Person v. Board of State Tax Commissioners

Brown, J.,

in the same case, concurring, says, at p. 562: “I agree, also, that it is well settled that the shares of stock in any corporation, when owned by individuals, are separate and distinct property from the assets of the corporation and may be taxed as such.”

In the same case Holce, J., 152 N. C., at p. 582, says, quoting from Bank v. Tennessee, 161 U. S., 146: “The capital stock of a corporation and the shares into which such stock may be divided and held by individual shareholders are two distinct pieces of property. The capital stock and the shares of stock in the hands of the shareholders may both be taxed, and it is not double taxation. Van Allen v. Assessors, 70 U. S. (3 Wall), 573; People v. Comrs., 71 U. S. (3 Wall), 244, cited in Farrington v. Tenn., 95 U. S., 687. This statement has been reiterated many times in various decisions by tbis Court, and is not now disputed by any one.”

A later case, Brown v. Jackson, 179 N. C., 363-371 (1920), cites and approves tbe above cases.

Tbe above decisions of tbis State and of tbe United States Supreme Court are uniform, and without variation or shadow of turning, to tbe effect that tbe shares of stock in tbe bands of tbe stockholders are separate and distinct from tbe tangible property, tbe franchises and capital stock of tbe corporation, and that it is not double taxation to tax tbe shares in tbe bands of tbe stockholders and also to tax tbe franchises, capital stock, and other property of tbe corporation. These decisions should be tbe end of tbe controversy.

But there are many decisions in other courts to precisely tbe same effect.

In our own Court are many other cases. In Comrs. v. Tobacco Co., 116 N. C., 446, tbis Court held, in accordance with tbe decision rendered by Chief Justice Smith in Belo v. Comrs., 82 N. C., 415; 33 Am. Rep., 668, and by Ashe, J., in Worth v. R. R., 89 N. C., 305, and indeed, in accordance with all legal authorities and text-books, as follows: “As to corporations, by all tbe authorities, it is in the power of tbe Legislature to lay tbe following taxes, two or more of them in its discretion at tbe same time: (1) To tax tbe franchise (including in tbis tbe power to tax also tbe corporate dividend) ; (2) tbe capital stock; (3) tbe real and personal property of tbe corporation. Tbis tax is imperative and not- discretionary under tbe ad valorem feature of tbe Constitution. (4) Tbe shares of stock in tbe hands of the stockholder. Tbis is also imperative and not discretionary.” Tbis last, of course, is due by tbe owner thereof, tbe stockholder.

It is further, said in tbe same case, on tbe identical point presented here, as follows: “Tbe capital stock belongs to tbe corporation. Tbe shares or certificates of stock are entirely a different matter. They belong to tbe shareholders individually, and under tbe Constitution must be taxed ad valorem like other ‘property belonging to tbe bolder, independently of tbe taxation upon tbe corporation, its franchises/ ” etc.

This case has been cited with approval: Comrs. v. S. S. Co., 128 N. C., 559; Lacy v. Packing Co., 134 N. C., 571; Land Co. v. Smith, 151 N. C., 72; Pullen v. Corporation Commission, 152 N. C., 554; 58 L. R. A., 590, 594, 601, note; 60 L. R. A., 367, note.

Tbe corporations are further discriminated in favor of by tbe provision at bottom of page 148, Laws 1921, that if they bold stock in other corporations (paying tbe small “excess capital” tax) they shall not pay taxes upon tbe money invested in such other corporations. When tbe American Tobacco Company was dissolved it appeared that that company held controlling stock in 65 subordinate companies as tributaries or aliases, under which to do their style of business.

There is also a provision in the Laws of 1921, p. 148, not far from the bottom, that corporations paying this tax on the small part of the capital known as “excess capital stock” (and amounting in the whole State to almost nothing), “shall not be required to pay tax on the mortgages, bonds, other securities and credits owned by them” — though every one else must do so.

Then there is a further provision, which secures safety even from public criticism, that the Public Treasurer and the State Tax Commission shall not allow the lax returns of the corporations to be examined, Laws 1921, top of p. 251, and prescribes a penalty of $1,000, one year’s imprisonment, and dismissal from office for any one giving information. This enables them to do anything and deny everything!

The banks, which formerly were taxed in the manner provided in Revisal, 5267 and 5268, have now “received theirs,” as can be found by reference to Laws 1921, p. 248. Thus everybody who could foresee the coming and necessary increase of taxation has “gotten under shelter” except only those who create the wealth of the State, or who by their own efforts, manual or mental, earn the incomes which they receive.

To this may be added that while the constitutional amendment of 1920 provides that “incomes from property already taxed may be taxed,” by recent legislation (Laws 1921, ch. 34, sec. 306 (5), page 210) : “Dividends from stock in any corporation, the income of which shall ■have been assessed and the tax on such income paid by the corporation” shall not be taxed! That is, not only the money invested in “stock” by individuals and others (amounting in this State probably to fifteen hundred million dollars) is absolutely exempted from taxation in defiance of the constitutional provision, Article V, section 3, that “all stocks” and other personal property shall be taxed, but it is now further provided that the income or dividends received by the stockholders, and which is paid into their pockets from such stock is exempt from taxation in spite of the recent amendment that “incomes derived from property taxed” (even if the stock had been the property of the corporation) shall be taxed. And it is further provided by a more recent act, Special Session 1921, p. 152, that banking corporations may deduct from taxation 5 per cent of their surplus and undivided profits, besides, also, the total amount of the surplus and undivided profits invested in State or United States bonds, or the bonds of the Federal Farm Loan Banks and Joint-stock Land Banks.

