BEFORE ROY NOBLE LEE, ROBERTSON and SULLIVAN
ROY NOBLE LEE, CHIEF JUSTICE, FOR THE COURT:
Appellee Grenada Bank is a Mississippi banking corporation and, at the time of this suit, was operating branch banks in fifteen Mississippi counties. Two of these branch banks, Calhoun County Bank and Bank of Derma, are located in Calhoun County.
On January 21, 1983, appellee reported to the Calhoun County tax assessor that the net value of the intangible assets of its two Calhoun County branches was $23,991. Quite to the contrary, the Calhoun County tax assessor computed the value of these intangibles to be $522,561 and assessed them for taxation at 100% of this amount. Based upon a levy of 95.5 mills, and adding an assessment $8,635 for furniture and fixtures, appellee was thus charged taxes of $50,729.22, over twice what it contended was the true value of its branch banks' intangibles.
Appellee made timely objection to this valuation and assessment, and the Calhoun County Board of Supervisors overruled the objection. Appellee paid the taxes under protest and perfected an appeal to the Circuit Court of Calhoun County, where a jury trial was had. The jury found the valuation made by the county tax assessor to be fair and reasonable. Upon appellee's motion, the trial court entered judgment for appellee notwithstanding the verdict. In setting aside the jury verdict, the court reasoned that the tax assessor's valuation and assessment were unconstitutional under 112 of the State Constitution, which requires that the imposition of taxes be equal and uniform throughout the state. The court found violation of 112 because the formula for valuation used for assessment by Calhoun County was different from the formula employed by the other fourteen counties in which appellee maintained branches. The court also found violation of 112 in that appellee's branches were assessed at 100% of true value while the personal property of other taxpayers in Calhoun County was assessed at only 30%. (Real property was assessed at 15%.) Based upon the formula used in the other counties, the trial court held that the value of appellee's intangibles in Calhoun County was $23,991, to be assessed at a rate of 22.269% *fn1 on a levy of 95.5 mills, thus yielding a tax liability for appellee of $510.21, nearly 99% less than the tax paid by appellee under protest. Accordingly, the trial court ordered a refund of the excess.
From this judgment the Calhoun County Board of Supervisors now perfects its appeal, and appellee crossappeals.
HOW IS THE VALUE OF BRANCH BANKS' INTANGIBLE PROPERTY TO BE DETERMINED FOR TAX PURPOSES?
TO WHAT EXTENT MAY THE EARNED SURPLUS OF THE PARENT BANK AND ALL ITS BRANCHES BE EXCLUDED FROM CALCULATION OF THE VALUATION CONSTANT USED IN DETERMINING THE BRANCHES' INTANGIBLE VALUE?
TO WHAT EXTENT MAY THE BAD DEBT RESERVES AND ALLOWANCES OF THE PARENT BANK AND ALL ITS BRANCHES BE EXCLUDED FROM CALCULATION OF THE VALUATION CONSTANT USED IN DETERMINING THE BRANCHES' INTANGIBLE VALUE?
WHAT IS THE PROPER ASSESSMENT RATIO FOR USE IN TAXATION OF BRANCH BANKS?
HOW IS THE VALUE OF BRANCH BANKS' INTANGIBLE PROPERTY TO BE DETERMINED FOR TAX PURPOSES?
There is no specific statutory guidance for evaluating the intangible assets of branch banks. Miss. Code Ann. 27-35-37 (1972) directs the manner of assessment of such intangibles:
At the time fixed by law for the assessment of banks, the person in charge of a branch bank shall furnish the assessor, under oath, a statement showing the amount of the capital of the parent bank employed by it, less that invested in real estate of the said branch bank, and the assessor shall assess it accordingly. The said real estate shall be assessed where situated as other real estate. The
branch bank shall pay taxes, state, county and municipal, upon such assessment in the county where located, at the time and in the manner that banks are required by law to pay taxes. This shall not apply to agents who do not sell exchange, but simply make collections. The amount of capital so assessed against the branch bank shall be credited on the assessment of capital of the parent bank.
Nothing in the foregoing section pertains to valuation. Miss. Code Ann. 27-35-29 (1972) deals generally with valuation of property subject to ad valorem taxes. That section provides in pertinent part:
It shall be the duty of each person fixing the value of his property to estimate the same at its cash value at the time of valuation, and not what it might sell for at a forced sale, but what he would be willing and would expect to accept for it if he were disposed to sell it.
