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Whitney et al. v. Ragsdale.

from the language employed. The second section of the act requires the president or cashier of the bank to deliver a statement of the names and amount of interest of each stockholder to the proper county auditor on or before the 15th day of March in each year. The act was approved and went in force on that day. To enable bank officers to comply with the law for that year, however, the second section of the act declares, that "the sworn statement, required by the second section of this act, may be made for the year 1867, at any time on or before the 1st day of May, but for subsequent years shall be made within the time required by the said second section."

To construe the word "may" as simply permissive would render the provision not only idle, but absurd. It would be an insult to the Legislature to suppose that they intended to allow each bank to elect whether or not its stockholders should be taxed.

The next objection is to the law itself. While it is admitted that this law is within the act of Congress, it is contended that it is in conflict with a provision contained in the section of the State Constitution already cited, requiring "a uniform and equal rate of assessment and taxation." The specification is, that as to the listing and valuing of all his other personal property, each owner is allowed to attend to it himself, but as to National bank stock, he is represented by an officer of the bank. But as to real estate, he makes no return or estimate of value. In that case, as in this, such return and estimate are made by another person under oath. But this objection was disposed of in the case of The Louisville & N. A. R. R. Co. v. The State ex rel. McCarty, etc., 25 Ind. 177, where the point was made, that where the law provided a special method for the appraisement of the real estate belonging to a railroad, it was in contravention of the constitutional provision in question, and was, therefore, void. But this court, in deciding that case, sustaining the law, said: "The Constitution does not require a uniform method of valuation of property, but only such regulations as shall secure a just valuation for taxation of all property, both real and personal.' The Legislature must use a discretion as to the best method of securing a just valuation of property, and unless the method adopted be clearly inadequate to secure that result, we cannot question its action."

It is objected, again, that the act requires the stock to be taxed where the bank is located, irrespective of the residence of the

Root v. Erdelmeyer.

owner. It is not contended that this violates any act of Congress, but that it conflicts with the "general revenue system of the State." But we are referred to no provision of the Constitution which prohibits the Legislature from declaring that all National bank stock shall be taxed at the place where the bank is located, and that all shares in other corporations shall be taxed where the owners reside. The rate of assessment and taxation is still uniform and equal. That some of the stockholders are non-residents of the State is no reason for this exemption from taxation. "It is not necessary that a person, to be amenable to the taxing power of the State, shall be a citizen of the State, or domiciled within it." Board of Supervisors v. Davenport, 40 Ill. 197.

The final fault found with the act in question is, that it is ineffectual, because it provides that an officer of the bank shall list the stock. It is contended, that such officer is "an officer of one of the fiscal agents of the general government," and, therefore, the duty cannot be imposed upon him. As the duty is not inconsistent with the trust imposed upon him as such officer of such fiscal agent, we are not prepared to admit his exemption from State authority by virtue of his position.

In this case, however, the tax has been assessed, and whether or not the act provides for extreme cases is not necessary for our consideration now.

Judgment is affirmed, with costs.

ROOT V. ERDelmeyer.

(37 Indiana, 225.)

What is not a tax for "municipal purposes."

Under a statute of Indiana, National bank stock was not taxable for municipal purposes. Held, that a tax for school purposes or for a donation by a town ship to aid in building a railroad was not a tax for "municipal purposes," and, therefore, not within the restriction.

WORL

ORDEN, C. J. Deloss Root, suing for himself as well as all others interested in the question, filed his complaint against the appellees, to restrain the collection of three items of taxes

Root v. Erdelmeyer.

assessed against shares of the capital stock of the First National Bank of Indianapolis, viz.: first, a tax of twenty-five cents on the hundred dollars, levied by the school trustees of the city of Indianapolis, for school-house purposes in said city; second, a tax of one cent on the hundred dollars, levied for Center township; third, a tax of twenty cents on the hundred dollars, levied by the commissioners of Marion county, on the property of Center township, to aid, by way of donation, the Illinois Central Railway Company.

A demurrer was sustained to the complaint in the court below, at the Special Term, which ruling was sustained on appeal to the General Term.

The plaintiff below seeks a reversal of the judgment rendered against him on demurrer.

In respect to the item of taxes to aid the railway company, it may be observed that in the case of John v. The Cin., etc., R. R. Co., 35 Ind. 539, this court decided that a township might aid, by way of subscription to the stock of a railroad company, as well as a county. And in the opinion of a majority of the court, a donation and subscription stand upon essentially the same ground. They are both provided for by law and must stand or fall together.

