Bank of Commerce v. Adams County , 130 Miss. 37 ( 1922 )

Smith, O. J.,

delivered the opinion of the court.

The appellant filed a petition with the board of supervisors of Adams county, praying that the assessment for taxation for the year 1921 of its capital stock, surplus, and undivided profits be reduced, which the board declined to do, and it appealed to the court below, where the cause was submitted to the judge for decision without a jury, who after hearing the evidence entered an order approving the ruling of the board of supervisors, from which the appellant appeals to this court.

The petition, all of the allegations of which are supported by uncontradicted evidence, is as follows:

“Your petitioner, Bank of Commerce, avers and alleges it is a banking corporation under the laws of the state of Mississippi, with domicile in Natchez, Miss.; that it has five hundred shares of capital stock of par value of one hundred dollars per share, or total par value of fifty thousand dollars; that, in compliance with the statute so requiring, it gave in to the assessor the amount of its capital stock, surplus, and undivided profits as shown by its books on February 1, 1921, which shows the book value of its capital stock as increased by its surplus and undivided profits to be considerably in excess of the real or market value on February 1, 1921, of its capital stock as increased by the surplus and undivided profits shown on its books; that on February 1, 1921, the fair market value of its capital stock, including the surplus and undivided profits, was only one hundred and twenty dollars per share, or sixty thousand dollars for the entire capital stock, from which should be deducted the thirteen thousand, six hundred and sixty-nine dollars and fifty-six cents assessed against its real estate in Catahoula parish, La., leaving forty-six thousand, three hundred and thirty dollars and forty-four cents to be assessed against its capital stock, ■surplus, and undivided profits.

“The premises considered, petitioner prays that the assessment against it upon its capital stock, surplus, and undivided profits be reduced to said sum of forty-six thousand, three hundred and thirty dollars and forty-four cents.”

Section 4273, Code of 1906 (Hemingway’s Code, section 6907), as amended by chapter 193, Laws of 1920, in so far as it provides for the taxation of incorporated banks, is as follows:

“The president, cashier, or other officer having like duties, of each bank or banking association in this state, existing by the laws of this state, shall deliver to the assessor of taxes of the county in which it is located, a written statement, on or before the first day of May of each year, under oath, of the number and amount .of all the shares of its capital stock paid in, . . . and of the sum of all undivided profits or surplus or accumulation of any sort constituting part of the assets of the bank and not including its real estate; and the value of such shares estimated at par and increased by the proportion of the par value of all the shares of stock to the said surplus fund or accumulation, . . . shall be the basis of the taxation of such shares to the bank . . . and the taxes levied on such assessment shall be a first lien on the assets of the bank, but if the shares of such bank or banking association are of less value than par, they shall be valued accordingly.”

The contention of the appellee in effect is, and the court below seems to have held, that this statute requires a bank to give in to'the tax assessor the sum of its undivided profits, surplus, and accumulations as the same appear on its books, and that it should be then assessed with the sum of its capital stock, undivided profits, surplus, and accumulations as given to the assessor, although the bank’s actual undivided profits, surplus, and accumulations may be in fact less than that carried on its books as such, resulting, when such is the case, in the shares of stock being assessed at more than their true value.

Section 112 of our state constitution provides that “property shall be assessed for taxes . . . according to its true value,” and section 181 thereof provides that — “The legislature may provide for the taxation of banks and banking capital, by taxing the shares according to the value thereof (augmented by the accumulations, surplus, and unpaid dividends), exclusive of real estate, which shall be taxed as other real estate.”

The evident purpose of the latter section of the constitution is to permit the legislature to provide that banks be not taxed on their specific property in which their capital may be invested, but in lieu thereof on the aggregate value of the shares into which their capital stock is divided, in determining which the bank’s accumulations, surplus, and unpaid dividends must be taken into consideration. Construed in this light, the requirement of the statute herein-before set out is that the sum of the bank’s actual undivided profits, surplus, and accumulations shall be given into the tax assessor, and not necessarily that carried on its books as such. The books of a bank may or may not disclose what its actual undivided profits, surplus, and accumulations are, for it may have failed to charge off uncollectable losses; property owned by it may be worth more or less than the value at which it is being carried on its books, etc. The requirement of the statute is not that fictitious undivided profits, surplus, and accumulations shall be given in for assessment, but such only as constitutes, in the language of the statute, “part of the assets of the bank.”

It is the duty of the tax assessor to assess the shares of the bank’s capital stock at their true value, and he cannot do this unless he is advised' of the amount of the bank’s capital stock and of the sum of its actual undivided profits, surplus, and accumulations, if it has such in fact. What the appellant should have done was to have given in the sum of its actual undivided profits, surplus and accumulations and not that which it is carrying 'on its books as such, but its failure to do so does not deprive it of the right to have its assessment reduced to the proper amount. The only evidence introduced as to the value of the shares into which the appellant’s capital stock is divided was that their market value was one hundred and twenty dollars each, making their aggregate sixty thousand dollars, which valuation necessarily includes not only the bank’s'original capital, but its accumulations. Consequently, in the absence of other evidence, it must control. The appellant pending this appeal paid state and county taxes to the amount of five hundred and forty-six dollars and twenty cents in excess of what it should have paid had the board of supervisors reduced its assessment in accordance with its request so to do.

The true value of the appellant’s capital stock, undivided profits, surplus, and accumulations being, according to the evidence, sixty thousand dollars, from which the value of its real estate, amounting to thirteen thousand, six hundred and sixty-nine dollars and fifty-six cents, should be deducted, the judgment of the court below will be reversed, and judgment rendered here, reducing the appellant’s assessment on its capital stock, undivided profits, and surplus to forty-six thousand, three hundred and thirty dollars ancl forty-four cents, and awarding it a recovery of the five hundred and forty-six dollars and twenty cents paid by it as taxes on the excess value of its property pending this appeal, as provided by section 4310, Code of 1906 (section 6944, Hemingway’s Code).

Reversed and judgment here.

Anderson, J., took no part in the decision of this case.