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market value of the shares. If this be true, it must follow, as we have already shown, that section 3608 of the Political Code, prohibiting any assessment of shares of stock, is unconstitutional. That a system of taxation may be adopted by a state under which all those elements may be included as property of the corporation in the assessment against the corporation was, as we have seen, held by the United States Supreme Court in several cases. (See cases cited, supra, and recognized both in the Davenport Case, and in the majority and minority opinions in the Dodge Case.) This conclusion necessarily follows the undisputed doctrine that a state may assess and tax at their full cash value shares of stock in corporations. That our statutes, as construed by this court, positively command the assessment of all such elements in such a manner as to make the aggregate value of the corporate property measure up in amount to the aggregate market value of the shares, appears very clear to us. Those statutes expressly require that all property belonging to corporations shall be assessed and taxed at its "full cash value," defined to be the amount at which the property will be taken in payment of a just debt due from a solvent debtor, and this positive injunction is as applicable to the intangible property of a corporation, such as its corporate franchise, which admittedly must be assessed and taxed, as it is to the tangible property, such as real estate. As was said by Mr. Justice Brewer, in the dissenting opinion in the Dodge Case: "But it is said there is no specific command to include in the property of a state corporation the good will, dividend-earning power, and the like, and that they are necessarily included in the selling value of the stock of any corporation. It is true, these items are not in terms mentioned, but neither are desks and furniture. The language is general, so general that it includes everything, not excepting good will, dividend-earning power and the like, for they are 'capable of private ownership.' They belong to the corporation. There is no good will in a share of stock over and above the good will which belongs to the corporation, and, if the corporation sells and conveys all that it possesses 'capable of private ownership' it sells and conveys its good will, and there is nothing left of good will or anything else belonging to the stockholders. This is so plain that he who runs may read." The statutes expressly requiring the assessment of all the property, both tangible and intangible, to be at its full cash value, it is obvious. that there is but one method by which the cash value of the intangible property can be ascertained, a method ordinarily much more certain and accurate in its results than any method that can be devised for the ascertainment of the value of real estate and many articles of personal property. It is settled law in this state that a proper method for

ascertaining the value of the franchise of a corporation is by deducting from the aggregate market value of its shares the value of its tangible property, and taking the difference as the value of the franchise. See San José Gas Co. v. January, 57 Cal. 614; Spring Valley Water Works v. Schottler, 62 Cal. 69, 117; Spring Valley Water Works v. Barber, 99 Cal. 36, 38, 33 Pac. 735, 21 L. R. A. 416; Bank of California v. San Francisco, 142 Cal. 276, 287, 75 Pac. 832, 64 L. R. A. 918, 100 Am. St. Rep. 130. It was said by Chief Justice Beatty in his concurring opinion in Stockton Gas and C. Co. v. San Joaquin Co. (Cal. Sup.) 83 Pac. 59, that the method of ascertaining the value of a corporate franchise by taking the difference between the market value of the shares and the value of the tangible property as the basis of assessment has been sanctioned in several cases, and nowhere disapproved. It appears too clear for question that such difference between the market value of the shares of stock and the value of the tangible property is necessarily the aggregate cash value of such intangible property as under our system must be held to belong to the corporation, call it franchise, good will, or dividend or profit-earning power, or what you please. Whatever it is, our laws positively require it to be assessed by the assessing officers to the corporation at its full cash value, precisely as all other property is required to be assessed at its full cash value. The aggregate value of the shares evidenced by the certificates of stock, must be the aggregate cash value of the property of the corporation held by it in trust for its stockholders. This being so, the method already approved by the decisions of this court as a "proper method" is not only a "proper method." It is the only method by which the cash value of the intangible property required to be assessed can be ascertained, and is, therefore, the method necessarily enjoined by our laws upon the assessing officers. Whether or not in the case of a banking corporation which possesses no other franchise than its corporate franchise, the whole of its intangible property may be considered "franchise" and be assessed eo nomine, as seems to be clearly intimated by the cases we have cited, is not absolutely necessary to a determination of the question under discussion. This was also true of the case of Bank of California v. San Francisco, supra, where the decision of such question was expressly withheld. 142 Cal. 289, 75 Pac. 832, 64 L. R. A. 918, 100 Am. St. Rep. 130. It is enough for the purposes of this discussion, that all of such intangible property must be assessed under some name as the property of the corporation. It is, however, apparent that, while it is a simple matter enough to fix the value of the whole, it would be impossible to segregate and apportion the value of all the elements entering into the making up this property, and nothing of benefit to any one

