NATIONAL BANK t:. CITY OF RICHMOND.
fice of the property, and enable enough to be realized from it to payoff the debts of the corporation, and that they had no design to disregard the interests of the complainant. It may be that at the final hearing the facts will present a. differen,t aspect, but on the case as it now appears a preliminary injunction should not be granted. The Illotion is denied.
NATIONAL BANK OF VIRGINIA '11. CITY OF RICHMOND
MERCHANTS' NAT. BANK '11. SAME.
(Oircuit Oourt, E. D. Virginia. July 1,1890.)
Under Rev. St. U. S. § 5219, which declares that nothing In the national bank· ing act shall prevent all the shares of stock of a national bank from being induded, in the assessment of the personal property of the owners of ljluch shares, an ment of the entire stock of a national bank in solido against the bank itself is invalid. ' Act Va. Jan. 27, 1l:l90, assessment, is void. attempts to legalize taxes levied upoulluch invaUd: ' , , '
.. SAME-CONSTITUTIONAL L A W . '
In Equity. James Alfred J£YTIe8, for National Bank of Virginia. Pegram &; Stringfellow, for Merchants' National Bank. C. V. Meredith, City Atty .· for defendants. Before BOND and HUGHES, JJ. BOND, J. On July 17, 1889, the defendant Cunningham, who was the collector of taxes for the city of Richmond, presented to the Merchants' National Bank of Virginia, located at Richmond, a bill of taxes assessed upon the of stock of that association, of which thE" lowing is a copy: '
1889. (Ward 3.) The Merchants' National Bank, to City of Richmond, Dr. Tax on shares of stock. - $255,000 Less value of real estate, 53,942 $201,058; at 1.40, $2,814 81
-With a. request that the same be promptly paid, to avoid a penalty, of 5 per imposed by the ordinances of that city. A similar bill for taxes, to the amount of $2,324, was presented to the National Bank of Virginia, as a tax on its shares of stock, which were valued at $216,000, with a deduction of $50,000 for real estate held by the bank. After the presentatiQn of these bills by the collector, the corporationswhoae, sepm:ate bills shares had been assessed fOf the payment of the otCQUJp1ajnt this courtJo elljointhecollectodromproeeeqiqg toeql.;
lect thl:' sanie from the bank. A temporary injunction was issued, and now, the matter having: been finally heard upon their answers and exhibits and arguments of counsel, it is to be determined whether the temporary, injunction shall be dissolved or mllde permanent. The power to tax national bank shares is given by section 5219 of Revised Statutes, which declares that nothing in the law of the United States respecting banks shall prevent all the shares in any such association from being included in the valuation of the personal property of the owner or holder of such shares, in assessing taxes imposed byauthority of the state within which the association is located. The tax in these cases is assessed upon all the shares issued by the association in solido against the association, and the cashier is required by the collector to pay it or be subject to a penalty. In the <'h8e oj First Nat, Bank oj Richmond, 39 Fed. Rep. 309, (tried in this court a short time ago,) the record in which case ba.$;gone to the supreme court, it was held by the district judge that such an assessment of a tax on the whole of the shares of a .b.ank, at their market value, was nothing else than an assessment of the Capital stock of the bank, and was not authorized by the act of congrellS, and that to tax the shares of the bank at all they must be listed in the' name of the shareholder. Any other view of the law than this would work a grievous wrong to the shareholders ofnational banks. By the'law of Virginia, d6very person assessed for a tax upon his personal property has a right to deduct from the valuation the amount of his indebtedness, so that he may be charged only with taxes on what he owns, when a balance is struek between him and his.creditors. To as:>ess the bank on all its shares i'Q, is to prevent entirely a shareholder therein from this benevolent and just 'provision of law. Since the decision in the Case ofthe First Nat. Bank oj Richmond, prom pted by a desire to remedy this difficulty, the general assembly of Virginia, by act approved Jannary27, 1890, provided: ..An act to legalize and confirID certain. taxes imposed by the city of Richmond, the year 181:19, nponall the shares of stockissuell by stale and nationall:>lj.nks.]o.cated city. (1) Be it ena<:tedby the gf'neral ofVirgihia. that the aSIit-SBIDenis for taxes Irnl,osed by the city of Hichmond for the year t'ighteen hundred and eighty-ninl', upon all sharI'S of stock issl\f'd byetate /;Ind national banks loeated in said citj'. and r('qllired by said city to be paid by the cashier of:each bank, respectively, are hereby legalized and continiit'll, SUbject to the right oj' the shareholders. or their personal reprl'senta-' tives, of stock i!:!Slled byibe national or state l.anks which were located in said city during the year eighteen hundred and eighty-nine, to claim a delluction from "l'cancellatlon of &ucbliSSessments as provided for ill the neXot section, (2) Within five day!:! from the. passage of .this act the ('olleetor of city taxes of said city shall notify the cashier of each of sidil banks that at the office of such collector. the said colleetor will be in attendance at his ollice for three weeks sllbsequentto. the st'rviceof said notice, anti will hear any applications that may to him for the, ,purpose oftledllcting fj'om the assessment aforesaid Ilny.amount which any .tlbareholder of any olle or, mureof said banks, or any personal repl'esentativeof such sh8.l'ellolder. by reason of the indehted/lt's8 of said shareholl,ier, would' havtlbeen entitled to deduct from the value of his shareaof stock, liad such 'amount Leen investetl in otht'r mone.\'ed capital. ,(3) the itimeabuve' nallled the caalJiers of anoY of saW banks,
NATroNAL BANK fl. Crry OF RiCHMOND.
