Commonwealth v. Lehigh Valley Railroad , 186 Pa. 235 ( 1898 )

Opinion by

Mu. Justice Mitchell,

The court below sitting without a jury under the act of 1874, found that the report of the defendant company to the auditor general “was the result of careful, painstaking and diligent inquiry made by the defendant’s officers in order to ascertain the facts contained therein; and these officers discharged their full duty to the commonwealth, and ascertained as nearly as lay in their power the relevant facts concerning the owners of the company’s bonds, and particularly the facts concerning the residence of such owners. There is no evidence to show that the officers could have ascertained by proper diligence the residence of any other holder of the defendant’s bonds; and no presumption of fact arises from the evidence before us that the residence of any bondholder, which was returned as unknown, was actually within the state of Pennsylvania in the year 1895.”

This finding, in the absence of convincing demonstration of error, is conclusive of the case, unless the court was wrong in-refusing to recognize a presumption that the bonds of domestic or Pennsylvania corporations are held by resident owners. The commonwealth contends that this is a proper and necessary presumption, and that it throws on the corporation the burden of proving- what bonds are exempt from tax by reason of the non-residence of their owners. The existence of such a presumption is the vital question in the case.

To ascertain if the corporation is claiming an exemption from a genera] tax we must look at the statute. The Act of June 30, 1885, P. L. 193, provides: “ Sec. 4. That hereafter it shall be the duty of the treasurer of each private corporation . . . . upon the payment of any interest on any script, bond or certificate of indebtedness issued by said corporation to residents of this commonwealth, and liéld by them, to assess the tax imposed and provided for state purposes upon the nominal value of each and every said evidence of debt, and to report .,. . . to the auditor general the amount of indebtedness of the corporation owned by residents of this commonwealth, as nearly as the same can be ascertained; ” and to deduct three mills on the dollar, etc., and pay into the state treasury. The Act of June 8, 1891, P. L. 229, increased the tax to four mills, but made no other change which affects the present question.

The tax is not in any sense or in any degree a tax on the corporation or its property, but on the individual citizen of the state who holds the bonds. The corporation is chargeable with it only as a collector, and by reason of default in the duty to collect: Com. v. Lehigh Val. R. R. Co., 104 Pa. 89; Com. v. Del. Div. Canal Co., 123 Pa. 594; Com. v. Lehigh Val. R. R., 129 Pa. 429.

The tax, moreover, is not only not on the corporation but it is not on the bondholders generally, but only on such as are within the taxing power of the state. This limitation is the result of the language and intent of the act, and also of the lack of jurisdiction of the state itself to tax property of nonresidents which has no actual situs within the state. The tax, therefore, is not a general tax on all bonds, but only on such as are “ issued to residents of this commonwealth and held by them,” and the duty of the corporation is to assess it and “ to report to the auditor general the amount of indebtedness of the corporation owned by residents of this commonwealth, as nearly as the same can be ascertained.” The ascertainment of this amount is a matter of fact depending in each case on the circumstances and the evidence. There is no presumption in regard to it. Presumptions are founded on the ordinary and usual course of events, as shown by common experience. The testimony in the present case of experts, bankers, brokers and dealers in such securities is uniform that, though in the case of a small corporation whose affairs were not well known away from home, the bonds would be likely to be held locally, yet in tlie ease of large corporations, the bonds are dealt in and held in many different states and in foreign countries, and are constantly changing ownership between residents and nonresidents of the various states and of foreign countries. A very pertinent illustration is to be found in the present ease where it is shown that of the bonds returned by the company as held by persons whose residence is unknown, one million tliree hundred and nineteen thousand dollars were originally sold in London, and are not known to have been returned to this country. In the face of such testimony and such facts, it would be contrary to reason and justice, as well as to experience, to bold that there is any presumption on the subject which the corporation is required to overcome. The duty of the corporation is to use diligence to ascertain the residence of its bondholders, and whether it has done so is a question of fact in each case to he determined by tlie circumstances and the evidence.

Judgment affirmed.