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district taxes; and any failure to do so would destroy the uniformity required by the Constitution with respect to the property within the limits of the body imposing the taxes.

There being, then, no valid law in force in this State, by which the shares of stock in National Banks belonging to residents of the State can be taxed, the shares owned by non-residents cannot be taxed, because the proviso to section 41 of the Act to provide a national currency, of June 3, 1864, expressly declares that there shall be no tax imposed upon non-residents that is not imposed upon residents of the State. Van Allen v. Assessors, supra; see, Wells v. Weston, 22 Mo., 385; Covington v. Southgate, 15 B. Mon., 491; Morford v. Unger, 8 Ia., 82; Langworthy v. Dubuque, 13 Ia., 86; Woolbridge v. Detroit, 8 Mich., 301; Phila. Asso. v. Wood, 39 Pa., 73; Sacramento v. Crocker, 16 Cal., 119; Trustees v. McConnel, 12 Ill., 140; O'Kane v. Treat, 25 Ill., 557; Hunsaker v. Wright, 30 Ill., 148; R. R. Co. v. Morgan Co., 14 Ill., 163; Mills v. Thornton, 26 Ill., 300; King v. McDrew, 31 Ill., 421; Chicago v. Larned, 34 Ill.,275. If the shares can be taxed at all at the place of the bank's location, irrespective of the owner's residence, it must be by requiring the bank to pay the taxes, or some equivalent process in rem. It does not seem probable, however, that under the State Constitution even this could be done as against residents of the State living out of the bank's district. It is sufficient for the purposes of this case, that this has not been attempted by the Law of June, 1867.

II. The Law of June, 1867, is in contravention of the proviso of the 41st section of the National Currency Act and, therefore, void.

This proviso is that the shares cannot be subjected to taxation "At a greater rate than is ascertained upon the moneyed capital in the hands of individual citizens of the State."

I do not contend that this requires the tax authorities to ascertain the lowest rate of taxation on moneyed capital in any one of the very many municipal bodies into which the State is divided, and that this should be taken as the maximum rate proper to be observed in the taxation of bank stock. I think that would be an unreasonable and impracticable rule. But I do insist that the rate should be the same as the rate upon moneyed capital in the hands of individual citizens in the various districts where the shareholders reside, and that that is the rate imperatively required by the proviso in question taken in connection with the rules of taxation prescribed by the State Constitution. III. The opinion of the Supreme Court of Illinois, that the Law of 1867 is valid, is erroneous, and this court is not bound to adopt its conclusion.

First. The decision of the United States Court was reached and announced in August, 1871. This was not, as appears from the opinion of the learned judge who pronounced it, until after an effort had been made to bring the case before this court upon an agreed statement of facts, and that effort had failed. The decree was not reached until December, 1872, and no appeal has, as yet, been prosecuted therefrom.

In the case at bar, the decree was rendered Dec. 5, 1872, and the record upon appeal filed herein, Oct. 16, 1873.

When the United States Courts first obtain

jurisdiction, the state courts must give way, so, by analogy, at least, when the United States Court has declared a state law unconstitutional, no subsequent decisions of the state court can intervene and prevent an independent investiga tion and decision upon the merits by this court. Second. But, as we have seen, the construction of the law of Congress is involved; and this being so, the state courts can lay down no rule which this court is bound to follow.

Third. The legislation and judicial decisions in Illinois have uniformly agreed with the positions I have taken, up to the decision in ques

tion.

Trustees v. McConnel, 12 Ill., 140; Chicago v. Larned, 34 Ill., 267; Harward v. St. Clair Levee Co., 51 Ill., 130; Supervisors v. Davenport, 40 Ill., 197; Dunleith v. Reynolds, 53 Ill., 45, and the numerous other cases cited ante.

Fourth. The case at bar also involves contract obligations. "A law which alters the terms of a contract by imposing new conditions or dispensing with those expressed is a law which impairs its obligation, for, as stated on another occasion, such a law relieves the parties from the moral duty of performing the original stipulations of the contract, and it prevents their legal enforcement. State Tax on Foreign held Bonds, supra.

