Shares of stock in a real estate trust, so called, which represent the rights of the beneficiaries in real estate, under a declaration of trust providing that no right, title or interest in such real estate shall vest in the shareholders, are personal property, and, as such, are not to be deducted by the Commissioner of Corporations in ascertaining (under the provisions of R. L., c. 14, § 38) the valuation of the corporate franchise of a corporation owning such shares, for the purpose of taxation.

With the bonds of such trust, however, which are secured by real estate owned by the trustees, it is otherwise, and the value of such bonds may be deducted from the aggregate value of the shares of the corporation in determining the taxable value of the franchise.

Hon. WILLIAM D. T. TREFRY, Tax Commissioner.

JAN. 6, 1903.

DEAR SIR: :- - In your letter of November 3 you ask whether, in ascertaining the value of a corporate franchise for the purposes of taxation, you are required, under R. L., c. 14, § 38, to deduct as "real estate subject to local taxation "stocks and bonds of certain real estate trusts, so called.

The stocks are shares representing the rights of beneficiaries in real estate, under certain declarations of trust which provide that no title, interest or estate in any land is to vest in the shareholders, and that the shares are to be and remain as to title personal property only. The bonds are mortgage bonds, secured by real estate owned by such trustees. The trustees have paid local taxes on all the real estate, assessed by the local authorities as of May 1, 1902.

As to both stocks and bonds, it is obvious that, unless they are deducted from the value of the corporate franchise, double taxation will result. Though not taxable to individuals owning them, if they are allowed to enter into the estimated market value of the capital stock of the corporation which owns them, they will be taxed indirectly, while the real estate which makes them valuable has already paid a tax. If the spirit of forbidding double taxation were perfectly carried out in the law, these interests would be deducted, but there are numerous instances where the spirit has

failed. The Legislature has not provided that a corporation may deduct from the value of its franchise all property elsewhere taxed, or upon which an unincorporated owner would not be required to pay a tax. For example, if a corporation owns stock in another domestic corporation, this may not be deducted from the value of the former corporation, though to an individual owner it would not be taxable. The Legislature has provided merely for deduction of real estate and machinery upon which a local tax has been paid. Therefore, unless these stocks and bonds are real estate, you are not authorized to deduct them.

First, as to the shares of stock. It may be suggested that, since the trust is not a corporation, the shareholders have the whole equitable estate in the land, subject to certain restrictions contained in the trust agreement, in spite of the provision that their interest shall be only personal, this provision being ineffectual until the property is actually converted into personalty. Such a contention was made in Howe v. Morse, 174 Mass. 491, but the court found it unnecessary to pass upon it. If this is sound, then it may be that the corporation owning an equitable interest in real estate, subject to local taxation to the trustees, should deduct its value.

But while there is no authority upon either side of the question, in my opinion the interest of a shareholder is personal property. One hundred years ago the question was much discussed whether stock in corporations, whose property consisted exclusively of real estate, was not an interest in realty. While a few States held it to be realty until the doctrine was corrected by legislation (see Welles v. Cowles, 2 Conn. 567; Copeland v. Copeland, 7 Bush, 349), the English and most of the American decisions settled down upon the other view, only one of them (Johns v. Johns, 1 Ohio State, 351) basing it solely upon the ground which is the one point of difference between that case and the present, that the inter

ested parties were incorporated. See Russell v. Temple, 3 Dane Abr. 108 (Mass. 1798); Bligh v. Brent, 2 Y. & C. 268 (1837); Arnold v. Ruggles, 1 R. I. 165 (1837). See In Re Jones' Estate, 172 N. Y. 575.

These leading decisions mention as one ground that the real estate is owned not by the members, but by the corporation, which is a distinct entity; and base their conclusion also upon the ground, which applies as well to the present situation, that the test must be not the nature of the property out of which the dividends come, but the nature of the rights which ownership of the stock carries. These rights are strictly personal in both cases. The fact that the property is owned by a real instead of an artificial person is not, in

my judgment, an essential distinction. I advise you, therefore, that you have no authority to deduct these shares owned by the corporation from the value of the corporate franchise.

The bonds, on the other hand, present a different question. The interest of a mortgagee of real estate under a duly recorded mortgage is declared by statute to be real estate for the purposes of taxation. If a corporation is mortgagee, it is held that such interest must be deducted from the market value of its shares in taxing the corporation. Firemen's Insurance Co. v. Commonwealth, 137 Mass. 80. From that decision it is a step forward to hold that the interest of a holder of bonds secured by a trust mortgage of real estate is real estate; but this step has been taken by a divided court in construing the statute exempting "any loan on mortgage of real estate taxable as real estate" (R. L., c. 12, § 4, cl. 2) from taxation as personal property. Knight v. Boston, 159 Mass: 551. In view of these decisions, it is my opinion that you should deduct the value of these bonds from the aggregate value of the shares of the corporation.