could be accomplished by any such attempted | ly essential to prevent embarrassment in the

segregation. We are satisfied that under the system of taxation in this state as construed by our decisions, all such intangible property may be properly included in the assessment of the corporate franchise of the corporation.

Another question presented upon this appeal is as to the propriety of the remedy by injunction. We are satisfied that no injunction pendente lite restraining such acts upon the part of the tax collector as were specified in the injunction, should have been issued, and that the motion to dissolve this injunction should have been granted. It is well settled by the decisions in this state that the equitable remedy by injunction will not be granted to restrain proceedings of the officers on whom is devolved the duty of enforcing the tax laws, merely because the tax sought to be enforced is illegal. To justify the exercise of such a remedy, it must appear that the same is necessary to protect the rights of the property owner and that he has no adequate remedy at law. In the matter of granting such relief, therefore, a court of equity will go no further than is necessary to protect the rights of the property owner, and will not to any greater extent impede the officers of the state in the performance of their duties. This general matter has several times been under consideration by this court, notably in the cases of Sav. and Loan Soc. v. Austin, 46 Cal. 415, 488, and Houghton v. Austin, 47 Cal. 646, 650, 666. In the first of these cases, which was an appeal from an order refusing to dissolve an injunction, this court said: "If the tax were conceded to be illegal, it does not necessarily follow that, for that reason alone, the plaintiff would be entitled to an injunction. Dows v. City of Chicago, 11 Wall. (U. S.) 110. 20 L. Ed. 65, Mr. Justice Field, in delivering the opinion of the court, says: "Any delay in the proceedings of the officers, upon whom the duty is devolved of collecting the taxes, may derange the operations of government, and thereby cause serious detriment to the public. No court of equity will, therefore, allow its injunction to issue to restrain their action, except where it may be necessary to protect the rights of the citizen whose property is taxed, and he has no adequate remedy by the ordinary processes of law. It must appear that the enforcement of the tax would lead to a multiplicity of suits, or produce irreparable injury, or where the property is real estate, throw a cloud upon the title of the complainant, before the aid of a court of equity can be invoked. This, we think, is a correct statement of the rule, as established by the weight of authority." This ruling was affirmed in Houghton v. Austin, supra, and these cases have never been overruled or modified in this respect by any later decision. The rule appears to be founded on well-settled equitable principles and appears to us to be absolute

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matter of the execution of revenue laws by the proper officers, and to be specially applicable in the matter of preliminary injunctions where the question as to the legality of the tax has not been finally determined. Under that rule, no act on the part of officers required by the law to be performed in the execution of the revenue measures will be stayed by injunction, unless that act is of such a nature, and will have such an effect, as to irreparably injure the property owner, or, as said in the case above cited and quoted from, "where the property is real estate, throw a cloud upon the title of the complainant." It is obvious that a general allegation that such an act will cast a cloud upon the title of the complainant, and will be to her great and irreparable injury is insufficient to justify such relief, where the laws of the state show clearly that no such effect can be produced.

