Schleman v. Guaranty Title Company , 153 Fla. 379 ( 1943 )

On November 13, 1942, the Guaranty Title Company, a corporation, filed in the Circuit Court of Hillsborough County, Florida, its bill of complaint against Anthony Schleman, as Tax Collector of Hillsborough County, and J.M. Lee as Comptroller of the State of Florida, and alleged that it was engaged in the conduct of a general abstract and title insurance business in the City of Tampa, Florida, and owned personal property consisting of furniture and equipment used in connection with the operation of the abstract and title business; a certain amount of cash on deposit in banks; designated stocks; abstract records, and accounts receivable.

The tax return as by it made to the County Tax Assessor, disclosed that it owned intangible personal property of a value of $35,000.00, and the Tax Assessor assessed the abstract records as tangible property and placed a valuation of $32,000.00 thereon and assessed its abstract records as intangible property for a valuation of $35,000.00. The plaintiff, being dissatisfied therewith, protested, the assessment of the abstract records so made as tangible personal property before the Board of County Commissioners of Hillsborough County acting as a Board of Equalizers, and contended that they should be assessed as intangible personal property, but the protest was rejected and the County Tax Assessor was by the Board directed to strike from the intangible property roll the abstract records assessed as intangible personal property.

The assessor complied with the order so made, with the result that the abstract records of the plaintiff remained assessed on the tangible personal property rolls of Hillsborough County at a valuation of $32,000.00, while plaintiff contended that the abstract records so owned by the plaintiff, as a matter of law, should be assessed as intangible personal property and not as tangible personal property, as it appears now on the tax rolls of Hillsborough County. The plaintiff tendered into court a sufficient amount of money to pay the assessment upon its abstract records as intangible personal property and otherwise offered to do equity.

The defendants filed a motion to dismiss the bill of complaint on the grounds viz: (1) the bill of complaint was without equity; (2) it affirmatively appeared that the described property was lawfully assessed; and (3) that the bill of complaint failed to allege discrimination against the plaintiff or that its property had been assessed in a manner different from other property of like nature and similarly situated. Likewise, a motion was filed to strike from the bill of complaint all allegations and references therein to the effect that the abstract information or abstract records were intangible personal property.

On January 21, 1943, an order was entered by the Circuit Court overruling the motion to dismiss and the motion to strike, and subsequently a reconsideration of the aforesaid order was had, when an order of affirmance was entered under date of March 10, 1943. The order of reconsideration was entered largely because the case of Brooksville Abstract Co. v. Kirk, 101 Fla. 175, 133 So. 629, had not been considered. The cause comes before this Court on petition for interlocutory writ of certiorari authorized by Supreme Court Rule No. 34, praying for an order quashing the order of the lower court dated January 21, 1943.

Evolved from the questions propounded, it is safe to conclude; that an answer to the following question will be determinative of the controversy presented: Are abstract records, consisting of certain loose-leaf records or memoranda showing certain information taken off from the public records, and so compiled and arranged in files as to tracts and names as to enable abstractors, by reference thereto, to make abstracts of title, which abstract records also contain certain work sheets, abstractors' notes and indices, and all of which records are either in loose-leaf form or bound in loose leaf books, and were not produced for the purpose of sale or being dealt with as a commodity of commerce, and no part of which records proper is incorporated into the abstracts as produced and sold, but which are at all times kept and maintained for the sole and exclusive use of the compiler and which abstract records or memoranda consist of thousands of sheets of paper having certain matter written in typewriting, ink or pencil thereon, together with fasteners, binders and covers, pursuant to law, properly assessed for taxation as tangible personal property?

In Section 1 of Article IX of the Florida Constitution, adopted at the General Election of 1924, intangible personal property was not assessable at a higher rate than five mills on the dollar of the assessed valuation. The amendment as adopted conferred on the Legislature authority to provide for special rates of taxation on intangible personal property. See Porter v. First National Bank, 96 Fla. 740, 119 So. 130.

