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State Tax Commission v. Yavapai County Savings Bank

Supreme Court of Arizona

July 5, 1938

STATE TAX COMMISSION and STATE BOARD OF EQUALIZATION, FRANK LUKE, THAD M. MOORE and D. C. O'NEIL, as Members of the State Tax Commission and State Board of Equalization; COUNTY BOARD OF EQUALIZATION OF MARICOPA COUNTY and BOARD OF SUPERVISORS OF MARICOPA COUNTY, and GEORGE FRYE, JOHN A. FOOTE and C. WARREN PETERSON, Members of said Board of Equalization Board Supervisors; J. D. BRUSH, County Assessor of Maricopa County, and HARRY M. MOORE, County Treasurer and Ex-officio Tax Collector of Maricopa County, Appellants,
YAVAPAI COUNTY SAVINGS BANK, a Corporation, and YAVAPAI COUNTY SAVINGS BANK, a Corporation, Trustee, Appellees

APPEAL from a judgment of the Superior Court of the County of Yavapai. Richard Lamson, Judge. Judgment reversed and cause remanded with instructions.

Mr. Joe Conway, Attorney General, Mr. Allan K. Perry, his Special Assistant, for Appellants State Tax Commission, State Board of Equalization, Mr. Frank Luke, Mr. Thad M. Moore and Mr. D. C. O'Neil, as members of such Boards; Mr. John W. Corbin, County Attorney, Mr. Lin Orme, Jr., his Deputy, for Appellants County Board of Equalization of Maricopa County and Board of Supervisors of Maricopa County, and Mr. George Frye, Mr. John A. Foote and Mr. C. Warren Peterson, as Members of such Boards; Mr. J. D. Brush, County Assessor of Maricopa County, and Mr. Harry M. Moore, County Treasurer and Ex-officio Tax Collector of Maricopa County.

Messrs. Favour & Baker, and Mr. A. M. Crawford, for Appellees.


[52 Ariz. 376] LOCKWOOD, J.

Yavapai County Savings Bank, a state bank having its principal place of business

Page 87

in Prescott, Arizona, and hereinafter called plaintiff, brought this action to enjoin the enforcement of a certain tax assessment placed upon it. The state tax commission, the boards of supervisors of Maricopa and Yavapai counties, and the assessors and treasurers of such counties were made parties defendant to the action. Judgment went in favor of the plaintiff in the trial court, and this appeal was taken.

The facts of the case are not in serious dispute, and we state them as follows: The plaintiff is, and has been for many years, a savings bank, with its principal place of business in Prescott, Arizona, and as such bank it has made loans in various parts of the state, among them being Maricopa county. The only part of its business which it conducts in Maricopa county is as follows: having made certain loans on property in that county, and become the owner of some of the properties upon which the loans were made, through foreclosure or otherwise, it has maintained an office in Maricopa county, where it has an agent whose sole business, so far as plaintiff is concerned, is to make collections upon its outstanding loans, contracts of sale and leases, look after the physical condition of its property, and advertise it for sale on terms fixed by plaintiff. He receives no deposits, pays out no money to depositors, makes no loans nor contracts of sale nor leases, all of the business of this nature being done only in Prescott, where all the records, securities and documents of the plaintiff are kept. In 1936 plaintiff made a return to the state tax commission, showing its capital surplus and undivided profits to be of a book value of $161,451.81. A copy of this was furnished to the assessor of Yavapai county who, in conformance with the orders of the commission, reduced the total by [52 Ariz. 377] 25 per cent., and set up $121,088.86 as the cash value of plaintiff's shares of stock for assessment purposes in 1936. The county assessor for Maricopa county, for the same tax period, listed certain real estate and personal property in Maricopa county belonging to plaintiff, and fixed an assessed value thereon of $91,795 as against plaintiff. In addition thereto, he made an assessment against the shares of stock of the bank of the same amount. Plaintiff protested to the tax commission and to the officials of Maricopa county that the assessment of real and personal property was void as being a tax upon the assets of a banking corporation, and contrary to the provisions of section 3069, Revised Code 1928, and that the assessment of the shares of stock was also void, inasmuch as plaintiff had not, during the year 1936, conducted a banking business in Maricopa county, and that any assessment whatever in Maricopa county was a duplication of the assessment already made in Yavapai county, and to that extent constituted double assessment, and resulted in a total valuation greater than the full cash value of the stock of plaintiff. Thereupon this action was brought against the taxing authorities who are parties hereto, and judgment was prayed for in the alternative, (a) that the Maricopa county assessment be stricken, and any further assessment by that county be restrained, (b) that the officials of Yavapai county be restrained from making any change in the assessment on the assessor's rolls, and (c) as an alternative relief that if the Maricopa county assessment were held to be valid, then that the assessment in Yavapai county be reduced by the amount of the assessment in Maricopa county. The court, in its judgment, in substance declared that any assessment in Maricopa county on the real and personal property of the plaintiff was void; that the assessment on the stock in the sum of $91,795 was void, but found that plaintiff maintained an office [52 Ariz. 378] in Maricopa county where it collected interest upon loans, and leased and sold real estate; that the total assessment of the stock of the bank, being $121,088.86, should be divided between te counties of Maricopa and Yavapai in the proportion that the assets of the plaintiff in Maricopa county, being $91,795, bore to its total assets, which were found to amount to $1,063,952.65. From this judgment the tax commission and the taxing officers of Maricopa county appealed, the officers of Yavapai county apparently being perfectly satisfied. The appealing defendants set up eight assignments of error, while the appellee-plaintiff presents two cross-assignments of error.

There are substantially two questions involved upon the appeal, one raised by the cross-assignments, and the other by the assignments. The first is whether or not plaintiff was subject to taxation at all in Maricopa county, and the second whether if it was so subject, upon what basis that assessment should be made. We consider the first question.

The Civil Code of 1887 contains the following provisions in that portion devoted to the subject of taxation:

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"2630. (Sec. 4.) Nothing in this act shall be construed to require or permit double taxation...."

"2633. (Sec. 7.) Shares of stock in a corporation possess no intrinsic value over and above the actual value of the property of the corporation for which they stand and represent and the assessment and taxation of such shares and also of the corporate property would be double taxation. Therefore all property belonging to corporations shall be assessed and taxed, but no assessment shall be made of shares of stock, nor shall any holder thereof be taxed therefor."

In 1893, however, the legislature, by chapter 85 of the session laws of that year, adopted the following provision in ...

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