Union Trust Co. v. State

Stockbridge, J., delivered the opinion of the Court. This is a suit brought in the name of the State of Maryland, in accordance with the provisions of section 152 of Article 81 of the Code of Public General Laws, against the Union Trust Company of Maawland to recover the amount ³⁷¹ of the State tax on 20,000 shares of the' capital stock of that corporation for the year 1907. The material facts are as follows: On January 11th, 1907, the Union Trust Company of Maryland by Eichard D. Sell-man, its treasurer, filed with the State Tax Commissioner the report required to be made by section 150 of Article 81, and on January 22nd of the same year, the Tax Commissioner placed the valuation upon the stock of $49.50 per share, gross, or with the deduction claimed by the Company and’ allowed by the Tax Commissioner, of $17.66 per share net, as the valuation of the stock of the company for the purposes of taxation. On some date between January 11th and 22nd, entries were made in a book in the State Tax Commissioner’s office, known as the book of division of stock, and in this was set out the number of shares liable to taxation in Baltimore City and in each of the counties.

And on or about the same date the Appeal Tax Court of Baltimore City and the County Commissioners in the several counties were notified of the valuation placed upon the shares of the stock of this corporation. In a letter from the Tax Commissioner to one of the counsel of the company appears the statement, that the levy of the tax was made by him, the State Tax Commissioner, and certified to the Comptroller on the 17th. of May, 1907, and by the certificate of the State Tax Commissioner it appears that on the 17th May, 1907, the Tax Commissioner certified to the Comptroller the assessment of this stock. From the valuation of the State Tax Commissioner and appeal was taken under the provisions of section 162 of Article 81, and the valuation of the State Tax Commissioner confirmed. On February 25th, 1907, the Union Trust Company reduced its outstanding stock from twenty thousand to ten thousand shares, and paid off, liquidated and retired ten thousand shares, at a valuation of $66 per share, and on the 16th April, 1907, notified the State Tax Commissioner of such reduction in its capital stock. ³⁷² The record in this case shows several demurrers, and at the trial the plaintiff offered six, and the defendant twenty-two prayers, of which the Court- granted the plaintiff’s first, second, fifth and sixth, and refused all of the other prayers. • The questions raised by the demurrers were all substantially raised under one or another of the prayers.

In the view which the Court takes of this case, it is unnecessary to consider in detail the several rulings on the demurrers and upon the prayers, as they all involve .one or another of four propositions of law, viz: 1st, That the taxes upon this stock were levied by the State Tax Commissioner, and not by the Comptroller of the State, and the levy was therefore void; 2nd, -That the assessment is void because it was an assessment made against the company and not against the owners of the stock; 3rd, Because it was not certified by the State Tax Commissioner to- the Comptroller until May 17th, 1907, two days after the date named in the statute; and 4th, Because at most, the State can recover taxes upon only ten thousand of the twenty thousand shares of stock which were issued by the company. . It is proper to say in limine, that laws for the assessment and collection of general taxes are construed with the utmost liberality; Turpin v. Lemmon, 187 U. S. 58 ; that the construction is not to be a critical one with a view to defeat the enactment, but a liberal interpretation so as to uphold it, if possible; McSherry, C. J., in Monticello Co. v. Baltimore City, 90 Md. 416 ; Am. Coal Co. v. Co. Commrs., 59 Md. 185 ; and no authority is needéd for the proposition that the acts of a public officer in the discharge of his duties are entitled to the presumption of having been correctly performed. 1st. By the provisions of section 150 of Article 81, it is made the duty of the State Tax Commissioner to make the levy upon shares of stock of corporations as of the first day of January preceding, and the contention of the Trust Company in the present case is, that that was what was done with regard to this stock, although by Chapter 404 of the ³⁷³ /lets of 1906, the duty of levying the State taxes was imposed upon the Comptroller.

In passing, it is to be observed that the Act of 1906 was not in terms an amendment of section 150, but of section 22 of Article 81. and, therefore, it may be claimed that there were two sections of the Code, each of which gave the authority to levy the tax, hut gave it to different, officials. To this objection the answer is clear and complete. In the first place some confusion arises out of the use of the word “levy.” “I’he word 'levy’ has different meanings according to the object to which it is applied. As applied to taxes it sometimes means to raise and exact by authority of government or to determine by vote the amount of tax to be raised.

It is in this sense that towns and cities levy taxes, in other cases if is used with reference to the mere ministerial or executive act of entering them on the tax hook and collecting them.” 5 Words and Phrases, page 4101, citing State v. Lakeside Land Co., 71 Minn. 283 ; see also So. R. W. v. Kay, 62 So. C. 228. The Act of 1906, Chapter 404, in terms fixed the amount per hundred dollars to he imposed by way of tax.

This of itself constituted a legislative levy of the tax, hut that levy needed to complete it the entry upon the book of the State Comptroller. The Act of 3 906 vested no power in the Comptroller to determine the amount of rate of the tax, neither did it give him any function to perform in the way of valuing the stock, that is, assessing or determining the value of it for purposes of taxation. The function of the Comptroller under the Act of 3 906, was, therefore, a purely ministerial act, and was fully performed when he entered upon his books the number of shares of stock liable to taxation, the corporation the stock of which was taxed, the rate of taxation, and extended the amount of the tax. This apparently was also done by the State Tax Commissioner under the authority of section 150, but it was none the less done by the State Comptroller when lie made his entries, and the fact that similar ³⁷⁴ action was taken by two separate officials, identical in its nature, and each acting under express provisions of law, though one or the other of them may have been superfluous, can not be regarded as invalidating the tax.

Glarh Disí. Co. v. Cumberland, 95 Md. 476 . Nor can the fact, as in this case, that the Legislature has made the levy itself be a ground of objection. Such a power is distinctly within the province of the Legislature, and the fact that it may be delegated, either in whole or in part, does not destroy the validity of the act, but such delegation may be, and sometimes is, ma.de because the power can in such manner be more conveniently exercised; State v. Mayhew, 2 Gill, 490 . 2nd.

The second ground of objection is the assumption that the tax sought to be collected in this suit, is a tax levied upon the company, and not one where the stock was valued and assessed to the owners thereof in the county or city in which the owners respectively resided. Upon this branch of the cáse it is tó be noted, first, that there is no requirement exacted by section 150 of Article 81, that the official of the corporation shall return to the State Tax Commissioner a list of the stockholders therein, only of the number of shares of capital stock. The requirement of the list of stockholders appears in section 156, and such list is to be made in an entirely separate return, required from the officers of a corporation, to the Appeal Tax Court of Baltimore City, the County Commissioners of a county, or the city clerk of an incorporated town or village. Most of the cases which have heretofore been before this Court have been cases where it was sought to recover county or municipal taxes, and in one or two of them, with the State taxes added.

In the present case there is no attempt to require payment by the Trust Company of any local or municipal taxes, only of the taxes due to the State of Maryland, and for that reason the corporation being created by law the agent of the State for the collection of taxes upon the shares of its capital stock, it was sufficient as between the State’s officers and those from whom ³⁷⁵ the tax was due, for the State to look solely to the corporation, but this is very far from being a tax upon the corporation. It has been repeatedly held by this Court that the tax upon the capital stock is not a tax upon the corporation, but upon the owners of that stock, the corporation being made the medium through which the tax is collected. This is in strict accord and analogy with the case of .the Monticello Co. v. Baltimore City, 90 Md. 416 , in which McSherry, C. J., in speaking of the distilled spirits there sought to be taxed in the hands of the warehouseman,