Pursuant to Section 1 of Article IX, the Florida Legislature enacted Chapter 20724, Acts of 1941, Laws of Florida, which, among other things, defined and classified for taxation purposes intangible personal property. Section 2 of the Act defines "Intangible Personal Property" as "all personal property which is not in itself intrinsically valuable but which derives its chief value from that which it represents." Section 3 of the Act classifies for taxation purposes intangible personal property into four classes and identifies them as Classes A, B, C and D.

Class A intangible personal property is defined by the terms of the Act as "all moneys, United States Legal tender notes, bank deposits of all kinds, certificates of deposits, cashier's and certified checks, bills of exchange, drafts, and money placed with savings, building and loan associations." Class B is defined by the terms of the Act as being "all stocks, or shares of incorporated or unincorporated companies; all bonds except bonds of the several municipalities and counties of the State of Florida, and also such bonds or governmental bonds as may be exempt from taxation under the Constitution or laws of the United States or the State of Florida; all notes, bonds and other obligations bearing date prior to January 1, 1942, for payment of money which are secured by mortgage, deed of trust or other liens upon real or personal estates situated in Florida, . . .; and the beneficial interest of residents of Florida in trust estates of all kinds . . . Class C is defined by the terms of the Act as being "all notes, bonds and other obligations bearing date subsequent to December 31, 1941, for payment of money which are secured by mortgage, deed or trust or other liens upon real property situated in Florida, provided that only that part of the mortgage, deed of trust, or other lien, the real property of which is located within the State shall bear to the whole value of the real property described in said obligation shall be included." Class D of the Act is to define and include "all other Intangible Personal Property not embraced in Classes A, B, or C."

Section 5 of the Act confers on the State Comptroller the power and duty to make or provide such reasonable rules and regulations as may be necessary and proper to effectuate and carry out the several terms, conditions and provisions of the Act.

Section 13 of the Act provides for the annual levy and assessment, and fixes the amount or amounts thereon to be assessed and collected, on all intangible personal property defined and classified as Classes A, B, C and D supra viz: (a) a tax of 1/20 of one mill on the dollar of the taxable value is assessed on intangible personal property classified and defined as Class A in Subsection (1) of Section 3 of the Act; (b) a tax of one mill on the dollar of the taxable value is assessed on tangible personal property classed and defined as Class B in Subsection (2) of Section 3 of the Act; (c) a tax of three mills on the dollar of the taxable value is assessed on intangible personal property classified and defined as Class C in Subsection (3) of the Act; (d) a tax of one mill on the dollar of the taxable value is assessed on intangible personal property classified and defined as Class D in Subsection (4) of the Act.

Abstract records are not named, classified or defined as intangible personal property in Subsections (1), (2) and (3) of Section 3 of Chapter 20724, supra. If classified as such for taxation purposes, they must necessarily fall within Class D, which is defined to include "all other intangible personal property not embraced in Classes A, B, or C" of Section 3,supra. Approximately ten years prior to the enactment of Chapter 20724, supra, this Court had before it the case of Brooksville Abstract Co. v. Kirk, 101 Fla. 175, 133 So. 629, in which it was held that an abstract plant was tangible property.

In the last above cited case, suit was brought by the Brooksville Abstract Company to enjoin the collection of a tax assessed against an abstract plant. The bill of complaint alleged that:

"its said abstract plant is without value except in the hands of complainant, and to the extent that complainant chooses to use same as a basis for producing documents of salable value; and that in the hands of any other person than complainant, said plant would be valueless, saving only as said complainant might lend value thereto by explaining the contents thereof, or assisting in the use thereof, and saving further only the intrinsic value of a few pounds of paper and bottles of ink, and other materials composing said plant, which intrinsic value is so small as to be negligible."

