sold, all bills paid and where the clerical force was kept and employed, was not doing business in this commonwealth within the meaning of this act or of the supplemental acts of June 8, 1891 (P. L. 229), and June 8, 1893 (P. L. 353). Commonwealth v. Tonopah Min. Co., 19 Pa. Dist. Rep. 260, p. 263. Neither the capital stock of a mining company nor a deposit balance in bank of a foreign mining corporation is taxable in this commonwealth where the corporation kept an office only with two clerks for the purpose of making transfers of sales of its capital stock, but where none of the mining property was kept in the State and where all the purchases were made and accounts kept and bills paid in a different State. Commonwealth v. Tonopah Min. Co., 19 Pa. Dist. Rep. 260, p. 263. PROPERTY OF CORPORATIONS-TAXATION-THIRD SUPPLE MENT. LAWS 1891, P. 229. JUNE 8, 1891. AN ACT to provide increased revenues for the purpose of relieving the burdens of local taxation, being supplementary to an act, entitled "An act to provide revenue by taxation,” approved June 7, 1879, amending the first, fourteenth, sixteenth, twentieth, twenty-first, twenty-fifth and twenty-sixth sections of an act supplementary thereto, which became a law on the first day of June, A. D. 1889, entitled "A further supplement to an act, entitled 'An act to provide revenue by taxation,' approved June 7, A. D. 1879," and providing for greater uniformity of taxation by taxing all of the property of corporations, limited partnerships and joint-stock associations having capital stock at the rate of five mills on each dollar of its actual value. WHEREAS, There is a widespread demand for the enactment of such measures as will bring about the equalization of taxation and the relief of local taxation upon real estate: SEC. 1. Be it enacted, etc. : That the first section of the said act which became a law on the first day of June, A. D. 1889, entitled "A further supplement to an act entitled 'An act to provide revenue by taxation,' approved June 7, A. D. 1879," which reads as follows, to wit: (here follows sec. 1 of the act of June 1, 1889, see page 921, be and the same is hereby amended so as to read as follows: SEC. 1. Be it enacted, etc.: That from and after the passage of this act all personal property of the classes hereinafter enumerated, owned, held, or possessed by any person, persons, copartnership, or unincorporated association or company, resident, located or liable to taxation within this Commonwealth, or by any joint-stock company or association, limited partnership, bank or corporation whatsoever, formed, erected, or incorporated by, under or in pursuance of any law of this Commonwealth or of the United States, or of any other State or Government, and liable to taxation within this Commonwealth, whether such personal property be owned, held or possessed by such person or persons, copartnership, unicorporated association, company, joint-stock company or association, limited partnership, bank or corporation, in his, her, their, or its own right, or as active trustee, agent, attorney-in-fact or in any other capacity, for the use, benefit. or advantage of any other person, persons, copartnership, unincorporated association, company, joint-stock company, or association, limited partnership, bank, or corporation, is hereby made taxable annually for State purposes at the rate of four mills on each dollar of the value thereof, and no failure to assess or return the same shall discharge such owner or holder thereof from liability therefor to the Commonwealth, that is to say: All mortgages, all moneys owing by solvent debtors, whether by promissory note, or penal or single bill, bond, or judgment; all articles of agreement and accounts bearing interest; all public loans whatsoever, except those issued by this Commonwealth or the United States; all loans issued by or shares of stock in any bank, corporation, association, company, or limited partnership, created or formed under the laws of this Commonwealth or of the United States, or of any other State or Government, including car-trust securities and loans secured by bonds or any other form of certificate or evidence or indebtedness, whether the interest be included in the principal of the obligation or payable by the terms thereof, except shares of stock in any corporation or limited partnership liable to the capital stock tax imposed by the twenty-first section of this act, or relieved from the payment of tax on capital stock by said section; all moneys loaned or invested in other States, Territories, the District of Columbia or foreign countries; all other moneyed capital in the hands of individual citizens of the State: Provided, That this section shall not apply to bank notes, or notes discounted or negotiated by any bank or banking institution, savings institution, or trust company: And provided, That the provisions of this act shall not apply to building and loan associations: Provided also, That this section shall take effect on the first day of January, A. D. 1892. SEC. 2. That section 14 of said act which reads as follows, to wit: (here follows sec. 14, of the act of June 1, 1889), be and the same is hereby amended so as to read as follows: SEC. 14. That the county commissioners or board of revision of taxes of each and every county in this Commonwealth, are hereby authorized and required, annually hereafter, at the usual period of making county rates and levies, to assess or cause to be assessed, for the use of the Commonwealth, upon all stages, omnibuses, hacks, cabs and other vehicles used for transporting passengers for hire, except steam and street passengers railway cars, owned, used or possessed within this Commonwealth, by any person or persons, or