372
FEDERAL REPORTER.
or strike out of existence those made before its passage. Admitting that the legislature caunot discriminate between mortgages on the ground of the locality of the property affected by them, it follows that so long as there are any two-county mortgages in existence in the state, an act taxing only one-county mortgages is open to the objection of want of uniformity. In reaching this conclusion concerning the validity of this act, I have not been unmindful of the responsibilityof declaring an act of the legislature void. But, as was said by this court under similar circumstances, (Oreg.on et Wash. T. et I. 00. v. Rathbun, 5 Sawy. 38,) "In a plain case like this, it is as much the duty of the court to declare the act of the legislature invalid as to reform or set aside a contract for mistake or fraud. In so doing, it but upholds and obeys the supreme law,-the constitution,-to which both courts and legislatures are bound to conform their conduct." Let the injunction issue as prayed for; the plaintiff first giving a bond with sufficient surety, to be approved by the master of this court, in a sum equal to the tax in question and 20 per centum thereon, conditioned that the plaintiff will pay all damages which the defendants or either of them may sustain by reason of such injunction, if the same shall be held wrongful, to be ascertained by a. reference or otherwise. as this court may direct. Due of law, Oounty of Santa Olara v. Southern Pac. R. 00. 18 FED. REP. 385, and note, 449; Rail1'oad Tax Oases, 13 FED. REP. 722, and note, 783; obligation of contract, Sawyer v. Parish of Ooncordta, 12 FED. u,EP. 754, and note, 761; state power of taxation and equality and uniformity, Railroad Tax Oases, 13 FED. REP. 722, and note, 785;. In re Watson, 15 FED. REP. 511, and note, 514; State of Indiana v. Pullman Palace Oar 00. 16 FED. REP. 193, and note, 201; Oounty of Santa Olara v. Southern Pac. R. 00. 18 FED. llEP. 385, and note, 445; restraining collection of tax, Second Nat. Bank v. Oaldwell, 13 FED. REP. 429, and note, 434; taxation of national bank shares, Second, Nat. Bank v.Oaldwell, 13 FED. REP. 429, and note. 433; Ewchang6 Nat. Bank v. Miller, i,rifra.and note.-rED.
EXOHANGE NATIONAL BANK V. MILLER,
County Treasurer. etc.
(Cirouit Oourt, 8. D. Ohio, W. D. February 7,1884.) 1. 'l'AXATION-NATIONAL BANK SHARES-INEQUALITIES IN VALUATION.
Inequalities in the valuation of property for taxation, under the constitution and laws of a state requiring that all property shall be taxed upon its value by a uniform rule, afford no ground for relief, unless it be made to appear that such inequalities result not merely from error in judgment on the part of the aSdessing officer, but it must appear also that there was an intentional discrim. ination. The same rule applies to the valuation of shares in national banks
1 Reported by J. C. Harper, Esq., of the Cincinnati bar.
EXCHANGE NAT. BANK 17. HILLER.
878
for taxation, where it appears that they were artuallyassessed at a greater rate than other moneyed rapital in thl.' hands of individual tax·payers of the state. Intentional discrimination may be established by proof of inequalities so gross as to lead the court to the conclusion that they were designed. But the facts do not warrant such conclusion in this case. 2. UoRPonATIONs-l:lHARES ARE PROPERTY DISTINCT FROM: THE PROPERTY OF TIDIl (JORPORATION.
Shares in the capital stock of corporations in Ohio are not necessarily to be treated or regarded as portions of the capital of the corporation. They are property of the shareholders, distinct and separate from the property of the corporation itself.
8.
TAXATION OF NATIONAL BANK SHARlts-TRUE MONEY VALUE.
Under the constitution and laws of this state, and also under the law of con· gress authorizing taxation on share!! in national bunks, they may be taxed at their true money vahle.
4. SAME-UNITED l:lTATES BO)lDS AND OTHER NON-TAXABLE SECURITIES NOT DEDUCTED,
A statutory rule fixing such value, which does not permit a deduction from for the amount of United States bonds or other non-taxable securities held by the bank, is not in conflict with the constitution of Ohio, nor with the law of congress taxation on such shares. 5. SAME-OHIO-SUCH NON-TAXABLE SECURlTIES DEDUCTED FROM: RETURNS OF l1U}IVIDUAL BANKERS, BUT NOT FROM: THOSE OF NATIONAL BANKS.. .
The elimination from the returns made b.y uniucorporated banks and individual bankers to the assessing officers, withm the state of Ohio, of all United Statl's bonds and other non-taxable securities held or owned by sucqbank or in favor of such bank or banker banker, is not a deduction nor a and against the holder and owner of shares in national banks, although such shares are valued for taxation without such deduction for the non-taxable se· curities held lind owned by the bank.
6. SAME-"OTHER MONEYED CAPITAL" MEANS TAXABLE MONEYED CAPITAL.
"Other moneyed capital," in section 5219, Rev. St., refers to other'talllable moneyed capital, anrl the valuation of' shares in national banks for taxation is not, within the meaning of that section, at a greater rate than the assessment of other moneyed capital, unless such othcr moneyed capital be subject or liable to taxation.
In Chancery. Perry <f Jenney, Stallo, Kittredge If Wilb.1I, and Harrison If Olds, for complainant., Foraker rf Black and O. J. Oosgrove, Co. 801., for defendant. Before BAXTER and SAGE, JJ. SAGE, J. Tl).e tax from which the complainant prays to be.relieved was assessed on the duplicate of 1882, under the following sections of the Revised Statutes of Ohio: "Sec. 2765. The cashier of each incorporated bank shall make out and return to the auditor of the county in 'Yhich it is located, between the first and second Monday of May, annually, a report in duplicate, under oath,exbibiting, in detail, and under appropriate heads, the resources and, liabilities of such bank at the close of business on the Wednesday next preceding s,aid second Monday, together with a full statement of the names and residences of the stockholders therein, with the number of shares held by each, and the par value of each share. "Sec, 2766. Upon receiving such report, the auditor shall fix the total value of the shares of such bank according t.() their true value in money, and deduct frOm the aggregate sum so found the valu!! of the real included in the statement of resources as the same stands on t':te duplicate; and when Ine bank is located in any city of the first or second class, he shall thereupon
314
make out and transmit to the city. board of equalization, otherwise to tile conntyboard of equalization, a copy of the report so made by the cashier, togethel' with the Taluation of such shares as so fixed by the auditor."