This value is generally referred to as" true value. "Miss. Const. 112, as amended; Washington County Bd. of Supervisors v. Greenville Mill, 437 So.2d 401 (1983); State Tax Commission v. Fondren, 387 So.2d 712 (Miss. 1980).
The intangible value of a unitary banking system, i.e., of a parent bank and all its branches viewed as one, can be determined simply enough. The difficulty lies in apportioning this value among the parent and its branches viewed separately. Where, as in the case sub judice, the parent and its branches are located in several counties, the intangible value of the entire system has no single situs, for intangible value by definition is an incorporeal asset. There must therefore be some device by which this intangible value is distributed among all the taxing districts occupied by the banking system. In this case, appellant relied on one valuation formula for meeting this need, and appellee relied on another.
A. Tax Commission Formula
In May, 1981, the State Tax Commission suggested a formula for evaluation of branch bank intangibles. This formula was printed on the Commission's Form 71-070," Assessment of Intangibles of Branch Banks, "and was clearly labeled as a suggestion only:
NOTE: The Tax Commission suggests that the capital assigned to branch banks be determined by applying the ratio that Book Value of real and personal property assessed to the branch bank bears to the Book Value of real and personal property owned by the bank and its branch banks, to the Net Value for Assessment Purposes computed on Form 71-068.
This formula may be expressed algebraically as follows:
LBP is local branch property, i.e., the value of the property of the branch bank(s) located in the assessing county. AP is all property, i.e., the value of all the property of the parent bank and all its branches regardless of location. PC is parent bank's capital, i.e., the assessed capital of the parent bank and all its branches as determined from Tax Commission Form 71-068. *fn2 VI is value of intangibles.
Operation of this formula is simple. The property fraction yields a percentage. The PC figure is then multiplied by this percentage to yield figure VI which represents that portion of the intangible value of the banking system allocated to the assessing county. In the case at bar, the value of the property of appellee's Calhoun County branches was $212,857. The value of the property of the parent bank (appellee) and all its branches was $9,736,596. Under the formula, this yields a percentage of 2.19%. Figure PC, the parent's assessed capital, was $10,814,957. Multiplied by 2.19%, this yields a VI of $236,848. From this figure VI there is then subtracted for assessment purposes the value of the real estate held by the local branches and the value of the branches' tangible personalty, as these are taxed separately. See Miss. Code Ann. 27-35-11, 27-35-12. Combined, these subtracted amounts equal figure LBP. Thus, in this case, VI minus LBP equals $23,991, the value of appellee's Calhoun County Branch intangibles for purposes of assessment.
B. Calhoun County Formula
In the case at bar, the Calhoun County Tax Assessor employed an evaluation formula different from that suggested by the State Tax Commission. The Tax Assessor's formula was based upon deposits received rather than property held:
LBD is local branch deposits, i.e., the value of all deposits made to the branch banks in the assessing county. AD is all deposits, i.e., the value of all deposits made to the parent bank and all its branches regardless of location. As with the Commission's suggested formula, PC is parent bank's assessed capital, and VI is value of intangibles.
Deposits made to appellee's Calhoun County branches during the period in question totalled $30,909,000. Combined deposits made to the parent bank (appellee) and all its branches totalled $452,824,747. Under the Tax Assessor's formula, this yields a percentage of 6.83%. In the case at bar, the Tax Assessor used a percentage of 6.8%. Figure PC multiplied by 6.8% yields a VI of $735,417. As with the Commission formula, there is subtracted from this figure VI an amount equal to the Commission formula LBP. Thus, in this case, under the Calhoun County Tax Assessor's formula, VI minus LBP equals $522,560, the value of appellee's Calhoun County bank intangibles for purposes of assessment. *fn3
It should be apparent from comparison of these two formulas that the parent bank and all its branches, when viewed as a whole, receive the same valuation under either formula. If the same formula is used for the parent and all its branches, then the adding together of every separate figure VI reached will equal figure PC. Since figure PC is the same in both formulas, the overall valuation reached under either formula is the same.
What differs between the two formulas is the result in apportioning the overall valuation among the parent and all its branches. Under the Calhoun County formula, the valuation of appellee's Calhoun County branches is nearly 22 times greater than under the Tax Commission formula. However, the result is that if the Calhoun County formula is applied to appellee and its remaining branches elsewhere, valuation of some other branch or branches will necessarily be correspondingly lower than would have been the case under the Tax Commission formula. Again, this is because overall evaluation (figure PC) is the same under either formula. But notwithstanding this fact, the overall tax liability of appellee and all its branches, when viewed as a whole, ...