City Investments, Ltd. v. Johnson

SHENK, J.

This is an appeal by the plaintiff from a judgment partially in its favor, in an action to recover taxes paid under protest. The question presented involves the validity of a tax' assessed against the predecessors of the plaintiff and collected under the Bank and Corporation Franchise Tax Act of 1929. (Stats. 1929, p. 19.) The contention is that the tax so assessed and collected was for the first half of the calendar year 1929 and overlapped a previous tax collected for the fiscal year 1928-1929, and was therefore void to the extent of the overlap. The trial court granted a refund on account of the tax applicable to the month of December, 1929, but denied any further relief.

The plaintiff is the successor of four affiliated corporations which were dissolved in December, 1929. In 1928 taxes were assessed and collected on the franchise of the four corporations as provided by subdivision (d) of section 14 of article XIII of the Constitution and section 3664d of the Political Code. That constitutional subdivision adopted in 1910 provided for an annual tax on the franchise of the affiliated corporations, at the rate of one per centum of the actual cash value thereof. The first half of the 1928 assessment was paid on August 6, 1928, and the second half on January 28, 1929. In November, 1928, section 16 of article XIII was added to the Constitution. Subdivision 2 (a) of that section provided that corporations subject to be taxed pursuant to subdivision (d) of section 14, in lieu of the tax thereby provided for, should annually pay to the state for the privilege of exercising their corporate franchises within the state a tax equal to four per cent of their net incomes. Subdivision 5 of said section provided that the taxes should become a lien on the first Monday in March of 1929 and of each year thereafter

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also that the legislature should pass laws necessary to carry the section

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into effect. In 1929 the legislature passed the Bank and Corporation Franchise Tax Act which was approved and effective on March 1, 1929. By section 4 thereof corporations of the class referred to in subdivision 2 (a) of said section 16 of article XIII of the Constitution were required to pay annually to the state, for the privilege of exercising their corporate franchises within the state, a tax according to or measured by their net incomes, at the rate of four per centum upon the basis of net income for the next preceding fiscal or calendar year.