In the very recent case of Brown v. Jackson, 179 N. C., 363, it was held that the stock of the Atlantic Coast Line Railroad Company was taxable in the hands of the shareholders, and is not exempt from taxation like other stocks. This seems to have bad very small enforcement, or there is much less of this stock owned in the State than is generally supposed, for as it appears from the State Auditor’s report, the entire sum derived from taxes on stocks of all kinds in this State last year is reported as $25,000.

In Belo v. Comrs., 82 N. C., 415, Chief Justice Smith held that a tax upon the shares of stock in the hands of stockholders was imperative and not discretionary, in addition to the tax upon the real and personal property of the corporation, which was also imperative and not (discretionary. That decision stands unquestioned in our Eeports, and has been reiterated and approved by Ashe, J., in Worth v. R. R., 89 N. C., 305, and in every case since.

It is further said in Comrs. v. Tobacco Co., 116 N. C., 446, on the identical point presented here, as follows: “Originally the tax upon the shares of stock was collected of the individual shareholders at their several places of residence. Buie v. Comrs., 79 N. C., 267. But under that method many shares failed to be listed for taxation. Besides, the shares of nonresident owners, except those of national banks, escaped taxation in this State under the ruling in R. R. v. Comrs., 91 N. C., 454. To remedy this, the provision was passed which, in sec. 14, ch. 296, Laws 1893 (which has been substantially reenacted at every session of the Legislature since), requires the list of shares to be given in by the proper officer of the corporation, which shall pay the same in behalf of the shareholders. This does not affect the liability of the shares to tax as the property of the shareholders, but is simply for the convenience of the State in collecting the tax. The effect is merely to change the situs of the shares for taxation from the residence of the owner to the locality where the chief office of the corporation is situated, as was held in Wiley v. Comrs., 111 N. C., 397. It simply extends to the collection of taxes due by shareholders in other corporations the mode of collection already in force as to shareholders in national banks.” Bui it should be noted that this is now changed to a total exemption of the owner of stock from all taxation thereon.

That opinion further said: “The capital stock belongs to the corporation. The shares or certificates of stock are entirely a different matter. They belong to the shareholders individually, and under the Constitution must be 'taxed ad valorem like other ‘property belonging to the holder, independently of the taxation upon the corporation, its franchises, etc.’

To the same effect aré the decisions throughout the country, which can be found grouped in the elaborate notes to State Board v. Coggin (Ill.), 58 L. R. A., 513-618, which cite the. above case at pp. 590, 594, 601. On p. 594 it quotes from Chief Justice Waite, in Tenn. v. Whitworth, 117 U. S., 129, as follows: “In corporations four elements of taxable value are sometimes found: (1) franchises; (2) capital stock in the hands of the corporation; (3) corporate property; and (4) shares of the capital stock in the hands of the individual stockholders.”

The Constitution of this State, Article Y, section 3, specifies the only property which may be exempted from taxation, and in it there is no authority to the Legislature to exempt the owners of the ‘stocks’ and ‘bonds’ of any corporation from payment of taxes upon the true value thereof because the corporation has paid taxes (as it rightly should do) upon its own property, nor for any other reason. In that same article, section 5, there is authority to exempt “wearing apparel, arms for muster, household and kitchen furniture, and mechanical and agricultural implements of mechanics and farmers, libraries, and scientific instruments, or any other personal property, to a value not exceeding $300.” But the State has felt so poor that every farmer and mechanic for more than 50 years has been required to pay taxes on his clothing for his family, his household and kitchen furniture, his blacksmith’s and farming tools and plows “above $25,” until, the matter being called to the attention of the Legislature (see concurring opinion in this Court, Wagstaff v. Highway Commission, 177 N. C., at bottom of page 360), this exemption was raised to $300 for the first time by the Legislature of 1919.

Those who labor and toil have been required to pay taxes on everything above $25 — on their pots and pans, the washing tub of the washerwoman, the farmer on his plows, the blacksmith on his tools, and every one on everything above $25. The Tax Commission now contends that the Legislature, contrary to the equality of taxation, required alike by the Constitution and by justice, had power to exempt, and has exempted, the investment of fifteen hundred millions of the best property in the State, the stock of its most prosperous corporations, from paying any share of the burden of maintaining the Government under which they live, and thus made it nontaxable, though this Court and the United States Supreme Court have held that the property of the corporation itself could not be exempted from taxation by the act of the Legislature. R. R. v. Allsbrook, 110 N. C., 137, affirmed on writ of error, 146 U. S., 279.

It is a maxim of the law, as well as of political economy, that the “power to tax is the power to destroy,” and there is no power more deadly to the prosperity of a people than to increase taxation on those of small means, and who by their labor and their efforts earn a bare living, while wholly exempting stocks issued and sold by the wealthy and powerful corporations, the just share of taxation on the purchasers of which must thus be paid by the class that is less wealthy and influential.

Tbe owner of a note for money loaned a neighbor is taxed, while the borrower is taxed also on the land mortgaged to secure the loan. They are not corporations, endowed with special privileges.

