
    Hubbard, as Treasurer v. Brush.
    
      Taxation of personal property — Foreign corporation doing business in this state — Property situated and taxed in Ohio — Stock shares exempt from taxation — Deduction of debts from credits — Sections 2746, 2744 and 2730, Revised Statutes.
    
    1. Where all the business of a foreign corporation is transacted in this state, and all of its property situated and taxed here, shares of its capital stock held in this state are exempt from taxation by force of section 2746, Revised Statutes.
    2. dioses in action, whether book accounts, promissory notes, or the like, of foreign corporations that are kept in this state and arise out of the corporate business transacted here, are subject to taxation under the provisions of section 2744, Revised Statutes.
    8. Such corporation, in listing for taxation its “credits” liable to taxation in this state, may, under the provisions of section 2730, Revised Statutes, deduct from its claims and demands that arise out of the business it transacts in this state, such of its bona fide debts as arise from the same source.
    (Decided November 28, 1899.)
    
      Error to the Circuit Court of Cuyahoga county.
    The defendant in error brought this action in the court of common pleas of Cuyahoga county to restrain the collection of taxes assessed against him in that county on certain shares of stock owned by him in The Sandusky Portland Cement Company, a West Virginia corporation. The defendant in error prevailed in the court of common pleas, and on appeal by the plaintiff in error to the circuit court he again had judgment enjoining the collection of the taxes in dispute. Whereupon the plaintiff in error brought the cause to this court for review. The facts will be stated in the opinion.
    
      P. H. Kaiser, for plaintiff in error.
    First, The facts as found by the circuit court do not show that all the capital stock of said company is taxed in Ohio in the name of the company, but do show the contrary.
    Second, Said section 2746 applies only to domestic corporations, and has no reference whatever to foreign corporations. Worthington v. Sebastian, Treasurer, 25 Ohio St., 1; The Railroad Co. v. Pennsylvania, 15 Wall (U. S.), 300; The Railroad Co. v. Jackson, 7 Id., 265; Thomas v. Mason County Court, 4 Bush (Ky.), 135; McKean v. Northampton Co., 49 Penn St., 519; Great Barrington v. Berkshire, 16 Pick., 572; Bradley v. Bauder, 36 Ohio St., 28; Grant v. Jones, 39 Ohio St., 506; Brown v. Noble, 42 Ohio St., 405; Myers v. Seaberger, 45 Ohio St., 232; Sommers v. Boyd, Treas., 48 Ohio St., 648; Rutland v. Hotchkiss, 42 Conn., 426, 100 (U. S.) 491; 1st Beach on Private Corporations, Sec. 289 on page 481; Bank of Augusta v. Earle, 13 Pet., 519; Rece v. N. N. & M. 
      
      M. V. Co., 82 West Va., 164; B. & O. R. R. Co. v. Cary, 28 Ohio St., 208.
    Substantially the same holdings are made in Western Union Telegraph Co. v. Mayer, Treasurer, etc., 28 Ohio St., 521; Bridge Company v. Mayer, 31 Ohio St., 317; Cooley on Taxation (2nd Edition), page 21.
    The foregoing considerations and authorities warrant the following conclusions as applied to the present case:
    First • — • That the Sandusky Portland Cement Company had its residence in the state of West Virginia on the day preceding the second Monday in April, 1895, being the day for listing personal property in that year.
    Second — That on that day the legal situs of the $8,136.53 of accounts receivable, then owned by said company, was in the state of West Virginia, and not in Ohio.
    Third — That, therefore, said accounts receivable were not taxable in Erie county, Ohio, or in any other place in Ohio.
    Fourth — That such being the case, it is not true that all the capital stock of said company was taxed in Ohio in the name of such company; and the facts, therefore, do not bring the case within the terms of Section 2746 of the Revised Statutes of Ohio.
    Section 2746 applies only to stock in domestic corporations and has no application whatever to stock in foreign corporations.
    The scope and reach of this legislation has been under consideration by the Supreme Court of Ohio in two cases. Bradley et al. v. Bauder, Auditor, 36 O. S., 28.
    
      Again the legislation of Ohio upon the subject of the exemption of shares of stock in corporations whose capital stock was taxed in the name of the company, came under the consideration of the Supreme Court in the case of Lee, Treasurer v. Sturges, 46 Ohio St., 153.
    