Fifth. While I concede that it is the practice of this court to follow the latest settled adjudications of the state courts, giving construction to the laws and constitutions of their own State, it will not necessarily follow decisions which may prove but oscillations in the course of such settlement. Nor will it follow any adjudication to such an extent as to make a sacrifice of truth, justice and law. Gelpcke v. Dubuque, 1 Wall., 175, 17 L. ed., 520.

*Mr. Chief Justice Waite delivered [*499 the opinion of the court:

We are called upon in this case to determine whether the General Assembly of the State of Illinois could, in 1867, provide for the taxation of the owners of shares of the capital stock of a national bank in that State, at the place, within the State, where the Bank was located, without regard to their places of residence. The Statute of Illinois, under the authority of which the taxes complained of were assessed, was passed before the Act of Congress, approved February 10, 1868, 15 Stat. at L., 34, which gave a legislative construction to the words, "place where the Bank is located, and not elsewhere," as used in section 41 of the National Banking Act, 13 Stat. at L., 112, and permitted the State to determine and direct the manner and place of taxing resident shareholders, but provided that non-residents should be taxed only in the city or town where the bank was located.

The power of taxation by any State is limited to persons, property or business within its jurisdiction. State Tax on Foreign-held Bonds (R. R. Co. v. Pa.), 15 Wall., 319, 21 L. ed., 186. Personal property, in the absence of any law to the contrary, follows the person of the owner, and has its situs at his domicil. But, for the purposes of taxation, it may be separated from him, and he may be taxed on its account at the place where it is actually located. are familiar principles, and have been often acted upon in this court and in the courts of

These

Illinois. If the State has actual jurisdiction of the person of the owner, it operates directly upon him. If he is absent and it has jurisdiction of his property, it operates upon him through his property.

Shares of stock in national banks are personal property. They are made so in express terms by the Act of Congress under which such banks are organized. 13 Stat. at L., 102, sec. 12. They are a species of personal property which is, in one sense, intangible and incorporeal, but the law which creates them may sepa500*] rate *them from the person of their owner for the purposes of taxation, and give them a situs of their own. This has been done. By section 41 of the National Banking Act, it is in effect provided that all shares in such banks, held by any person or body corporate, may be included in the valuation of the personal property of such person or corporation in the assessment of taxes imposed under state authority, at the place where the bank is located, and not elsewhere. 13 Stat. at L., 112. This is a law of the property. Every owner takes the property subject to this power of taxation under state authority, and every non-resident, by becoming an owner, voluntarily submits himself to the jurisdiction of the State in which the bank is established for all the purposes of taxation on account of his ownership. His money in

vested in the shares is withdrawn from taxation under the authority of the State in which he resides and submitted to the taxing power of the State where, in contemplation of the law, his investment is located. The State, therefore, within which a national bank is situated has jurisdiction, for the purposes of taxation, of all the shareholders of the bank, both resident and non-resident, and of all its shares, and may legislate accordingly.

The State of Illinois thus having had, in 1867, the right to tax all the shareholders of National Banks in that State on account of their shares, it remains to consider at what place or places within the State such taxes could be assessed.

It is conceded that it was within the power of the State to tax the shares of non-resident shareholders at the place where the bank was located, but it is claimed that under the Constitution of the State resident shareholders could only be taxed at the places of their residence. We have not been referred to any express provision of the Constitution to that effect. There is nothing which in terms prohibits the General Assembly from separating personal property within the State from the person of the owner and locating it at appropriate places for the 501*] purposes of taxation, but it is insisted that sections 2 and 5 of Article IX. of the Constitution of 1848, which was in force when the Act of 1867 was passed, contain an implied prohibition.

may be vested with power to assess and collect taxes for corporate purposes; such taxes to be uniform in respect to persons and property within the jurisdiction of the body imposing the same. And the General Assembly shall require that all property within the limits of municipal corporations belonging to individuals shall be taxed for the payment of debts contracted under authority of law." The corresponding provisions of the Constitution of 1870 are in substance the same.

The object of these sections is to secure uniformity of taxation. That, it is said in Bureau Co. v. R. Co., 44 Ill., 238, is to be regarded as the cardinal principle, the dominant idea of this article of the Constitution. But uniformity in this connection is only another name for equality, for the provision is for "levying a tax by valuation, so that every person and corporation shall pay a tax in proportion to the value of his or her property." The value of the property being ascertained, the same rate of taxation must be laid upon all.

