This appeal involves the interpretation and application of Section 14-a, Article 3, of Chapter 118 of the Acts of *Page 427 the Legislature, 1939, relating to the assessment for the purposes of taxation of the property of building and loan associations and federal savings and loan associations. The particular question at issue is the assessment for the year 1941 of the property of the Hancock Federal Savings and Loan Association, the principal office of which is in Hancock County, West Virginia.
The assessment complained of was made upon a consideration of the following statement stipulated in the record, and was reached by an examination of the books of the loan association. We copy the stipulation:
"It is stipulated and agreed by counsel representing the respective interests in these proceedings that instead of the original return used by the Assessor in making up the personal property books for 1941, and testified to by said witnesses Robert A. Douglass and Kenneth Hill, being filed as an exhibit herein, that same be copied into and made part of the record, and read and considered as part of the evidence in this cause, which said return reads as follows:
Name — Hancock County Federal Savings and Loan Association of Chester — Hancock County.
Capital Stock or Shares
Optional saving Shares ......... $1,887,689.96
Free Shares ...... 658,300.00 $2,545,989.96
Other Capital
Surplus .......... 360,540.33 Undivided Profits 145,735.05 Federal Ins. Reserve ........ 140,000.00 Uncollected Interest ....... 4,627.97 650,903.35 ------------ ------------- Total .......... $3,196,898.31
Deductions
Assessed value of real estate ... 278,150.00 Other Deductions 30,000.00 *Page 428 Borrowed Money ... 50,000.00 Total Deduc. ................... 58,150.00 ----------- ------------- Net Value ........ $2,838,743.31."
Another stipulation, not entirely clear to us, immediately follows the above, and reads:
"It is further stipulated and agreed that instead of the original return made by the petition and testified to by said witnesses Robert A. Douglass and Kenneth Hill being filed as an exhibit herein, that same be copied into and made part of the record, and read and considered as part of the evidence in this cause, which said return reads as follows:
Schedule D
Capital Stock or Shares
Optional Savings — Par $100.00 Amount ......................... $1,887,689.96 Full paid — Par $100.00 Amount .. 658,300.00
Total Free Shares .............. $2,545,989.96
Deductions
Assessed value of real estate ....... $278,150.00 Other Deductible Liabilities ....... 79,000.00 357,150.00 ----------- ------------- Net Capital Value ... $2,188,839.96 30% Deduction ....... 656,651.99 ------------- Net Value ......... $1,532,187.97."
We proceed on the assumption that these stipulations represent the contentions of the parties, although the record discloses that the association claims that there should be a further deduction of $139,162.02 representing the difference between the amount at which its real estate was carried on its books, and its assessed value, and at one point in the testimony the claim is made that the assessment value should be fixed at $1,332,152.77. The principal points of difference are $650,903.35, being the aggregate of surplus, undivided profits, reserves and uncollected interest, and the arbitrary deduction of thirty *Page 429 per cent from what is termed the "Net Capital Value" of the stock or shares being assessed, and amounting to $656,651.99, and based on the contention that other property in Hancock County, particularly real estate, was not assessed in excess of seventy per cent of its value.
The assessor, disregarding the odd figures under $100.00, assessed the property of the loan association at $2,838,700.00 under classification No. 1. An appeal from this assessment was prosecuted before the county court, acting ex officio as a Board of Review and Equalization, which body sustained the action of the assessor. The Circuit Court, on appeal from the board's ruling, reduced the assessment made by the assessor to the sum of $2,267,839.96, or a net reduction of $570,803.35, by disallowing the deductions of $30,000.00 and $50,000.00 designated in the stipulated statement above as "Other Deductions", and "Borrowed Money", and allowing a deduction of $650,903.35 covering the items of surplus, undivided profits, reserves and uncollected interest. From this finding and order, the State Tax Commissioner prosecutes this appeal.
