Corry v. Mayor of Baltimore ( 1903 )

James C. Corry, a resident of the State of Pennsylvania and a non-resident of the State of Maryland, filed a bill in Circuit Court No. 2, of Baltimore City, on behalf of himself and other non-resident stockholders of the New York and Baltimore Transportation Line, a corporation of the State of Maryland, against the Mayor and City Council of Baltimore, James P. Gorter, Collector, Murray Vandiver, Treasurer of the State of Maryland, and the New York and Baltimore Transportation Line, to restrain and enjoin the defendants from collecting certain State and municipal taxes for the year 1899, on one hundred and fifty shares of the capital stock of the transportation company, of the par value of twenty dollars per share.

The defendants answered the bill, but subsequently these answers were withdrawn and by an agreement demurrers were considered as filed by the defendants. And from a decree of the Circuit Court of Baltimore City, of the 24th of June, 1902, sustaining the demurrers and dismissing the plaintiff's bill, this appeal has been taken.

The principal and important question presented by the case is whether the method of taxation provided by the statutes of Maryland of stocks in Maryland corporations held by non-residents of the State is valid and constitutional. The provisions of the several statutes of the State, relating to the tax will be found in secs. 2, 4, 141 and 144 of the 81st Art. of the Code of Public General Laws, and in the Supplement of the Code of 1900.

These statutes distinctly provide that the shares of capital stock of all corporations, whether owned by residents or non-residents, shall be liable to assessment and taxation, and by sec. 131 of the Code the stock held by non-resident stockholders in steamboat or other companies, c., is situate for the purpose of taxation at the place where its principal office for the transaction of business is located, that is in this case in the city of Baltimore.

The mode, method and manner of the assessment, valuation and taxation, as applicable to stock held by non-resident shareholders is clearly and fully provided and directed by the several statutes, and it is admitted that the taxes in this case were imposed according to the provisions of the statutes.

The appellant urges four grounds why the tax laws of the State, here in dispute are not constitutional and valid:

(1) Because the tax is a personal one, and it is beyond the powers and jurisdiction of the State to levy a personal tax against a non-resident of the State.

(2) To enfore the collection "is taking property without due process of law," or color of right and in contravention of the Constitution of the United States.

(3) That no provision is made by the statutes for a hearing or opportunity to be heard, by the non-residents of the State.

(4) That the levy of the city tax upon stock held by non-residents in corporations in Baltimore city is exempt by the new charter (Act of 1898, ch. 123).

Some of the questions raised on this appeal can hardly, at this date, be regarded as res nova in this Court. Similar statutes have been acted from time to time by the General Assembly of the State imposing a tax upon corporate stock in Maryland corporations held by non-residents and in one form or another have been brought to this Court for construction. The principle of this legislation has been upheld and recognized by this Court in all the cases, except where the statute was plainly in contravention of the State or Federal constitutions. Whatever may be the adjudications in other States, it is quite certain that in the construction of this statute we are to be controlled by the decisions of our own Court, in so far as they are applicable to the case.

It is distinctly declared by the 15th Article of the Bill of Rights, that "every person in the State or person holdingproperty therein, ought to contribute his proportion of public taxes for the support of the government, according to his actual worth in real or personal property."

In the case of the Mayor and City Council of Baltimore v.Baltimore City Passenger Railway Company, 57 Md. 31, it is said, that express provision is made by the Act for valuing the stock owned by non-residents at the place where the company has its principal office for the transaction of business, that the shares of stock held by non-residents are liable to taxation, and that for the purposes of taxation, such shares are situate in the city of Baltimore, where the appellee has its principal office.

The provisions of the statute under discussion clearly fixes the situs of stock held by non-residents for taxation at the place of the principal office of business of the corporation within the State, and the shares of stock being taxable property under the statute, the State and municipality of Baltimore under the conceded facts of this case, clearly had jurisdiction to impose a tax upon the property situate here, and to collect taxes thereon, notwithstanding the fact the appellant was a non-resident of the State.

It would answer no good purpose, to discuss at length the question of the constitutionality of this tax in the light of the many and recent adjudications of this Court upon the subject, but we need only refer to the following cases, which sustain the conclusions we have reached. American Coal Co. v. CountyCommissioners of Allegany County, 59 Md. 185; United StatesElectric Light and Power Co. v. State, 79 Md. 70; Crown Corkand Seal Co. v. State, 87 Md. 696; The American CasualtyInsurance Co.'s case, 82 Md. 563; Bonaparte v. State,63 Md. 456; Baldwin v. Washington County, 85 Md. 155, and Kinehart v. Howard, 90 Md. 1.

The second and third objections urged by the appellant are, that sec. 144 of Art. 81 of the Code fails to provide a notice to the shareholder of the assessment and valuation of this property and he was therefore without an opportunity to be heard as to the value of the shares, and to enforce the collection would be "taking property without due process of law."

This section of the Code was under consideration in the recent case of James Clark Distilling Co. v. Mayor, c., ofCumberland, 95 Md. 468, and we distinctly said: "That a notice to each shareholder is unnecessary, because the corporation represents the shareholder. If the valuation is not satisfactory, an appeal may be taken by the corporation for the shareholder, an opportunity is thus afforded for the shareholders to be heard through the corporation and that gratifies all the requirements of the law."

It will be also seen that secs. 141 and 144 of Art. 81 of the Code do not contemplate a personal notice to the property holder, but a compliance with the requirements of the statute is a sufficient notice to the non-resident property holder of the assessment and valuation of the property. We find nothing in the cases of Gittings v. Mayor, c., 95 Md. 419; Ulman v.Baltimore, 72 Md. 587; County Commissioners Allegany Co. v.Union Mining Co., 61 Md. 545, relied upon by the appellant, in conflict with this construction of the statute.

The appellant's fourth contention is that the shares of stock held by him, are exempt from city taxes by reason of the provision of the city charter (Acts of 1898, ch. 123), which provides: That no stocks, bonds, mortgages, certificates or other evidences of indebtedness of any bank, or other corporation situate within the limits of the city, which are owned or held by persons, residing without said limits shall be subject to taxation for the purpose above set forth. Sec. 6, sub-section Taxes, City Charter (Acts of 1898, ch. 123).

This section of the charter has no reference to stocks, bonds,c., owned and held by non-residents of the State. It applies to persons living within the State, but without the limits of Baltimore City, that is, to stocks, bonds, c., held by persons residing within the counties and cities of the State. It therefore has no application to this case.

We have examined the Federal decisions bearing upon the questions raised on this appeal and find them in harmony with the views we have expressed. We cite the following cases in support of the conclusion reached by us in this case: New Orleans v.Stempel, 175 U.S. 309; Savings and Loan Society v. MultnomahCounty, 169 U.S. 421; McCulloch v. Maryland, 4 Wheaton, 316;Coe v. Errol, 116 U.S. 517; Pullman Car Co. v. Pa.,141 U.S. 18; Nevada Bank v. Sedgwick, 104 U.S. 111; Kirtland v.Hotchkiss, 100 U.S. 491; Bristol v. Washington Co.,177 U.S. 139.

We hold, therefore, that the shares of stock held and owned by the appellant, a non-resident of the State, in a Maryland corporation, are liable to taxation, under the statutes of this State, and that the tax is not in violation of either the State or Federal Constitution.

For these reasons the decree of the Circuit Court No. 2, of Baltimore City, will be affirmed with costs.

Decree affirmed with costs.

(Decided January 16th, 1903.)