by any corporate body or bodies, and upon all annuities yielding annually over two hundred dollars, a tax of 4 mills upon each and every dollar of the value thereof; Provided also, That this section shall take effect on the first day of January, A. D. 1892. (Original section not taken.) SEC. 3. That section 16 of said act which reads as follows, to wit (here follows sec. 16 of the act of June 1, 1889), be and the same is hereby amended so as to read as follows: SEC. 16. That for the year 1892, and annually thereafter, three-fourths of the net amount of tax based on the return of property subject to taxation for State purposes required to be made to and accepted by the State board of revenue commissioners annually, by county commissioners and the board of revision of taxes in cities coextensive with counties, that is collected and paid into the State treasury by a county or city coextensive with a county, shall be returned by the State treasurer to such county or city coextensive with a county, for its own use in payment of the expenses incurred by it in the assessment and collection of said tax: Provided, That in consideration of the return to counties and cities coextensive with counties of the tax as aforesaid, no claim shall be made upon or allowed by the Commonwealth for abatements, tax collectors' commissions, extraordinary expenses, uncollectible taxes or for keeping a record of judgments and mortgages. (Original section not taken). SEC. 4. That section 20 of said act which reads as follows, to wit: (here follows sec. 20 of the act of June 1, 1889, see p. 921), be and the same is hereby amended so as to read as follows: SEC. 20. That hereafter, except in the case of banks, savings institutions and foreign insurance companies, it shall be the duty of the president, chairman or treasurer of every corporation, having capital stock, every joint-stock association and limited partnership whatsoever, now or hereafter organized or incorporated by or under any law of this commonwealth, and of every corporation, joint-stock association and limited partnership whatsoever, now or hereafter incorporated or organized by or under the laws of any other State or territory of the United States, or by the United States or by any foreign government, and doing business in and liable to taxation within this commonwealth, or having capital or property employed or used in this commonwealth by or in the name of any limited partnership, joint-stock association, company or corporation whatsoever, association or associations, copartnership or copartnerships, person or persons, or in any other manner, to make a report in writing to the auditor genera!, in the month of November, 1892, and annually thereafter, stating specifically: First. Total authorized capital stock. Second. Total authorized number of shares. Third. Number of shares of stock issued. Fourth. Par value of each share. Fifth. Amount paid into the treasury on each share. Sixth. Amount of capital paid in. Seventh. Amount of capital on which dividend was declared. Eighth. Date of each dividend declared during said year ended with the first Monday of November. Ninth. Rate per centum of each dividend declared. Tenth. Amount of each dividend during the year ended with the first Monday in said month. Eleventh. Gross earnings during the year. Twelfth. Net earnings during said year. Thirteenth. Amount of surplus. Fourteenth. Amount of profit added to sinking fund during said year. Fifteenth. Highest price of sales of stock between the first and fifteenth days of November aforesaid. Sixteenth. Highest price of sales of stock during the year aforesaid. Seventeenth. Average price of sales of stock during the year; and in every case any two of the following-named officers of such corporation, limited partnership or joint stock association, namely: The president, chairman, secretary and treasurer, after being duly sworn or affirmed to do and perform the same with fidelity and according to the best of their knowledge and belief, shall, between the first and fifteenth days of November of each year, estimate and appraise the capital stock of the said company at its actual value in cash, not less however than the average price which said stock sold for during said year, and not less than the price or value indicated or measured by net earnings or by the amount of profit made and either declared in dividends or carried into surplus or sinking fund, and when the same shall have been so truly estimated and appraised they shall forthwith forward to the auditor general a certificate thereof, accompanied with a copy of their said oath or affirmation, signed by them and attested by a magistrate or other person duly qualified to administer the same: Provided, That if the auditor general and State treasurer, or either of them, is not satisfied with the appraisement and valuation so made and returned, they are hereby authorized and empowered to make a valuation thereof, based upon the facts contained in the report herein required, or upon any information within their possession or that shall come into their possession, and to settle an account on the valuation so made by them for the taxes, penalties and interest due the Commonwealth thereon, with right to the company dissatisfied with any settlement so made against it to appeal therefrom in the manner now provided by law; and in the event of the neglect or refusal of the officers of any corporation, company, joint stock association or limited partnership, for a period of sixty days, to make the report and appraisement to the auditor general as herein provided, it shall be the duty of the auditor general and State treasurer to estimate a valuation of the capital stock of such defaulting