The question of the assessment of the property of building and loan associations has been twice before this Court. In 1896, in Ohio Valley B. L. Assn. v. County Court, 42 W. Va. 818,26 S.E. 203, we held: "Building and loan associations are not to be assessed with a capital stock. The members are to be assessed with their shares." In Charleston Federal Savings andLoan Association v. James, 120 W. Va. 781, 200 S.E. 845, we held: "Both state and federal building and loan associations are incorporated companies within the meaning of Code,11-3-12, and are corporations within the meaning of Code,11-3-13. Therefore, their intangible and other personal property is subject to taxation." The decision in this case was reached on a consideration of decisions from other jurisdictions, rendered subsequent to the decision first above referred to, and by reasons of fundamental changes in our tax laws which, in our opinion, made our first decision inapplicable. Loan Assn. v. James, supra, was decided *Page 430 in December, 1938, and the Legislature, at its session next following, enacted a statute specifically providing for the assessment of the property of building and loan and federal loan associations. The pertinent provisions of this statute read as follows:
"Sec. 14-a. Assessment of Capital and Realty of Building and Loan Association, and Federal Savings and Loan Association. The capital of every building and loan association and federal savings and loan association, as represented or evidenced by the investment shares and investment accounts in such association, shall be assessed at its true and actual value, according to the rules prescribed by this chapter, to such building and loan association or federal savings and loan association in the county, district, and town where such association is located: Provided, however, That such shares and such accounts held by the United States government or any of its agencies shall not be included in determining the assessment. The real and actual value of such capital, represented by the market value of such investment shares and investment accounts as aforesaid, shall be ascertained according to the best information which the assessor may be able to obtain whether from any return made by such association to any officer of this State or the United States, from actual sales of such investment shares and investment accounts, from answers to questions by the assessor, as hereinafter provided, or from other trustworthy sources.
* * * * *
The real estate of any such building and loan association or federal savings and loan association shall be assessed as in other cases, and a proportionate share of such assessed value shall be deducted in ascertaining the market value of such investment shares and investment accounts, but in ascertaining the true and actual value of such capital as represented by such investment shares and investment accounts as aforesaid, the assessor shall take into consideration all earned reserves and undivided profits of any such association."*Page 431
It will be noted that the statute quoted refers to "The real and actual value of such capital, represented by the market value of such investment shares and investment accounts". The record before us shows that the investment shares have no market value in the sense in which that term is usually employed. The value of the shares are frozen at par, and may be purchased from the association at any time at that price. Therefore, the price at which such shares may be purchased fixes their sale value, and affords no useful criterion in fixing their real value. We do not think this provision was intended to be all controlling, and certainly not to the extent of permitting a loan association to escape taxation on assets which make the shares possess an actual value beyond their value in the market place. In this instance, if we were assessing these shares to the owner, as distinguished from the association, the price at which they could be sold would be their actual value; but when we assess the association, we assess all of its property, as under our constitution we must. The fact that the association holds assets in excess of those necessary to make the investment shares worth par, leaves that excess in the hands of the association. That excess is property owned by the association. Among whom it shall be finally distributed is of no concern; it is nevertheless property which should contribute to the support of the government which protects it. We think that part of the statute which refers to market value is inapplicable to the case at bar.
Furthermore, the statute expressly says: "* * * in ascertaining the true and actual value of such capital as represented by such investment shares and investment accounts as aforesaid, the assessor shall take into consideration all earned reserves and undivided profits of any such association." For what purpose shall they be taken into consideration? The manifest object of section 14-a is to secure the assessment of the association's property, and to provide for the ascertainment of the true and actual value thereof, and it is difficult to perceive what possible meaning, other than that relating to value, can *Page 432 be attributed to the language used. We hold that the assessor properly included in his assessment of the association's property the sum of $650,903.35 covering the reported value of the association's surplus, undivided profits, reserves and uncollected interest.
We are fortified in our conclusion by a study of the constitutional provisions relating to taxation which have guided us from the foundaton of the state. That all property, both real and personal, shall be assessed, is one of the fixed stars in our system of taxation will be disclosed below.
Section 1 of Article VIII of our Constitution of 1863, provides:
"1. Taxation shall be equal and uniform throughout the State, and all property, both real and personal, shall be taxed in proportion to its value, to be ascertained as directed by law. No one species of property from which a tax may be collected, shall be taxed higher than any other species of property of equal value; * * *."
Section 1, Article X, the Constitution of 1872, reads:
"Taxation shall be equal and uniform throughout the State, and all property, both real and personal, shall be taxed in proportion to its value, to be ascertained as directed by law. No one species of property, from which a tax may be collected, shall be taxed higher than any other species of property of equal value; * * *."
