of any incorporated city or town or any board of state harbor commissioners. All of the provisions of this chapter not in conflict with anything in this section contained are hereby made applicable to all proceedings had under this section. En. Stats. 1899, 234.

SHARES OF STOCK IN CORPORATIONS.

Sec. 3608, Pol. C. Shares of stock in corporations possess no intrinsic value over and above the actual value of the property of the corporation which they stand for and represent; and the assessment and taxation of such shares, and also all the corporate property would be double taxation. Therefore, all property belonging to corporations, save and except the property of national banking associations not assessable by federal statute, shall be assessed and taxed. But no assessment shall be made of shares of stock in any corporation, save and except in national banking associations, whose property, other than real estate, is exempt from assessment by federal statute. En. Stats. 1881, 56. Amd. 1899, 96.

Legislative History.

The original section did not contain the provisions as to national banks.

Section Cited.

Spring Valley Waterworks v. Schottler, 62 Cal. 115, 117, 118; McHenry v. Downer, 116 Cal. 22, 23, 28, 31, 17 Pac. 779.

Annotation.

Taxation of Stock.-Shares of stock in mining corporations constituted under the laws of California, but whose tangible property is situated in another state, are taxable. (City and County of San Francisco v. Flood, 64 Cal. 504, 2 Pac. 264.)

The revenue act does not make a corporation liable for taxes assessed on its capital stock, when such capital is represented by

shares of stock which are not the property of the corporation. (People v. National Gold Bank, 51 Cal. 508, citing 63 Cal. 526, 527, 531, 533.)

Shares of stock in a corporation, the tangible property of which is situated in another state, and subject to taxation under the laws thereof, such shares being owned by a resident of this state, are taxable here without regard to the taxes thus imposed upon the corporate property. (City and County of San Francisco v. Fry, 63 Cal. 470, citing 64 Cal. 507, 2 Pac. 264.)

Shares of stock of foreign corporations, the certificates of which were physically in the possession of the executrix of the estate owning them in San Francisco at the date of the assessment, are taxable at the latter place. Shares of stock of foreign corporations, the certificates of which were not within this state, nor in the actual possession of the executrix of the estate owning them on the tax day, but were in New York City, where they were held in pledge as collateral security for certain advances made thereon prior to the testator's death, are also taxable in this state; and bonds of foreign corporations similarly situated to the shares of stock last named are also taxable in this state. (Stanford, Executrix, etc. v. City and County of San Francisco, 131 Cal. 34, 63 Pac. 145.)

SHARES OF NATIONAL BANKS.

Sec. 3609, Pol. C. The stockholders in every national banking association doing business in this state, and having its principal place of business located in this state, shall be assessed and taxed on the value of their shares of stock therein; and said. shares shall be valued and assessed as is other property for taxation, and shall be included in the valuation of the personal property of such stockholders in the assessment of the taxes at the place, city, town, and county where such national banking association is located, and not elsewhere, whether the said stockholders reside in said place, city, town, or county, or not; but in the assessment of such shares, each stockholder shall be allowed all the deductions permitted by law to the holders of moneyed capital in the form of solvent credits, in the same manner as such deductions are allowed by the provision of paragraph six of section thirty-six hundred and twenty-nine of the Political Code of the state of California. In making such assessment to each stockholder, there shall be deducted from the value of his shares of stock such sum as is in the same proportion to such value as the total value of its real estate and property exempt

by law from taxation bears to the whole value of all the shares of capital stock in said national bank. And nothing herein shall be construed to exempt the real estate of such national bank from taxation. And the assessment and taxation of such shares of stock in said national banking associations shall not be at a greater rate than is made or assessed upon other moneyed capital in the hands of individual citizens of this state. Stats. 1899, p. 96.

Annotation.

Taxation of Shares of National Banks.-The plaintiff was the owner of certain shares of capital stock of a national bank upon which a tax for the year 1880 had been assessed, and an agreed case was submitted in the lower court by her and the defendant, who was tax collector (under section 1138 of the Code of Civil Procedure), in which the question in effect was whether the assessment was valid. Held, the provision of section 3640 of the Political Code, as amended March 22, 1880 (under which the assessment was made), so far as it applied to national banks, was in violation of the restriction imposed by section 5219 of the Revised Statutes of the United States, forbidding the taxation of such shares at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of the state; and the assessment was, therefore, void. (Miller v. Heilbron, 58 Cal. 133.)

Section 1 of article XIII of the Constitution, providing that "all property in the state not exempt under the laws of the United States shall be taxed in proportion to the value to be ascertained as provided by law," and that "the word 'property,' as used in this article and section, is hereby declared to include moneys, credits, bonds, stocks," etc., is not self-executing, but merely fixes the liability of property to taxation, and the standard upon which it is based, viz., in proportion to its value, but confines the duty of prescribing the machinery by which to ascertain the value to the legislature, with which the power of taxation is lodged; and it cannot be properly objected to the taxation of shares of national bank stock that they were not assessed in pursuance of the provisions of that section of the Constitution. (McHenry v. Downer, 116 Cal.