corporation, company, joint stock association or limited partnership, and settle an account for taxes, penalty and interest thereon, from which settlement there shall be no right of appeal. SEC. 5. That the twenty-first section of the said act, which reads as follows, to wit: (here follows sec. 21 of the act of June 1, 1889, see p. 922), be and the same is hereby amended so as to read as follows: SEC. 21. That every corporation, joint stock association, limited partnership and company whatsoever, from which a report is required under the twentieth section hereof, shall be subject to and pay into the treasury of the Commonwealth annually a tax at the rate of five mills upon each dollar of the actual value of its whole capital stock of all kinds, including common, special and preferred, as ascertained in the manner prescribed in said twentieth section, and it shall be the duty of the treasurer or other officers having charge of any such corporation, joint stock association, or limited partnership, upon which a tax is imposed by this section, to transmit the amount of said tax to the treasury of the Commonwealth within thirty days from the date of the settlement of the account by the auditor general and State treasurer: Provided, That for the purpose of this act interests in limited partnerships or joint stock associations shall be deemed to be capital stock and taxable accordingly: Provided also, That corporations, limited partnerships, and joint stock associations liable to tax on capital stock under this section shall not be required to make report or pay any further tax on the mortgages, bonds, and other securities owned by them in their own right; but corporations, limited partnerships, and joint stock associations holding such securities as trustees, executors, administrators, guardians or in any other manner, shall return and pay the tax imposed by this act upon all securities so held by them as in the case of individuals: And provided further, That the provisions of this section shall not apply to the taxation of the capital stock of corporations, limited partnerships and joint stock associations organized exclusively for manufacturing purposes and actually carrying on manufacturing within the State, excepting companies engaged in the brewing or distilling of spirits or malt liquors, and such as enjoy and exercise the right of eminent domain: Provided further, That in case of fire and marine insurance companies the tax imposed by this section shall be at the rate of three mills upon each dollar of the actual value of the whole capital stock. SEC. 8. That all acts or parts of acts inconsistent herewith or that are supplied by this act, be and the same are hereby repealed, saving, reserving, and excepting unto the Commonwealth the right to collect any tax, taxes, interest, penalty or penalties due or owing or accrued under the said laws or parts of laws prior to the dates when the several sections of this act go into effect. 125672°-20- -59 ANNOTATIONS. TAXATION OF CAPITAL STOCK. 1. CONSTITUTIONALITY OF ACT. 2. CONSTRUCTION OF ACT-INCOME AND NET EARNINGS. 4. WHOLE CAPITAL STOCK-TAXATION. 5. CAPITAL STOCK-APPRAISEMENT BY OFFICERS. 6. CAPITAL STOCK-MINIMUM VALUE-DETERMINATION. 7. DEDUCTION OF TAX ON BONDS OR DEBTS. 1. CONSTITUTIONALITY OF ACT. This act making the capital stock of corporations a distinct class of investment for the purpose of taxation is not repugnant to the constitution relative to uniformity of taxation. Commonwealth v. Mammouth Vein Coal & Iron Co., 11 Pa. Dist. Rep. 328, p. 330. Commonwealth v. National Oil Co., 157 Pa. St. 516. Commonwealth v. Mill Creek Coal Co., 154 Pa. St. 524. This act is not repugnant to the constitutional provision requiring that taxes shall be uniform on the same class of subjects, on the ground that it subjects the real estate of a mining company held as capital stock to a State tax, while the real estate of individuals is by statute exempted from taxation for State purposes. Commonwealth v. Mammouth Vein Coal & Iron Co., 11 Pa. Dist. Rep. 328, p. 330. 2. CONSTRUCTION OF ACT-INCOME AND NET EARNINGS. The correct construction of section 4 is that so much of the income of a corporation, whether called net earnings or amount of profit made, as is either declared in dividends or carried into surplus or sinking fund, is to be taken as the test of the minimum value of the capital stock for the purpose of taxation. Commonwealth v. Sharon Coal Co., 3 Pa. Dist. Rep. 19, p. 22. The words "net earnings" in section 4 of this act are not wholly independent of the words that follow; but construing the section so as to give effect to every word used, it follows that the words "net earnings" mean the same as "amount of profit made," for the purpose of measuring the value of the capital stock of a mining company for taxation. Commonwealth v. Sharon Coal Co., 3 Pa. Dist. Rep. 19, p. 21. When the amount of profit, less expenses, equals the net earnings of a corporation, and when the net earnings, less expenses, equal its profits, then the net earnings and profits must equal each other. If the net earnings and the amount of profit made by a corporation are not the same, then by this act the price or value of the capital stock is to be measured by one or the other only and not by both. But the legislature did not intend to leave uncertainty as the basis for the valuation of the capital stock of a corporation for taxation. Commonwealth v. Sharon Coal Co., 14 Pa. County Ct. Rep. 222, p. 224. 3. APPLICATION OF ACT. Where no part of the net earnings of a corporation was during a tax year declared in dividends or carried into surplus or sinking fund, then the act does not apply. Commonwealth v. Sharon Coal Co., 14 Pa. County Ct. Rep. 222, p. 227. |