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"Moneyed capital cannot be said to be exempt from taxation by the laws of this State, because that portion of it which is invested in the shares of various classes of corporations is exempt. Not only does the State tax moneyed corporations generally, but the capital invested in these corporations is taxed in the hands of corporations" (Wallace, J.). First Nat. Bank of Utica v. Waters, 7 Fed. Repr. 152 (1881).
It seems that the exemption from State taxation of some moneyed capital does not necessarily invalidate a statute authorizing an asses3ment upon national bank shares. McMahon v. Palmer, 102 N. Y. 176 (1886).
Section 5219 is not intended to control the power of the State over taxation, or to prohibit exemptions, but only to prevent discrimination against national bank shares. Mercantile Nat. Bank of New York v. Mayor, etc., of New York, 28 Fed. Repr. 776 (2d U. S. Circuit, 1886); affirmed, 121 U. S. 138.
If the State tax the capital stock of certain corporations, but exempt the shares, while shares of national banks are taxed, but the capital stock itself is exempt - held, that this is no discrimination under section 5219. Id.
The exemption of shares of life insurance companies, of stock and bonds of the city of New York, of bonds of other municipalities of the State and of deposits in savings banks - held, justified by public policy, and not to indicate improper discrimination against national bank shares. Id.
The fact that some corporations, or some personal property, may be subject to a less rate of taxation than that of capital employed in banking corporations, will not alone vitiate the statute imposing taxes upon shares in banks, unless it appears to be the clear intent of the legislature to discriminate against them. Id.
It seems that investments in the shares of railroad, ferry, canal, manufacturing and other industrial corporations are not "moneyed capital " within the meaning of United States Revised Statutes, § 5219. Id.
Held, that the statutes of Pennsylvania were open to the objection that they violated the principle of equality, which the act of Congress intended to establish between capital invested in national bank shares, and other moneyed capital. Boyer v. Boyer, 113 U. S. 689 (1885).
Held, following Mercantile Bank v. New York, 121 U. S. 138, that according to the laws of New Jersey, under which the assessment was made, that the rate of taxation was not greater than that assessed upon the moneyed capital in the hands of individuals of that State. Newark Banking Co. v. Newark, 121 U. S. 163 (1887).
The varying methods of corporate taxation in the State of New York are not such as to make the taxation of national bank shares in that State violative of the restriction contained in section 5219 of the U. S. R. S. The following laws are considered: Laws 1857, chap. 456; Laws 1880,
chap. 596, § 3; Laws 1881, chap. 361; Laws 1882, chap. 409, § 312. Mercantile Bank v. New York, 121 U. S. 138 (1887).
Under Laws 1886, chap. 761, if party assessed claims an assessment to be in violation of section 5219 of the U. S. R. S., as excessive, he must pursue the course provided by the statutes of New York for its correction, or resort to equity to enjoin the collection of the illegal excess, upon payment or tender of the amount due upon what is conceded to be a just valuation. Stanley v. Supervisors of Albany, 121 U. S. 535 (1887).
The statute (Laws 1883, chap. 345), legalizing and confirming upon certain conditions the assessments contained in certain assessment-rolls in the city of Albany, held not in conflict with acts of Congress respecting the taxation of national bank shares, and to be a valid exercise of the power of the legislature to cure irregularities in assessments. Williams v. Supervisors of Albany, 122 U. S. 154 (1887).
Section 5219 does not require a perfect equality of taxation between State and national banks, but only that the shares of the national banks shall not be taxed at a higher rate than other moneyed capital in the hands of individuals. Within the limits, that the system of State taxation of its own citizens, of its own banks, and of its own corporations shall not work a discrimination unfavorable to the holders of the shares of national banks, the manner of assessing and collecting all taxes by the States is uncontrolled by the act of Congress. The claim that a State statute taxing savings banks on the amount of their paid-up capital, but not the shares held by individual shareholders, worked a discrimination,- held, unfounded. Davenport Bk. v. Davenport, 123 U. S. 83 (1887).
This last case was followed in the case of Bank of Redemption v. Boston, 125 U. S. 60 (1888).
The manifest intention of section 5219 is to permit the State in which a national bank is located to tax, subject to the limitations prescribed, all the shares of its capital stock without regard to their ownership. The proper inference is, that the law permits in the particular instance, the taxation of the national banks owning shares of the capital stock of another national bank by reason of that ownership, on the same footing with all other shares. Id.