20, 47 Pac. 779.)

National banks are agencies of the federal government, and are not subject to the taxing power of the state without its consent; but the general government has consented, in section 5219 of the Revised Statutes of the United States, that the states may tax the stock or shares of national banks, subject to the restrictions that the taxation shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of the state, and the shares of any national banking association owned by

T

nonresidents of any state shall be taxed in the city or town where the bank is located, and not elsewhere. (McHenry v. Downer, 116 Cal. 20, 47 Pac. 779.)

The clause in the United States statute, that "the taxation shall not be at a greater rate than is assessed upon other moneyed capital," etc., means more than that there shall be no more discrimination with respect to the percentage, or any valuation which might be made, but that taking the assessment, rate of assessment, and valuation together, the taxation on shares of national banks should not be greater than on other moneyed capital, and where there is a discrimination under the state law of taxation of shares of national banks in favor of state banks or other moneyed capital, such discrimination is violative of the act of Congress. (McHenry v. Downer, 116 Cal. 20, 47 Pac. 779.)

Under section 3608 of the Political Code, shares of stock in national banks are not subject to assessment for purposes of taxation, and the shares of state banks being exempt from taxation under the section, the shares of stock in national banks cannot be assessed as other personal property, as the machinery provided therefor works such a discrimination in favor of the state banks and against shares of national banks, as to be violative of the restrictions of the act of Congress, and an assessment and tax of national bank shares is null and void. (McHenry v. Downer, 116 Cal. 20, 47 Pac. 779.)

The personal assets of a national bank, as distinguished from shares of stock held by its shareholders, are exempt from state taxation. National banks and their property are withdrawn from the domain of state taxation, except so far as Congress has expressly consented that they may be taxed, in section 5219 of the Revised Statutes of the United States. (People v. National Bank of D. O. Mills & Co., 123 Cal. 53, 69 Am. St. Rep. 32, 55 Pac. 685.)

The general and special deposits in a national bank are assessable to the depositors, and not to the bank. (People v. National Bank of D. O. Mills & Co., 123 Cal. 53, 69 Am. St. Rep. 32, 55 Pac. 685.)

The right of the state to exercise its power of taxation over the property of national banks is limited and defined by section 5219 of the Revised Statutes of the United States; and the state can exercise no power of taxation not therein expressly permitted. (First National Bank of San Francisco v. City and County of San Francisco, 129 Cal. 96, 61 Pac. 778.)

An assessment of the personal assets of a national bank by the state is not permitted and is void; and the taxes collected under such void assessment, if paid under protest, may be recovered back. (First National Bank of San Francisco v. City and County of San Francisco, 129 Cal. 96, 61 Pac. 778.)

The method of taxation of shares of stock of national banks prescribed by these sections held constitutional in Nevada National Bank v. Dodge, 119 Fed. 57.

SHARES OF NATIONAL BANKS.

Sec. 3610, Pol. C. The assessor charged by law with the assessment of said shares shall, within ten days after he has made such assessment, give written notice to each national banking association of such assessment of the shares of its respective shareholders; and no personal or other notice to such shareholders of such assessment shall be necessary for the purpose of this act. And in case the tax on any such stock is unsecured by real estate owned by the holder of such stock, then the bank in which said stock is held shall become liable therefor; and the assessor shall collect the same from said bank, which may then charge the amount of the tax so collected to the account of the stockholder owning such stock, and shall have a lien, prior to all other liens, on his said stock, and the dividends and earnings thereof, for the reimbursement to it of such taxes so paid. Stats. 1899, p. 97.

Annotation.

Constitutionality of Sections.-The provisions of this section and sections 3608 and 3609, so far as they relate to the assessment and taxation of national bank stock, are constitutional. (Nevada National Bank v. Dodge, 119 Fed. 57.)

CHAPTER II.

DEFINITIONS.

§ 3617. Definition of terms.

DEFINITION OF TERMS.

Sec. 3617, Pol. C. Whenever the terms mentioned in this section are employed in this act, they are employed in the sense hereafter affixed to them:

First-The term "property" includes moneys, credits, bonds (except of railroad or quasi public corporations), stocks, dues, franchises, and all other matters and things, real, personal, and mixed, capable of private ownership. . . . . En. March 12, 1872. Amd. 1873-74, 143; 1875-76, 58; 1877-78, 64;1880, 5; 1881, 56; 1889, 203; 1895, 310.

Legislative History.

The term "property" was first defined by the amendment of 1880. The definition was as above, except that it had not the words