We have already stated the acts specifically prohibited by the temporary injunction here involved. It is very clear that, under our law, none of these acts could have the effect heretofore stated. It may be conceded that the execution of a deed of said property by the tax collector to the state of California, which deed, by express provision of the Political Code, would purport to convey the absolute title, and be primary evidence as to certain matters affecting the regularity of the proceedings and conclusive evidence as to other of said matters (sections 3786, 3787), would constitute a cloud upon the title, within the rule enunciated in a long line of cases (see Maskey v. Lackmann, 146 Cal. 777, 780, 81 Pac. 115), and that, therefore, the execution of such a deed, pending proceedings to determine the validity of the assessment, might, in a proper case, be enjoined. Such, however, was not one of the acts specifically enjoined here, all of those acts being things required by the law to be done before any deed can be executed. No such deed could be executed by the tax collector until the expiration of five years from the date of sale (Pol. Code, §§ 3781, 3785). We are satisfied that, under our law, none of these acts so enjoined could in any way prejudice plaintiff's rights, or throw a cloud upon her title. Under our present system, the only cloud upon the title of the taxpayer created prior to the execution of such a deed to the state, is such cloud as arises from the fact that the tax is a lien upon his property in favor of the state, attaching as of the first Monday in March (the date of assessment), and continuing until the taxes are paid or the property sold for the payment of the tax. Pol. Code, §§ 3716, 3717, 3718. The effect of this lien is in no degree practically added to by anything required to be done by the tax collector prior to the execution of the deed. To comply with the laws of the state looking to the enforcement of unpaid taxes, the tax collector

is required to make publication of the entire delinquent list within a certain period, together with a notice that at a stated time, the property upon which the lien of the state exists will, by operation of law, be sold to the state, and at the time stated, to declare all such property, as to which the taxes have not been paid, sold to the state, to make an entry accordingly upon the delinquent list, and to make out and file of record a certificate of such sale (Pol. Code, §§ 3764 to 3778). The only practical effect of a compliance with these provisions, in addition to preserving the rights of the state in the matter of such taxes as are ultimately found to be valid, is to start running the period of five years within which redemption can be effected and at the expiration of which a deed may be issued to the state. During this period, the legal title to the property continues in the taxpayer, subject to the lien in favor of the state created by the assessment and levy. Neither the certificate of sale (see Clarke v. Mead, 102 Cal. 516, 36 Pac. 862), nor any of these acts of the tax collector constitutes even prima facie evidence as to the validity of assessment or levy, and the taxpayer has a full and complete protection against the creation of any cloud upon his title in the enjoining of the execution of the deed. Under such circumstances, equity will not interpose to the extent of preventing the performance of those preliminary acts which cannot affect the rights of a taxpayer, the failure to perform which may result in prejudice to the state in the enforcement of its revenue laws.

chise" and taxing it as franchise. A franchise is simply a special privilege granted by the state directly or through one of its mandatories. When that privilege is the privilege of being a corporation, when the franchise granted is simply the franchise to be a corporation, that franchise can have no greater value than what it has cost the incorporators to obtain it and what it would cost other incorporators to obtain the identical privilege. cal privilege. Since in this state these franchises are open to all upon the same conditions, that cost is the mere expense of filing papers and procuring clerks' certificates, say $10, and it cannot be said that such a franchise or privilege can ever be worth more than that amount while our laws remain unchanged. A tremendous distinction is, of course, to be observed between this franchise to be a corporation and some special franchise to do a particular thing, as the franchise to use a particular city street for street railroad purposes. Such a franchise, and others of like kind, often have enormous value, and this value comes from the fact that once granted, no other person can obtain them. It is not open to citizens upon the same terms, but it is in its nature monopolistic. But I' advert to this merely in passing, for we are here dealing with the franchise to be a corporation.

To illustrate the fallacy of assessing the difference in value between the market value of stock and the value of the tangible property as franchise let us instance a case. Three men as copartners are engaged in the business of selling dry goods. By the exer

The order denying the motion to dissolve cise of varied qualities which go to make a the injunction is reversed.

business success they have developed an enormous and profitable business. They are as

We concur: BEATTY, C. J.; SHAW, J.; sessed for the value of their tangible propSLOSS, J.; LORIGAN, J.

I dissent: MCFARLAND, J.

