In cases involving federal questions affecting | Wall., 244 [71 U. S., XVIII., 344]; Van Allen a State, the State cannot be regarded as stand- v. Assessors, 3 Wall., 573 [70 U. S., XVIII., ing alone. It belongs to a Union consisting of 229]; Queen v. Arnaud, 9 Àd. & E. (N. S.), itself and all it sister States. The Constitution 806; Bank Tax Case, 2 Wall., 200 [69 U. S., of that Union, and "The laws made in pursu- XVII., 793]. ance thereof, are the supreme law of the land, anything in the Constitution or laws of any State to the contrary notwithstanding"; and that law is as much a part of the law of every State as its own local laws and Constitution. Bk. v. Dearing, 91 U. S., 29 [XXIII., 196]. * * * * Yet every State has a sphere of action where the authority of the National Government may not intrude. Within that domain the State is as if the Union were not. Such are the checks and balances in our complicated but wise system of State and national polity. This case turns upon the construction to be given to the 10th section of the charter of the bank. Our attention has been called to nothing else. The exercise of the taxing power is vital to the functions of government. Except where specially restrained, the States possess it to the fullest extent. Prima facie it extends to all prop erty, corporeal and incorporeal, and to every business by which livelihood or profit is sought to be made within their jurisdiction. When exemption is claimed, it must be shown indubitably to exist. At the outset, every presumption is against it. A well founded doubt is fatal to the claim. It is only when the terms of the concession are too explicit to admit fairly of any other construction that the proposition can be supported. R. Co. v. Bd. of Supers., 93 U. S., 595 [XXIII., 983]; Tucker v. Ferguson, 22 Wall., 527 [89 U. S., XXII., 805]. Can the exemption here in question, examined by the light of these rules, be held valid? Upon looking into the section, several things clearly appear: (1) The tax specified is upon each share of the capital stock, and not upon the capital stock itself. (2) It is upon each share subscribed. Nothing is said about what is paid in upon it. That is immaterial. The fact of subscription is the test, and that alone is sufficient. (3) This tax is declared to be "in lieu of all other taxes." Such was the contract of the parties. The capital stock and the shares of the capital stock are distinct things. The capital stock is the money paid or authorized or required to be paid in as the basis of the business of the bank, and the means of conducting its operations. It represents whatever it may be invested in. If a large surplus be accumulated and laid by, that does not become a part of it. The amount au thorized cannot be increased without proper legal authority. If there be losses which im pair it, there can be no formal reduction with out the like sanction. No power to increase or diminish it belongs inherently to the corporation. It is a trust fund, held by the corporation as a trustee. It is subject to taxation like other property. If the bank fail, equity may lay hold of it, administer it, pay the debts and give the residuum, if there be any, to the stockholders. If the corporation be dissolved by judgment of law, equity may interpose and perform the same functions. Wood v. Dummer, 3 Mas., 308; Curran v. Arkansas, 15 How., 304; Gordon v. App. Tax Ct., 3 How., 133; People v. Comrs., 4 The shares of the capital stock are usually represented by certificates. Every holder is a cestui que trust to the extent of his ownership. The shares are held and may be bought and sold and taxed like other property. Each share represents an aliquot part of the capital stock. But the holder cannot touch a dollar of the principal. He is entitled only to share in the dividends and profits. Upon the dissolution of the institution, each shareholder is entitled to a proportionate share of the residuum after satisfying all liabilities. The liens of all creditors are prior to his. The corporation, though holding and owning the capital stock, cannot vote upon it. It is the right and duty of the shareholders to vote. They in this way give continuity to the life of the corporation, and may thus control and direct its management and operations. The capital stock and the shares may both be taxed, and it is not double taxation. The bank may be required to pay the tax out of its corporate funds, or be authorized to deduct the amount paid for each stockholder out of his dividends. Ang. & A. Corp., secs. 556, 557; Bk. v. The State, 9 Yerg, 490; Van Allen v. Assessors [supra]: Bradley v. People, 4 Wall., 459 [71 U. S., XVIII., 433]; Queen v. Arnaud [supra]; Bk. v. Com., 9 Wall., 353 [76 U. S., XIX., 701]; State v. Branin, 3 Żab., 484; M'Culloch v. Maryland, 4 Wheat., 316. There are other objects in this connection liable to taxation. It may be well to advert to some of them. 1. The franchise to be a corporation and exercise its powers in the prosecution of its business. Burroughs, Taxation, sec. 85; Пamilion v. Mass., 6 Wall., 632 [73 U. S., XVIII., 904]; R. R. Co. v. Reid, 13 Wall., 264 [80 U. S., XX., 568]. 