The complainant contests the validity of the tax on the general ground that its shares are assessed at a higher rate than other moneyed capital in the hands of individual citizens, specifying (1) that the shares are valued too high, compared with other property on the tax duplicate; and (2) that the assets of the complainant consist, in part, of United States bonds, not subject to taxation, but included in the valuation made by the auditor and placed on the duplicate. In support of the first objection the complainant has introduced testimony relating to a meeting Of decennial assessors from all parts of the state, held at Columbus in 1880, preparatory to the appraising of real estate, at which meeting, according to the testimony of two witnesses, the conclusion or general understanding was that real estate should be assessed at two-thirds to three-fourths of its value, and that by that rate the assessment would represent the true cash value in money, taking into consideration "that real estate is almost. 81ways sold on long terms, and the losses occurring thereby." A third witness testifies that he was present, but that to the best of his recollection no rate waH fully agreed upon. One witness states that the meeting was quite large, but how many assessors attended, or how many localities were represented, does not appear, nor does it appear that assessors were guided in their valuations by the action of the meeting, in opposition to their own judgment of the money value of the property by them appraised. There is testimony also that the object of the meeting was to make the assessments of real estate uniform. And whether two-thirds to three-fourths of what is spoken of by witnesses as the value of real estate sold upon paypayments-part in cash ·and part on time-would be what is spoken of as its true cash value in money, does not appear. There is testimony tending to show great inequalities in the valuation for taxation of real and personal property, including shares in national banks, but in no instance do.es a witness testify that any assessor has been governed in making an assessment by any other rule than his judgment of the true money value of. the property assessed. It is contended for the complainant that this testimony brings the case within the rule of PeltU'n v.' Nat. Bank, 101 U. S. 143, and Oummings v. Nat. Bank, 101 U. S. 153. That is not our view. In Pelton V. Nat. Bank it was held that the systematic and intentional valuation of all other moneyed capital by the taxing officers far below its full value, while shares of national banks were assessed at their full value, was a violation of the. act of congress which prescribes the rule by which they were to be taxed by the state. In that case the court found that the valuation' of national bank shares was intentionally higher than the valuation of other personal property, and . .
EXCHANGE NAT. 'BANK V.MILLER.
that 'this was neither an accident, ora tniatake, but a principle deliberately adopted in the valuation of all shares in nationalbanks, and applied without exception; and therefore the'decree below in favor of the complainant was fiffirmed. 'In Cummings v. Nat. Bank, the supreme court found that the assessors of real propetty, the assessors of personal property, and the auditor of Lucas county, Ohio, concurred in establishing a rule of valuation by which real and personal property, except money. was assessed at one-third, and money or invested capital at ·six-tenths, of its actual value, and that the assessments on shares ofincorporatedbanks, as returned by the state board of equalization for taxation to the auditor of Lucas county, were fully equal to their selling price and to their true value in money, and the decree enjoining the collection of the excessive tax was affirmed. No such state of facts is shown in the case now before this court. It is true, as shown by the testimony, that, although the shares of the complainant were valued for taxation at but 86.7+ per cent. of their true value in money, they were valued higher than other persoJial property, but the error or inequality is not shown to arise otherwise than from a mistake in judgment on the part of the assessing officials. It would, perhaps, be more exact to say that the judgment of the assessors, in their official valuation; differs from the judgment of witnesses in their unofficial valuation, as expressed in their testimony. 'fhe differences are no greater than frequently arise between witnesses in cases on trial on questions ofvalue. And there is no certain standard by which the court can determine which is correct. Valuations, excepting of money and of standard marketable articles, are, at best, uncertain. The influences which affeot' salable values are various and often complicated. Much depends upon who is the owner or vendor, as well as upon who is the purchaser. The shrinkage in the value or'estates result in many instances largely from the consideration that the salable value imparted by the fact of the ownership of the deceased is gone. A thol1sand influences, tangible and intangible, so affect the salable value of property, real and personal, in the city and in'the country, as to make its valuation a work of exceeding difficulty, and it is not to be wondered at, rior is it a circumstance of itself warranting an appeal to a court of ohancery, that there are great inequalities in valuations for taxation. To correct these the state has provided for appeals to appropriate tribunals, whose duty it is to equalize valuations and the burden of taxation. When these are exhausted all that can be done, practioally, is done, excepting in calles of intentional discrimination. We are of opinion that the rule laid down in Nat. Bankv. Kimball, !()3 U. S. 732, applies here. There it was held that no case for relief is made by averring that the assessments are unequal and partial, and that some other propertyil3rated for taxable purposes 1tt less than one-half of its cash value, unless it is further' averred
876
that the officers appointed to make assessments combine together and establish a rule or principle of valuation, the necessary result of which is to tax one species of property higher than others, and higher than the average rate. It has been held, and, we think, correctly, that inequalities in valuation may be so great as to authorize the court to conclude that they are the result of intention, but we do not think that the testimony warrants such conclusion in this case. To the same effect as Nat. Bank v. Kimball is Wa.goner v. Loomis, 37 Ohio St. 571, where it was decided that inequalities in valuations, made under a valid law, of property for taxation, do not constitute grounds for enjoining the tax, in the absence of fraudulent discriminations by the agents and officers making such valuations, and that a petition for such injunction, which shows that the plaintiff's property was valued at only 80 per cent. of its true value in money, while other property in the county was valued at only 40 per cent. of its value, and avers that such valuations were unequal, unjust, and illegal, is insufficient. 2. Is the assessment invalid for the reason that the assets of the complainant consisted in part of United States bonds, not subject to taxation, but included in the valuation made by the auditor, and placed on the duplicate? The legislature, in providing for the taxation of shares in national banks, is subject to two classes of restrictions: First, those imposed by congress, and contained in section 5219, Bev. St..; and, second, those imposed by the constitution of the state of Ohio. If the act under which the assessment was made exceeds any of these restrictions it is invalid, at least to the extent of the excess. The valuation of shares in national banks, under sections 2765 and 2766, Rev. St. Ohio, quoted above, is fixed by deducting from the resources of the bank, its liabilities, and also the value of the real estate, included in statement of resources, as the same stands on the duplicate. These are the only deductions. It is urged on behalf of the complainant, that, by the constitution and statutes of Ohio, taxation is limited to tangible property, subject to ownership, and capable of definite money valuations, and that COtporate franchises are not recognized as subjects of taxation. To these propositions, as stated, we agree, and, in our opinion, they are recognized by the legislature of Ohio in providing, by the law already referred to, for the taxation of shares in national banks. Nothing is taken into account, in the valuation of the shares for taxation, but the tangible property of the bank. From the sum of its resources is deducted the sum of its liabilities, and the assessed value of its real estate. The remainder is divided by the total number of shares, and the quotient is the amount which the law fixes as the taxable value of each share. · It is also urged that the taxable property of corporations in Ohio is taxed on valuation, like the property of individuals, and not otherwise, and that shares in any corporation are considered and treated as
