Commercial Inv. Trust Co. v. Farve , 134 Okla. 133 ( 1928 )

The plaintiff, a New York corporation, brought an action in the district court of Carter county, Okla., against the defendants for an alleged balance due on a certain promissory note. Said note was executed by Ada Tubby LaFountaine on the 23rd day of June, 1923, in favor of the Nash Motor Company of Ardmore, Okla. Said motor company was a copartnership composed of W. J. Farve and John Baptiste. Said note was for the principal sum of $957.30, and the same was payable in 12 equal monthly installments of $79.78 each, the first installment being paid one month from the date of the execution of said note. Said note was thereafter sold and transferred by the Ardmore Nash Motor Company to the plaintiff herein.

Upon trial of the said case the plaintiff offered said note in evidence, and Ada Tubby LaFountaine objected to its introduction upon the ground that it was incompetent, irrelevant, and immaterial, which objection was by the court overruled.

Thereafter the defendants filed a demurrer to the evidence of the plaintiff, alleging in said demurrer that the note offered in evidence by the plaintiff was incompetent for the reason that said note was for more than eight months duration and was governed by the laws of the state of Oklahoma, and said note showed on its face that it ran for more than a period of eight months, and that the taxes required by law had never been paid on said note.

The court sustained said demurrer and rendered judgment in favor of the defendants, and the plaintiff prosecutes this appeal to reverse the action of the trial court. The sole question to be determined in this case is whether or not said note was taxable within the purview of section 9608, C. O. S. 1921, which section reads, in part, as follows:

"Any person owning any bond, note of any duration of over eight months, or other choses in action, evidenced by writing located in the state of Oklahoma, may take same to the office of the county treasurer of the county in which the owner of said bond, note, of a duration exceeding eight months or other choses in action, resides, or he may send a description of the same to said county treasurer and pay to the said county treasurer a tax of two per centum (2%) of the face amount thereof for five years. * * ' Provided, the provisions of this act shall not apply to any property which under existing laws is not subject to taxation, and provided, further, all property taxable under the provisions of this act, and owned by a nonresident of the state of Oklahoma, shall be listed for taxes in the county in which such evidence of indebtedness is located; and provided, further, nothing in this act shall cause any part of the capital stock of a corporation to be exempt from taxation; and provided, further, the bonds, notes, and other choses in action, evidenced in writing held by banking corporations which pay taxes on its capital stock, surplus and undivided profits, shall not be subject to the provisions of this act."

Section 9613, C. O. S. 1921, provides:

"No bond or note of over eight months duration or other choses in action, which has not been registered with the county treasurer of the county in which it is located and the tax paid in accordance with this act shall be admitted in evidence in any of the courts of the state of Oklahoma; Provided, that this act, shall not apply to notes secured by real estate mortgages which have been or hereafter may be registered under the provisions of chapter 246. Session Laws 1913, as amended by chapter 105, Session Laws 1915."

When the note in the instant case was executed, the payor and payee were both residents of this state. The note became immediately taxable under section 9608, supra. The owner of said note thereafter transferred the same to plaintiff and forwarded it to the plaintiff's place of business in the state of New York.

The state possesses the power to fix a time at which property within its jurisdiction may acquire a taxable situs, and under provision of section 9608, supra, the situs of said note for purposes of taxation was fixed immediately after its execution and delivery to the payee in the state of Oklahoma.

In the case of In re Harkness' Estate, 83 Okla. 107,204 P. 911, it is said:

"A state has power to fix a time at which property within its jurisdiction may acquire a taxable situs."

In the case of McIntosh et al. v. Advance Rumley Thresher Co., 117 Okla. 248, 246 P. 403, this court in the second paragraph of the syllabus thereof again said:

"A state has power to fix the time at which property within its jurisdiction may acquire a taxable situs, but it cannot fix the taxable situs of a thing which has never come into the state and over which it is without power to control."

In the case of White v. Grounds, 121 Okla. 171, 249 P. 271, the court said:

"However, when such note, bond or other choses in action, upon which the tax has not been paid as provided therein, is offered in evidence, it is incumbent upon the party offering the same to show a state of facts exempting the payment of such tax."

In the case of Wommer et al. v. Wommer, 91 Okla. 79,216 P. 150, this court said:

"There is no testimony in the record showing that the note was ever registered and the tax paid according to the provisions of this statute, and this was a fact to be proved as a condition precedent to the introduction of the note, as testimony, and it was ignoring the plain provision of the statute to permit it to be introduced over the objection of the defendants, and since the note was the basis of the plaintiff's action and not recovery for money had and received, it follows that the note was incompetent testimony and could not be considered as a basis for judgment under the rule announced by this court in Williams v. Williams, 87 Okla. 195, 209 P. 769, where it was held that if the plaintiff fails to prove sufficient facts to make out the case, and on the contrary proves a state of facts that precludes a recovery, and defendant interposes a demurrer to the testimony of the plaintiff, such demurrer should be sustained."

In the case of Harrell et al. v. Suter, 100 Okla. 56,227 P. 403, this court held that evidence of indebtedness taxable under section 9608, supra, was incompetent unless it was first shown that the tax had been paid thereon or that it was exempt therefrom.

We do not think that the state can be defeated of its right to impress its taxes against the class of property herein under discussion simply because such property has temporarily been removed from the state, and thereafter returned. If such were the case the state would suffer great loss on account of temporary removals from the state of this class of taxable property. The inhibition against the introduction of bonds, notes, etc., taxable under section 9608, supra, was in order to force the holders of such paper to register and pay the tax thereon.

Evidence of credits which are taxable under section 9608, supra, can be easily secreted and withheld from taxation by the owner thereof, and when such is the case and the owner thereof seeks to enforce the collection of the same by an action at law, the statutes of this state provide that such evidence of indebtedness shall not be admitted in evidence "in any of the courts of the state of Oklahoma."

The Legislature has a right to determine what may or may not be admitted in evidence in the courts of this state.

It appearing that the notes introduced in evidence had been subject to a state tax, and the owner thereof having failed to register the same and pay tax thereon, and it further appearing that said notes did not come within exemption provided by law, they were not admissible in evidence, and the court, therefore, correctly sustained the defendants' demurrer.

Judgment is affirmed.

MASON, V. C. J., and PHELPS, HUNT, RILEY, and CLARK, JJ., concur. BRANSON, C. J., dissents.