      Williamson, Cushing & Clarke, for defendant in error.
    The main question for decision is, therefore, what does Rev. Stat., Sec. 2746 mean by saying, “No person shall be required to list for taxation any share or shares of the capital stock of any company, the capital stock of which is taxed in the name of such company?” When is the capital stock (i. e., the property representing the capital stock) “taxed in the name of a company” in Ohio? Brush claims it is so “taxed” when the company pays taxes on it; in other words, that the test of exemption is location of property. The treasurer claims it is to be taken as “taxed” only when the company has been incorporated in Ohio, no matter where the property is, or is taxed; in other words, that the test of exemption is place of incorporation.
    Brush’s claim is in accordance with the language of the statute; the treasurer absolutely ignores the language of the statute.
    The construction of this provision has already been before the supreme court of the United States once, and before this court three times. Sturges v. Carter, 114 U. S., 511; Jones v. Davis, 35 Ohio St., 476; Bradley v. Bauder, 36 Ohio St., 28; Lee v. Sturges and Ins. Co. v. Ratterman, 46 Ohio St., 153.
    It is plain that the legislature was recognizing the inequity and oppressiveness of a certain form of what is popularly called" “double taxation,” and, with intent to avoid it, enacted this exempting clause.
    And we submit that, both by the spirit and by the strict letter of section 2746, the shares of this Cement Company’s stock were exempted from taxation.
    To make Section 2746 fit the treasurer’s construction, it is necessary to eliminate entirely the phrase, “the capital stock of which is taxed in the name of said company,” and to substitute the pharse “the charter of which was obtained solely from Ohio,” or some equivalent expression referring only to place of incorporation and omitting all reference to taxation.
    Counsel for the treasurer also refers to the majority opinion in Lee v. Sturges as laying down the rule that the legislature is presumed not to intend exemptions from taxation. It is true that such presumption is there said to exist; but this court, both before and since the decision of Lee v. Sturges, has announced the conflicting, or rather the controlling rule, that the legislature is presumed not to intend to impose what is popularly called double taxation. Bank v. McGregor, 6 Ohio St., 50; Fraser v. Seiborn, 16 Ohio St., 623; Payne v. Watterson, 37 Ohio St., 124; Tennessee v. Whitler, 117 U. S., 137; McNeal v. Hagerty, 51 Ohio St., 267.
    To tax, as property, the shares of a corporation which, though chartered elsewhere, has all its property in Ohio, and pays taxes on it all in Ohio, while exempting from tax the shares of Ohio corporations on the groud that the corporate property is taxed in Ohio, would, we submit violate Section 2, Article 12, of the Ohio Constitution, which requires the property must be taxed by a uniform rule, and also Section 2 of Article 1, which provides that “gov-eminent is instituted for their” (the people’s) “equal protection and benefit.”
    The unifromity required in taxing property must be uniformity with regard to the property, not with regard to some immaterial incident. It would not be uniformity to tax the property of all tall men by one rule and of all short men by another. Field v. Commissioners, 36 Ohio St., 476; State v. Ferris, 53 Ohio St., 314.
    And, as Sec. 2746 must, if possible, construed so as to conform to the Constitution, and not violate it, our opponents’ construction of it is inadmissible.
    These constitutional questions are not touched on in the opinion in Lee v. Sturges.
    
    If we are right in our claim that Ohio does not tax shares of stock in a foreign corporation having' all its property in Ohio, and being taxed on all of it in Ohio, then we submit that the Cement Company’s ownership of $8,000.00 worth of business accounts receivable did not render its shares of stock taxable. And this for several reasons:
    1. Even if the taxable situs of these accounts were not in Ohio, the law does not concern itself “de minimis.” The circuit court found that the company’s tangible property in Ohio constituted the bulk of its property. If location of property in Ohio is the test of exemption, nobody would claim that the shares of a rich Ohio company would be deprived of exemption just because it had a horse and wagon, or some trifling or unsubstantial part of its property, over the line in Indiana, so as to make it not taxable in Ohio. The presence of substantially all the property in Ohio would sufficiently comply with the statute.
    2. As these accounts receivable are less in amount than the company’s debts, the company would not have to pay any taxes on them in Ohio, even if they were situated in Ohio. The company pays already just as much taxes as though it had been organized in Ohio.
    3. ' Besides, as they are less than the debts, .they represent borrowed money rather than the “capital stock” of the company; and this court has several times said that it is the payment of taxes on the property which represents the subscribed capital (viz., personal property: such real estate as is necessary to the daily operations: moneys: and “credits,” or excess of claims over debts), that entitles the shares to exemption. Jones v. Davis, 35 Ohio St., 476; Lee v. Sturges, 46 Ohio St., 160.
    4. And finally, Ohio has the power, and by statute exercises the power, of taxing the accounts receivable of foreign corporations, so far as those accounts receivable grow out of business conducted in Ohio from Ohio headquarters, just as it taxes the áecounts receivable of Ohio corporations. Rev. Stat, Sec. 2744 requires (with immaterial exceptions) every corporation, “whether incorporated by any laAV of this state or not,” to list for taxation “all the personal property, which shall be held to include all such real estate as is necessary to the daily operations of the company, moneys and credits, of such company or corporation, within the state.”
    Under Sec. 2776, when any railroad company has part of its road in this state and part thereof in any other state or states, the proper board shall take the value of its entire property, moneys, and credits, and divide it in the proportion the length of road in this state bears to the whole length of the road, and determine the principal sum for the value of such road in this state accordingly.
    