HENSHAW, J. I concur in the judgment, and generally in the reasoning and principles announced in the prevailing opinion. Something more, however, remains to be said upon the question, and no better time for its saying presents itself than is offered by the present case. Concededly it is of the highest importance to the commonwealth that the tax system should be uniform and just and that no one person or class of persons should be exempt from the payment of a tax, the collection of which is enforced against others. Per contra, that no one person or class of persons should be compelled to pay a tax which is not enforced against others. The fault of The fault of our system in this regard-a fault of which the taxpayer may justly be heard to complain-is not in the assessment of intangible property represented by the difference between the market value of the stock and the value of the tangible property, but it is in calling this difference the value of the "fran

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erty, the stock on their shelves and their solvent credits or book accounts. They decide to incorporate, and without the slightest change in location, stock, book accounts, without the slightest change of any kind, they pay $10 to the state of California, obtain articles of incorporation and issue to themselves each one-third of the shares. These shares have a value far in excess of the total value of the goods on the shelves and of the solvent credits. Upon an investment say of $1,000,000 their profits show a return of 6 per cent. upon $10,000,000. Finding, therefore, the value of the solvent credits, and goods on hand at $1,000,000 and the value of the stock at $10,000,000, the assessor assesses this corporation $9,000,000 for its franchise, for which franchise but the day before it paid the state $10, and as to which franchise -which is merely the privilege as a corporation to carry on the business of buying and selling dry goods-any 3 men in the state of California may secure the identical privilege for the same expenditure of money. The necessary result would be that while yesterday the privilege was assessed for $1,000,000,

to-day the corporation is assessed for $10,000,000, $9,000,000 of which is the so-called value of the franchise. I am not disputing the existence of this $9,000,000 of property. I do insist that it was not called into being, nor in any way created, through the privilege to be a corporation so granted by the state. This $9,000,000 is, and logically can be, nothing other than the good will of the business, which good will is itself a species of property distinctly recognized by the laws of this state, property capable of private ownership, and, therefore, property which should be assessed. And not only should it be assessed, but I insist it should be assessed not under the misleading and deceptive misnomer of franchise, but assessed, for what it really is, good will. (Civ. Code, §§ 655, 992, 993.) Even if the Legislature should declare that it should be assessed as franchise, this declaration does not make it franchise. The legislative declaration that it should be assessed as "beauty" would not make it beauty. The simple proof of the matter is that of this $9,000,000 assessed as franchise, $8,999.990 are in effect good will, and the remaining $10, is the value of the franchise. think that this matter should be lightly put aside with the statement that as the property after all is assessed it does not matter under what name it pays its taxes. Logical

results can only be reached by correct reasoning and correct reasoning and a true interpretation is essential to that great desideratum, the uniformity in operation of our revenue system. Therefore I am here contending that the property which is assessed should be assessed under its true name, and that this should be declared by this court, not only because it is the logical and correct interpretation of the law, but because it is of great moment that the assessors themselves should be properly directed in their delicate tasks, and that the taxpayer in turn should know upon just what property of his the law is imposing its burden. My position, therefore, is not that corporations should not pay this tax. But they should not be expected to pay it under the blind and misleading guise of franchise. They should be called upon to pay taxes upon the property as it actually is -the good will.

No Justice of this court, I think, disagrees with me upon the proposition that in fact it is the good will which is being assessed under the guise of franchise, and no one will question but if the good will of a corporation is thus subject to assessment in this state, the good will of every other business, whether carried on by a partnership or an individual, should equally be subject to taxation.

(41 Wash. 172)

MILLER v. O'LEARY. (Supreme Court of Washington. Oct. 19, 1906.) 1. ADVERSE POSSESSION-EXTENT OF POSSESSION.

Where the lessor of a lot had no title to a strip thereof. the construction on the strip by the lessee of a sidewalk leading to a joss house was not an adverse possession of the entire strip under the 12 years' statute of limitations.

[Ed. Note. For cases in point. see vol. 1, Cent. Dig. Adverse Possession, § 537.]

2. SAME-PAYMENT OF TAXES.

Under the 7 years' statute of limitation requiring payment of taxes under claim and color of title. payment of taxes on land outside of the taxpayer's boundaries. under an error as to the location of the boundaries, was insufficient.

[Ed. Note.--For cases in point. see vol. 1, Cent. Dig. Adverse Possession, § 512.]