EXCHANGE NAT. BANK
V. MILLER.
377
"portions" of the taxable property of the corporation, and not otherwise, and are not required to be listed by the owner when the property of the corporation is listed. The oonstitution of Ohio deolares that the property of corporations shall be subject to taxation the same as the property .of individuals, (art. 13, § 4,) and the law (Rev. St. Ohio, § 2746) exempts from taxation the shares of the oapital stock of any oompany, the capital stook of whioh is taxed in the name of such company. If the taxation of the property of the corporation be regarded as indireot taxation of the shares, it is, perhaps, true that the shares are considered and treated as "portions" of the taxable property of the corporation, but the direot and proper view is that the property of the corporation, in the case stated, is taxed, and the shares are exempt. In cases where the property of the corporation is not taxed we do not agree that the shares aTe considered and treated as "portions" of the taxable property ofthe oorporation. By seotion 2736 of the Revised Statutes of Ohio each person listing property is required to include in his statement all investments in bonds, stooks, joint-stock companies, etc., in his possession. Section 2737 provides that such statement shall truly and di8tinctly set forth the amount of all moneys invested in bonds, stooks, joint-stock companies, etc., and section 2739 provides that investments in bonds, stocks, and joint-stock oompanies shall be valued at the true value thereof in money. These seotions prescribe the standard for the valuation of shares for taxation. It is their true value in money, and not the proportion which they bear to the taxable property of the corporation. If the property of the corporation is taxed, the shares are exempt. But congress does not authorize the property of national banks, excepting their real estate, to be taxed, and it cannot be taxed without authority from oongress. It does permit the taxation of shares as the property of their owners or holders. And one of the points decided by the supreme court of Ohio, in Frazer v. Siebern, 16 Ohio St. 614, is that shares in national banks liable to taxation in the state of Ohio "are to be understood as the individual property or choses of the stockholders, as contradistinguished from aliquot parts of the capital and property of the bank, and as such may be taxed at theirfull value, without deduction for the franchise, or for real estate otherwise taxed, or for untaxable bonds owned by the bank." We do not see how language oould be more explicit. In Bradley v. Bauder, 36 Ohio St. 28,the question was whether a person residing in Ohio and owning shares of stock in a foreign corporation was required to list the same for taxation, notwithstanding the capital of the corporation was taxed in the state where the corporation was located. The argument was that capital of the corporation' was invested in property taxed in the name of the corporation; that the shares only represented proportions of that property; and, therefore, that taxing the shares was, by another mode, taxing the property of the corporation. But Judge BOYNTON, pronouncing the opinion,
318
said; "This. argument, however plausible,. has never met with favor from the (wurts," and the legality of the tax upon the shares, as property, distinct and. separate from the property of the corporation, and therefore not "portions" of the same-was affirmed. In J¥agoner v. Loom'is, supra,Judge McILVAINE intimates, on page 5,80, that the officers of the law violated their sworn duty in placing ,the national bank shares of the plaintiff in error on the duplicate at .their par value, "instead of their true value in money, (as the constitution requires,} which was 125 per cent. of their par value." In each of these c'ases th.ere is a clBa! recognition that the shares are entirely dililtinct, as taxable ,property, from the property of the corporation, and in Frazer v. Siebern, and in Wagoner v. Loomis, that intangible constituents of value-as the franchise-may be included in fixing the tiru.s mOney value of the shares for taxation. But by the law under which, the shares of the. complainant were valued for taxation everything intangible is excluded. The aggregate tax value of aU. the shares is equal to the net value of the capital of the bank; less the, assedsed value of its real estate. The non-taxable bonds owned by the bank are not excluded. How that affects the validity. of the .assessment is a question which we shall now consider. ta.xation upon the shares in national banks by Congress the states within which theYa.re located, under two restrictions: First, "that the taxation shall not be at a greater rate than is assessedupon other m.oneyed oapital in the hands of individuals within such state;" and, second, "that the shares of any national banking association, owned by non-residents of any state. shall be taxed in the city or town where'the bank is located, and not elsewhere. The real estate of the bank is also taxable as other real estate. Rev. St. § 5219. .By section 2759, Rev. St. Ohio, the county auditor is required to allow to, every individual banker, and to every unincorporated bank, in addition to the credits allowed in the valuation for taxation of national bank shares, "the average amount of United States government, and other securities that are exempt from taxa. tion," held by such banker or unincorporated bank. Wherefore, it is argued that the taxation upon the national bank shares is in violation of the first restriction imposed by congress, in that it is "at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens." No complete definition of other "moneyed capital" has bectn given. It .must, however, be held to mean other taxable moneyedeapital. Otherwise, the law of congress, permitting taxation of the shares, would defeat itself, for they could not be'taxed at a grea.ter rate than individual investments in United States bondEl, which are exempt. . Unil;worporated banks and individual bankers can be taxed only upon their Property. The statement they are reo to make and return to the auditor shall, the law says, set forth not only their taxahle property, but also United States bonds a.nd other non-taxable securities held by them. The auditor is required
EXCHANGE 'NAT. BANK V. MILLER.
379
to delluct from the statement sO made and: returnoo that' which t1;le state has no power to tax. The statute creates no exemption. It lays hold upon every item of property which it can reach, and taxes every item which it can tax, allowing only the credits allowed to other' individual tax-payers. The auditor, accordingly, in fixing the amount for taxation, deducts from the statement, which the law compels the unincorporated bank and the individual banker to make, the securities which the state could not tax if it would. If it were material to inquire why the law requires that non-taxable securities shall be included in the return, the answer might be suggested by sections 139 and 1522 of the Revised Statutes of Ohio, relating to the statistic&.l duties of tlie secretary of state and of assessors; Every tax-payer is required, at the time of listing his property, to make to the a verified statement, which shall among other things, "the amount of United States bonds owned, the amount of legal tender notes or money exempt from taxation, and the amount of state bonds or certificates. " As the unincorporated bank and the individual banker make their returns to the auditor, it is provided that those returns shall contain the items which the assessor, in the discharge of his statistical duties, is required to take from every individual taxpayer. Unless the taxation on the shares in national banks is indirectly a tax on the property of the bank, there is no discrimin:J,tion in favor of the individual banker and the unincorporated bank. But in Van Allen v. The Assessors, 3 Wall. 573, the supreme court of the United States decided that "the tax on the shares is not a tax on the capital of the bank." They state, as familiar law, that "the cOl'poration is the legal owner of all the property of the bank, real and personal," and that the interest of the shareholder is "a distinct, independent interest or property, held by the shareholder like any other property that may belong to him, " and that "it is this interest which the act (If congress hasleft subject to taxation by the states." Chief Justice CHASE, for himself, and Associate Justices WAYNE and SWAYNE, in a dissenting opinion, argued with great power that taxation 'on shares in national banks, without reference to the amount of their capital invested in bonds of the United States, was "actual, though indirect, t.axation of the bonds," but the holding by the majority of the court was affirmed in People v. Com'rs, 4 Wall. 244, and has since remained as settled law, so that the dissenting opinion of the chief just.ice only strengthens the authority of Van Allen v. The Assessors. In People v. Com'rs, the only question before the court was whether the holder of the bank shares was entitled to deduct from their value a due proportion of the sum which the bank had invested in government bonds. This was decided in the negati e. Mr." J llstice NELSON, who pronounced the opinion of the court, sai I that "the meaninj:{ and intent of the law.makers was that the rate of the taxation of the shares should be the same,or not greater, than upon the moneyed
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380
FBDERAL REPORTER.
capital of the individual citizen which is subject or liable to taxation.: Eliminating from the return made by the unincorporated bank or individual banker, every item of property and of moneyed capital exempt from taxation, is not deducting, nor is it discriminating in favor of snch bank or banker and against the holder or owner· of shares in a national bank. What is such discrimination is clearly shown in People v. Weaver, 100 U. S. 539. That case was taken to the supl'eme court of the United States from the court of appeals of New York. 1\1r. Justice MILLER, delivering the opinion, said: "It cannot be dispated,-it is not disputed here,-nor is it denied in the opinion of the state court, that the effect of the state law is to permit a citizen of New York, who has money capital invested otherwise than in banks, to deduct from tLtat capital the sum of all his debts, the remainder alone suuject to taxation; while he whose money is invested in shares of bank stocks can make no such deduction. Nor, inasmuch as nearly all the banks in that state, and in a!l others, are national banks, can it be denied that the owner of such shares who owes debts is subjected to a heavier tax on account of those shares than the owner of moneyed capital otherwise invested who also is in debt, because the latter can diminish the amount of his tax by the amount of his indebtedness, while the former cannot."