      The practical effect of the Nichols law, sustained in State v. Jones, 51 Ohio St., 492, and in Adams Express Co v. Ohio, 166 U. S., 185, is to tax foreign express, telegraph and telephone companies doing part of their business in Ohio, on a proportionate part of their intangible property, such as franchises, goodwill, contracts and credits, all of which contribute to the value of the shares of stock, taken as a guide in fixing the valuation of the property of the companies for taxation in Ohio.
    
      People ex rel. Yellow Pine Co. v. Barker, 23 N. Y. App., Div. 524 (affirmed in 155 N. Y., 665, without report on the prevailing opinion below) sustained the right of the state of New York to tax a New Jersey corporation which did business, and had property in vested in its business, in New York, on “credits and bills receivable, due the corporation for merchandise sold by it in the course of the transaction of its business in the state of New York.”
    These decisions make it clear that the accounts receivable of the Cement Company, growing out of business which it conducts solely in Ohio, and payable to it at its principal office, which is in Ohio, do have in Ohio a situs for taxation, although the company’s charter is a West Virginia charter.
   Bradbury, C .J.

The defendant in error, a resident of Cleveland, in the county of Cuyahoga, owned preferred shares of stock in The Sandusky Portland Cement Company, of the par value of $10,-000, which in 1895, he declined to list for taxation on the ground that the corporation, though created under the laws of West Virginia, had its principal office, place of business and property in Ohio, and that it listed and paid taxes in this state on all its property; which action of the corporation, by virtue of Section 2746, Revised Statutes, he claimed exempted the shares of its capital stock from taxation. The board of equalization of the city of Cleveland, however, denied his claim, and valuing his stock at $6,000, added that sum to the amount of his taxable property, and taxes thereon were charged against him on the books of the auditor of Cuyahoga county. This action was brought to restrain the collection of the taxes assessed against him by reason of the addition thus made to his taxable property. In his petition he alleged as the grounds on which the collection of the taxes in controversy should be restrained, that the corporation, as above stated, had listed and paid taxes in this state on all of its property. Issue was taken on this averment of his petition. After a trial in the court of common pleas the cause was appealed to the circuit court, there tried on its merits and the facts found and separately stated by the court as follows:

’’The Sandusky Portland Cement Company is, and at all times herein referred to has been, a corporation organized under the laws of the state of West Virginia, having its principal office and principal .place of doing business in Erie county, Ohio. * * * and engaged solely in the business of extracting from its lands in said Erie county, the materials for Portland cement, and manufacturing such cement from such materials upon said lands in said county and there selling the same. Its property upon the day preceding the second Monday in April, 1895, consisted of its real estate and plant thereon, in said county, cement on hand in said county] said land, plant and cement constituting the bulk of its property), cash to the amount of $41.19 in its possession in said county, $44.50 on deposit in a bank in said county, and accounts receivable amounting to $8,136.53. It owed on said day legal bona fide debts in the form of bills and accounts payable amounting to $16,630.82.* * * All the personal property field by it witfiin tfie year preceding tfie first day of April, 1895, to be used in manufacturing, or partially or wholly manufactured, was so field by it in said Erie county. All of its said property, except said accounts receivable, was listed for taxation in tfie name of said company, and taxed in tfie name of said company, in 1895, in said county. Tfie company fiad no office and did no business in West Virginia, during tfie times referred to.”

Tfie defendant in error relies upon tfie provision of Section 2746, R. S., wfiicfi reads as follows: “Section 2746. Personal property of every description, moneys, credits, investments in bonds, stocks, joint stock companies, or otherwise, shall be listed in tfie name of tfie person who was tfie owner thereof on tfie day preceding tfie second Monday of April of each year; but no person shall be required to list for taxation any share or shares of tfie capital stock of any company tfie capital stock of wfiicfi is taxed in tfie name of such company.”