According to the method in the State of Ohio, a State board of equalization has the power to equalize the valuation of bank shares in the different counties as between such shares, but has no power to equalize the valuetion of bank shares for taxation as compared with other moneyed capital in the State. While there was no absolute necessity that this method should result in a discrimination, it is one of the probabilities that it should produce such a result. Held, an unlawful discrimination under section 5219. In this case the collection of the tax to the extent of the discrimination was enjoined. Whitbeck v. Mercantile Nat. Bank of Cleveland, 127 U. S. 193 (1888).
The Ohio laws make no provision for the deduction of the bona fide indebtedness of any shareholder from the shares of his stock, and pro
vide no means whereby said deduction can be secured,— held, that it was not a condition precedent to the granting of relief that a demand should have been made for such deduction prior to the delivery of the rolls to the collector. Id.
The term other moneyed capital," in United States Revised Statutes, § 5219, prohibiting taxation, at a greater rate than other money capital in the hands of individual citizens does not necessarily embrace shares of stock in all corporations whose capital is employed in business carried on for the pecuniary profit of shareholders, although it may include shares in some corporation. Bank v. New York, 121 U. S. 138.
The restriction in United States Revised Statutes. § 5219, as to taxation of shares of stock in the national banks, is equality of assessment with other moneyed capital, not with other property generally. Talbott v. Silverbow County, 139 U. S. 438; Bank v. Board of Equalization, 123 id. 83. The rule and test of the distinction is to be found in the nature of the business in which the corporation is engaged. The act simply prohibits taxation at a greater rate than like property similarly situated. Bank v. New York, 121 U. S. 138.
Exemption of moneyed capital in the hands of individuals in the shape of deposits in savings banks cannot affect the rule for the taxation of shares in national banks, because it is not like other property similarly invested. Bank v. New York, 121 U. S. 138; Bank v. Board of Equalization, 123 id. 83; Bank v. Boston, 125 id. 60.
The mode of taxation adopted by the State of New York, in reference to its corporations, excluding trust companies and savings banks, does not operate în such a way as to tax shares of national banks at a greater rate than that imposed upon other moneyed capital in the hands of individual citizens. Palmer v. McMahon, 133 U. S. 660.
Although trust companies in New York are not banks, in the commercial sense, the shares of stock held by individuals therein are moneyed capital, within U. S. R. S., § 5219.
But it does not appear that the tax upon them is less, in fact, than that imposed upon shares in national banks. Bank v. New York, 121 U. S. 138.
Taxation of national bank shares is not affected by the exemption of municipal bonds of a city, or of shares of stock of corporations created by other States. Bank v. New York, 121 U. S. 138.
The uniform valuation of national bank shares, in common with those of State banks, at par, although the actual value of the shares differs, does not violate the act of Congress which prohibits assessments by the States upon national bank shares higher in proportion than upon other moneyed capital. It constitutes no discrimination against banks of either kind. Williams v. Albany County, 122 U. S. 154; Stanley v. Same, 121 id. 535.
Where a county auditor assessed moneyed capital and personal prop erty, including national bank shares, at 60 per cent. of its cash value,
an increase of 5 per cent. in the assessment of the bank shares made by the State board of equalization, is such a discrimination as is forbidden by United States Revised Statutes, section 19. The board could change the assessed value of the shares to make them equal among themselves, but has no power of equalization of the same with other personal property. Whitbeck v. Bank, 127 U. S. 193.
People ex rel. Bank of Commonwealth v. Commrs. of Taxes, 32 Barb. 509 (1860); People ex rel. Kennedy v. Commrs. of Taxes, 35 N. Y. 423 (1866); Bradley v. The People, 4 Wall. 459 (1866); People ex rel. Cagger v. Dolan, 36 N. Y. 59 (1867); Nat. Albany Bank v. Hills, 5 Fed. Repr. 248 (1880); S. C., Hills v. Exchange Bank, 105 U. S. 319 (1881); Supervisors of Albany v. Stanley, id. 305 (1881); Stanley v. Albany County, 6 Fed. Repr. 561 (1881); S C., 15 Fed. Repr. 483 (1883); People ex rel. Thurman v. Ryan, 88 N. Y. 142 (1882).