The decisions from the U. S. Supreme Court are uniform, like our decisions, on this point. In Van Allen v. Assessors, 70 U. S. (3 Wall.), 573, 583, and 584, it is said: “The tax on shares is not a tax on the capital of the bank. The corporation is the legal owner of all the property of the bank, real and personal; and within the powers conferred upon it by the charter, and for the purposes for which it was created, can deal with corporate property as absolutely as a private individual can deal with his own, . . . the interest of the shareholder entitles him to participate in the net profits earned by the bank in the employment of his capital, during the existence of its charter, in proportion to the number of his shares; and upon its dissolution or termination, to his proportion of the property that may remain, of the corporation, after the payment of its debts. This is a distinct, independent interest or property, held by the shareholder like any other property that may belong to him.” This is quoted verbatim and approved. People v. Comrs., 71 U. S., at p. 258, the Court saying, “And we add, of course, is subject to like taxation

And in Tennessee v. Whitworth, 117 U. S., 129, at p. 136, Mr. Chief Justice Waite, in delivering the opinion of the Court, says: “In corporations four elements of taxable value are sometimes found. First, the franchise; second, the capital stock in the hands of the corporation; third, the corporate property; and fourth, the shares of capital stock in the hands of the individual stockholders.”

In Bank v. Tennessee, 161 U. S., 146, the Court says: “The capital stock of a corporation and the shares into which such stock may be divided and held by individual shareholders may both be taxed, and it is not double taxation ” citing Van Allen v. Assessors, 70 U. S. (3 Wall.), 573; People v. Comrs., 71 U. S. (3 Wall.), 244, already cited in Farrington v. Tennessee, 95 U. S., 687.

In New Orleans v. Houston, 205 U. S., 395, Mr. Justice Matthews said, speaking for the Court: “It is well settled by the decisions of this Court that the property of shareholders in their shares, and the property of the corporation in its capital stock, are distinct property interests, and, where that is the legislative intent clearly expressed, that both may be taxed,” as in the Constitution of North Carolina. This doctrine is fully recognized in Union Refrigerator Transit Co. v. Kentucky, 199 U. S., 194, and in many other cases. There are sound reasons for it in public policy.

In a more recent case, Hawley v. Malden, 232 U. S., 1 (October, 1913), the Court says: “The property of shareholders in their respective shares is distinct from the corporate property, franchises, and capital stock of the corporation itself, and may be separately taxed.” It also quotes with approval Corry v. Baltimore, 196 U. S., 496, that “A state has the undoubted right in creating corporations, to provide for the taxation in that State of all their shares, whether owned by residents or nonresidents.”

These uniform decisions by the U. S. Supreme Court and by our own Court — for there is no decision to the contrary — are sufficient, but we may add the following to the same purport from those States, whose Constitution, like ours, require uniformity and equality in the taxation of property.

Alabama: In Bank v. Hewitt, 112 Alabama, 553, it is said: “The question has been fully considered and settled that the ownership of land by a corporation is entirely separate from the ownership by shareholders of stock in the corporation. The former is realty, the latter is personalty under all circumstances. The corporation acting through the power conferred by its charter, the shareholder disposes of his shares as he does of any other property he may own. The property of each is subject to taxation, without regard to the other. The one may become insolvent, while the other is entirely solvent. A private corporation, like an individual, may invest its money in nontaxable property. "When it does so, the property remains subject to taxation. Desty on Taxation, 330; ibid., 371; Maguire v. Board of Revenue, 71 Ala., 401; Van Allen v. The Assessors, 70 U. S. (3 Wall.), 583. Many authorities might be cited to the proposition.”

Georgia: In 125 Georgia, 595 (1906), it is said: “It would be more than idle to contend in this day that one who owns shares of stock in a corporation is not the owner of property. It is true the value of the property depends largely, if not entirely, upon a fiction of the law. But every holder of a share of stock in any corporation is a property owner. Shares of stock are bought and sold. They are bequeathed to legatees and descend to heirs. The Legislature may have even the right under our Constitution to declare that the situs for taxation of shares of foreign stock held by a resident of Georgia is not in Georgia, but they clearly have the power to declare that shares of such stock have a situs for taxation in this State. The General Assembly has so declared, and residents in this State who own this class of property must bea/r the same burden of taxation as is required of owners of other hinds of property.”

Illinois: In Bank v. Kinsella, 201 Illinois, 31 (1903), the Court says: “The taxing of tangible property to the corporation and of the shares of stock to the holders thereof is not double taxation,” quoting from Banking Co. v. Parks, 88 Illinois, 173, as follows: “This Court has repeatedly held that the tangible property of a corporation and the shares of stock are separate and distinct kinds of property under different ownership; the first named being the property of the corporation, and the last named is the property of the individual stockholders, both of which, under the provisions of the revenue law, being subject to taxation.” It also quotes Porter v. R. R., 76 Illinois, 561, and subsequent cases, and the U. S. Supreme Court, in Minot v. R. R., 18 Wall., 206, and Taylor v. Secor, 69 U. S. (2 Otto), 575, and other cases, as follows: “These cases hold that such taxation is neither double nor unconstitutional; that the property of different ownerships must be taxed by the municipalities from which they derive their powers and franchises.” It further quotes, in Trust Co. v. Lander, as follows: “A state has a power to tax both the capital and shares of a corporation, unless prohibited by its Constitution, and to do so would not be double taxation.” And further quotes several authorities that “The capital stock of a corporation and the shares into which such shares are divided and held by individual shareholders are two distinct pieces. of property. The capital stock and the shares of stock in the hands of shareholders may both be taxed, and it is not double taxation.” Among the many cases cited for this proposition is Van Allen v. Assessors, 70 U. S., 573.