This exemption of shares of tfie corporate stock from taxation, by tfie terms of tfie foregoing section, is made to rest on tfie circumstance that tfie “capital stock” of tfie company “is taxed in tfie name of tfie company.” The phrase “capital stock,” witfiin tfie meaning of that term, as employed in that section, should be field to embrace tfie entire corporate property. If any part of tfie corporate property is not taxed witfiin this state, tfie owners of shares of its stock who are residents of this state are not exempt by virtue of tfie provisions of that section from, listing those shares for taxation in this state and paying taxes thereon, the exemption applying only in cases where the “capital stock,” i. e., all the corporate property, has been taxed Within this state. Lee v. Sturges; Insurance Co. v. Ratterman, 46 Ohio St., 153; Sturges v. Carter, 114 U. S., 511.

Although the language of that section in terms exempts corporate shares from taxation only where the capital stock is taxed in the name of the company, yet if all of it was by law taxable, but by the neglect of assessing or corporate officers was not taxed, there would, nevertheless, be strong ground to hold that the shares would be exempt from taxation in the hands of its unoffending owners, and the public remitted for relief against the corporation under the laws that provide for correcting false returns. This question, however, is neither directly involved in the case now before us nor discussed by counsel, the defendant in error not planting his claim to relief on such omission, but contends that as matter of fact all the corporate property was taxed in this state. The finding of fact places this contention beyond all controversy, unless the choses in action of the corporation, which were found to aggregate $8,000, should have been listed for taxation in this state, notwithstanding the corporate liabilities were still greater. The decision of the case depends upon this question.

The finding of the circuit court, in as far as it rejects on this question, shows that the corporation whose stock defendant in error held, was a foreign corporation, but that all of its property was situated within this state and its business wholly conducted herein. Whatever situs, in fact, its choses in action possessed, was also herein, for it appears that it maintained no office and did no business whatever in West Virginia, the state by which it was created, but that its office was in this state where its property was situated and its • business transacted.- And whether these choses in action consisted of promissory notes, book accounts or other evidence of indebtedness, they must be presumed to have been kept in its office in this state. However, notwithstanding all this, doubtless the legal situs of this intangible property for most purposes, was that of the residence of the corporation, which, in law, is within the state by whose authority it was created. Bank of Augusta v. Earle, 13 Pet., 519; B. & O. R. R. Co. v. Cary, 28 Ohio St., 208; Bridge Co. v. Mayer, 31 Ohio St., 317; 25 Am. and Eng. Ency. of Law (1st Ed.), 146.

Does that situs for all purposes adhere to the corporate residence, or may choses in action, having the relation, connection and situation in which these were found, be held to possess such a situs in this state as will clothe the state with jurisdiction over them for taxation? The state attempts by section 2744, Revised Statutes, to assert and exercise such power or jurisdiction. The section, so far as it relates to this subject, reads as follows: Section 2744. “The president, secretary * * * of every joint stock company, for whatever purpose they may have been created, whether incorporated by any law of this state or not, shall list for taxation * * * all the'personal property, which shall be held to include * * * credits of such company or corporation within the state.”

We perceive no reason for denying to the state the power asserted by this section. If men choose to resort to another state or country for authority to organize a corporation for the purpose of engaging in business in this state, or if that was not their original purpose, choose afterwards to plant themselves herein, and in either case transact the corporate business and hold the corporate property wholly within our borders, and enjoy the protection of our laws, it is only just and reasonable that its property should be subject to taxation herein as fully as if its organization had been effected under our own laws, and the right of taxation should not be defeated nor limited upon the ground that for some other purpose the situs of a part of its property should be regarded as being in the state or country where the corporation was organized.

