I arrive at the same conclusion expressed by Mr. Justice BRICE but by a somewhat different route.
The majority seek to distinguish the Michigan decisions they cite as being relied on by the State by calling attention *Page 394 to the fact that the Michigan statutes, Comp. Laws 1929, § 10140, imposed upon "every corporation [1] organized or [2] doing business [in Michigan]." (Emphasis mine.)
They also in discussion of the second point raised by the appeal, viz., "was the corporation in the instant case `engaged in any business' during the year 1937, so as to be liable for the tax?" rely upon what may be said to be (numerically) the weight of judicial decisions to the effect that "merely doing the acts necessary to maintain corporate existence, and holding property, and distributing proceeds of such property does not result in engaging in business so as to have liability attach."
The contrary view said by appellant to be the sounder doctrine is sustained by decisions from the courts of last resort in Massachusetts, Rhode Island, Arkansas and Pennsylvania. There is much to be said in favor of the appellant's choice of doctrine. The argument of convenience arising from the administrative difficulties in pursuing the doctrine favored by the majority supports the Attorney General's position. Furthermore, as hereinafter again mentioned, the expense of maintaining the Corporation Commission, which involves visitorial and inquisitorial powers for the better governance of corporations in the exercise of their corporate franchises, suggests that the franchise tax is designed to in part defray such expense, and in most instances, the acts which are done by the corporation to maintain its corporate existence, holding property, and distributing property, reports whereof are required to be made to the Corporation Commission, will be just as much a concern of the state and just as much a burden upon its revenues whether the corporation is "engaged in any business" as understood in the one sense or the other. However, what I or the other Justices may think is the sounder doctrine is of little concern except as it may be of some assistance in arriving at the intent of the legislature.
Keeping in mind the difficulties of construction of statutes of this sort, as expressed by Mr. Justice Cardozo in Michigan v. Michigan Trust Co., cited and quoted by the majority, I think it may be assumed that our legislature was conscious of these difficulties and informed as to the divergence of opinion when framing the title to the Act, and that the clause "or the continuance of its charter within this state" was inserted designedly.
It is a rule of statutory construction that all of the words and phrases of a statute must be considered in arriving at the intention of the legislature. It must be kept in mind that the first clause of the title to the Act is as follows: "An Act to Levy an Annual Franchise Tax on Domestic and Foreign Corporations for Profit Doing Business in This State." (Emphasis mine). The majority would doubtless concede that the clause in the title "Doing Business in This State" standing alone means the same thing as the clause in Sec. *Page 395 2 of the Act as follows: "engaged in any business in this State."
This being so, anything which throws light on one of these clauses throws light on the other. Going back to the title again I think the words immediately following the phrase "Doing Business in This State" viz., "for the Privilege of Carrying on, Doing Business, or the Continuance of its Charter Within This State", must be considered as qualifying and explanatory of the words immediately preceding.
To my mind, the phrase "or the Continuance of its Charter Within This State" has a meaning distinct from the preceding clause "for the Privilege of Carrying on, Doing Business" and is tantamount in effect to the word "organized" appearing in the Michigan statutes for purposes of construction. That is to say, the tax is upon "the Privilege of Carrying on, Doing Business" OR "the Continuance of its Charter Within This State". For emphasis I state the matter another way. The Michigan legislature intended to levy the tax upon corporations "organized" while our legislature evinced the intent to impose the tax upon corporations that desired to "stay organized."
Also the words "or the continuance of its charter within this state" seem to be an interpretative clause which indicates intention of the legislature to avoid the doctrine announced by some courts that merely doing such acts as are necessary to maintain corporate existence and holding property for the purpose of distributing its avails is not engaging in any business. In other words, by this clause in the title "or the continuance of its charter within this state" the legislature chose the doctrine announced by the Massachusetts, Arkansas and other courts thatany corporate activity or exercise of its charter privileges will amount to engaging in business so as to result in liability for the franchise tax. This view adds significance to the employment of the word "any" in the clause in Section 2 "engaged in any business in this State" as though the legislature, being conscious of the divergence of view as to the meaning of the phrase "doing business" and "engaged in business", sought by the employment of the word "any" to embrace doing of acts necessary to maintain corporate existence, holding property, and distributing the avails thereof, etc., as doing business within the legislative understanding.
