Stagg v. George E. Nissen Co.

CONNOR, J.

Two questions of law are presented by this appeal. The answers to both questions require only a consideration of the statute applicable to the facts as found by the court below. The questions are as follows:

1. Is a domestic corporation, organized under the laws of this State and doing business for a profit as authorized by its charter or certificate of incorporation, liable for an annual franchise tax assessed and levied by the Commissioner of Revenue of this State, under the provisions of section 210, chapter 427, Public Laws of North Carolina, 1931; N. C. Code of 1931, sec. 7880 (118), after the appointment by a court of competent jurisdiction of a receiver of the corporation, and prior to its dissolution as provided by law, where the receiver, under the orders of the court, is continuing to do the business which the corporation was authorized to do by its charter or certificate of incorporation, and which it was doing at the time of his appointment?

2. If so, is it the duty of the receiver who, under the orders of the court, has in his possession all the assets of the corporation for administration, as directed by the court, to pay such franchise tax out of the assets of the corporation in his hands as an expense of the receivership ?

The statute [N. C. Code of 1931, sec. 7880 (118)] provides that on or before the first day of August of each year the Commissioner of Revenue, having first ascertained and determined from reports made to him by the corporation, or from his official investigation of the corporation, the correct amount of its capital stock, surplus, and undivided profits, shall assess and levy a franchise tax for the “privilege of carrying on, doing business, and/or the continuance of its charter within the State, on each and every such corporation,” at the rate prescribed by the statute.

By the express terms of the statute, the corporation is liable for the annual franchise tax for each year during which it enjoys the privilege of the continuance of its charter. It is immaterial whether or not the corporation exercises its privilege of doing or carrying on the business authorized by its charter or certificate of incorporation; it is liable so long as it enjoys the privilege granted by the State of “being” a corporation. When it surrenders or forfeits this right it ceases to be liable for the tax.

Both questions presented by this appeal are answered in the affirmative. See Michigan v. Michigan Trust Co., 76 L. Ed., 1134, and annotation. The judgment is

Affirmed.