Indiana: In Building Co. v. Board, 30 Indiana App., 13, it is said that the assessment of taxes upon the company for money loaned arising from interest and premium does not amount to double taxation on the grounds that the stockholders are assessed on their shares since their shares are assessable against the stockholders, citing, on p. 21, several cases from the Indiana Supreme Court.

Iowa: In Judy v. Beckwith, 137 Iowa (1908), 30, the Court says: “A shareholder and the corporation are two distinct persons, their rights and interests with relations to the property and business are distinct and separable. The corporation is the sole owner of such property, while the shares of the capital stock simply entitles the holder to demand his just proportion of the dividends, and when the corporation is dissolved, to also demand his like proportion of the remnant of assets.” Then, after citing authorities that the owner of the stock can bring an action to recover them, and that on his death it is distributed to his heirs, the Court adds: “Such shares being personalty, representing valuable rights personal to the owner, no good reason can be assigned why they should not be governed by the usual rule, which makes such property taxable at the owner’s domicile. With but very little discord in the cases, save as objection has been occasionally made in academic discussions, such taxation is upheld by all the courts,” citing numerous authorities from many states. It is further said (p. 35) : "Capital stock and shares of capital stock represent different property rights, one belonging to the corporation and the other to the shareholders, and both may be taxed without violation of any established principle of law ” citing a long list of cases from several states, among others, Belo v. Comrs., 82 N. C., 415, and Shelby Co. v. Bank, 161 U. S., 149.

In Head v. Board, 170 Iowa, 306 (1915), the Court held, citing U. S. authorities, Bank v. Des Moines, 205 U. S., 516, particularly, that “Shares in corporations are property entirely distinct and independent from the property of the corporation. The tax on an individual in respect to his shares in the corporation is not regarded as a tax as upon the corporation itself.”

Kansas: In Bank v. Moon, Kansas (1918), the Court held: “The distinction between the class of property known as shares of stock and the class of property owned by the corporation called capital stock, and sometimes called capital, has always been recognized and enforced by the Supreme Court of the United States. Its decisions are authoritative because of the legislative purpose to conform the tax law to the requirements of the Eederal law. A specious argument frequently advanced is that the shares of stock represent the capital stock, which in turn represents the property of the corporation, so that a tax return of shares by the stockholders, or the corporation for them, and a return of capital stock or property by the corporation, accomplish the same end, but by different methods. The fallacy of this argument is exposed by the decision in People v. Comrs., 71 U. S. (4 Wall.), 244.” The Court then quotes from the several cases from the U. S. Supreme Court above set out.

Kentucky: In Franklin Co. v. Bank, 87 Kentucky, 382, it is said: “The capital stock of a bank and the shares of capital are distinct things, and both may be taxed. So, also, the franchise, the surplus earnings, and the real estate are things distinct from the capital stock, and from each other, and the State may tax the bank under each of these heads without imposing double taxation.” The Court says: “It may be regarded as settled by the current of authority, and for the purpose of this investigation we will concede that it is so settled, that the appellee’s capital stock and the shares of its stock are distinct things. That the capital stock is the money authorized to be paid in, and actually paid in, as the basis of the business of the bank, and the means of conducting its operations. The corporation cannot increase or diminish this capital stock without express authority to do so; for the reason that it constitutes a trust fund which is held by the appellee as trustee, first, for the purpose of meeting and making good its liabilities; second, after discharging its obligations for the benefit of its stockholders. The shares of the capital stock are represented by certificates. Each holder is a beneficiary to the extent of his ownership. But he cannot control or withdraw a dollar of the principal; that must remain as the basis of tbe corporation’s business operation. Tbe shareholder is entitled only to share in the profits. So, the capital stock and the shares of the capital stock are distinct things, and both may be taxed. So, also, the franchise — the right of the corporation to exercise its powers in the prosecution of its business as a distinct right from its capital stock— may be taxed. So, also, its surplus earnings, being distinct from its capital stock, may be taxed. So, also, its real estate, if it does not represent its capital stock, but only its earnings, which are not a part of its capital stock, may be taxed. Angell and Ames on Corporations, sees. 556, 557; Bradley v. People (4 Wall.), 459; National Bank v. Commonwealth (9 Wall.), 353.”

Massachusetts: In Hawley v. Malden, 204 Mass., 104, the Court held, quoting New Orleans v. Houston, 119 U. S., 277, and other U. S. decisions: “It is well settled by the decisions of this Court that the property of the shareholders and the property of corporations in its capital stock, are distinct property interests, and where that legislative intent is clearly expressed both may be taxed” adding as citations Transient Co. v. Kentucky, 199 U. S., 194, and many other cases, and adding: “There are sound reasons for it in public policy.” This case itself was affirmed on writ of error by U. S. Supreme Court, 232 U. S., 1.

