Gambar halaman
PDF
ePub

First National Bank v. Douglas County.

alleged, the collector is about to collect by entering the bankinghouse of the plaintiff and seizing its property.

The bill avers that the capital of the plaintiff is $200,000, and that this amount is wholly invested in bonds issued by the United States; the stock is divided into shares of $100 each, and is valued for taxation at that sum. The object of this bill is to have the whole tax declared void, and to restrain its collection.

The principal ground for the relief asked is, that the act of the Legislature of the State, passed February 27th, 1873, which provides for the taxation of shares in National banks, is void, for noncompliance with the conditions upon which, under the acts of Congress, such taxation by the State, or under its authority, is permissible. The third section of this act is in these words: "The stockholders of every National bank located in this State, or of any bank incorporated under the laws of the State, shall be assessed and taxed on the value of their shares of stock therein in the precinct where such bank is located, whether the stockholders reside in such place or not. Such shares shall be listed and assessed with regard to the ownership thereof, subject, however, to the restriction that taxation of such shares shall not be at a greater rate than is assessed upon any other moneyed capital in the hands of individual citizens of this State, in the county or precinct where such bank is located. The shares of capital stock of National banks not located in this State, held in this State, shall not be required to be listed under the provisions of this act. Each National bank shall furnish to the assessor a full and correct list of the names and residences of its stockholders, and the number of shares held by each, and the assessor shall report the same to the county clerk in his assessment return. The taxes against such shares shall be levied against the holder of the same, in the list of personal property, and shall be paid by the bank.

The revenue law of the State further provides that the value of stock incorporations shall be taxed, and that "in assessing the value of such stock, the actual value, in cash, of all the property that is represented, shall be considered, and no deduction shall be made in such valuation by reason of debts owing by said corporation, unless, as in other cases, such deductions be made from the item of money and credits listed by such corporation."

The plaintiff contends that the act of February 27th, 1873, is void, and no tax can be lawfully levied thereunder, because :

1. The act does not provide that the tax imposed on the shares

First National Bank v. Douglas County.

shall not exceed the rate imposed upon the shares of banks organized under the authority of the State.

2. The act in effect provides for the taxation of the capital of the National bank, and not of the shares in the hands of the stockholders thereof, forasmuch as thereunder the valuation of the entire property of the bank is to be first ascertained, and the bank itself to pay the taxes the name of the stockholder being used merely to give to the proceedings the color of a tax upon the shareholder's interest.

The act of Congress, in express terms, allows the States to impose taxes upon the shares of National banks, and the only substantial limitation upon the power of the States is that they shall not subject these shares to taxation to an amount greater than they assess upon their own banks, or upon moneyed capital in the hands of their own citizens.

The first objection above stated to the State enactment is not well taken. The act provides in terms that the stockholders in all banks, State and National, shall be assessed and taxed on the value of their shares therein. This is equivalent to a provision that there shall be no discrimination in favor of the State banks, and against the National banks, and it is not necessary that there should be added a clause that the tax imposed on the shares in National banks shall not exceed that imposed on shares in State banks.

It is next urged as an objection to the State legislation above mentioned, that it in effect provides for a tax upon the capital instead of the shares of the banks, and that the capital of the plaintiff is invested in United States securities, which are exempt from taxation, the taxation under the law of the State is illegal. By recurring to the act of the State, it will be seen that it does not undertake to tax capital, but only shares, and that this mode is prescribed for shares in both classes of banks. It is settled by the decisions of the Supreme Court of the United States that, as respects the power to tax, there is a distinction between capital and shares; and that the shares may be taxed although the entire capital of the bank is invested in United States bonds, and that in the valuation of such shares for taxation, such valuation is not illegal because the assessing officers have not deducted the value conferred upon the shares by the non-taxable United States securities owned by the bank. Van Allen v. Assessors, 3 Wall. 573; People ex rel. Duer v. Tax Commissioners, 6 Am. Law Reg. 467; Lionberger v. Rouse, 9 Wall. 470.

Bowden v. Santos.

The above cases are decisive against the objection we are now considering to the act of the State. It does not attempt to discriminate against the National banks, but provides one and the same mode for ascertaining the value of shares in the stock of all corporations, and more than this the legislation of Congress does not require. Lionberger v. Rouse, supra.

The bill does not state that the valuation of the shares in the plaintiff's bank is in excess of their actual value, nor that the valuation of the shares in the State Bank of Nebraska is less than their real value, and states no fact showing that the taxation, which the plaintiff seeks to avoid, is in fact excessive or disproportionate. It is, therefore, destitute of any substantial equity.

It is alleged on information and belief that the capital of the banking partnership of Caldwell, Hamilton & Co. has not been assessed for taxation, but it is not stated that this has been intentionally done, nor does the bill negative that this may have been an accidental omission, and hence makes no case entitling the plaintiff to relief against the payment of taxes in question.