2. Accumulated earnings. State v. Utter, 34 N. J. L., 493; Ins. Co. v. Charles, 47 Mo., 462. 3. Profits and dividends. Atty-Gen. v. Bk. etc., 4 Jones, Eq., 287. 4. Real estate belonging to the corporation and necessary for its business. R. R. Co. v. Reid [supra]; Bk. v. Edwards, 5 Ired. L., 516. 5. Banks and bankers are taxed by the United States: (1) On their deposits. (2) On the capital employed in their business. (3) On their circulation. (4) On the notes of every person or State bank used and paid out for circulation. R. S., p. 673, et seq. The States are permitted, in addition, to tax the shares of the national banks. R. S., p. 1015. This enumeration shows the searching and comprehensive taxation to which such institutions are subjected, where there is no protection by previous compact. Unrestrained power to tax is power to destroy. M'Culloch v. Maryland [supra]. When this charter was granted, the State might have been silent as to taxation. In that case, the power would have been unfettered. Bk. v. Billings, 4 Pet., 514. It might have reserved the power as to some things, and yielded it as to others. It had the power to make its own terms, or to refuse the charter. It chose to stipulate for a specified tax on the shares, and declared and bound itself that this tax should be "in lieu of all other taxes." There is no question before us as to the tax imposed on the shares by the charter. But the State has by her revenue law imposed another and an additional tax on these same shares. This is one of those "other taxes" which it had stipulated to forego. The identity of the thing doubly taxed is not affected by the fact that in one case the tax is to be paid vicariously by the bank, and in the other by the owner of the share himself. The thing thus taxed is still the same, and the second tax is expressly forbidden by the contract of the parties. After the most careful consideration, we can come to no other conclusion. Such, we think, must have been the understand ing and intent of the parties when the charter was granted and the bank was organized. Any other view would ignore the covenant that the tax specified should be "in lieu of all other taxes." It would blot those terms from the context, and construe it as if they were not a part of it. In the case before us, the charter tax is upon the shares. The tax complained of is a further tax on those shares. Without the phrase, "in lieu of all other taxes," the parallelism is complete. A further tax could no more be imposed upon the shares in one case than upon the capital stock in the other. The same negative considerations apply to both. In Bk. v. Edwards [supra], the charter provided "That a tax of twenty-five cents, on each share of stock owned by individuals in said bank shall be annually paid into the treasury of the State by the president or cashier of the said bank on or before the first day of October in each year, and the said bank shall not be liable to any further tax." It was held that the bank was liable to no other tax, state or county, and that the banking house and the lot upon which it stood was within the exemption. Gordon v. App. Tax Ct., seems to us conclusive of the case in hand. The Legislature of Maryland continued the charters of certain banks on condition that they would make a road and pay a school tax; and it was provided that, upon any of the banks complying, the faith of the State was pledged not to impose any further tax or burden upon them during the continuance of their charters under the Act. There is no reservation or discrimination as to any "other tax." All are alike included. Such is the natural effect of the language used. The must subtile casuistry to the contrary is unavailing. Under such a contract between individuals, a doubt could not have existed. It may as well be said the power is reserved to tax anything else, as further to tax the shares. We cannot so hold, without interpolating into the clause a term which it does not contain. This we may not do. Our duty is to enforce the contract as we find it, and not to make a new one. If it is was intended to make the exception claimed from the universality of the exemption as expressed, it would have been easy to say so, and it is fairly to be presumed this would have been done. In the absence of this expression, we can find no evidence of such an intent. Our view is fully sustained by the leading authorities upon the subject. We will refer to a few of them. In The Binghamton Bridge, 3 Wall., 51 [70 U. S., XVIII., 137], it was declared by the Act of the Legislature authorizing the bridge to be built that it should not be lawful to build any