
    TAX VALUATION OF NEWSPAPER. PROPERTY.
    Common Pleas Court of Greene County.
    J. P. Chew v. R. R. Grieve.
    Decided, March 28, 1912.
    
      Taxation — Newspaper Publisher Not a> “Manufacturer" — Valuation for Taxation Purposes of Newspaper Property — Good'Will and Earning Capacity Essential Elements of Value.
    
    
      1. The publisher of a newspaper is not a “manufacturer” in the sense that he is entitled to make a return of his newspaper property as a manufacturer.
    2. In returning newspaper property for taxation it should be listed at its true value in money, and in ascertaining such value good will and earning capacity should be considered together with every other fact or circumstance bearing on the question of value; and this rule is applicable. notwithstanding the property may have attained learge earning capacity by reason of the ability and skill of its individual managers, and its earnings might be greatly diminished were the management changed.
    
      C. L. Darlington, -for plaintiff.
    
      Frank L. Johnson, Prosecuting Attorney, for defendant.
   Jones, J.

This court is unable to agree with the contention of plaintiff that the publisher of a newspaper is a “manufacturer” and entitled to make a return and be assessed for taxation as such. Such a definition has been held in a number of cases to apply to a publisher of books, or even to a producer of stationery, or a job printer, but a distinction is made between these occupations and that of printing a newspaper. The publisher of a newspaper does not combine, refine or change the character of any raw material. He takes sheets of paper, a finished product, and by means of other finished products, type and ink, he impresses characters upon the paper, which enhances its value, for the time being, at least, but it is still a sheet of paper.

' In our own state, as was forcibly remarked by Judge Shearer of our own circuit court, in an interesting and thorough opinion in Village of Tippecanoe v. Boercher, 5th O. C. C. Rep., 6, 8, we get little aid from the language of the statute in determining in any particular ease, who is a manufacturer, for, as he says, “reduced to the last analysis a manufacturer is a manufacturer.” In the view of this court, the enhancement in value of the plain sheet of paper, when it is covered With interesting printed m'atter, does not make the printer or publisher a manufacturer, more than the painter or artist who enhances the value of a canvas or a sheet of cardboard, or a board or piece of metal (all finished products in themselves), by placing on them a picture, drawing or a sign.

I am unable to find any reported decision in Ohio as to newspaper publishers, but outside the state the decided weight of authority seems to be that they are not considered as manufacturers for the purpose of taxation. Por a full collection of these authorities see very full notes in 40th American Reports, 446; 52d American Reports, 107 to 109; especially 62d L.R.A., 62, 63, 64.

Outside of one federal decision, the only states that seem to have held a newspaper publisher to be a manufacturer are Utah and Louisiana. The case in the latter state (see 62d L.R.A., 63) was decided by a divided court, and in a later case the Supreme Court of that state seem to have reached a different conclusion, for it held that:

“ ‘Manufacture,’ in its ordinary sense, means the changing of raw material into some new useful form. Its natural import is to produce an article, so that a thing is not usually said to be manufactured unless its form is materially changed. A change or addition in or to the mode of use of an article already manufactured" can not be considered a manufacture, so that under a statute exempting from taxation property employed in manufactures, printing machinery by which letters and bill-heads are printed on blank paper is not exempt.” Patterson v. New Orleans, 16th South., 815; 47th La. Ann., 275. Referred to in “Words & Phrases Judicially Defined,” Vol. 5, page 4355.

See also Oswald v. St. Paul Globe Pt. Co., 60th Minn., 82; 61st N. W., 902, 903.

The plaintiff, then, being subject to the general rule requiring his property to be assessed for taxation at its true value in money,' did the board of revision adopt-an improper and illegal method in ascertaining and fixing such value!

It is averred that the plaintiff’s return for taxation was $1,500, which was increased by the board, $13,500, of which increase $2,000 was on the machinery, materials and stock, and $11,500 on the estimated gross annual receipts for subscriptions.

The record of the board itself simply states that the board found the actual value of plaintiff’s plant, excluding real estate, to be $18,000, and ordered it placed upon the duplicate for that sum, without reciting how that conclusion was reached. It is also recited in the minutes of the board that the plaintiff stated that he would not take $25,000 for his plant in question.

It is true that the income of a newspaper depends largely upon the editorial skill, and mental ability and judgment of the man who is its editor, and that the amount of such income may fluctuate largely, according to the degree with which such skill and judgment is exercised. It is also true that the "good will” of such paper is an intangible element of its value, and may be largely decreased, or almost destroyed by changes in public opinion, or sometimes in a manner difficult to account for at all. It is also true that we have no tax on incomes, professional or otherwise, and that it would be improper to, in effect, subject the skill of an editor, author, lawyer or physician to a tax, by estimating his supposed earning capacity and taxing him thereon. '

Still the proprietor of a newspaper, even if he happen to be also the editor, whose talent is responsible largely for the success of his journal, does not stand in precisely the same position as the other professional men named. He has a business as well as a profession, a business which he can sell, while they have nothing that is marketable — nothing that they can transfer to others. A successful lawyer or physician desiring to retire, could probably realize but little more on a sale than the intrinsic value of his library and fixtures, but no successful newspaper publisher would dream of selling his plant for the mere appraised value of its contents.