In Loring v. Beverly, 222 Mass. (1916), 332, it is said, citing the above case: “Shares of stock are property distinct in kind from the capital, franchise or other property of a corporation. Taxation upon one or all of these elements of property of the corporation does not prevent taxation upon the shares of stock as the property of the owner at his domicile.”

New Jersey: In State v. Branin, 23 N. J. L., 484, the Court held: “The stock of incorporated banks, although the bank pays a tax on its capital, may be taxed in the hands of stockholders if authorized by the Legislature.” In that State the Constitution does not require, as here, the equal and uniform taxation of all property, including “investments in bonds and stocks.”

Ohio: In Bradley v. Bauder, 36 Ohio State, 35, the Court says:

“The argument is that the capital of the corporation is invested in property which is taxed in the name of the corporation, and that the shares in the capital stock, when owned by individuals, only represent proportions in the ownership of such property, and hence, to tax the shares is another mode of taxing the property of the corporation, and that a tax upon both, although the tax upon one is imposed by another State, violates the rule or principle of equality established by the Constitution. This argument, however plausible it seems, has never met with favor from the courts. Double taxation, in a legal sense, does not exist, unless the double tax is levied upon the same property within the same jurisdiction. Here the property owned by the plaintiffs is not only not the same as that owned by the corporation, but its sitios, so fa/r as shares of sioclc are capable of one, is in a different State."

Tennessee: In State v. Bank, 95 Tennessee, 221, tbe Court “reaffirms that taxation of capital sioclc to the corporation and of the shares of stock to its stockholders is not double taxation. Capital stock and shares of stock are separate and distinct property interests and form separate and distinct subjects for taxation,” citing numerous cases. Tbe capital of a corporation, whatever invested in, and tbe individual shares of stock, are distinct species of property. Farrington v. Tennessee, 95 U. S., 679. Tbe owner of a share of stock owns no part of the capital of the company. Watson v. Spratley, 10 Exch., 256. The corporation is its sole owner, holding the same, it is true, in trust, for the purpose for which the corporation was created, and upon its winding up, for the benefit of creditors and shareholders. The ownership of a share of stock, so far as the property of the corporation is concerned, is but the ownership of the right to participate, from time to time, in the net profits of the business, and upon the dissolution of the corporation to a proportion of the assets after the payment of the corporate debts. It is personal property, which, upon the death of the owner, goes to his administrator, although the entire capital of the corporation may consist of real estate. The owner may sell or dispose of his stock at pleasure, and, in so doing, works no change or modification in the title to the corporate property.”

Virginia: In Commonwealth v. Charlottesville, 90 Virginia, 190, the Court quotes with approval and reaffirms the proposition laid down in Bank v. Richmond, 79 Virginia, 113, as follows: “The capital stock and the shares of capital stock are distinct things, the former belonging to the corporation and the latter to individuals. Both may be taxed, and it is not double taxation.” At that time the Constitution of Virginia, like ours, required uniformity in taxation, but at their Convention in 1900 that provision was struck out. In this State it has simply been ignored.

That Court, citing cases, added: “The two are very different things. The capital or capital stock belongs to the corporation; the shares to individuals, and being different property interests, and consequently distinct subjects of taxation, the better opinion is that taxing both is not double taxation. Burroughs, Taxation, 170; Bank v. Richmond, 79 Va., 113; Farrington v. Tennessee, 95 U. S., 679.”

Washington: In Bank v. Pierce Co., 20 Wash., 683, the Court holds, citing Van Allen v. Assessors, and other U. S. decisions, that "the tax on the shares is not a tax on the capital of a bank. The corporation is legal owner of all the property of the bank, real and personal; and within tbe powers conferred upon it by tbe charter, and for tbe purpose for wbieb it was created can deal witb tbe corporate property as absolutely as a private individual can deal witb bis own.”

STJMMARY

It appears clearly from tbe above authorities that it is held uniformly always and everywhere — ubique, semper et eadem — -that tbe stock in tbe bands of shareholders is bis individual property, and that tbe capital stock, franchises, and tangible property of tbe corporation are its property, that there is a distinct ownership by tbe two parties of a separate and distinct species of property, and that tbe taxation of one does not exempt tbe property of tbe other from taxation. Tbe cases say tbe opposite contention is “specious.”

It also appears that in all cases where the Constitution, as in this State, requires that all property, real and personal, shall be taxed, it is unconstitutional to exempt the shares of the stockholders from taxation upon the ground that the property of the corporation, whether capital stock, franchises, or tangible property, is taxed.

There are some states in which the requirement of tbe Constitution of North Carolina and of some other states that there shall be “uniform taxation of all property,” and that “all moneys, investments in bonds, stocks, etc., shall be taxed uniformly” does not appear. In those states it is held to be discretionary what property shall be taxed. But, in all others, tbe shares in tbe bands of tbe stockholders are required to be taxed, and to refrain from doing so is a clear evasion of an imperative constitutional duty, which was imposed for tbe protection of those who might not have idle money to invest in stocks and other securities.

But the defendants claim that the Court is without authority to issue a mandamus to the Corporation Commission to levy the tax. Every citizen is entitled to have the Court pass upon his claim that the taxes imposed by any statute, or even which is likely to be imposed, shall be declared illegal by the courts if contrary to the constitutional protection. This is constantly done when injunctions are sought against issuance of bonds, and formerly, when there was a provision requiring equation between the taxes on the poll and taxes on the property, this Court repeatedly held statutes laying taxation without observing this equation to be invalid.