Section 1 of Article X, was amended by a vote of the people in 1932, and now reads:
"1. Subject to the exceptions in this section contained, taxation shall be equal and uniform throughout the State, and all property, both real and personal, shall be taxed in proportion to its value to be ascertained as directed by law. No one species of property from which a tax may be collected shall be taxed higher than any other species of property of equal value; * * *."*Page 433
These quotations do not cover provisions as to property which may be exempted from taxation.
While making fundamental changes, the requirement that all property, not specifically exempt, shall be assessed for purposes of taxation is retained. Under our present constitution, property is classified and made to bear different rates of taxation, but the provision which provides that all property shall bear some burden of taxation remains in its original form. Any legislation which relieves property of this burden would directly and plainly violate our constitution, and it cannot be assumed that the Legislature, when it enacted the statute here involved, had any such purpose in mind. Even if it had such purpose, it could not legally make the same effective. We are convinced that the Legislature's intent and purpose was in keeping with the constitutional provisions now in effect, and that it used appropriate language to make effective such purpose.
We find no fault with the Circuit Court's action in relation to the deduction of $278,150.00 representing the assessed value of the real estate owned by the association. Such action was clearly in accord with the statute which the Legislature had the power to enact. The value of any class of property is, under the constitution, "to be ascertained as directed by law". Here we have specific direction as to how credit may be given in the ascertainment of the taxable value of property, where the value of that property is partly represented by real estate which has already been assessed, and we would not be justified in prescribing any other method.
The contention that we should reduce the assessment of the association's property because, as contended, certain property of other classes, particularly real estate, is assessed at something less than its true and actual value is without merit. In West Penn Power Co. v. Board of Review, 112 W. Va. 442,164 S.E. 862, it was held, in effect, that a taxpayer was entitled to have his property assessment reduced to the level at which other property of the *Page 434 same class was assessed in the same governmental unit. It will be noted that this decision applies to property of the same class. It does not appear that intangible property in Hancock County is assessed at less than its true and actual value. There is, therefore, no basis for the application of the rule laid down in the West Penn case. This question was raised inChristopher v. James, 122 W. Va. 665, 12 S.E.2d 813, 816, and it was stated in the body of the opinion that the requirement of equal and uniform taxation set out in Section 1, Article X of our Constitution "means merely that as to classes of property, businesses or incomes there shall be uniformity of taxation." See also, Bistor v. McDonough, 348 Ill. 624,181 N.E. 417; People v. Telephone Co., 277 Ill. 303, 36 N.E.2d 362.
The assessor allowed the association a deduction of $30,000.00 under the head of "Other Deductions", and $50,000.00 for "Borrowed Money". These deductions were disallowed by both the County Court, acting as a Board of Review and Equalization, and the Circuit Court. We think both should be allowed. It is not quite clear what "Other Deductions" cover, but the record does disclose that the association owns $24,000.00 of stock in the Federal Home Loan Bank of Pittsburgh and $5,000.00 Home Owners' Loan Corporation bonds, and these two investments practically cover this item. The $50,000.00 borrowed money lessened the item of undivided profit to that extent. We are not unmindful of the statute which prevents deduction for indebtedness as applied to the ordinary case, but here we have a statute which, as we hold, requires an ascertainment of the value of investment shares and accounts, in which ascertainment earned reserves and undivided profits shall be taken into consideration. Where we do this we should consider items which lessen the amount of such undivided profits and reserves.
In the consideration of this case, we have assumed that the values reported are true values. Should the *Page 435 property of the association be of less value than that carried on its books, it is assumed that, upon a proper showing, future assessments will be made in accordance to the realities of the situation, as may then be presented to the taxing authorities. The case presented to us is one where, if we accept the view of the association, a very large sum of money will escape taxation, in face of constitutional requirement that all property be taxed, and in face of a statute which we think was intended to and does conform to the constitutional mandate.
We, therefore, reverse the Circuit Court of Hancock County in the particulars set out in this opinion, and fix the assessment of the property of the association for the assessment year beginning January 1, 1941, at the sum of $2,838,700.00, with costs to the appellant.
Reversed.