By Sections 3 and 4 of the Act, every corporation for profit "engaged in business in this state" shall annually make and file with the Corporation Commission a report in such form as the Commission may prescribe, signed and sworn to by some of the corporate officers designated, which report shall show the name of the corporation; the location of its registered office in this state and the name of the agent therein and in charge thereof upon whom process against the corporation may be served; the names of all of the principal officers of the corporation; the date of the annual election of officers; the amount of authorized capital stock; the *Page 396 amount of capital stock subscribed, the amount thereof issued and outstanding, and the amount of capital stock paid up; the nature and kind of business in which the corporation is engaged; the value of the property owned and used by the corporation in this state and where situated and the value of the property owned and used outside of this state and where situated; the total gross receipts derived from its property and business in this state and the total gross receipts from its property and business, both within and without this state during the preceding year; the change or changes, if any, in the above particulars made since the last annual report. By Sec. 9 of the Act, certain penalties are imposed for failure of corporations to make reports and it is further provided that the failure to make such reports shall be cause for dissolution of the corporation in case of domestic corporations, and cause for cancellation of the permit to do business in case of foreign corporations.
If the majority view is sound, then it seems to me corporations not "engaged in business in this state" as defined by the majority, that is, those corporations doing only the acts necessary to maintain corporate existence could fail and refuse to make the reports required by Secs. 3 and 4 of the Act without incurring the penalties prescribed upon the basis of the argument that the language of said sections is limited in its operation to such corporations only as are "engaged in business in this state" as that term is defined in the majority opinion. The exercise of corporate franchises by holding directors' meetings, election of officers, making reports, etc., is an important function to be performed by a corporation to secure a "Continuance of its Charter Within This State".
The important purposes to be served by the making of the reports required is apparent. The Act manifests an intention that the state shall exercise some supervisory control over corporations as long as they are exercising their franchises, whether they are actually carrying on the business purpose of making a profit or not. When they cease to exercise their franchises, in other words, when they become "dormant" so as to no longer be required to perform any acts to maintain corporate existence, no tax is required.
It is a burden on the revenues of the state to receive, file, analyze and consider such reports. A purpose of the franchise tax doubtless is in part to pay these administrative expenses. If the corporation owns property, the state affords police protection for such property.
Appellant says in its brief:
"If it be held that a corporation such as appellee is not subject to the tax levied by Chapter 116, supra, administrative difficulties in enforcing the Act will be multiplied. It will be necessary for the taxing authorities to pass on innumerable fact situations to determine liability in any given case. If the tax paying corporation wishes to avoid liability, it may do so by dissolution or by filing a certificate of *Page 397 suspension pursuant to Section 32-149(6), New Mexico Statutes Annotated, 1929 Compilation, which reads in part as follows:
"`Whenever any corporation is no longer engaged in active business in this state, any two stockholders directors or officers thereof may unite in signing a statement to that effect, which statement may be filed in lieu of such annual report, and upon the filing of the same the state corporation commission shall be authorized to strike the name of such corporation from the list of live corporations in this state; but such action shall not be construed in any sense as a formal dissolution of such corporation, nor shall such corporation be relieved thereby from any outstanding obligation.'"
These are not mere arguments of convenience to demonstrate what the law ought to be. They indicate the legislative intent that every corporation "for the Privilege of Carrying on, Doing Business," or every corporation which desires a continuance of its charter within this state must pay a franchise tax. When so considered, I think "the tax on the privilege to do becomes closely assimilated * * to one on the privilege to be", and as an alternative that if the corporation does the acts which are necessary to a continuance of its right "to be" within this state it is "engaged in (any) business in this state".
For the foregoing and many of the reasons stated by Mr. Justice BRICE, I concur in his dissent.