In accordance with this view, the judgment of the state court was reversed. It was within the power of the legislature of New York to allow or to disallow a deduction from the listed value of the property of the tax-payer equal to the amount of his indebtedness; and to allow it to one and to refuse it to another was, by intentional discrimination, to make the taxation unequal. But in the case of an unincorpClrated bank, or of an individual banker in Ohio, the state levies its taxes upon every dollar's worth of property which it has power to tax, at the same rate and by the same method as in the taxation on national bank shares, leaving untouched only the property which it has not power to tax. It is claimed that 'upon a proper application of the decision in Frazer v. Sieber-n, supra, the assessment must be held illegal. We do not so think. The act of congress then in force, authorizing taxation upon shares in national banks, contained the following restriction not to be found in the present law: "That the tax so imposed under the laws of any state, upon the shares of any of the associations authorized by this act, shall not exceed the rate imposed upon the shares in any of the banks organized under authority of the state where such association is located." The state of Ohio imposed no tax upon shares in the state banks, which were then in existence. On the contrary, by the fifty-ninth section of the act of 1861, then in force, they were expressly exempted. But the state banks themselves were taxed upon their capital, subject to a deduction for the valne of their real estate, and of their non-taxable bonds of the United States, while the tax on shares in national· banks was upon their nominal or par value without any deduction for real estate, which was taxed separately a.gainst the banks as real estate, and
EXCHANGE NAT. BANK V. KILLER.
381
without deduction for United States bonds owned by the banks. The court, recognizing that the equivalent taxation necessary to justify & tax upon shares in national banks might be either upon the shares in the state banks and assessed against the shareholders, or upon the capital of the bank and assessed against the bank itself, provided only that it be equivalent, held that "the tax against the owners of shares in the national banks must not exceed that imposed, in some form, upon the state banks or their stockholders." And, finding that the tax upon the shares in the national banks was in excess of that assessed against the state banks, the court enjoined the collection of the excess. As we have already found that the limitation in the present act of congress is, in effect, that the taxation on the shares shall not be at a greater rate than is assessed upon other taxable moneyed capital, it follows that the failure to levy a tax against a citizen of the state, whether a banker, a manufacturer, a merchant, or a capitalist, upon property or investments which the state has no power to tax, does not make out a case of discrimination against the owner or holder of shares in a national bank. Our conclusion is that the bill must be dismissed, and it is so ordered. POWER OF STATES TO TAX. National banks, as such, being instrumentalities of the government, are not liable to taxation by the states. 1 Such banks derive their authority to do business in the states by virtue of a United States statute, which is supreme law. 2 Their franchise is not liable to state taxation, nor can the state authorize its municipalities to exact from them license taxes for doing business within their limits. s A city cannot tax the business of a bank which might be the fiscal agent of the federal government, although it may tax its property and the shares of its stockholders.4 Congress may permit states to talC national banks,5 and Its shares held by individuals,6 and this althoubh its capital may be invested in bonda or other !lecurities of the United States; 7 but the permission of congress is a prerequisite to such authority.s A state can impose only sucb a tax on national banking corporations as is authorized by the act of congress creating them, and that act only authorizes lMcCulloch v. Maryland, 4 Wheat. 316; Osborn v. Bank of U. S. 9 Wheat. 738; Bank of Commerce v. New York. 2 Black, 620; Bank Tax Cases. 2 Wall. 200; Plttsbnrg v. Nat. Bank, 65 Pa. St. 46; Collins v. Chiengo, 4 Biss. 472. B Carthage v. First Nat. Bank of Carthage. 71 Mo. 509; Van Allen v. Assessors. 3 Wall. 573; Bradley v. People, 4 Wall. 459; LIonberger v. Ronse, 9 468; Tappan v. Nat. Bank, 19 Wall. 400; Hepburn v ilchool Directors. 23 Wall. 480; second Nat. Bank v. Caldwell, 13 Fed. Rep. 429.
'Carthage v. First Nat. Bank of Carthage, 71 Mo. 5Q9; Nat. Bank v. Mayor, etc:, 8 Helsk. &14. 'Johnston v. Macon. 62 Ga. 650; Macon v. First Nat. Bank,W Ga. 648; Macon v. Macon Sav. Bank. 60 Ga. 133. e Van Allen v. Auessors, 3 WaH. 573; 3<1 N. Y. 161; Frazer v. Selbern, 16 Ohio St. 614; Mintzer
v. Montgomery Co. M Pa. st. Anstin v.Bos. ton. 96 Mass. 359; City of Utica v. Churchill, 43 Barb. 550; People v. Com'rs, 4 Wall. :Ut; Nat. Bank v. Com. 9 Wall. 353; First Nat. Bank v. D.:>uglas Co. 3 Dill. 298. 330; Wright v. StUtz. 27 Ind.338; Hubbard v. Sup'rs. 23 Iowa. 130. GNat. Bank v. Com'rs, 9 Wall. 363; People v. BradleY,39 III. 130 ; St. Louis Nat. Bank v. PapIn, 4 DlII.29; Goddard v. Hnlow, 1 Nott & MeG. 46; Stetson v. Bangor, 66 Me. 274; State V. Haight, 31 N. J. 399; State v. Hart. Id. 43t. 7People v. Com'rs, 4 WaH. 269; Wright v. Stlltz, 27 Ind. 238; St. Lonis B. & S. Ass'n T. Lightner, 47 Mo. 393. Contra, Whitney v. Madi. IOn, 23 Ind. 331. 'People v. Weaver, 100 U. S.543; McCnlloel v. M"ryland, 4 Wheat. 316; Osborn v. Bank of U. S. 9 Whent. Wenton v. Charleston, 2 Pet· 449; People v. Assessors, 44 Barb. 148.
382
".:;
""I'EOERAL REPORTER.
