WALKER, J., dissenting. Action heard upon an agreed statement of facts, substantially as follows: Plaintiff contracted to sell to the defendant ten bonds of (254) the State of North Carolina, par value $1,000 each, issued in pursuance of chapter 150, Public Laws 1909, for the price of $10,550.
The bank refused to take and pay the bonds, alleging that the plaintiff stated to the defendant at the time said agreement to purchase was entered into that the said bonds could be carried by the defendant as part of its surplus, and that the tax value of the shares of stock held by the shareholders of the defendant bank would not be increased by virtue of the defendant owning said bonds, and defendant stated to plaintiff at the time that it would purchase said bonds upon this representation of the plaintiff, and the said representation was a part of the inducement for the defendant to enter into said agreement to purchase said bonds and become part of the consideration for said agreement. This is admitted by plaintiff in the "case agreed."
In the answer of the defendant it is charged that such allegations were false and untrue, but there is no averment or finding which charges plaintiff with intentional deceit and fraud.
The plaintiff asks for $250 damages for breach of contract, the admitted difference between the market and contract price of the bonds. The Superior Court rendered the following judgment upon the "facts agreed": "The court being of the opinion that the holding of the bonds *Page 245 as stated in the complaint would not increase the tax value of the shares of stock held by the stockholders, and the court being of the further opinion that an increase of the tax value of the shares of stock held by shareholders of the defendant company by virtue of defendant company holding said bonds as a part of its surplus, would be an illegal tax on said bonds and the income and coupons accruing thereon; it is therefore ordered and adjudged that the plaintiff recover of the defendant the sum of $250 and the cost of this action, to be taxed by the clerk."
From the judgment rendered the defendant appealed. The object of this "friendly suit" is evidently to procure a construction of section 4 of ch. 150, Laws of 1909, which is as follows: "The said bonds and coupons shall be exempt from all State, county or municipal taxation or assessment, direct or indirect, general or special, whether imposed for purposes of general revenue or otherwise, and the interest paid thereon shall not be subject to taxation as for income, nor shall said bonds and coupons be subject to taxation when constituting a part of the surplus of any bank, trust company or other (255) corporation."
No one disputes the proposition that our State bonds are all exempt from direct or income taxation in the hands of an individual or corporation, but it is contended that when the Corporation Commission comes to determine the taxation value of a share of stock owned by a stockholder in a bank or other corporation, in case it finds that any portion of its surplus assets, over and above the amount of its capital stock, is invested in this particular issue of bonds, under the terms of the act, the commission must deduct them from such assets. It is contended that the words, "nor shall said bonds and coupons be subject to taxation when constituting a part of the surplus of any bank, trust company or other corporation," are not to be found in any other legislation authorizing the issue of bonds, and that the General Assembly inserted them in the act of 1909 for the purpose of creating a home market for the bonds and to largely enhance their value.
In view of the fact that there are several millions more of these bonds to be shortly issued, we would be glad to decide this important question now, but regret that we are unable to do so in the form presented.
With perfect respect and deference for the learned counsel, as well as for the parties, this is evidently a "suit made to order," arising not out of a real controversy between the parties litigant, but instituted solely for the purpose of obtaining the opinion of the Court upon a "feigned issue." *Page 246
In Blake v. Askew, 76 N.C. 327, such an issue was presented to this Court to test the validity of State bonds. The Court dismissed the action as a feigned issue, holding that the State's interest could not be put in jeopardy by such a proceeding when the State was not represented by any of her agencies.
In this action both the interests of the State and of the stockholders of defendant bank are directly affected, and should not be passed upon in a feigned suit, when neither is represented.
The "false representations" set up by defendant in avoidance of the alleged contract constitute no false representation of a fact, but amount to nothing more than an expression of plaintiff's opinion upon what is a question of law. The only foundation for such opinion is the act of the General Assembly, which the bank officials could easily examine and form their own opinion.
Under our laws the Corporation Commission is the official (256) body whose duty it is first to pass on this question and to promulgate their decision so that all persons affected by it may learn of it.
According to our method of bank taxation, Laws 1909, the property of banking corporations (except real estate and articles of personalty, such as safes, furniture, and the like, is taxed through its shareholders by taxes levied upon its stock in the hands of its owners. The Corporation Commission is the agency of the State now charged with the duty of assessing the value of such shares and certifying it and the names of the owners to the different counties where they reside. Upon this assessed valuation the cashier, for convenience, remits the State tax on each share for the stockholder direct to the State Treasurer, and the stockholder pays the county and municipal taxes where he resides. Laws 1909, p. 703, sec. 33. The valuation of bank stock is based by the commission upon the estimated value of shares as reported by the officials of the bank, and also upon other sources of information pointed out in the statute.
If the Corporation Commission, when it comes to determine the value of the stock corporations, shall decide to include in the surplus such bonds of this issue as the corporation may own, and thereby increase the value of its shares of stock in the hands of its stockholders, they, as well as the bank, in their behalf may contest the matter in the courts of the State with the Corporation Commission by appeal under Rev., sec. 1074, or by injunction proceedings, as they may be advised. In such proceeding the interests of the State are represented by the commission and that of all its stockholders by the bank, as well as a shareholder in connection with it. As this is an important question, we do not doubt that the Corporation Commission will facilitate a speedy settlement of it. *Page 247
This action is dismissed. Let each party pay half the costs, both of this and the Superior Court.
Dismissed.