Shelby County Trust Co. v. Board of Trustees ( 1891 )

JUDGE BENNETT

delivered the opinion of the court.

The appellant, at the time it instituted this suit, did business in the town of Shelbyville under articles of incorporation filed in the county clerk’s office pursuant to chapter 56, General Statutes. Its capital stock was fifty thousand dollars.

The appellee’s charter provides: c5That the board of trustees of said town be, and they are hereby, authorized and empowered to assess, levy, and collect annually a tax not exceeding fifty cents on each one hundred dollars of real and personal estate within the limits of said town, including real and personal estate owned by banks and other corporations, and the capital stock 'and surplus assets of banks and other corporations.”

The appellee assessed and levied a tax of fifty cents on each one hundred dollars of appellant’s fifty thousand dollars of capital stock. The appellant, admits the appellee’s right to tax it Tinder the provision of its charter quoted, but denies its right to tax it for a greater sum than its capital stock paid in, which is only five thousand dollars. The appellant relies on the cases, of Franklin County Court, &c., v. Deposit Bank of Frankfort, 87 Ky., 370, in support of this view. The appellant understands those cases to decide that the capital stock of corporations is the money authorized to be paid in and actually paid in; from which it is argued that shares of stock not paid in do not constitute capital stock for the purpose of taxation. The court did say in those cases that the State could only tax the capital stock paid in, but we said so for the reason that the charters of the banks restricted the right of the State to tax the capital stock of the banks actually paid in; but, unless thus restricted, the opinion shows that a different rule ordinarily prevails. Here the appellant’s business was to act as trustee, committee, administrator, guardian, &c., and its capital stock was to be taken as surety on its bonds in such cases: and in order that the surety of this trust should be adequate, it should be paid in or secured to be paid in; and if it should become insolvent, the same reason would exist for taking action against the corporation that exists in individual cases. So it will be seen that the appellant’s stock paid in, and secured to be paid in, is its trust fund and assets upon which it does business, and its payment may be enforced at any time in order to meet its business obligations. The presumption is that its real value is its nominal amount, and it should be taxed accordingly. There is no more reason why it should not be thus taxed than in the case of a solvent promissory note which is taxed at its nominal amount It is upon the principle of property value that this capital stock paid in, and secured to be paid in, is taxed at its nominal amount, and to allow the appellant to do business on it, and not pay taxes on it because the money has not been" actually paid in, would be an evasion of its proportionate burdens of government. The appellee having the power to tax such property, the same rule applies.

The judgment is affirmed.