a tax on the sbares in such banks,.andnotou· its capital stock,! States have the power to tax national banks. only at· a rate, in the manner, and on the particular conditions authorized by congress j 2 and the requirements of the act must be obeY!ld in good faith, and the state tax must be construed in connection with the act. 3 The permission given by the national banking act to tax national banks, removes aliy implied exemption that might othArwise exist. 4 REAL ESTATE. The state may tax the real estate and the shares of national banks. 6 Under the Revised Statutes the state is left free to exercise the power of taxation over national banks, assessing the same upon the real property of the bank, or upon the shares of its capital stock, at the election of the state, in accordance with the requirements of the state constitution and laws, and only in conformity with the rules applicable to citizens and corporations of the state.6 Real estate is taxable by state authority, and the separate sh&.res of its capital stock, as the personal property of the holders· of such shares, may be taxed by the state or its municipal corporations, so long as the tax is not at a greater rate than is assessed upon in the bands of individual citiz.enR of such state.7 Real estate owned by a bank should be assessed as realty in the township where it is situated, and not as a part of tbe capital stock of the bank.8 The bLInking office and lot lawfully owned and occupied as its place of business by a national bank is not liable to assessment and taxation as real estate eo nomine against the bank.9 CAPITAL NO'1"TAXABLE. The capiltalofa national bank is not taxable by the state. to Capital stock as such cannot be assessed. The only way stock can be reached is by assessment or-the different shares of stockholders,l1 and an assessment onthe shares in gross again.Rt the bank is not authorized and is illegal.l 2 .A. bank is not liable to taxation on its capital under a statute which reqUires owners of property to return it for taxation. It does not own the shares held by individuals,n but it is the owner of all the property of the corporation, real and personal j 14 but it is not liable for either state or municipal taxes on the shares of stock not owned by it, but owned by individual stockholders. 15 If the shares of a national bank, when in the hands of a receiver, have any value, they are taxable in the hands of the holders or owners; but the property held by the receiver is exempt to the same extent that it was before his appointment. t6 Such property cannot be subjected to sale for the payment of the demand of a creditor against the clahn'for the property by a receiver of the bank subsequently appointed. t7 The taxation by a state of the capital stock 1Carthage v. First Nat. Bank, 71 Mo. 609; Van Allen V. Assessors, 3 Wall. 613; Bradley v. Peo. ple,4 Wall. 459; Lionberger v. Rouse, 9 Wall. 468; Tappan v. Nat. Bank, 19 Wall. 490; llepburn v. School Directors, 23 Wall. 480. 8Sumter Co. v. Nat. Bank, 62 Ala. 464; Nat. Commercial Bank v. Mobile, Id. 284. 8 First Nat. Bank v. St. Joseph, 46 Mich. 626; S. 0.9 N. W. Rep. 838. 'Union Nat. Bank v. Chicago, 3 Blss. 82. fNat. Commercial Bank v. Mobile, 62 Ala. 2fl4; Lake City Bank v. Golding, 2 Utab, I; Sumter Co. v.Gaillesville Bank, 6:! Ala. 464; First Nat. Bank v. Donglas Co. 3 DiU. 330. 6 Nat. Cemmerdal Bank v. Mobile, 6) Ala. 234. 1I,oflin v. Citizens' Nat. Bank, s:; Ind. 3418Rice Co. Com'rs v. Citizens' Nat Bank,?3 Minn. 281. 9Second Nat. Bank v. Caldwen, 13 Fed. ·Rep. 430; Lackawanna Co. v. First Nat. Bank,!l4 Pa. St. 221; People v· Com'rs of Taxes, 60 N. Y. 6731 and
10 Nat. Commercial Bank v. Mobile, 62 Ala. 295; People v. Com'rs, 4 Wall. 244; Bradley v. People, U. 469; I'lalt Lake City Bank v. Golding, 2 U tab, 1; Sumte. Co. v. Gaine·svllle Bank, 62 Ala. 464; F'rst Nat. Bank v. Douglas Co. 3 DU!.330. 11 Collins v. Chicago, 4 Biss. 472. UNat. Commercial Bank v. Mobile, 62 Ala. 284. 13Waco Bank v. Rogers, 51 Tex. 606; North Ward Bank v. Newark, 40 N.J. LaW,5GS; Waite v. Dowley, 94 U. S. 627; Snmter Co. v. GalnesvlJ1e Bank, 62 Ala. 468; Van Allen v. Assessors, 3 Wall.5&!. . . UVan Allen v· .AsBessors, 3 Wall. 684: Sumter Co. v. Gainesville Bank, 62 Ala. 468. v. Rogerll,61 Telt'. 606·, 16Rosenblatt v. Johnston, 104 U. S. 463. 17Woodwllrd V. Ensworth, 4 Colo. 683; Nat. Bank v. Colby, 21 Willi. 609.
EXCHANGE NAT·.
383
ofa national bank invested in United Stateg securities will be.regtraine'.1,t b1,1t injunction ,will not lie to restrain the collection of a tax illegally assessed by the municipal authorities upon the shares ofa national bank in grosa, instead of against the individual shareholders, though iluch municipal corporation be insolvent, as there are ample remedies at SHARES OF STOCK SUBJItCT TO TAXATiON.· Shares of national bank stock are subject to taxation by the stateS against the 'shareholders;4 They may be taxed at the place where the. bank is 'situated. 5 They are exceptions to the rule that personal property follows the owner, for they ara by law made taxable at the situs of the bank. 6 The state in which the national bank 'is situated has the exclusive right to deriVe revenue from the shares of such bank, no matter where the shareholders may be domiciled.? A state may authorize the assessment in the city or town within the same state where the lIwner resides,S the stockholder having the right to be assessed at his domicile within the state in which the bank is located.9 The mode by which the tax shall be assessed and collected, and the place where' it shall be laid on resident stOckholders, is left to the di::lCl'etion of the legislature of the state in which the bank is lorated. 1o Under the general state statutes the stock belonging to an inhabitant ofa school-district in a t<lwnother than that in which the bankis situated, cannot be taxed for the purpose of defraying the expense of building a school-house in the distrlct. ll Where the legh,lature declared that the tax on the shares of 1'10o"resideot stockholders shall be assessed against and paid by the bank, if this were in fact unjust to the residentst.oclQlOlders the remedy for the injustice would be'with the legislature. 12 'fhe fact that a national bank in one state keeps a clerk inl\;nother state authorized to receive deposits, does not 'fender' the bank taxable to the latter state. IS States may 'tax dividends declared to holders of national bank stock; 14 but the consent of the comptroller of the treasury being necessary for an increase of shares of, the stock, new shares issued under a vote of the corporation are not assessable of the comptroller of his approval shall be issued. 10 until the RATE. The only restrictions imposed by the act of congress on the power of the states to tax national bank shares is that it shall not b!'l at a greater rate than is asspssed on "other moneyed capital" in the hands' of individual dtizens of the state, l10nd that ,shares owned by non-residents shall be taxed in the city or town where the bank is located. 16 '.. Other moneyed capital" means money capital invested otherwise than in national banks. 1 'rhis re? striction only requh:es thattM amount of tax imposed and the system of assessment applied to shares of the stock shall be substantially the Same as are 1Flr.t Nat. Bank v. Donglas Co. 3 Dill. 298. 2 Vat. Commer"lal Bank v. Mobile, Ala. 284.
SHowell v. Cassopolis, 35 Mich. 471; Kyle v. FayetteVille, 75 N.C. 445; Buie v.Fayetteville, 79 N. C. North Nat. Bank v. Newllrk, 39 N. J. Law, 380; Nat. Bank v. Com. 9 Wall. 303; TJionberger v. ROllse, Id. 468; Austin v. Bostou. 14 Allea, 3&9. . 'Snmter no v. Gulne.ville Bank,62 Ala. 464. 6Firat Nat. Bank v.Smlth, 65 Ill. 44 j Bake: v. First Nat. Bank, 67 Ill. ;297. STappan v.March. Nat. Bank, 19WaJ1. Baker v. First Nat. Bank, 67 Ill. 297; Provo Inst. v. Boston, 575; McLaughlin v,Chad. well, 7 Helek. ,See 15 St.atLarge, 34. 7Sl1mterCo. v.Nat. Bank of Gainesville, 62 Ala. 469, Nat. Bank v. Com'rs, 9 Wall. 355. 8 Austlll v. Boston, 14 Allen,
.
tNorth Ward Nat. Bank v. Newark, 40 N. J. Law. 658; North Ward Nat. Bank v. Newark, 39 N. J. Law, 380; Howell v, Cassopolis, 35 Mich. f{yle v. FaYetteville. 75 N. C. 445; Bule v. Same, 7D N. C. 267. 10i'iorlh Ward Nat. Bank V. Newark, 39 N. J. Law,3SU. ' , . 11 Little v. Little, 131 Mass. 361. 12North Ward Nat. Bank v. 40 N. J. Luw, 562; Slate v. Branin, 3S N. J. Law, · . lSNnt. State Bank v. Pierce, 1S Alb. Law J. 16. I'Statev. Collector, 2 Bailey, 654. 15 Charleston v. People's Nat. Bank. 5 S. C.103. 16Llonbel:j(er v. Rouse. 9 Wall. 473,; Pollard v. state, 65 A\a.R2S; ldiller v.Hellbrun,58 CaL 133; No}.'th Ward Nat. Bank v. N. J. Law, 380; Ruggles v. Fond duLac, 53 WI·. 439. . n Miller v. 68 Cal; 13J; People v. Weaver,
884
.EDERAL REPORTER.