It is, however, insisted that the bank cannot be made liable in respect of the taxes on the shares, and that the collector ought to be restrained from making distress of the property of the bank. But the act of the State in terms provides that the taxes on the shares "shall be paid by the bank," and it is competent to make such a provision. National Bank v. Commonwealth, 9 Wall. 354; Lionberger v. Rouse, supra. Undoubtedly the bank could be made liable to pay such taxes by suit, and no reason is seen why the collection may not be enforced by distraint in the same manner as other taxes are collected. The demurrer to the bill is sustained and the

bill dismissed.

Decree accordingly.

BOWDEN V. SANTOS.

(1 Hughes, 158.)

Transfer of stock to escape liability to creditors.

Shareholders in a National bank, knowing it to be insolvent, transferred their shares for the purpose of escaping liability to creditors. Held, that as to such creditors the transfer was void.*

(Circuit Court, Fourth Circuit, Eastern District of Virginia.)

*See Magruder v. Colston (44 Md. 349), post.

Bu

Bowden v. Santos.

ILLS in chancery filed by Bowden, receiver of the First National Bank of Norfolk, to enforce the personal liability of defendants as owners of shares of stock in said bank.

L. L. Lewis, for plaintiff.

Baker & Walke and W. H. C. Ellis, for defendant.

HUGHES, J. The bill in this case is filed to set aside certain transfers of the shares of the capital stock of the First National Bank of Norfolk (of which the plaintiff is receiver), made by the defendant Santos, to the defendants Lamb and Williams, a few days before the suspension of the bank, in May, 1874. It also prays that Santos may be decreed to pay to the plaintiff the par value of the shares thus transferred.

As to the facts, the bank suspended on the 26th day of May, 1874, and is utterly insolvent. The defendants Santos and Lamb, at the time of its suspension, were directors, and for a long time prior thereto had been officers of the bank. The defendant Lamb was president up to a short time before its suspension. For some time. before that event the bank had been in a critical condition, and it had been evident to the officers that its "suspension was a mere question of time." The defendant Santos, aware of the condition of the bank (it was the subject of frequent discussion by the directors), and anxious to relieve himself of liability as the holder of the stock in question, transferred in due form, on the books of the bank, to Lamb, nineteen of his shares on the 16th May, and his remaining twenty shares to Williams, on the 21st day of May, 1874.

At the time of these transfers both Lamb and Williams were insolvent, and have ever since been unable to respond to the demands of the creditors on account of these shares. At the time of the transfers there was already standing in the name of Lamb on the books of the bank over 200 shares of its capital stock. The receiver has been unable to make any thing out of either Lamb or Williams, on account of their liabilities to the bank.

On the other hand, Santos, at the time of the transfers, was, and is, a man of high standing and credit in business circles, and of large means. In his answer it is averred by Santos that the transfer of the shares was a bona fide transaction, and for valuable

Bowden v. Santos.

consideration; but the allegation in the bill that Williams was insolvent, and unable to respond to the demands of the creditors on account of these shares, is not denied. It is abundantly established by the evidence in the case that the transfers were made to exonerate the defendant Santos from his liability as stockholder.

In his answer, Santos declares that he was never the purchaser or owner of the nineteen shares transferred to Lamb, and yet the testimony shows that he executed his note (which he has since been requested to pay) for these shares, and that they stood in his name on the books of the bank for a considerable number of months before he transferred them to Lamb.

The defense set up that these shares were formerly bought in by Lamb for account of the bank, and that it was agreed between them that if Lamb, acting for the bank, would buy the shares for the bank, he might place them in Santos' name, provided he would indemnify him, i. e., take a transfer of the shares when it should be desired by Santos, is invalid. Under the provisions of the National Currency Act (Rev. Stats., § 5201), a National bank is prohibited from purchasing or holding its own shares. What is forbidden to be done directly the law does not allow to be done indirectly. Consequently the promise on the part of Lamb to take the shares when requested, if it could be sustained on any ground, under the circumstances of this case, certainly cannot be sustained on the ground upon which it is placed in the answer. It is founded upon an illegal agreement, and the case comes strictly within the ruling of the judges in the case of Ex parte Walker, 39 Eng. L. and Eq. 579.

Plain as these facts are, they are no plainer than the law of the case. Indeed, there is no serious defense set up against the prayer of the bill, except the technical one that a bill does not lie, no discovery being sought, and there being adequate remedy at law. Counsel for defense rely, as to the doctrine that there is no such thing as fraud per se, on Davis v. Turner, 4 Rand. 422, and as to jurisdiction of equity where no discovery is sought, on Home Ins. Co. v. Stanfield, 1 Dill. 424, and Medyl v. Mayes, 6 Rand. 658. But this is a case of trust, and equity has jurisdiction in all matters of trust. That the capital stock of an incorporated company is a trust fund for the payment of the debts, and is required by courts of equity to be honestly and faithfully regarded and handled, is settled by very many decisions of the courts of this country. I refer only to

« SebelumnyaLanjutkan »