Very truly yours,

HERBERT PARKER, Attorney-General.

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House of Representatives Order requiring Institution of Specific Proceedings-Attorney-General.

The House of Representatives has no authority to require that the AttorneyGeneral forthwith appear before some justice of the Supreme Judicial Court for the purpose of obtaining from the court an order restraining the stockholders of a gas company from taking action to increase its capital stock, or to require him to institute specific proceedings of any character.

JAN. 8, 1903.

Hon. JAMES J. MYERS, Speaker of the House of Representatives.

SIR: In response to the order issued by the Honorable House of Representatives, purporting to require the Attorney-General forthwith to appear before some justice of the Supreme Judicial Court for an order restraining the Massachusetts Gas Company and its shareholders from increasing its shares of stock, and for such further or other relief in the premises as to said court shall seem meet, which order is in the form following:

Ordered, That the Attorney-General forthwith appear before some justice of the Supreme Judicial Court for an order restraining such association, the Massachusetts Gas Companies, or its shareholders, from taking any such action as is contemplated in the above notice to shareholders, and for such further or other relief in the premises as to said

court shall seem meet. And the clerk of this House is hereby directed to immediately notify the Attorney-General's office of the passage of this order, ―

I submit, for the consideration of that Honorable Body, the following suggestions:

The Honorable House of Representatives is doubtless aware that it has no authority to fix a limit of time within which the AttorneyGeneral shall discharge the duties of his office.

The House of Representatives has no power to compel action by the Attorney-General, as prescribed by the terms of the order. Chapter 7 of the Revised Laws defines the duties of the AttorneyGeneral, providing that he shall, when required by either branch of the General Court, attend during its sessions and give his aid and advice in the arrangement and preparation of legislative documents and business, and shall give his opinion upon questions of law submitted to him by the Governor and Council or by either branch of the General Court; and it is further provided that he shall appear for the Commonwealth in all suits and other civil proceedings in which the Commonwealth is a party or interested, or in which the official acts and doings of its officers are called in question, in all courts of the Commonwealth, and in such suits and proceedings before any other tribunal, when requested by the Governor or by the General Court or by either branch thereof.

No authority is conferred upon the General Court, or either of its branches, to order the Attorney-General to institute specific proceedings of any character. Should the Legislature pass a statute absolutely requiring the Attorney-General to institute a definite action, such statute would be unconstitutional, as in conflict with Article XXX. of the Declaration of Rights of the Massachusetts Constitution, which provides that in the government of this Commonwealth the legislative department shall never exercise the executive and judicial powers, or either of them.

The deference that I owe to the source of the order addressed to me leads me to state more fully the considerations upon which my conclusions are based.

The form and tenor of the communication from the House of Representatives compels me to remind that honorable body that its constitutional powers and functions are legislative, not executive, and that the limitations of these respective jurisdictions must be inviolately preserved and maintained. The law of this Commonwealth has imposed upon the Attorney-General responsible executive duty and authority, which he can delegate to no other officer or department of the government; and, on the other hand, no

other department established by our constitutional law has power to assume the exercise of functions committed by the people to his charge, or power to direct or command him to act upon the dictation of any other influence than that of his own conception of his duty under the law, to which alone he owes official obedience. He can evade no responsibility in the discharge of his duties by yielding to the assumed authority of any other officer or servant of the State. He can find justification for his conduct in office by no plea that he has surrendered his discretion or authority to any other official power whatsoever. That the people may know upon whom to charge a failure in the performance of public duty, each officer must stand responsible for his every act within the field of the jurisdiction committed to his charge and care.

The communication of the Honorable House of Representatives fails to recognize the elemental principles of the constitutional law of the Commonwealth. Its action, as indicated by this communication, is based upon no lawful authority vested in it. I am, therefore, compelled to respectfully advise the Honorable House of Representatives that I cannot act in obedience to the specific command transmitted to me.

It would seem, from the communication addressed to me, that the Honorable House of Representatives is of opinion that facts and conditions exist requiring immediate action in behalf of the Commonwealth. If this be true, I regret that the House of Representatives has not followed the course prescribed by the law in such event, and communicated to me the evidence of such facts and conditions, in order that I might, within the field of my official duty, have given that consideration to the issues which their apparent importance might require, and have advised the Honorable House of Representatives, if it so required, in accordance with my duty in that regard, whether any or what action ought to have been, or ought now to be, taken in the premises, or to have taken such action upon my own initiative as investigation of the facts and evidence submitted to me might have warranted or justified.

Very truly yours,

HERBERT PARKER, Attorney-General.