Susquehanna Power Co. v. State Tax Commission

³⁶¹ Offutt, J., delivered the opinion of the Court. On October 10th, 1929, the State Tax Commission of Maryland assessed the capital stock of the Susquehanna Power Company, a Maryland corporation, at $6,000,000, and on October 11th notified it that the assessment would become final unless cause to the contrary were shown within fifteen days from that date. On October 23rd, 1929, the company filed a protest, which was heard on November 8th. After that hearing, on December 18th, 1929, the assessment was made final, and on or about January 2nd, 1930, the company filed in the Circuit Court for Harford County a petition in the nature of an appeal from the action of the commission, and on January 3rd, 1930, addressed a similar petition to the Comptroller of the Treasury and the Treasurer of Maryland.

The latter appeal has not apparently been considered, but the appeal to the Circuit Court for Harford County was in due course heard, and on January 20th, 1930, by an order of that court, the assessment made by the State Tax Commission was affirmed. Erom that order the company has appealed to this court. The questions raised by the appeal are: (1) Whether an appeal lay from the action of the State Tax Commission to the Circuit Court for Harford County; (2) whether the commission erroneously included in its valuation of the company’s machinery in its power house and dam “the cost of adapting such power house and dam to receive the same”; (3) whether a provision, contained in Code, art. 81, sec. 183, that in no case shall the stock of a corporation such as the appellant be valued in the aggregate for assessment at less than the full value of the real estate and chattels real or personal, is repugnant to articles 15 and 23 of the Maryland Bill of Rights and to the Fourteenth Amendment to the Constitution of the United States, and therefore void; (4) whether any valuation of the capital stock of the company in excess of the value of its real property and chattels real and personal must necessarily include the value of its “franchise rights” granted under a license from the Federal Power Com ³⁶² mission and is void; and (5) -whether, as its stock is owned by a nonresident, it is taxable in Maryland. In view of the decisions in Balto. & Phila.

Steamboat Co. v. State Tax Commn., 157 Md. 282 , and Fidelity Trust Co. v. Gorman, 134 Md. 338 , there can be no possible donbt as to the right of the company to appeal on any question of law from the action of the State Tax Commission to the Circuit Court for Harford County. The appellee moved to dismiss the appeal in the lower court on the ground that, as Code, art. 81, sec. 170, allowed an appeal to the Comptroller of the Treasury and the' Treasurer, that right was exclusive. But that statute was in force when the cases cited were decided, and it must be assumed that, in deciding that an appeal lay also to the courts on questions of law, under sections 253, 259, article 81 of the Code of 1912, it was considered that the right to appeal to court and the right to appeal to the Comptroller and the Treasurer were cumulative and not exclusive remedies. The reason for that conclusion becomes apparent when the two remedies are compared.

The appeal to court, being upon questions of law only, was designed to secure to the taxpayer the privilege of having the decisions of the commission on such matters reviewed by the only agency competent to deal with them, while the appeal to the Comptroller and Treasurer gave to him the privilege of having the judgment of the commission on questions of fact reviewed by a board of two laymen, fiscal officials, who by the nature of their offices were qualified to decide such questions. Broadly stated, the next point presented by the appeal is that the commission erred (1) in its rulings on the prayers or instructions submitted by appellant, and (2) that it erred in failing to state the reasons which influenced it in valuing appellant’s stock, and that these errors invalidated the assessment which it imposed on such stock. Taking the second of these questions, it cannot be fairly said that the commission failed to state the reasons which affected its action. For when Mr. Howard, of counsel for the company, suggested at the hearing, “We would know better how to proceed if the commission would give us some ³⁶³ idea how they arrived at this tentative value of $6,000,000,” the chairman of the commission replied, “We made the assessment in accordance with the law.

The three elements mentioned by tbe law—market value of the stock, net earnings and net assets—were taken into consideration.” It is true that, after the chairman had made that statement, the Attorney General stated that the commissioners “did not have to tell how they did their work.” We do not agree with that statement, and in our opinion the law is otherwise. The commission was an administrative fact finding board, created by statute with such powers, and only such powers, as the statute gave it. It was neither above uor beyond the law, and when its conclusions were challenged in some appropriate and orderly manner sanctioned by law, it was bound to justify them by showing that they had a legal basis. It had no more right to assess property by fiat, and without regard to its actual worth, than it had to bodily appropriate the private property of the citizen to the use of the state.