This prohibition of the exemption of investments in stocks and bonds is in section 3 of Article V. Section 1 of that same article required, until recently amended, that there should be an equation in the statute levying taxes between the tax on property and the tax on polls, and as to that it has been repeatedly held that when that requirement was not observed the statute levying the tax issue was void. R. R. v. Comrs., 148 N. C., 220; French v. Comrs., 74 N. C., 692; Trull v. Comrs., 72 N. C., 388; Mauney v. Comrs., 71 N. C., 486. In Board of Education v. Comrs., 137 N. C., 310, and in Jones v. Comrs., 107 N. C., 248, it was beld tbat the observance of this equation was absolutely necessary to the validity of all revenue or taxing laws, providing for the ordinary and necessary expenses of the Government, and that an act levying a tax, or making, repairing, or keeping up the public roads of a county exempting polls from taxation was unconstitutional. S. v. Godwin, 123 N. C., 697. And there are many others holding that the non-observance of this requirement in section 1 renders the taxing law invalid in toto. This provision in section 3 of .thé same article must, therefore, be void if the requirement that all property, including “investment in stocks and bonds,” shall be taxed equally and uniformly is disregarded.

Indeed, in R. R. v. Comrs., 148 N. C., 220, it was held by Connor, J. (now the distinguished judge of the Federal Court in Eastern North Carolina), speaking for a unanimous Court, three of whom (.Judges Walker, Hoke, and the writer) are still on this bench, that a mandamus could issue to compel the commissioners to place the omitted items necessary to comply with the equation of taxation upon the tax list. This case has been repeatedly cited and approved since by this Court. See the numerous cases cited thereto in the Anno. Ed. Among other eases citing and approving that case was the opinion in the same volume, Perry v. Comrs., 148 N. C., 521, by Hoke, J., also speaking for a unanimous Court. The cases holding that the revenue act was void if it disregarded section 1 of this Article Y of the Constitution, and holding that a mandamus could issue were to enforce this provision in order to lighten the tax on property by observing the requirement to levy a tax upon the polls.

In this case, the plaintiffs are seeking under section 3 of the same article to require the lightening of the burdens upon the property of nonstockholders by placing upon the tax list (or holding void an act which does not do so) an immensely greater relief by taxing investments in stocks as required by section 3 of the same article. If, as the above cases hold, it was invalid to omit the levy of a poll tax because this made somewhat heavier the tax on property, for a stronger reason it is necessary to require fifteen hundred millions of money invested (whatever the sum is, it is very large) in the best property of the State to be placed on the tax list, that this equality and uniformity in taxation of all property may be observed, which the Constitution requires.

For a stronger reason, when the taxes laid upon that large portion of our people who own no stocks in corporations is greatly increased, being probably double or more than it should be by reason of the fact that the investments by the wealthy of their funds in so-called “tax-free stocks” have exempted them from all the burdens of the Government, the Court should declare the illegality of such exemption. The mere formality, even if it were erroneous, that the complainant taxpayers here ask for relief by mandamus cannot vitiate the right of the plaintiffs to have a proper judgment, declaring the statute invalid, as has been so often done in other instances.

It has been over and over again held by this Court that the form of the prayer of relief is immaterial; and, indeed, if there were no prayer at all for relief it would not be a defect, but “the party can obtain any relief to which the facts alleged entitled him.” McCullock v. R. R., 146 N. C., 316, and some 50 cases since, many of which are cited in C. S., 506 (3), and many others, with which all lawyers are familiar.

The complaint which is made in this proceeding is based upon the soundest principles of justice, and upon the clear and unmistakable language of the Constitution, which requires that “investments in stocks and bonds” shall be taxed uniformly with other property, and it is not denied, and cannot be denied, that a vast sum, if not fully a billion and a half, of money is invested in stocks, owned by the influential classes, and is absolutely exempt from all taxation, and thereby the taxation of all others is probably doubled. These latter are those who pay double taxation, for they not only pay taxes on their own property, assessed often at a high figure, but they pay the taxes which ought to be paid by the owners of “investments in stocks and bonds,” as is explicitly required by the Constitution.

This provision of the Constitution is relied upon by the plaintiffs as a shield against the continuance of this discrimination, and this action is brought in accordance with numberless precedents adjudging invalid statutes authorizing issuance of bonds, and which invalidated statutes levying taxation in disregard of the equation between the property and the poll tax, and in divers other cases. A statute which exempts so large a part of the property of the State from all taxation with the result of doubly taxing those who do not own stocks in corporations, the plaintiffs claim, should therefore be declared illegal.

The plaintiffs claim that the illegally exempted stocks should pay fifteen million dollars city, county, and State taxes annually. It may be more or less than that sum. An exact knowledge of the amount cannot be ascertained until this exempted property is placed upon the tax list, like real estate and other property, as the Constitution plainly requires. Until then, only an estimate can be made, for the statute above quoted makes it punishable, with penalty of $1,000, a year’s imprisonment, and dismissal from office to give information on the subject from the corporation reports. Laws 1921, ch. 34, sec. 805 (2), p. 222. The corporations offering for sale “tax-free” securities are well protected.

