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might not subsequently approve them upon a presentation of all the facts showing failure to realize a sufficient amount by the sale of the bonds first approved for the same purpose.

2. St. 1910, c. 536, goes no further than to require the Board to make certain additional regulations and restrictions with reference to any issue of bonds which it may authorize under the provisions of section 103, and I am of opinion that it may apply as well to a pending petition as to one brought after its passage. It interferes with no vested rights of the petitioning company, and, therefore, is not subject to any objection upon constitutional grounds.

3. The conclusion reached in replying to the second question requires that the third question of the Board be answered in the negative.

TAXATION - DOMESTIC CORPORATION - MINIMUM LIMIT OF
TAX-LOCAL TAXATION - DEDUCTIONS
DEDUCTIONS MORTGAGE ON

REAL ESTATE.

In determining the minimum limit of tax upon a domestic corporation under the provisions of St. 1909, c. 490, part III., § 43, that "the total amount of tax to be paid by such corporation in any year upon its property locally taxed in this commonwealth and upon the value of its corporate franchise shall amount to not less than one tenth of one per cent of the market value of its capital stock at the time of said assessment as found by the tax commissioner," a mortgage on real estate taxable as real estate to the mortgagor, and held by a domestic corporation, is not included within "its property locally taxed in this commonwealth," and the tax paid by the mortgagor on such real estate may not be used to reduce the amount of the franchise tax to be paid by the corporation holding such mortgage.

Commissioner. 1910 October 27.

You have requested my opinion upon a question which is To the Tax substantially as follows: in determining the minimum limit of tax upon a domestic corporation, is a mortgage on real estate taxable as real estate to the mortgagor, held by such corporation, included within "its property locally taxed in this Commonwealth"?

St. 1909, c. 490, part III., § 43, relative to the taxation of domestic corporations, provides in part that:

the total amount of tax to be paid by such corporation in any year upon its property locally taxed in this commonwealth and upon the value of

its corporate franchise shall amount to not less than one tenth of one per cent of the market value of its capitel stock at the time of said assessment as found by the tax commissioner.

In my opinion, a mortgage on real estate, taxable as real estate to the mortgagor, held by a domestic corporation, is not included within "its property locally taxed in this Commonwealth;" in other words, the tax paid by the mortgagor on such real estate is not to be used to reduce the amount of the franchise tax to be paid by the corporation holding such mortgage.

In determining the minimum franchise tax to be paid by a domestic corporation, both the amount "to be paid by such corporation in any year upon its property locally taxed in this Commonwealth" and the amount to be paid by it "upon the value of its corporate franchise" are to be considered. Taxes, if any, to be paid by anybody else upon the property of the corporation are not to be included. It follows that the tax to be paid upon mortgaged real estate is not to be included when it is not to be paid by the corporation holding the mortgage. The interest of a mortgagee in real estate may be assessed to him as real estate, or the whole estate may be assessed to the mortgagor in possession. St. 1909, c. 490, part I., §§ 15-18, inclusive, § 45. Abbott v. Frost, 185 Mass. 398; Sullivan v. Boston, 198 Mass. 119. Only when the mortgagee's interest is assessed to the mortgagee can it properly be said that the tax is to be paid by it. This is not such a case. The situation is similar to that in the case of leased real estate. Such real estate may be assessed to the lessor or to the lessee. St. 1909, c. 490, part I., §§ 15 and 20. In an opinion of my predecessor (2 Op. Atty.-Gen. 556) you were advised that real estate leased by a domestic corporation is "its real estate . . . subject to local taxation" within the meaning of St. 1903, c. 437, § 72 (now St. 1909, c. 490, part III., § 3), and that the value of such real estate is to be deducted from the value of the corporate franchise "if it appears that such leased real estate is taxed to the corporation." In both cases the actual method of taxation employed governs.

The fact that in a particular case a corporation which is the

mortgagee by reason of an agreement with the mortgagor bears the burden of the tax on its interest, although such tax is not assessed to it, is immaterial. The purpose of the minimum limit upon the amount of the franchise tax was to require each domestic corporation to pay some tax directly. As was observed by the committee which reported the business corporation law (see report, pp. 60-61), a corporation holding only securities would not, in the absence of such a provision, be subject to taxation in the Commonwealth. The reason that such a corporation would not be subject to taxation is that the value of its non-taxable securities would be deducted from the value of its franchise before the tax was computed. The reason for the deduction of the value of such securities is that the value represented by them is otherwise taxed. The corporation holding such securities indirectly bears the burden of such taxation, yet the Legislature intended that such corporation should be directly taxed on its franchise, and to accomplish that purpose provided for the minimum limit. A corporation holding a mortgage on real estate taxable as real estate to the mortgagor is in a situation analogous to that of a corporation holding nontaxable securities. By the same reasoning, it should not escape the payment of a franchise tax even if it indirectly bears the burden of the tax assessed on its interest in the mortgaged real estate.