imposed and applied to other moneyed capital.! Where different rates of taxation are imposed upon different clll8ses of moneyed capital the rate of taxation on national bank shares should not exceed the rate imposed on shares in statl;\ banks. 2 In the taxation of national bank shares it must appear that the assessors acted under som,e agreement or rule which necessarily tended to tax such shares at a greater rate than is assessed on other moueyed capital, to reudel' the assessment void. 8 If the amount assessed on them is governed by the same percentage on the valuation as that applied to other moneyed capii,tl, the act of congress is satisfied.4 Any system of assessment of taxes which exacts from the owner of the shares a larger sum in proportion to their actual value than it does from the owner ot other moneyed capital valued in like manner, taxes them at a greater rate within the meaning of the act, of congress. 6 . VALUATION. The actual and not the par value is the standard of taxation of national bank shares,6 and such valuation is not affected by the fact that a portion of the capital of the bank is invested in United States bonds; 7 and the surplus fund which a national bank is required to rederve from its net profits is not excluded in the valuation of its shares for taxation. 8 Under . certain limitations, the shares of the national banks are taxable, with exclusive reference to their value, and without regard to the nature of the property held by the bank as a corporation. s They may be lawfully included in the valuation of the personal property of the owners thereof in assessing state taxes,1o The provision of the act of congress has reference to the entire process of assessment, and includes the valuation of the shares, as well as the rate of percentage charged thereon. l l Shares in national banks may be valued above their par value. 12 The actual value of the stock diminished by the proportionate value of the real estate owned by the bank, furnishes the proper sum upon which to assess the tax. 13 The state cannot evade the restriction contained in the act of congress, by requiring the value of the property to be added to the value of the shares. 14 Where the value of the real estate held by the bank was not deducted, the shales are subjected to double taxation, and the tax was invalid,16 REDUCTION FROM VALUATION. Where other moneyed corporation was taxed, but a reduction to the whole amount of the owner's indebtedness was to be made before assessment, and no such deduction was allowed to the holders of national bank stock, the tax upon such shares is invalid.I6 Under a statute making taxable all credits in excess of the debts of the person taxed, it is not necessarily in conflict with the act of congress providing that national bank stock shall not be taxed at a greater rate than other moneyed capital, even though the latter are taxed for their full value, without deduct1Pollard v. state. 65 Ala. 628. 2 City Nat. Bank v. Padncah, 2 Flippin, 61. S First Nat. Bank v, Farwell, 7 Fed. Rep. 518; S. c, 10 Blss. 270. 'PelIon v. Nat. Bank, 101 U. S. 145; People .... Weaver, 100 U. S. 539, 6PoU"rd v. Slate, 65 Ala. 632; PelIon v. Nat. Bank, 101 U, S. 145. BPeople v. Com're, 94 U. S. 415; S, C. 67 N. Y. 516; Van Allen v, Aesessore, 3 Wall. 573; People v. Com're of Taxee, 8 Hun, 556. 7Id. 8Staft'ord Nat. Bank v. Dover, 68 N. H, 316; Flr!lt Nat. Bank v. Peterborougb,56 N. H.38; Nat. Bauk .... Com're, 9 Wall, 353; People .... rom'rs, 67 N. Y. 516; S. C. 94 U. S. 415 9Evnnsville Nat. Bank v. Britton, 105 U. S. 3<5; Van Allen v. Aesessors, 3 Wall. 673. 10Van Allen v. Assessors, a Wail. 673; People v. Com're, 4 Wall. 244; Nat. Bauk v. Com. 9 Wall. 363; Tappan v. Merch, Nat. Bank, 19 Wall. 491; People v. Com're, 94 U. S. 416; Waite v. Dowley. 94 U. S. 627; Adams v. Nashvllle, 95 U. S. 19; McIver v. Robinson, 63 Ala. 466; Nat. Com merclal Bank v. Mobile, 62 Ala. 296, 11 People v. Weaver, 100 U. S. 639. llPellon v. Nat. Bank,101 U. S. 143. 18 People v. Weaver,l00U. S. 039; Snp'r! or AI· bany v. Slanley. 105 U. S. 306; S. C. 12 Fed. Rep. 87. see People v. Dolan, 36 N. Y. 59; Nat. Alb Exch. Bank v. Hilla, 6 Fed, Rep. 261. UPelton v. Nat. Bank, 101 U. S. 143. 16 Nat. Bank v. Kimball, 103 U. S. 732. 18 City Nat. Bank V. Paducah, 2 Flippin, 61.
EXCHANGE NAT. BANK V. DULLED.
886
ing indebtedness.! The provisions which authorize the tax-payer to deduct his indeutedness from the amount of money loaned and solvent credits, tax· ing only the excess, and exempts from taxation of the capital stock of incorporated companies created ·under any law of the state such portion thereof as may be invested in property, and taxed otherwise as property, and limits municipal taxation upon such corporations, in their operation upon mono eyed capital discriminate unfavorably against shareholders in national banks, and are to that extent violative of the act of congress. 2 Shareholders are not entitled to any allowance for such of the capital and surplus of the bank as may be invested "in government bonds; 3 as a state statute taxing bank stock must levy the tax on the shares of stockholders, as distinguished from the capital of the bank invested in federal securities.· Congress may subject the shares of national bank stock to state taxation, notwithstanding the capital is invested in national securities. s The shares of stock are property, separate and distinct from the property of the corporation Which they represent. 6 DEDUCTION OF INDEBTEDNESS. Any statute is in conflict with the rastrictiYe clause of the act of congress in so far as it does not permil; a stockholder to deduct the amount of his just indebtedne.'Js from the assesscd value of his stock, while the owners of all other taxable personal property may deduct debts from the value of their property.7 When the shareholder has no debts to deduct, the law provides a mode of assessment ror him which is not in contlict with the act of congress; the law in that case can be held valid,8 and he cannot recover back the tax paid pursuant thereto. If he bas debts, the assessment excluding them from computation is voidable, but the assessing omcers act within their authority until they are duly notified that he is entitled to deduction of such debts,9 and notice of debts must be given to the assessor. 