The sufficiency of the bill of complaint was tested by demurrer by which it was contended that "the bill of complaint alleged no facts whatever upon which equitable relief should be granted," and that the bill of complaint was without equity. The chancellor sustained the demurrer and the same on appeal here was affirmed, when we in part said:

"It is a matter of common knowledge that an abstract plant is tangible property possessing the attribute of value.

"There are no allegations in the bill upon which relief prayed for could be based.

"The order appealed from should be affirmed with directions that the demurrer be sustained and the bill is dismissed. It is so ordered."

Our holding in Brooksville Abstract Co. v. Kirk,supra, is in accord with the weight of authority and is based on sound reasoning. See 1 Am. Jur. 156-7, par. 3; Washington Bank of Walla Walla v. Fidelity Abstract Sec. Co., 15 Wn. 487, 46 P. 1036, 37 L.R.A. 115, 55 Am. St. Rep. 902; Leon Loan Abstract Co. v. Equalization Board, 86 Ia. 127, 53 N.W. 94, 17 L.R.A. 199; Thompson on Abstracts and Titles, (2nd ed.) 52-53, par. 36., In the case of State v. St. Paul Abstract Co.,158 Minn. 95, 196 N.W. 932, it was held that a set of abstract books is personal property for the purpose of taxation.

The chancellor in this case applied to the bill of complaint the minority rule recognized by the State of Michigan, which is to the effect that a set of abstract books, as here involved, is but the unpublished manuscript of an author, valuable only on account of its literary contents, and that it belongs to the unleviable class of property, such as patents or copyrights, etc. See Dart v. Woodhouse, 40 Mich., 399; Perry v. City of Big Rapids, 67 Mich. 146, 34 N.W. 530. Cooley on Taxation, Vol. 2 (4th ed.) 1214, par. 553, when considering abstract books, said; "Manuscript containing abstracts of land-titles have been held in Michigan not to be taxable property, but the contrary rule is announced in Iowa and in Washington."

We have been unable to find a Florida case holding to the effect that abstract records are not property or immune from taxation. We held in Brooksville Abstract Co. v. Kirk,supra, that an abstract plant was tangible property and possessed the attributes of value and therefore was taxable. This holding was not altered or modified in the enactment of Chapter 20724, supra, which therein defined and classified with exactness intangible personal property but failed to alter, change or modify our holding in the case of Brooksville Abstract Co. v. Kirk, supra.

Counsel for respondent cite 18 C.J.S. 138-142. Generally, it may be said the cited authority treats the subjects of: (a) copyrights; (b) common law copyrights; and (c) common law rights. Many of the cases cited in the brief are taken from the footnotes appearing on page 138 to 142 supra. The copyright features of the law applicable to the abstract records of the respondent are not here involved. These citations throw but little right on the point in controversy, viz: should the abstract records be assessed as intangible personal property under Chapter 20724, supra? 1 R.C.L. 90, par. 2, simply recites the majority and minority rules. The copyright privilege of abstract records are not relevant to the controversy.

It is next contended that the following rule stated in Press Publishing Co. v. Monroe, 38 U.S. 410, 73 Fed. 196, 51 L.R.A. 353, (text: b. Compilers, 51 L.R.A. p. 358), is applicable:

"He who merely gathers and arranges in some concrete form materials that are open and accessible to all who have the mind to work with like diligence is as much the owner of the result of his labors as if his work was a creation rather than a construction

The answer to this contention is that the foregoing follows the Michigan minority rule while Florida adopted the majority rule in Brooksville Abstract Co. v. Kirk, supra, in 1931. The respondent's brief has been carefully studied and. the authorities cited therein read and examined.

The petition for an interlocutory writ of certiorari under Supreme Court Rule No. 34 is hereby granted and the order dated January 21, 1943 is hereby quashed with directions to dismiss the bill of complaint.

It is so ordered.

BUFORD, C. J., CHAPMAN and ADAMS, JJ., concur.

TERRELL, J., dissents.

ON REHEARING GRANTED