Property is made the constitutional basis of taxation. This is not unreasonable. Governments are organized for the protection of persons and property and the expenses of the protection may very properly be apportioned among the persons protected according to the value of their property protected.

The Constitution does not undertake to fix the value of the property. Neither does [*502 it prescribe any rules by which it is to be fixed. That is left to the General Assembly, for the provision in that respect is, "such value to be ascertained by some person or persons to be elected or appointed in such manner as the General Assembly shall direct, and not otherwise." The mode and manner in which the persons appointed to make the valuation shall proceed, are left to the discretion of the General Assembly. In fact, the whole machinery of taxation must be contrived and put into operation by the Legislative Department of the government.

As part of this machinery, taxation districts must be created. All property within the district must be taxed by a uniform rate. If property is actually within a district it is but proper that the Legislature should provide that it should be listed, valued and assessed there. In fact, the last clause of section 5, Article IX., seems to make that a duty, for it provides that the General Assembly shall require that all property within the limits of municipal corporations, belonging to individuals, shall be taxed for the payment of debts contracted under authority of law.

This power of locating personal property for the purpose of taxation without regard to the residence of the owner has been often exercised in Illinois, and sustained by the courts. Dunleith v. Reynolds, 53 Ill., 45. Since the adoption of the Constitution of 1870, which did not Section directs that "the General Assembly enlarge the powers of the General Assembly in shall provide for levying a tax by valuation, so this particular, very extended legislation has that every person or corporation shall pay a tax been had with a view to such location. Thus, in proportion to the value of his or her prop- live stock and other personal property used erty; such value to be ascertained by some per- upon a farm, must be listed and assessed where son or persons to be elected or appointed in the farm is situated; property in the hands of such manner as the General Assembly shall di- agents at the place where the business of the rect, and not otherwise." Section 5 directs that agent is transacted; water craft where they are "The corporate authorities of counties, town-enrolled; or, if not enrolled, where they are ships, school districts, cities, towns and villages, kept; the property of bankers, brokers, mer

chants, manufacturers and many other classes of persons specially enumerated, at the place where their business is carried on. This became necessary in order that the burdens of taxation might be equally distributed among those who should bear them.

503*] *We do not understand the counsel for the appellee to dispute this power, where the property is tangible and capable of having, so to speak, an actual situs of its own, but he claims that if it is intangible, it cannot be separated from the person of its owner. It must be borne in mind that all this property, intangible though it may be, is within the State. That which belongs to non-residents is there by operation of law. That which belongs to residents is there by reason of their residence. All the owners have submitted themselves to the jurisdiction of the State, and they must obey its wil when kept within the limits of constitutional power.

The question is then presented whether the General Assembly, having complete jurisdiction over the person and the property, could separate a bank share from the person of the owner for the purposes of taxation. It has never been doubted that it was a proper exercise of legislative power and discretion to separate the interest of a partner in partnership property from his person for that purpose, and to cause him to be taxed on its account at the place where the business of the partnership was carried on. And this, too, without reference to the character of the business or the property. The partnership may have been formed for the purpose of carrying on mercantile, banking, brokerage or stock business. The property may be tangible or intangible, goods on the shelf or debts due for goods sold. The interest of the partner in all the property is made taxable at the place where the business is located.

A share of bank stock may be in itself intangible, but it represents that which is tangible. It represents money or property invested in the capital stock of the Bank. That capital is employed in business by the bank, and the business is very likely carried on at a place other than the residence of some of the shareholders. The shareholder is protected in his person by the government at the place where he resides; but his property in this stock is protected at the place where the bank transacts its business. If he were a partner in a private bank doing business at the same place, 504*] *he might be taxed there on account of his interest in the partnership. It is not easy to see why, upon the same principle, he may not be taxed there on account of his stock in an incorporated bank. His business is there as much in the one case as in the other. He requires for it the protection of the government there, and it seems reasonable that he should be compelled to contribute there to the expenses of maintaining that government. It certainly cannot be an abuse of legislative discretion to require him to do so. If it is not, the General Assembly can rightfully locate his shares there for the purpose of taxation.