10 If the assessing officer proceeds after such notice and acts in violation of the act of congress, the tax-payer may take the requisite steps to secure the deduction, and when secured the residue of the state statute remains valid. l1 Where, under .the stat,ute, the stockholder has presented to the proper board of assessors his affidavit shOWing that bis personal property subject to taxation, including such shares, after deducting therefrom his just debts, is of no value, and they refuse, on his demand, to reduce his assessment of the shares, an injunction should be awarded to restrain the collection of the tax. 12 In the absence of evidence that the debt claimed for deduction was not a just one and enforceable against the party taxed, he is entitled to have it deducted, and this, although the transaction creating the debt was a " device to escape assessment and taxation;" so held, ill a case where the debt was created in the purchase of non-taxable sll/1urities. 13 Where ,the assess. IFlrst Nat. B.ank v. St. Joseph, 46 Mich. 626; II. C. 9 N. W. Rep. S3S. s PolI.rd v. State. G5 Ala. 628. 81<-lrst Nat. Bank v. Farwell, 7 Fed. Rep. 618. 'Nat. Bank v. Com're, 9 Wall. 353. & McCulloch v. Maryland. 4 Wheat. 316; Wes. ton v. Charleston, 2 Pet. 449; Collector v. Day, 11 Wall. 123; Ward v. Marylan", 12 Wall. 427; Vao Allen v. Assessors, 3 Wall. 693. 'Klrtland v. Hotchkiss, 42 Conn. 435; Van AI. len v. Assessore. 3 Wall. 673; Bradley v. People, 4 Wall. 459; Nal. Bank V. Com'rs, 9 Wall. 3&3. 1Sap'rs or Albany v. Stanley. 106 U. S. 3115; HUls v. NaS. Exch. Bank. Id. 319; Bank v. Britton, Id. 322; 8. O. 10 Blss. 603; 12 Fed. Rep. 96; Railroad Tax Case8, 13 Fed. Rep. 7:rT; People v. Weaver, 100 U. S. 639, revenlng ·. C.; Williams .v. Weaver, 76 N. Y. 3J; Rnd see Cummings Y. Nat. Bank. 101 U. S. 163; Runlea T. Fond do Lac, 10 N. W. Rep. 56lI. sSap'rs of Albany v. Stanley, 12 Fed. Rep. 90; Austh v. Boston. 14 Allen, 367. to the some ef. feet; People V. Bull, 46 N. Y. 67; Gordon v. Oornes, 47 N. Y. 608; Village of Middleton, Ex parte, 82 N. Y. 196. 9Sup'rs of Albany v. Stanley, 106 U. S.305; Hills v. NRt. Excb. Bank, Id. 319; Evansville Bank v. Britton, Id. 322; S. C. 10 Blss. 603; Fed. Rep. 96. lOSup'rs of Albany v. Stanley, 105 U. S. ::05; S. 0.12 Fed. Rep. 1. nSop'rs of Albany v. Stanley, 105 U. S. 305; Hills v. Nat. Excb. Bank, 106 U. S. 319; Ev.ns. vllle Bank v. Britton, 100 U. S. 322; 8. O. 10 Blss. 508; 12 Fed. Rep. 96. IllHUIs V. Nat. Exch. Bank. 106 U. S. 319; Evansville Bank v. Britton, Id.322; S. C.IOBlsl· bOO; 12 Fed. Rep. 96. UPeople v. Ryan, 88.N. Y.I4i.
v.19,Do.6-26
ment 1snot void,bntonly voidable, tt must stand good 'for the assessmenUu each case which is not shown to be in excess of the just debts of the holder that should be deducted.1 EQUALITY AND UNIFORMITY. The restrictions on the power of the state to tax national bank shares is intended to secure equality of valuation in their' assessment, as well ail equality in the rate of the tax after the assessment has been Il1ade. 2 The rule tllat they should not be assessed higher than other moneyed capital is notvivlated by taxing them without deduction of mortgages, jUdgments, and other securities for money loaned, although. some capital is subject to such exemption from taxation for other than state pnrposes;a so exeinpting from taxation money invested in statebondsjor city bonds, is not an unfriendly discrimination.4 The act of ,congress is not infringed by a state law which provides that all personal property, including money and all debts owing by solvent debtors, and shares in national and state banks, and other corporations, shall be asse3sed at their true value and taxe'd. at an eqnal rate, even if it also provides that certain classes of property, including shares in certain classes of corporations, shall be exempt from taxa.tion.5 The discrim", ination must be .. with moneyed capital itl the hands of inrlividual citizens;" a discrimination between shareholders in corporations, other than banks, is not within theprohibition. 6 The rule or principle of unequal valuation of different classes of property, adopted by local boards of assessors, is in conflict' with the constitution and 'works injllstice to ownerfJ of bank shares; 7 so 110' tax the shares.in a 'national 'bank at their fllll value, while other property is assessed at 30 or 40 per cent. of its value, is unjust and urilawful, and the bank may maintain an action to restrain the collection of such tax; 8 the court will not restrain the collection where the share3 are taxable and no excessive valuation is complained of, although the officers arrived at correct resul1l- by an erroneous method. 9 Although for purposes of taxation the statntes provide for the valuation of all moneyed capital, inclUding shares of national banks, at its true cash value, the systematic and intentional valuation of all other mon"; eyed capital by the taxing officers fat below its true value, while the shares are assessed at their true value,' is n violation of the act of congress, which prescribes the rule by which they shall be taxed by state authority; 10 and the statute which establishes a ni'ode of a.sl!lessments by Which shares are valued higher in proportion to their real value than other moneyed capital, is in con'"' flict, although no greater percentage is levied than on that of other moneyed oapital.l l In such case, on the payment or the tender of the sum which such shares ought to pay, under the rule established by that, act, a court of equity will enjoiq the state authorities from collecting the remainder; but where they are taxed at the same rate as other property, and the valuation of these shares is at half their ,actual vallie, while that of some other property is at less than half its value, a di,scrimination is not thereby shown. ls The validity of a municipal tax on the shares of a national hank is not impaired by the fact that the money paid for such stock may have been taxed for municipal purposes to the same p('rson.14 . D:rSCRIMINA;TION. A f)tate law is not violative of the act of congress merely on the ground that it allowed a "partial exemption" of a certain kind of moneyed oapital, which was designed to prevent a double burden of taxation, 1Hills v. Nat. Exch. Bank, 12 Fed. ReP. 95. t Albany Cit,. Nat. Bank v. Maher, 6 Fed Rep. 417. SGorgas' Appeal,· 79 Pa. St, 149. 4Pollard T. State, 66 Ala. 628; Adams T. Nash. Tille, 9611 ;S.:19, . 6Stratton v. Collins, 43 N,J. Law. 563. IFirst Nat. Ballkv. Waters, 7 Fed. Rep. 162. 'Cummlnga v. Nat. Bank, 101 U. S. 163. 8Id. Ojt. Louis Nat. Bank 'Y. Papin, 4 DllL 29. 10Second Nat. Blink v. Caldwell. 13 Fed. Rep. 432; Hepburn T. School-dlst. 23 Wall. 480. 111'eople v. Com'!'s, 69 N. Y. 91;S. C: 8 Hnn. 636.
11 St. Louis Nat. Bank v. Papin, 4 Dill. 29. 'lIClty Nat. Bank v. Paducah, 2 Flippin, til. URlchmond Cit,. v. Scott, 4S Ind. 668.