It is quite certain that less tban 3 per cent of tbe people of this State are "stockholders.” Yet they have this immense aggregation of property exempted from taxation, and the taxes which they should pay thereon are collected out of the other 97 per cent of the population, who are unable to secure any exemption of their property.

The plaintiffs have asked for a mandamus against the Tax Commission and the Tax Commissioner to place this omitted property upon the tax list. The U. S. District and Circuit Courts of Appeal and the Supreme Court of the United States have held that a mandamus will lie at the instance of a private creditor to force tax assessors to put property on their books, increase their assessed value, and do such other things as may be necessary to bring the property upon the tax list that taxes may be collected thereon to pay judgments of the courts or bonded indebtedness, notwithstanding, as in the well known case of Carteret County of this State, there may be express legislation forbidding the tax assessors to do so.

If the courts are sufficiently jealous of the rights of private creditors and bondholders to issue a mandamus against the officials to collect a debt, how much more jealous should the courts be when the rights of all the people are involved. A leading case upon this subject is Falls City Construction Co. v. Jimmerson, 222 Fed., 489; L. R. A. (1918 B), 1102, which holds that a mandamus lies at the instance of a judgment creditor of a county whose judgment cannot be collected (because of a permitted tax rate upon the assessed valuation of the property of the county which did not produce sufficient revenue) to compel the tax officials to raise the assessment to the full value of the property as required by the Constitution, although by so doing the taxes throughout the State will not be equal and uniform, as required by the Constitution, because the property in other counties was assessed below its true value.

The legislative enactment relied upon in this case to exempt so immense a mass of property as the money invested throughout the State in stocks, which are exempted from all taxation, is in direct violation of the express provision of the highest law, which is the Constitution of the State.

In Hicks v. Cleveland, 106 Fed., 462, decided in this Federal Circuit, Judges Goff, Simonton, and Waddell sitting, held that a mandamus would issue to compel the listing of property to pay interest on railroad bonds in South Carolina, Judge Simonton saying, for the Court: “The defense proceeds upon the ground that the Legislature of South Carolina has forbidden its officers to levy and collect the tax to pay this, and claims of the same character — has in effect made it a misdemeanor for them to do so — and that henee a mandamus under these circumstances will not lie,” but the Court held that the mandamus did lie, and that the act of the South Carolina Legislature was unconstitutional.

We have seen that mandamus lies to enforce the constitutional provision requiring the listing of all property for taxation, even though the Legislature has sought to exempt it. This has been held in cases where individual creditors only were plaintiffs, and were seeking to enforce collection of their claims.

In United Brethren v. Comrs., 115 N. C., 490, it is said: “The general rule is liability to taxation, and that all property shall contribute its share to the support of the Government which protects it. Exemption from taxation is exceptional. It needs no citation from reiterated precedents that such exceptions should be strictly construed, and if we have any doubts (which we have not), they should be resolved in favor of liability to taxation.”

In that ease, it was said that the fundamental principle of our Constitution is that all property shall be taxed uniformly except that which is either expressly exempted by the Constitution itself or as to which the power of exemption by the Legislature is left discretionary within the limits prescribed by the Constitution, citing Redmond v. Comrs., 106 N. C., 122.

This case has been cited with approval by Hoke, J., in Davis v. Salisbury, 161 N. C., 56, and in Southern Assembly v. Palmer, 166 N. C., 75, and other cases; and the doctrine has been reaffirmed at this term in Trustees v. Avery County, 184 N. C., 469.

The present case is much stronger, for here not only no exemption is granted or discretionary authority to exempt, but there is an express requirement that investments in stocks and bonds shall be taxed.

Since this ease was argued here, the President of the United States, yielding to an urgent and Union-wide demand, has urged upon Congress the adoption of an amendment forbidding the issuance of “tax-free” securities, and both Houses of Congress are already engaged in considering a bill to that effect. The steady accumulation of vast masses of wealth by corporations and individuals is a menace to our institutions. It has been largely caused by the exemption of their investments from taxation, thereby doubling the taxation upon all others. In response to an unmistakable public demand, the XVI Amendment was adopted, which required the levy of a heavily graduated income tax to put some restriction upon such vast accumulations, but this has been largely nullified by the device which special interests have secured in both national and state legislation of making it heavily penal for any officer to give information as to the returns on income. In this State it has also been greatly restricted by the recent constitutional amendment limiting the income tax to 6 per cent. In addition, the accumulation of great estates in corporations and in individual hands has been most strongly fostered by disregarding the constitutional provision now before us which forbids the exemption from taxation of “investments in stocks and bonds.”

These vast accumulations are seeking investment, and also public favor, now by legislation fostering loans to farmers and others upon mortgages. The result of this will be that many farmers and others will become mortgagors, and therefore tenants at will upon the property they now own, and gradually we must become largely a nation of peasants and laborers. What is needed is not this semi-charity, ostentatiously doled out, but simple justice by enforcing the constitutional provision requiring the taxation of “investments in stocks and bonds” equally and uniformly with other property, real and personal, “at their true value in money.” This will insure a reduction in the rate of taxation upon those who do not possess idle capital to invest in “tax-free” securities, and a heavily graduated income tax may prevent the accumulation, as now, in a few years of sums, which in ordinary and just-course of business would require hundreds of thousands of years to accumulate.