But it is said to be a violation of the consti19 WALL

tutional rule of uniformity to compel the owner of a bank share to submit to taxation for this part of his property at a place other than his residence, because other residents are taxed for their personal property where they reside. It is a sufficient answer to this proposition to say that all persons owning the same kind of property are taxed as he is taxed. Absolute equality in taxation can never be attained. That system is the best which comes the nearest to it. The same rules cannot be applied to the listing and valuation of all kinds of property. Railroads, banks, partnerships, manufac turing associations, telegraph companies, and each one of the numerous other agencies of business which the inventions of the age are constantly bringing into existence, require different machinery for the purposes of their taxation. The object should be to place the burden so that it will bear as nearly as possible equally upon all. For this purpose different systems, adjusted with reference to the valuation of different kinds of property, are adopted. The courts permit this. Thus, in a case in Illinois, involving the system adopted for the taxation of bank shares, it was said by the Supreme Court (McVeagh v. Chicago, 49 Ill., 329), "In view of this legislation it must be apparent that a system of taxation for bank shares, was designed peculiar to itself and independent of the general revenue laws of the State;" and the authority of the law was sustained and enforced.

*Again; it is said the law in question [*505 destroys the uniformity of taxation, because it provides for the collection of the taxes assessed on account of this kind of property in an unusual way. The Constitution does not require uniformity in the manner of collection. Uniformity in the assessment is all it demands. When assessed the tax may be collected in the manner the law shall provide, and this may be varied to suit the necessities of each case.

Since the decree was rendered in the circuit court, the Supreme Court of Illinois has passed upon this same question and declared the Law of 1867 to be constitutional. We might have contented ourselves by acknowledging the authority of this decision, but we are willing not only to acknowledge its authority, but to admit its correctness.

We have not felt called upon to consider whether the General Assembly could, under the provisions of the Act of Congress, provide for the taxation of shareholders at any other place within the State than that in which the Bank is located. It is sufficient for the purposes of this case that it might tax them there.

argument, and among them one which relates Other questions have been discussed in the to the power of the Bank to interfere in behalf

been done. We have not deemed it necessary to pass upon any of these questions, as those already decided are conclusive of the case.

of its stockholders in the manner which has

The decree of the Circuit Court is reversed, and the cause remanded, with instructions to proceed in conformity with this opinion.

195

548*] *THE ATLANTIC, TENNESSEE & | promise to pay 'dollars' was contrary to the OHIO RAILROAD COMPANY, the Charlotte fact." & South Carolina Railroad Company, Joseph H. Wilson, and Anderson Mitchell, Appts.,

v.

THE CAROLINA NATIONAL BANK OF COLUMBIA, South Carolina, L. D. Childs, and C. H. Manson.

(See S. C., "The Confederate Note Case," 19 Wall., 548-560.)

Railroad bonds, how payable-construction of

-interest thereon-usury.

1. The bonds issued in May, 1862, of the Atlantic, Tennessee and Ohio Railroad Company, a Corporation created by the State of North Carolina, were not payable in Confederate notes, but only in the legal currency of the United States.

2. The intention of the Railroad Company that the principal of its bonds should be paid in lawful money instead of Confederate notes, may justly be inferred from the nature of the contracts, particularly the long period before they were to mature. 3. There is sufficient in the circumstances of this case to repel the presumption created by the Ordinance of 1865, and Act of 1866, of North Carolina; and the ordinary presumption of law, as to the meaning of the parties in the terms used, must pre

vail.

4. With reference to the interest, payable semiannually, a different presumption cannot be allowed, as the interest must follow the character of the principal.

5. Usury, as a defense, must be specially pleaded or set up in the answer, to entitle it to consideration.

[No. 263.]

Argued Mar. 30, 31, 1874. Decided Apr. 13, 1874.

A

PPEAL from the Circuit Court of the United States for the District of North Carolina. The case is stated by the court. Messrs. William W. Boyce and S. F. Phillips, for appellants:

The court erred in holding that the bonds and coupons in suit were payable in legal currency of the United States, but should, at the utmost, have held that they were payable in Confeder ate currency, according to its value in May, 1862.