both of property 'and debts secured by it. t The fact that twobank8 by theft'. charters are. specially taxed, will not preclude taxation of the shares in the' national banks by general law; neither are theshar(\8 to be exclUded 'from r taxation because some other classes ofmoueyed capital are exempted from', taxation by a law of limited A tax may be levied b.Y' an IflCor-' porated city on the shares of stock of a national bank at the same rate ail on' real and personal property within the city, although there is stillinexistimctl branches of the state bank, the shares of which are not subject to munioipa1; taxation.3 Where there is no discrimination against such shares and in favor' of other moneyed capital in the hands of individual oitizens of the state, snch taxation is valid. 4 The act of congress of June 3,1864, was not intended to curtail the power of· the state en the SUbject of taxation, or to prohibit exemptions of particular kinds of property,.I;lUt to protect corporations formed' under its authority from unfriendly discrimination by the state in theexercise of their taxing powers.6 It was the intFlntion of congress to prevent the state, by hostile legislation, from discriminating against national banks, and to place all bank shares, state ,and national, on a common level.6 . The system of assessment of bank shares, owing to the faotthat the shares of different banks are differently rated, must neMssarHybe imperfect.7 'fhe law does not reqUire absolute accuracy whare the shareholders have the same rights as, other individuals taxed for Uloneyed capital; they should look to the statutes of the state for relief. 8 It is not sufficient, to invalidate the taxation;' to show that in the case of a single state bank, the shares of which are SUbject t(J like taxation, that the assessors, either by mistake or ilitentfon, have show'n" favor. 9 . . ENFORCEMENT OF PAYMENT. Payment of the tax imposed on bank shares may be enforced. 1o The tax imposed pursuant to statute becomes a lien upon the shares taxed, and such lien continnes till the tax is paid. ll It may be made the duty of every national bank to pay for its stockholders the tax legally assessed against their respective shares, whether the stockholders reside in the state or not. 12 The state statute relating to the collection of taxes upon bank shares does not apply to shares belonging to the estates of deceased persons. 13 A bank may,be compelled to disclose the amount of deposits due each depositor, and a state law to that effect is enforceable. 14 Where the statute requires or permits the bank to pay the tax: for the shareholder, as· trustee it is the proper complainant seeking relief against illegal exaction. t6 A statute requiring the cashier to return to the clerk of each town in the state where shareholders reside, a list of shareholders resident therein, and the amount is vaud,16 . paid out 011 each SUIT TO ENJOIN COLLECTION. A shareholder who has made affidavit and· demand for deduction of debts owed by him from the valuation of his shal'es, as required by law, may bring suit to enjoin the collection of such tax. t7 And
a.
11 Simmons v. Aldrich, 41 WIS. 241; Van S!yke 1Pollard v. State, 65 Ala. 633; Hepburn v. .... State, 23 Wis. 665; Basrnall v. State, 25 WI·. SChool Directors, 23 WaJl480. 112. 2Lemley v. Com'rs, 86 N. C. 382; Llonbergerv. 1SNat. Commercial Bank v. Mobile, 62 Ala. 295; Ronse, 9 WaIl. 468;' rappan v. Nat. Bank, Nat. Bank v. Com'rs, 9 Wall 3li3; Tappan v. 19 Wall. 490; Providence Ins. Co. v. Booton, 101 Merch.Nat. Bank,]9 Wall. 491; Walte v. D6wley, Mass. 596. . 94 U. S. 627; Adamo v. Nashville, 95 U. S. 19; 8 Richmond City v.Scott, 48 Ind. 568. Mclvers v. RobInson. 63 Ala. 456 . · 'Lemley v. Com'rs, 85 N. C.379. 13 Revere v, Baston, 123 Mass. 316. AAdams v. Nashville, 96 U. S. ]9; People v. 1'Flrst Nat. Bank v. Hughes, 24 Alb. Law J. 74. Com'rs.4 Wall. 244 ;·Hepburn v.School Directors, . 15Nat. Bank v. Cnmmlngs, 10] U. S.1031 .First 23 Wall. 480. Nat. Bank V. St. Joseph, 4C! Mich. 526· · Stanley v. Board oC Sup'U. ]6 Fed. Rep. 483. 10 WRite v. Dowley, 114 U. S. 627. 'TId. 17lfills v. Nat. Alb. Exch. Bank. 12 Fed. Rep. I]d.
tId,
93.
10 First Nat. Bank v. Douglas Co. 3 DlII. 299.
888
IZDZB1L BZPOBTBB.
where it is shown that the affidavit and demand would have been unavailing, they may show, in an action by the 'bank brought on their. behalf. the deductions to which they were entitled.l A national bank may, on behalf of its stockholders, maintain a suit to enjoin the collection of a tax which has been unlawfully assessed on the shares by state authorities. 1 and on the ground of an illegal assessment arising from the failure to deduct from the valuation the debts owned by the stockholders,3 although payable in the first instance by such shareholder, if a multiplicity of suits can be thereby avoided, or injury to its credit or business is anticipated.' Where the statute requires or permits the bank to pay the tax for the shareholder, as trustee, the bank is the proper complainant seeking relief against illegal exaction.. A bill to restrain the collection of the state tax must show a statute discriminating against them, or that they are rated higher in proportion to actual valuation than other moneyed corporations.8-[ED. fl·.C. 12 Fed. Rep. 93; Evansvl1le Nat. Bank v. Britton, 105 11. S. 322. Bee sup'ra of Alban)' v. Stanley, 12 Fed. Rep. 82. IHiIls v. Nat. Alb. Exeh. Bank, 105 U. 8.319;
IHllla v. Nat. Alb. hob. Bank, 105 U.8.3191
8. C. 12 Fed. Rep. 93; Evansvl11e Nat. Bank v. Britton, 1l)j U. S. 322. BNat. Alb. Exeh. Bank v. Hm·· 6 Fed. Rep. lU9; Hill. v. Nat. Alb. Exoh. Bank, 105 U. 8.319 J I. O. 12 It'ed. Boop. 83; Cllllllllinle v. Nal. BaniL,
101 U. 8. 163; Pelton T. Nat. Bank. 101 U. S. 143; Evansville Nat. Bank v. Brltton,l05 U. S. 322. 'Olt)' Nat. Bank v. Padneah. 2 Flippin, 61. See Nat. Alb. Exeh. Bank v. Hl11s.6 Fed. Rep.lUS; reversed, 12 Fed. Rep. 93. oNat. Bank V. Cummings, 101 U. S. 163. af. Armed; Evansville Nat. Bank v. Britton. 100 U. 8.322; S. 0.12 Fed. Rep. 83; Flret Nat. Bank v. St. J'o!8ph. 46 Mlob. 626. 'German Nat. Bank v. KImball, 103 U. S. 7321 Hille v. Nat. Alb. Exell. Bank, 12lt'8d. 1Wp. is,
MZHPms
& L. R. R. CO., as reorga.nized, ". Dow. 1
(Oircuit Oourt, 8. D. N6tD YQ'1'k. February 11,1884.) 1. ULTRA VmEs-RETENTION OF BENEFITS.
me., and at the same time repudiate its
A corporation cannot retain property acquired under a transaction 'Ultra obligations under the same transactions. ·
2. OORPORATIONS-POWER TO OONTRAOT WITH STOCKHOLDER&. A corporation is not precluded from contracting with ita bondholders because they own all the stock. B. SAllE-MORTGAGE Oll' OORPORATE FRANCHISE. A corporation lawfully purchasing its franchise has implied authority to mortgage it for the purchase money. 4. SAME-CASE STATED. A railroad corporation organized in Arkansaslssued bonds secured by trust mortgage of its franchises and other property; the mortgag-e was foreclosed. and a scheme of reorganization adopted. In pursuance of which the company conveyed all its property to the trustees. and the bondholders formed a new corporation, to which the franchises and other property of the old one were conveyed by the trustees. The new corporation, thus composed entirely of the original bondholders, issued its bonds to those bondholders, secured. by mortgage of its franchises and other property; and the new bonds were received in lieu of the old. Afterwards portions of the stock passed into other bands. Held. tbat the bonds constituted a valid obligation, notWithstanding the stockholders of the contracting corporation were the contractees, and notwitstanding a provision in the constitution of Arkansas forbidding private corporations to issue stock or bonds except for value actually received.
l8ee 7 Sup. Ct. Rep. 482, and 20 Fed. Rep. 260, 76i.