,or any holder of any shares of stock issued by any of such banks aSFlessed as ,above stated,9r anyone representing such shareholder, may appear before such collectoJ;', ,and make application to have a deduction made as l,l.bove stated. The collector 'S'hall have power to administer an oath to the applicant, and. after an examination of him upon the material facts of such application, shall grant such deduction: provided, the shareholder has made no deduction on account of his indebtedness from his other personal property. Or, if the said collector shall be satisfied from the evidence before him or otherwise that any such shareholder paid a municipal or county tax for the year eighteen hundred and eighty-nine upon his shares of stock in any other county, city, or town of this state. he shall deduct from said assessment an amount equal to the tax: cbargedinl!lllHlassessment upon the shares held byauch 'person. (4) After the expiration of the time,allowed for hearing the application ,above mentioned, the said collector shall amend the tax·bill now held against each cashier as above mentioned, bydeducting therefrom the aggregate of such deductions as may be allowed to the stockhOlders of the bank of which he is cashier. After each of said tax-bills has been so amended SO far as by reaBQn of,:f,'ny such deductions,. the collector shall present thesarue for pay·meotto the cashier against whom it is asseslled,and, if the same be not :paid .witl1inten d"ys from said presentation, the same Ahall then become ,a delinquent .taxdu!Jsaid city, and liable to the imcb penalties, al)d to 'be enfQ,rced .as other delinquent taxes due said city. (5) 'l'his Bet shall be in .force from its paasaKe." ' . :
It seems from this statute that the state, still adheringto'thc':right to assess the tax on all the shares of a banking association to the association, has directed the collector to notify the cashier of each,:blinkithat he will be ready ,at a certain time an'd place to triake any deduction from the assessment which any shareholder may show he to, and that he will amend any bill against any cashier as he may be advised .after such showing. But this does not avoid the difficulty, for,even if it .were the duty of the cashier, which it is not,to notify thestock.holders that the been.assessed for a tax upon its whole shares at a cer.tain valuation, it would be impossible for him,without great difficulty, to apportion the amount among the shareholders. The taxes of the city QfRichmondare higher than they are in the lesser towns of the state, and a, shareholder in Danville is not liable for as much tax as a share'holder in Richmond, nor is his tax payable to the same municipality. WhilE;lthe cashier can be required to collect and pay the tax, he. cannot be, required to ascertain its amount. This is the duty of those appointed .to asses!>, and levy, the tax in accordance with the law of Virginia. It was in view of this that congress provided (Rev. St. § 5210) that every national bank should keep at all times a full and correct list of the names nuwber ,and residence$ of all the shareholdersof the association, and of shares held by each, to be open to the inspection of all the shareholders and the officers authorized to assess taxes under state authority. The .last clause would be useless if the state officers were permitted to discover the pumber Qf shares the bank had issued, and then assess, the tax on ·them in solido itgainst the bank at market value. The method of assessment of, tbjs tax was illegal in the, first instance and void, ailll no 'act of U.e general ,l\ssembly of Virginia can' validate it. The case of StLp'ervisorll y. P. S. 305, which has been urged in argument in support
of the V'alidating act above quoted. is not in point. There it appears the was against the stockholders. We think the injunction heregranted should be made perpetual, and it is so ordered.
CoUHERClAL NAT. BANK OF CINCINNATI tI. HAMILTON NAT. BANK OF FT. WAYNE. (Ol,rcuU Oourt, D. Indiana; July 15,1890.) . ' "An'indorsee for collection for account ofa prior indorsee for collectloD is liable to the owner of the draft for the amount collected, and not remitted to the owner or " the, indorsee, though credit fOl,' the amount was, given the latter. and he " cb.arge<lthe Collector, and credited the owner. and was oharged for the same byth,e , , , owner, Bnd though the collector, by virtue of an agreement with ite indorser,' "whereny the amollDt,due irom' one to the other for collections was to be placed to the latter's oredit with a certain bank, wrote to that bank to place the amount to the, credit of the prior indorsee. which order it could have coulltermanded after no "tiW,()f tbe latter's , , '
.At Law. ' Lawrence Maxwell and Morris &; Barrett, for plaintiff. ' /Jell « Morris. for defendant. ,
GRESHAM, J. In April. 1884, the plaintiff sent to Fletcher & Sharp, banker$ at Indianapolis, a draft indorsed: "Pay to the order of Fenton. ,for, collection, on account of Commercial Bank." Fenton was Fletcher &Sha;rp'scashier, and the draft was sent to them in pursuance of an arrangement 'entered into in 1883. whereby Fletcher & Sharp were to make collections for the plaintiff, and remit balances on the 1st and 15th of each month. Fletcher & Sharpindorsed the draft: "Pay to the order of John Mohr, Jr., cashier, or order, for collection, for account of Fletcher & .sharp."......,and sentitto the defendant, whose cushier JohnMohr was, at Ft. Wayne. The defendant collected the draft on July 10, 1884. and the same day credited Fletcher & Sharp with the proceeds, 83,497.49, and advised them ofthe fact. On receipt of this advice. July 11th. Fletcher & Sharp charged the defendant, and credited the plaintiff, with the amount, and notified the latter. This notice was received by the plaintiff July 12th, when it charged Fletcher & Sharp. On July 15th the ,defendant posted a letter'at Ft. Wayne,addressed to Winslow. Lanier &00., bankers at New York. directing them to credit Fletcher & Sharp with' the amount collected; At thistime, and for several years previous, the defendant and Fletcher & Sharp had made collections for each other under. an arrangement whereby any. amount due from one to the other was placed to the latter's credit with Winslow, Lanier & Co·· with which banking firm both kept accountsjbut the plaintiff had no knowledge of