TAXATION

TOWNS

ASSESSORS

TERM OF OFFICE.

of three years

Since St. 1907, c. 579, § 1, providing in part that "each assessor in every city and town in the commonwealth . . . shall be elected or appointed for the term .," took effect on Jan. 1, 1908, there are no towns which may choose assessors for one year, as provided in St. 1907, c. 560, § 371. You request my opinion as to whether the provision of St. To the Tax 1907, c. 560, § 371, which authorizes towns to vote that selectmen shall act as assessors, is still in force.

That section provides, in part:

A town which chooses its assessors or overseers of the poor for one year may, instead of electing such officers, provide by vote that the selectmen shall act also as assessors or as overseers of the poor, or both.

Commissioner. 1910 November 2.

St. 1907, c. 579, § 1, provides, in part, that:

Each assessor in every city and town of the commonwealth, except in the city of Boston, shall be elected or appointed to hold office for the term of three years and until his successor is duly elected or appointed.

Section 2 provides that the act shall take effect on Jan. 1, 1908. Since Jan. 1, 1908, therefore, there are no towns which choose their assessors for one year. There are, therefore, no towns which may provide by vote that the selectmen shall act as

assessors.

To the Board of Railroad

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SAVINGS BANKS LEGAL INVESTMENTS STREET RAILWAY
COMPANY BONDS - DIVIDEND EQUAL TO FIVE PER
CENT. FOR FIVE YEARS RETURNS

NINE MONTHS ENDING JUNE 30, 1910-BOARD OF RAILROAD COMMISSIONERS CERTIFICATION.

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The Board of Railroad Commissioners, under the provision of St. 1908, c. 590, § 68, sub-division fifth, that deposits and the income derived therefrom may be invested by savings banks "in the bonds of any street railway company which has earned and paid in dividends in cash an amount equal to at least five per cent. upon all its outstanding capital stock in each of the five years last preceding the certification by the board of railroad commissioners hereinafter provided for;" and of St. 1909, c. 502, § 1, that the annual returns required by law to be made to such Board shall be returns for the year ending on the thirtieth day of June; and section 2, that such returns for 1910 "shall cover the doings of street railway companies . . . for the preceding nine months only, and said period of nine months shall be deemed, under the provisions of section sixty-eight of chapter five hundred and ninety of the acts of the year nineteen hundred and eight, sub-division Fifth, as one of the five years therein referred to, but the requirement that dividends equal to at least five per cent. upon all the outstanding capital stock of a street railway company shall have been earned and paid in cash in each of said five years, shall not apply to said period of nine months; and any street railway company which shall have earned and paid in dividends in cash an amount equal to five per cent. upon all its outstanding capital stock in each of the five preceding years with the exception of said nine months period, shall be included in the list to be certified and transmitted by the board," may certify and transmit to the Savings Bank Commissioner the name of a street railway company which has paid dividends of 2 per cent. for the year ending Sept. 30, 1905, 5 per cent. for the years ending Sept. 30, 1906, 1907, 1908 and 1909, respectively, and 2 per cent. on common and 3 per cent. on preferred stock for the nine months ending on June 30, 1910.

Your letter of November 23 requires my opinion upon the Commissioners. construction of chapter 502 of the Statutes of 1909, which provides, in section 1, that the annual returns required by law to

1910 November 28.

be made to the Board of Railroad Commissioners shall be returns for the year ending on the thirtieth day of June, and shall be transmitted to the Board on or before the thirtieth day of the following September.

Section 2 is as follows:

The return required by the preceding section to be filed for the period ending on the thirtieth day of June, in the year nineteen hundred and ten, shall cover the doings of street railway companies and every person, firm, association or corporation doing an express business upon either a railroad or railway in this commonwealth for the preceding nine months only, and said period of nine months shall be deemed under the provisions of section sixty-eight of chapter five hundred and ninety of the acts of the year nineteen hundred and eight, sub-division Fifth, relative to the investment of deposits, and the income derived therefrom, of savings banks in the bonds of street railway companies, as one of the five years therein referred to, but the requirement that dividends equal to at least five per cent upon all the outstanding capital stock of a street railway company shall have been earned and paid in cash in each of said five years, shall not apply to said period of nine months; and any street railway company which shall have earned and paid in dividends in cash an amount equal to five per cent upon all its outstanding capital stock in each of the five preceding years, with the exception of said nine months period, shall be included in the list to be certified and transmitted by the board. The list required by the provisions of said section sixty-eight to be certified and transmitted to the bank commissioner shall, after the passage hereof, be so certified and transmitted on or before the fifteenth day of December in each year.

St. 1908, c. 590, § 68, sub-division fifth, which is referred to in the above section, provides that a savings bank may invest

In the bonds of any street railway company incorporated in this commonwealth, the railway of which is located wholly or in part therein, and which has earned and paid in dividends in cash an amount equal to *at least five per cent upon all its outstanding capital stock in each of the five years last preceding the certification by the board of railroad commissioners hereinafter provided for. No such investment shall be made unless said company appears from returns made by it to the board of railroad commissioners to have properly paid said dividends without impairment of assets or capital stock, and said board shall on or before the fifteenth day of January in each year certify and transmit to the bank commissioner a list of such street railway companies.

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