Where foreign corporations voluntarily bring their property and business into this' state to avail themselves of advantages found here which they believe will enhance the probabilities that the business they intend to pursue will be profitable, they should not be heard to complain of laws which tax them as domestic corporations are taxed by the state. We hold, therefore, that the provisions of Section 2744, which make it the duty of foreign corporations to list for taxation in this state, their choses in action where they are held within this state and grow out of the business they conduct herein, is a valid exercise of the taxing powers vested in the state. This holding finds support in many adjudications, among which may be cited The People ex rel. v. The Village of Ogdensburgh, 48 N. Y., 390; Redmond v. Commissioner, 87 N. Car., 122; State ex rel, Taylor, Adm’r., v. St. Louis County Court, 47 Mo., 594. The state thus having jurisdiction to tax; among other classes of property owned by foreign corporations, its choses'in action found here which grow out of the business it transacts in this state, it becomes necessary to consider how they should be or are taxed by our laws. They fall within that class of property which our tax laws call “credits,” a definition of which is found in Section 2730, Revised Statutes, in so far as material to the present inquiry in these words: “The term ‘credits’ shall be held to mean the excess of the sum of legal claims and demands * * * over and above, the sum of legal Iona fide debts owing by such person.” This definition of “credits” applies equally to all persons and corporations, foreign or domestic. So that where a duty is enjoined upon either to list for taxation its “credits,” the term “credit” implies the balance remaining after all dona fide debts are deducted from its legal claims and demands. In this case the finding of the court showing that the corporate claims and demands aggregated $8,000, and its legal liabilities $16,000, therefore within this statutory definition it had no credits to list for taxation. The finding of facts showing further that the corporation had listed all of its other property in this state, it follows that it paid taxes on all its property and its shares of stock were not taxable. This conclusion, however, depends upon the meaning of the term “credits.” It is a constitutional term and found in Section 2 of Article 13 of the Constitution of 1851, where it is declared that “Laws shall be passed taxing by uniform rule all moneys, “credits” * * * etc. The framers of the Constitution did not define the word “credits,” which it thus employs to denote a specific subject of taxation. Prom the nature of its objects, and the brevity required of these fundamental instruments they can not deal in definitions, but can lay down only general rules, and employ general terms, leaving questions of construction to the appropriate departments of the government. This court in the year 1853, Bank v. Hines, 3 Ohio St., 1, in construing this section of the Constitution, held that a statute which allowed debts to be deducted from moneys and credits was repugnant to that section of the Constitution and, therefore, void. Ranney, J., in this regard, dissented from so much of the opinion and judgment as denied the right to deduct liabilities from claims and demands. Three years later, in Latimer et al. v. Morgan, Auditor, 6 Ohio St., 279, this ruling was adhered to by the court. Nevertheless, in 1856, the general assembly by statute defined the term “credit” and declared it to mean “the excess of the sum of all legal claims and demands * * * over and above the sum of the legal Iona fide debts owing by such person.” And ever since, a period of more than forty years, that legislative definition has been acquiesced in and Bank v. Hines, in as far as it denied the right to deduct liabilities from claims and demands, has been ignored. What this term “credits” means is directly involved in this action; for if that term, as it is found in the Constitution, is equivalent to the “claims and demands” so as to require every claim or demand, or in othe” words every chose in action, to be specifically listed for taxation in like manner as specific items of tangible property are listed, the general assembly has no power to assign to such term, or declare it to possess, any other meaning. This want of power in that body rests upon the established principle that the interpretation or construction which is to be placed on the language of the Constitution, at least where private, pecuniary rights are involved, belong not to the legislative, but to the judicial department of the state. Governor v. Porter, 5 Humph., 165; Westinghausen v. The People, 44 Mich., 265; Nougues v. Douglass, 7 California, 65; People v. Lynch, 100 Ill., 495; Powell v. The State, 17 Tex. App., 345.

Nevertheless, the legislative declaration under consideration, followed as it has been for so many years as well by those who gather, as by those who pay taxes, should be accorded great weight in determining this right of deduction. The People v. Andrew Lynch, 100 Ill., 495.

The word “credits” in the connection in which it is used in the Constitution is not made at all clear by a resort to the lexicographers. It is apparent, however, that if the framers of the Constitution had intended to specifically tax book accounts, promissory notes and the like, it would have only required the addition of a few words, not at all incompatible with the brevity required in such instruments, to manifest that intention. The ease with which it could have been done gives to the omission a signification entitled to some consideration. The administration of the laws governing taxation has developed the difficulties, if not the impracticability, of permitting the subtraction of debts and liabilities of the owner of real estate and tangible personal property from its value for taxation. Though even here there are those who contend that the deduction should be made.

The difficulties however attending a deduction of liabilities from claims and demands have not proved formidable since the practice was authorized by the legislature, and the practice itself has received general approbation. For these considerations, not to specify others, we are of opinion that the legislative declaration is in accord with the Constitution and, therefore, hold that the corporation involved in this controversy rightfully, in listing its property for taxation, deducted its liabilities from its claims and demands.

Judgment affirmed.  