It is submitted that obligations simply to pay "dollars" during the war, made within the Confederate States, should be taken to intend Confederate currency for the following reasons: (a) It was the only currency in general use. Taxes were paid in it. Salaries paid in it. Debts paid in it.

: Army paid in it.

Trust funds invested in it.

The banks received and paid it out universally.

"For four years and more, Confederate notes were the only currency of the country. Contracts during that period were predicated on that currency."

Pharis v. Dice, 21 Gratt. (Va.), 309. Confederate currency during the war, was "the only currency the banks were then receiving and paying out."

Hilb v. Peyton, 21 Gratt. (Va.), 395.

"In the abnormal condition of the currency, the presumption of the common law, as to

NOTE.-Contracts payable in Confederate notes; tender of see note to Thorington v. Smith, 19 L. ed. U. S. 361.

Walker v. Pierce, 21 Gratt., 726; see, also, Hale v. Wilkinson, 21 Gratt. (Va.), 88; Dearing v. Rucker, 18 Gratt., 439; Neely v. McFadden, 2 Rich., N. S. (S. C.), 174; Thorington v. Smith, 8 Wall., 13, 19 L. ed., 364.

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In this connection, attention is called to the ordinance of the Convention of North Carolina, of Oct., 1865, which establishes, as a presumption of law, that contracts to pay "dollars,' made during the war, are presumed to be payable in Confederate currency, subject to evidence of a different intent.

Laws of N. C. for 1866, sec. 39, p. 98.

Valuation by statutes of N. C., as value of Confederate currency for month of May, 1862. Ibid. for 1866, ch. 38, p. 97.

Here it is proper to call attention to the fact that the precise question raised in this case, as to the meaning of the term "dollars" in the bonds and coupons in suit, has been raised and decided on certain of the bonds and coupons of the identical issue of the bonds and coupons in this case, by the Supreme Court of North Carolina, in the case of Alexander v. R. Co., 67 N. C., 198.

It is assumed, then, from the above considerations and authorities, that the above presumption of law established by the Ordinance of the State of North Carolina, as to the term "dollars" in contracts made in North Carolina during the war, is to have effect in the present

case.

Claiming the full benefit of this presumption of law, we proceed to consider the case from the facts peculiar to the transaction.

(a) The Exchange Bank gave Confederate currency for the bonds in suit at 91 cents on the dollar. The Atlantic, Tennessee & Ohio Railroad Company transferred its obligation to pay so many "dollars" for $91.50 in Confederate currency.

(b) It is to be noted that the coupons of the Company's bonds were payable at the end of every six months.

The

It is not pretended that lawful money was demanded for the early accruing coupons. On the contrary, the early accruing coupons must have been paid in Confederate currency, because the plaintiffs claimed that only fifteen past due coupons on their bonds were unpaid when their bill was filed Apr. 28, 1871. issue of the bonds was dated May 1, 1862. From that date the interest, as evidenced by the coupons, began to run. From that date to the filing of the bill, was within one month of nine years. Seventeen coupons had become due then when the bill was filed. We consider ourselves authorized to presume, having regard to the fact that Confederate currency was the sole currency in circulation in the Confederate States in 1862 and 1863, and in the absence of evidence to the contrary, that the first two coupons on plaintiff's bonds were paid in Confederate currency. If these first two coupons had been paid in lawful currency, it was an important fact, which the plaintiffs below could have proved. Not having proved it, we assume that the first two coupons were paid in Confederate

currency.

This is a controlling fact. It shows a contemporaneous exposition of the meaning of the

term "dollars" as used by the Company. Contemporanea expositio est optima et fortissima in lege.

(c) The bonds authorized to be issued by the Company by resolution of the stockholders, the authority for the validity of the bonds on which the plaintiffs below rely, were to bear interest at the rate of six per cent.

Now, it is impossible, under this limitation to six per cent. of a rate of interest, that the parties receiving the bonds could suppose or the Company could intend that bonds bearing six per cent. interest, negotiated at 99 cents on the dollar in depreciated Confederate currency, could be solvable only in lawful currency. If so, then the bonds in question were paying nearly twelve per cent. interest at the date of their issue.

On the assumption that the Company and the Exchange Bank intended to make a lawful contract, we are bound to presume that the bonds and coupons were solvable in Confederate cur

rency.