These observations bring us to the main and only other objection to the taxes in question, which is that they are assessed for "municipal purposes," in violation of section 9 of the act of March. 15th, 1867 (3 Ind. Stat. 34), which provides as follows, viz.:

"Nothing in this, or any other act, shall be so construed as to authorize the taxation of stock in the bank of the State of Indiana, or in any National bank, for municipal purposes."

By the statute above cited, provision is made for taxing the shares of capital stock "in any bank or banking association, chartered or organized under the laws of this State, or chartered or organized under the laws of the United States, and having its banking-house, or place of business, in this State."

The question arises, what is meant by the words "municipal purposes," as used in the section above quoted?.

The appellant contends that the words were used in the broad sense that would embrace taxation for county and township purposes, as counties and townships are municipalities. But in this broad sense a municipality embraces the State itself. This broad. construction of the words would defeat the entire law, inasmuch as the State is as much a municipality as a county or township.

Root v. Erdelmeyer.

Webster says, "Municipal, as used by the Romans, originally designated that which pertained to a municipium, a free city or town. It still retains this limited sense, but we have extended it to what belongs to a State or nation as a distinct, independent body. Municipal law or regulation respects solely the citizens of a State, and is thus distinguished from commercial law, political law, and the law of nations."

We are of opinion that the word "municipal," as used in the above statute, was used in its original restricted sense, having reference to the incorporated cities and towns in the State having authority to levy and collect taxes, and that the restriction extends only to taxes for such city or town purposes. This construction is adopted from several considerations; first, if an enlarged meaning is to be given the word "municipal," so as to embrace counties and townships, no very good reason occurs to us why it should not embrace the State, which would defeat the law itself, or the section above set out would be nugatory; second, laws exempting property from taxation are to be strictly construed. The Common Council of Indianapolis v. McLean, 8 Ind. 328; third, the history of legislation on this subject places the construction we have adopted beyond reasonable question.

The charter of the bank of the State of Indiana contains the following section:

"SEC. 15. The capital stock of said bank shall be subject to the same rate of taxation for State and county purposes as the property or stock of other moneyed corporations; and the real estate and other property of said bank and branches, situated in any city or town, shall be taxable for municipal purposes, in the same manner as other property so situated, but the capital stock of said bank or branches shall not be taxable for municipal purposes." 1G. H. 142.

In this section it is too clear to admit of controversy, that towns and cities are the municipalities contemplated, and that the prohibition to tax for municipal purposes is a prohibition only to tax for town or city purposes.

This prohibition was held valid in the case of The Bank v. The City of New Albany, 11 Ind. 139. In the case cited, there is no intimation that the prohibition extended beyond cities and towns. If there is any such provision in the general banking law of the State, it has escaped our notice.

Then came the National banks. An act of Congress permits

Root v. Erdelmeyer.

the shares in the capital stock of the National banks to be taxed by the States; provided, "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." See Wright, Auditor, etc., v. Stilz, 27 Ind. 338.

Now, in the act of March 15th, 1867, it is apparent that the Legislature intended to put the bank of the State and the National banks, in respect to taxation upon their shares of stock, upon an equality, and that they used the term "municipal purposes" therein in the same sense in which it was used in the act providing for the establishment of the bank of the State.

The township tax, and the tax levied by the board of commissioners for railroad purposes, are in no sense levied for municipal purposes within the meaning of the law in question. The same is also true with respect to the tax levied by the school trustees of the city for school-house purposes. These taxes for school-houses are not levied for any purposes of cities as such, but for a State purpose in the fullest sense of the term. They are levied to carry out the system of common school education provided for by the State, and by virtue of the laws of the State. To be sure, "each civil township and each incorporated town or city in the several counties of the State is hereby declared a distinct municipal corporation for school purposes." 3 Ind. Stat. 441, § 4. Thus each civil township in the State, as well as each incorporated city and town, is made an instrumentality by means of which the educational purposes of the State are carried out. But when taxes are assessed by means of these instrumentalities for building schoolhouses, they are assessed for school or educational purposes, and not for municipal purposes.

We are of opinion that no error was committed by the court below.

The judgment below is affirmed, with costs.

S. E. Perkins, F. J. Mattler, and S. E. Perkins, Jr., for appellant.

L. Barbour and C. P. Jacobs, for appellees.

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