Appeal from Superior Court, King County; Geo. E. Morris, Judge.

Action by Mary M. Miller against J. O'Leary. From a judgment in favor of plaintiff, defendant appeals and plaintiff files cross-appeal. Affirmed.

Harold Preston and Fred H. Peterson, for appellant. Blaine, Tucker & Hyland and F. R. Conway, for respondent.

PER CURIAM. Mary M. Miller, plaintiff below, brought this action against James O'Leary, defendant, to recover the possession of a tract of land situate in the city of Seattle and described as the north 10 feet of lot 6 in block 30, of David S. Maynard's plat of the town of Seattle. From the record it is made to appear that some time prior to 1853 Henry L. Yesler and David S. Maynard severally settled upon and located under the Oregon donation act land claims in what is now the city of Seattle. The claims adjoined each other; the south line of Yesler's claim forming the north boundary of Maynard's. In 1853 Maynard filed the town plat above mentioned, evidently believing that the land included therein lay wholly within his own donation claim. But in this he was mistaken, as it actually extended over into Yesler's claim a distance of 130 feet. Block 30 was so platted that the north 10 feet of lot 6 therein, the tract in dispute. lay within the Yesler claim. Maynard, although he never acquired title to this 10-foot strip, conveyed the same not long after he filed the plat to one James Tilton, and from him the land passed through regular mesne conveyances to the defendant, who acquired it in June 25, 1896; his immediate grantor being one Daniel O'Leary. The plaintiff bas title from Yesler, having purchased the property from the executor of his estate. To maintain her action the plaintiff relied upon the conveyance from the executor of Yesler's estate to herself. The defendant concedes that Maynard had no title to the land when he conveyed to Tilton, and that none passed to him by virtue of the several conveyances from the 87 P.-8

| grantees of Tilton; but he contends that he has title by virtue of the general statute of limitations relating to adverse possession, and the special statute relating to the payment of taxes for seven consecutive years. The case was tried before the court sitting without a jury, and resulted in findings and a judgment in favor of the plaintiff for the recovery of the land. Both parties appeal, the plaintiff from the refusal of the court to award her judgment for rents, and the defendant from the judgment as entered.

With

With reference to the claim of adverse possession, it appears that in 1889 Daniel O'Leary, who then held the paper title, leased the whole of lot G to a Chinaman called "Quong Chong" for a term of five years, granting him permission to erect certain buildings upon the lot. At the time the lease was executed O'Leary claimed the whole of the lot, and pointed out its boundaries to Quong as the property leased. The lessee graded the lot immediately after the execution of the lease, and before the beginning of the year 1890 erected a joss house on the northwest corner of the lot immediately south of the strip, at the same time building a walk on the north side of the house along the strip back for a distance of about 60 feet, which was used as an entrance way to the rear door of the joss house, and to certain other buildings that were afterwards erected on the lot. This walk seems to have been maintained by the defendant's tenants from that time until shortly before the active dispute between the plaintiff and defendant began, perhaps about the year 1901. the exception of the payment of taxes to be mentioned later, these are, in substance, the only overt acts of adverse possession shown. Whether such acts, if they stood alone, would justify the court in saying that the legal title had been diverted from the plaintiff to the defendant. we think might reasonably be questioned: but other facts shown, it seems to us, scarcely leave the case in doubt. The most potent of these is the fact that no permanent structure in the way of a building was put upon the strip. Although the tenants of the defendant's grantor studded the remaining portion of the lot with a variety of buildings, even to the very margin of the disputed ground, yet scrupulous care was observed not to extend them onto it. It hardly seems possible that had the defendant's grantor contended in good faith as early as 1889 that the disputed tract passed by the deed from Maynard, or that he otherwise had claim to it, he would not have covered it with buildings. One of the plaintiff's witnesses. moreover, testified that the Chinese lessee did start to erect the joss house near the north line of the lot as platted, going so far as to level off the ground and commence the foundation, but shortly afterwards, at the solicitation of some one, moved it south until it was off the disputed strip.

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