An old fashioned newspaper plant publishing a popular and well established paper would probably sell for many times more than a new, modernly equipped office that had yet to gain and retain its constituency of subscribers.

Can this good will, intangible though it may be in its nature, be considered as an element in assessing the property for taxation? In this state the question has been determined in the affirmative by the highest court.

In the elaborate notes to the decision in State Board of Education v. Goggins, 58th L.R.A., 513, it is said on page 567:

“To the state of Ohio belongs the distinction of being the first to recognize in express terms, the taxability of good will as an element of capital stock.”

The case referred to is the well known “Nicholls’ Law Case,” State, ex rel, v. Jones, Auditor, 51st O. S., 492. The language of the court on page 512, is most appropriate to the case at bar:

“If by reason of the good will of the concern, or the skill, experience, and energy with which its business is conducted, the market value of the ^capital stock is largely increased, whereby the value of the tangible property of the corporation, considered as an entire plant, acquires a greater market value than it otherwise would have had it can not properly be said not to be its true value in money within the meaning of the Constitution, because good will and other elements indirectly entered into its value. The market value of property is what it will bring when sold as such property is ordinarily sold in the community where it is situated; and the fact that it is its market value can not be questioned because attributed somewhat to good will, franchise, skillful management of the property, or any other legitimate agency.”

•The doctrine of .this case, as is well known, was approved by the U. S. Supreme Court, in 165th U. S., 294, and 166th U. S., 185.

In the "telephone case,” State, ex rel, v. Halliday, 61st O. S., 352, 3d. syll., the Supreme Court said:

"In ascertaining the true value in money of such property in the hands of its owner, every fact or circumstance brought to the attention of the person or officer who is charged with the duty of fixing that value, and which in its nature bears on the question, should be considered by him. One of those circumstances is the earnings or rental of such article.”

The opinion in this ease is too long to be quoted here, but it is replete with reasoning applicable to the case at bar.

The Supreme Court of the United States said emphatically and tersely:

"Whatever property is worth for the purposes of income and sale, it is also worth for the purposes of taxation. ’’ Adams Express Co. v. Ohio State Auditor, 10th Ohio Federal Decisions, 426, syll. 4.

Further citation of authorities on this proposition would seem superfluous.

If "every fact and circumstance” bearing on the question of value, including the earning capacity, which is brought to the attention of the board, is to be considered by them in fixing value, and if the selling value is the tax value, then the board had the right to consider the statement of the plaintiff that the plant earned a gross income of $11,500 and that he would not sell it for $25,000.

If the board found the value of the plant to be a certain amount (less than that fixed by its owner), is not that finding, unless impeached for fraud, or as palpably excessive, conclusive and not subject to review by the court. The board is charged with the duty of making this valuation; the court is not.

In Wagner v. Loomis, 37th O. S., 571, the Supreme Court said:

“As a general rule, the decisions of officers and tribunals specially created and charged in tax laws with the duty of valuing property for taxation, and equalizing, such valuations are final and conclusive.”

It would seem if the board has assessed a valuation for this property, which can not be impeached on the ground already mentioned, that the result of its deliberations can not be successfully attacked on account of the method by which such conclusion was arrived at — on the same principle that a correct judicial decision will not be reversed because the eourt gave the wrong reason for arriving at it.

The burden of proof is on the plaintiff to make out a clear cause for an injunction. Spangler v. Cleveland, 43 O. S., 526.

It does not seem-to this court that such a ease has been made out as would justify the interposition by the judicial branch of the government with the proceedings of officers specially charged with duties in the department of valuing property for taxation.

It may be remarked that if the value of the good will of this property should change hereafter, that there are opportunities offered from year to year, by which a reduction in its valuation for taxation may. be secured to correspond with such decreased real value.

' Some reference was made in oral argument as to whether the court had any jurisdiction to review in any way the proceedings of the board. The jurisdiction of the eourt t.o enjoin illegal taxes on the duplicate from collection is conferred by statute, but there is also a general rule that the party complaining must exhaust his other remedies, if any, in the way of appeal or review by other taxing boards or officers before coming into court. See authorities collected in Michie’s Ohio Enc. Dig., Vol. 13, page 788, par. 4, particularly Mitchell v. Treasurer, 25th O. S., 143, 158. It is difficult for this court to see what other remedy the plaintiff had in this case other than the one he has invoked’ unless possibly he might have appealed to the Ohio Tax Commission under the provisions of Vol. 102 Ohio Laws, page 258, Section 151 (General Code, 5617-6). See also General Code, Sections 5617-3 and 5617-8. In view of the conclusion the court has reached, it is unnecessary to further discuss this proposition.

The demurrer to the petition must be sustained.

The court wishes to express its appreciation of the very able manner in which both counsel have presented this case, and to thank them for the help afforded by their excellent briefs.  