The provision of our Constitution prohibiting the issuance of “tax-free” securities should be strictly enforced, both because required by the Constitution and by a wise and just regard for those who produce the wealth of the State, and as a political necessity for the security of our free institutions.

When the United States Supreme Court set aside the income tax law, Judge Brown, one of the dissenting judges, stated that if that decision stood this country would “sink into a despotism of sordid wealth,” and the other dissenting judges were as outspoken and emphatic. The people of this country stood with the dissenting judges and wrote into the Constitution XVI Amendment under which we have now not only an income tax, but one that (until lately) was graduated to run as high as 68 per cent. Without this, the prophecy of the dissenting judges would not only have become true, but it would have been impossible to carry on the late war, or, indeed, the Government, with its greatly increased expenditures.

There is in this State, beyond all question, a vast amount of double taxation, which is caused entirely by the fact that a vast sum, probably fifteen hundred millions, invested in stocks, besides bonds are entirely exempted from all taxation with the result that the nonstockholding masses are taxed double and even treble their former taxation to make up the taxes which the Constitution requires shall be paid by uniform taxation on all property, including “investments in stocks and bonds.”

The result of this vast exemption is that all fluid wealth flows naturally to these illegally “tax-free” investments. Only in the last few days one of the corporations in this State has declared a 500 per cent stock dividend; that is $600- to every owner of stock for $100 invested, and each owner has thus $600 for every $100 put in the property, all of which is tax-free.

Another corporation, in tbe same manner, bas recently added six millions of stock dividends to its four million, giving tbe owners of tbe stock ten million dollars of exemptions and dividends instead of four millions. Another in tbe last few years bas increased its capital stock from a few millions to 100 millions, and tbe owners of tbe 100 millions all are exempt. These are merely a few instances of what is going on around us. "Who will invest money in farms, or lands, or bouses, or other investments when tbe same money invested in stocks grows thus marvelously, and not only tbe original investment, but all of this marvelous increase is also “tax-free” — the entire burden of tbe State, county, and city governments being thrown entirely upon tbe nonstockholding masses. Tbe growing demands of tbe State, county, and city governments for all purposes must be met, and with a steady growth in tbe bonded indebtedness of each (tbe principal being already nearly 100 millions, as well as tbe interest on which, must be met), taxation is falling wdtb terrific force upon property subject to taxation by reason of tbe exemption in direct conflict with tbe Constitution of tbe most profitable investments in tbe State. .

As to the plea that tbe statute of limitations is a protection of this illegal exemption because it bas been acquiesced in more or less by legislation, it must be said that this legislation bas been held illegal by every decision of tbe Court of this State and of tbe United States, and of all tbe other states whose Constitution, like ours, requires equal and uniform taxation of all property, except such as is exempted or authorized to be exempted by tbe Constitution itself. Tbe fact that tbe validity of this particular statute bas not until now been presented to tbe court, in its present shape, makes it all tbe more necessary to bold it invalid. That there is no statute of limitations in favor of unconstitutional legislation was held in R. R. v. Allsbrook, 110 N. C., 137, where tbe Court set aside tbe exemption which bad been granted to two great railroad companies by tbe Legislature after a lapse of nearly half a century. And in Mial v. Ellington, 134 N. C., 131, which overruled Hoke v. Henderson, 15 N. C., 1, after it bad been affirmed 60 times, and after a lapse of 73 years.

Tbe question whether tbe courts can bold any act of tbe Legislature unconstitutional bas been debated, but if any case should require that it be done tbe plaintiffs are presenting it now. So many statutes have been held unconstitutional by this Court without it being deemed a reflection upon tbe legislative department, surely tbe remedy should not be denied in a matter which affects vitally tbe rights of every taxpayer, even tbe humblest.

If tbe people of this State, with tbe facts before them, are content to continue this legislative exemption of fully one-third of tbe property of the State (and that third steadily increasing) from all taxation in the. bands of less than 3 per cent of its people while taxing the other 97 per cent, three, four, and five times as high as formerly, it is for them to say so. No one can complain if with the facts made known, and with full knowledge of the constitutional provision requiring equality and uniformity in the taxing of all property, and of the former uniform decisions of this Court, as above set out, a majority of the people so wish. This should be a Government of the people, and if they so will, they can permit the continuance of this exemption and consequent great inequality in taxation; but in my humble judgment it should be declared by this Court unconstitutional in accordance with all previous decisions. This provision against exemption of all wealth invested in corporation stocks from bearing any part of the burdens of Government — State, county, and municipal — was put in the Constitution for the protection of the masses of the people against the power of growing and enormous aggregations of wealth in the hands of the few.

"Whether the provision in the Constitution forbidding the exemption of investments in stocks and bonds is in conflict with legislation which exempts all investments in stocks in corporations; and whether the decisions of the courts of this State and of the United States, and others above mentioned, have held such legislation illegal or not is not a, matter of argument, but simply a question of reading the decisions themselves and the constitutional provision, as above set forth.

In setting forth the decisions themselves holding uniformly such exemption to be in conflict with the express letter of the Constitution, as well as its spirit — and contrary to the eternal justice of “equal rights to all and special privileges to none” — -and my deep conviction that this Court should declare these exemptions invalid, I have simply done my duty as it has been given me to see that duty.