Its tentative assessment had been made without consulting the taxpayer, and without notice to him, and, while ordinarily and in the absence of any direct attack, its action will be presumed to be correct (Cooley on Taxation, sec. 1073), when it is directly attacked, justice requires that the assessors should be required on demand of the taxpayer to state the basis of the assessment. In Consol. Gas Co. v. Baltimore City, 105 Md, 52, this court said: “The appellees have cited in their brief numerous, respectable and eminent authorities from other jurisdictions to sustain the proposition that the method of assessors in arriving at their conclusions is a matter absolutely committed to their discretion, and that the members of such tribunal cannot be put upon the stand to testify as to the operation of their minds in doing the work entrusted to them, and many of those authorities are collected in 27 Amer. & Eng. Ency. of Law (2nd Ed.), page 689. “After careful consideration of these authorities however, and with due respect to the eminent courts by which they ³⁶⁴ are announced, we do not think the law can be so declared in this State. “No proceeding more closely analogous to the present can be found, than that employed in condemning land under the principle of eminent domain, and in such cases, ever since the case of Tide Water Canal Co. v. Archer, 9 G. & J. 317 , the practice in Maryland has allowed the examination of jurors, who signed the inquisition as witnesses, on return of such inquisition for confirmation, ‘upon all subjects whatever relating to the controversy, as fully as any other persons wlm might be sworn as witnesses in the cause, that they may be examined as to the grounds and motives for their finding, in order to ascertain whether in coming to their conclusions they had not mistaken facts as well as the law.’ ” And while that case dealt with the examination of the assessors in the circuit court on appeal, its reasoning applies as well to a proceeding before the assessors themselves.

For unless the taxpayer is permitted to ascertain from that source what basis there was for the assessment, he would be at the mercy of the uncontrolled discretion of the commission, since he could obtain it from no other source, as the members of the commission cannot under the present procedure be examined in court. Fidelity Trust Co. v. Gorman, 134 Md. 340 . But conceding so much, the objection is without point in this case, for, as we have stated, the commission did give its reasons for the assessment it made, and those reasons were rational, sufficient, and legal, and we find no support for the statement that the commission “refused, though repeatedly requested to do so, to give any reasons, or indicate in any way by what process their ‘tentative assessment’ was arrived at.” Had the appellant desired any more detailed or specific statement than that givén, it could have applied for it by addressing appropriate questions, designed to elicit it, to> the commission. But having failed to do that, it cannot now complain that questions which it failed to ask wtere not answered.

The next objection is that the commission erred in its rulings on the instructions submitted by the appellant. The ³⁶⁵ first answer to that objection, so far as it relates to the first, fourth, and fifth instructions, is that they are mere legal abstractions which are not shown to have any relation to the action of the commission or the evidence before it. The first instruction stated as a matter of law that “the turbine wheels, dynamos and other machinery installed by said company in its power house and dam on the Susquehanna River, in Harford County, should be valued at their full value as machinery, without including in such valuation the cost and expense of installing the same or of adapting said power house and dam to receive the same.” Its fourth announced that so much of Code, art. 81, sec. 163, as declared that “in no case shall the stock of any corporation, in the aggregate, be valued at less than the full value of the real estate and chattels, real or personal, held by or belonging to such corporation,” was void as in conflict with articles 15 and 23 of the Declaration of Rights of the Maryland Constitution, as well as with the Fourteenth Amendment of the Federal Constitution. But there is nothing in the record from which it can be inferred that the commission included in the value of appellant’s machinery the expense of installing the same or of adapting the power house and dam to receive it.

Moreover, assuming that the cost of adapting the power house and dam to receive the machinery could not be included in the valuation of the machinery, the first instruction further stated that the expense of installing it should not be included in such valuation, and in that it went too far. The value of chattels of that character includes, as one of its elements, the expense of fitting it for the owner’s uses. And if such expenditure give the chattel an added intrinsic value, it should be considered in any valuation of it. And if, in considering that element of value, the commission erred, its error was one of judgment, which the circuit court was not authorized to rev-view.

Baltimore v. Ches.