Cases Arising Under Present System.
The following cases arose under the present system of taxing shareholders of banks inaugurated by Laws 1865, chap. 97:
The shares of a bank whose capital is invested in stocks of the United States are to be assessed at the place where such bank is located, and not elsewhere. People ex rei. Kennedy v. Commrs. of Taxes, 35 N. Y. 423 (1866); affirmed in 4 Wall. 244.
Bank shares should be assessed at their true value irrespective of the nominal par value. People ex rel. Williams v. Assessors of Albany, 2 Hun, 583 (1874).
The actual and not the par value of shares of stock of national banks is the basis of assessment. People ex rel. Gallatin National Bank v. Commrs. of Taxes, 67 N. Y. 516; affirming 8 Hun, 536 (1876); S. C., 4 Otto, 415 (1876).
A shareholder in a bank or banking association is not entitled to a deduction from the assessment of his shares, under Laws 1866, chap. 761, on account of his debts. People ex rel. Cagger v. Dolan, 36 N. Y. 59 (1867); overruled by People v. Weaver, 100 U. S. 539.
Under Laws of 1866, chap. 761, when the assessors have fixed the value of the shares, a proportionate deduction is to be made of the assessed value of the real estate. The deduction is thus made from the real and not from the nominal value of the capital. People ex rel. Tradesmen's Nat. Bank v. Commrs. of Taxes, 69 N. Y. 91 (1877); reversing 9 Hun, 650.
The situs of the property in national bank shares may, for the purposes of taxation, be separated from the residence of the owner, under the Banking Act. Tappen v. Merchants' Nat. Bank, 19 Wall. 490 (1873).
In proceedings by a bank to compel supervisors to refund taxes claimed to be illegally assessed, because the assessors did not deduct the value of the real estate when assessing the shares, but assessed both
at full value-held, that, in the absence of proof to the contrary, the assessors would be presumed to have made the deduction required by law, and that their affidavit that they had assessed the taxable personal estate at the full value thereof was not evidence that the deduction was not made. Matter of Farmers' Nat. Bank, 1 Thomp. & C. 383 (1873).
The requirement that the shares shall be assessed in the town or ward where the bank is situated is valid, since they are susceptible of a separate situs from the person of the owner. Williams v. Weaver, 75 N. Y. 30 (1878).
Placing the value of bank shares in a separate item in the column of personalty does not invalidate the assessment, and does not contravene section 5219, United States Revised Statutes. Where the assessors valued bank shares at their par instead of their market value - held, that this, though erroneous, did not make them individually liable, as they had jurisdiction. Williams v. Weaver, 75 N. Y. 30 (1878); affirmed, 100 U. S.
The omission of a city clerk to extend upon the assessment-roll the amount to be paid by each shareholder, until after such roll has been delivered to the city treasurer, does not render the taxation of such shares void. First Nat. Bank of Utica v. Waters, 7 Fed. Repr. 152 (1881).
The fact that the commissioners reduced the valuation of the real estate of a bank does not authorize them to increase the valuation of the shares without the notice which the law requires after the books are opened for correction. Laws 1882, chap. 409, §§ 314, 317, 318, apply to the time when assessments of the value of the capital stock of banks shall be made as well as of other personal property. Apgar v. Hayward, 21 Jones & S. 357 (1886).
In the assessment of shares of national banks in the city of New York, under Laws 1880, chap. 596, § 3 (amended by Laws 1881, chap. 477), when the owner does not reside in the ward where the bank is located, and has no real estate therein, it is proper that the assessment be made upon a list specially prepared for that purpose, although the owner lives and is assessed for personal property in another ward. Such a mode of assessment is not in conflict with section 5219 of the Revised Statutes of the United States. McMahon v. Palmer, 102 N. Y. 176 (1886); affirming 12 Daly, 362.
14. Place of taxation of individual bank capital-Every individual banker shall be taxable upon the amount of capital invested in his banking business in the tax district where the place of such business is located and shall, for that purpose, be deemed a resident of such tax district.
[Revisers' Note.-L. 1882, chap. 409, § 320; R. S., 8th ed., 1581, without change in substance.]
See 25 for manner of assessment.