(d) The deed of trust provided that if any of the principal or interest was unpaid, the trustee should sell the property of the Company for "ready money" in the Town of Charlotte, N. C.

Under this provision the sale of the road might have been had in ninety days after the October coupons were due in 1862. The road was to be sold for "ready money."

Now, we ask what other "ready money" was then in circulation at Charlotte, N. C., except Confederate currency?

(e) The trustees in their answer state: "Nor have they any personal knowledge of any statement of the President or other officers of said Company, that said bonds were not Confederate paper, but payable in lawful money." We submit that this statement of the trustees is of great importance.

As matter of current history, we assume that the general business of the country where these bonds were issued, at the time of their issue, was carried on in Confederate currency. Such was undoubtedly the almost universal rule.

Under this condition of things, if the bonds in question were intended to mean, not Confederate dollars, but lawful dollars of the United States, it is surely a most remarkable fact that the trustees knew nothing of it.

(f) The trust deed recites that the Company had determined to borrow $250,000, and to execute bonds therefor, in the sum of $500 each.

No one can doubt, from the light of the attending circumstances, that the Company intended to borrow the $250,000 in Confederate currency. Such being the case, what reason is there for supposing the "bonds for $500 each" meant a different currency? These two expressions occur in the same sentence, and according to all principle of rational construction, they must be taken to mean the same thing.

If we are right in that conclusion, it is clear the bonds in suit are payable in Confederate currency.

Mr. H. W. Guion, for appellees: By a convention, assembled in North Carolina Oct. 2, 1865, an ordinance was adopted bearing the title of "An Ordinance Declaring what Laws and Ordinances Are in Force, and for Other Purposes;" in the 3d section of which will be found, the following:

"It shall be the duty of the General Assembly to provide a scale of depreciation of the Confederate currency from the time of its first issue to the end of the war; and all executory contracts solvable in money, whether under seal or not, made after the depreciation of said currency before the first day of May, 1865, and yet unfulfilled (except official bonds and penal bonds payable to the State) shall be deemed to have been made with the understanding that they were solvable in money of the value of the said currency; it shall be competent for either of the parties to show by parol or other relevant testimony, what the understanding was in regard to the kind of currency in which the same was solvable; and in such case, the true understanding shall regulate the value of the contract: Provided, That, in case the plaintiff in any suit upon such contracts will make an affidavit that it was solvable in other currency than that above referred to, then such presumption shall cease, and it shall be presumed to be payable in such currency as shall be mentioned in the affidavit, subject to explanation by evidence as aforesaid."

Ratified in Convention Oct. 18, 1865.

The Legislature in the ensuing year passed two Acts connected with the subject; the first is as follows, viz.:

"An Act Relating to Debts Contracted During the Late War.

Whereas, A great many debts, which were contracted during the war, and yet unsettled, said debts having been incurred for property bought at irregular and extravagant prices, or for currency at a depreciated value; and whereas, the late State Convention made it obligatory on this General Assembly to provide a scale of depreciated currency for the settlement of these debts; and whereas, this General Assembly finds great difficulty in fixing a scale which will secure justice to citizens of all sections of the State; and whereas, in the opinion of this General Assembly, no scale which will do justice to all sections of the State can be adopted; therefore,

Section 1. Be it enacted, That, in all civil actions which may arise in courts of justice for debts contracted during the late war, in which the nature of the obligations is not set forth, nor the value of the property for which said debts were created is stated, it shall be admissible for either party to show on trial, by affidavit or otherwise, what was the consideration of the contract, and the jury in making up their verdict shall take the same into consideration and determine the value of said contract in present currency, in the particular locality in which it is to be performed, and render their verdict accordingly.

Ratified, Mar. 12, 1866."

The second Act above referred to is as follows: "An Act to Establish a Scale of Depreciation of Confederate Currency.

Whereas, By an Ordinance of the Convention entitled 'An Ordinance Declaring what Laws and Ordinances are in Force, and for Other Purposes,' ratified the 18th of October, 1865, it is made the duty of the General Assembly to provide a scale of depreciation of the Confederate currency from the time of its first issue to the end of the war; and it is further therein

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