other bridge within two miles above or below the one so authorized. This court held the in-appeared for Piff. in Err.in No. 661]. hibition to be a covenant, and upheld and enforced the restriction against the authority conferred by a later Act of the Legislature authorizing a bridge to be so built. It was held by this court that this was a contract, and that it exempted the stockholders from a tax levied upon them as individuals, according to the amount of their stock. Comment here is unnecessary. The points of analogy are too obvious and cogent to require remark. See, also, Bk. v. Knoop, 16 How., 369; Dodge v. Woolsey, 18 How., 331 [59 U. S. XV., 401]; and Home of Friendless v. Rouse, 8 Wall., 430 [75 U. S., XIX., 495]. In R. R. Co. v. Reid [supra], the charter declared that "The property of said company and the shares therein shall be exempt from any public charge or tax whatsoever." The Legislature passed laws taxing the entire franchise and rolling stock, and certain lots of land necessary to the business of the company. This court held the exemption to be a contract, and adjudged the laws to be void. Bk. v. State [supra], is a case marked by eminent judicial ability and careful thought. There it was stipulated, "that, in consideration of the privileges granted by this charter, the bank agrees to pay to the State annually the one half of one per cent, on the amount of the capital stock paid in by stockholders other than the State." It was held that a further tax on the capital stock was void, but that the State might tax the shares in the hands of individuals. The decree of the Supreme Court of Tennessee is reversed and the case will be remanded, with directions to enter a decree in favor of the plaintiff in error. In DUNSCOMB V.TENNESSEE AND SHELBY CO., No. 647, WICKS V. SAME, NO. 648, NEELY V. SAME, No. 649, AND HILL et al. v. SAME, NO. 661, in error to the Supreme Court of the State of Tennessee [all and by same counsel except that Mr. D. E. Myers argued and decided at the same time as No. 646, just delivered in Farrington v. Tenn. [ante, 558] These cases are all disposed of by the opinion The questions are substantially the same as in that case, and the results must be the same. The decrees of the Supreme Court of Tennessee are reversed and the cases will be remanded, with directions to enter decrees in favor of the respective plaintiffs in error. Mr. Justice Strong dissenting: I cannot concur in the judgments entered in these cases. If there be any doctrine founded in justice, and necessary to the safety and continued existence of a State, it is that all presumptions are against the legislative intent to relinquish the power of taxation over any species of property. In Bk. v. Billings, 4 Pet. 514; Chief Justice Marshall, speaking for the court, said: "As the whole community is interested in retaining it undiminished, that community has a right to insist that its abandonment ought not to be presumed in a case in which the deliberate purpose of the State to abandon does not appear." In Ins, and T. Co. v. Debolt, 16 How., 416, Chief Justice Taney, speaking of legislative Acts incorporating companies, said: 'The rule of construction in cases of this kind | there is no substantial difference in the extent has been well settled by this court. The grant of the exemption offered in these several charof privileges and exemptions to a corporation (is) are strictly construed against the corporation and in favor of the public. Nothing pass es but what is granted in clear and explicit terms. And neither the right of taxation nor any other power of sovereignty which the com munity have an interest in possessing undiminished will be held by this court to be surrendered, unless the intention to surrender is manifested by words too plain to be mistaken.' This doctrine we have many times reiterated and applied. And I do not understand that it is now denied. But I think a majority of my brethren, in the judgments now given, have failed to apply it to the construction of the Acts of the Tennessee Legislature under considera tion in these cases. ters, though there is some difference in their phraseology. But I think that the benefit of the exemption is in each case for the corporation. It was not intended for the individual stockholder. The Legislature were dealing with the proposed corporations. The corporate power granted and the immunities allowed were to the corporations, and the contract found in the charter was with the artificial being created, rather than with the natural persons who might have an interest in them. The language of the Acts is, the "institution" shall pay, or the "company" shall pay, an annual tax, which shall be in lieu of all other taxes. It was, therefore, the institutions or corporations the Legislature had in view, alike in imposing the fax and granting the immunity, and not the natuOne other thing, it appears to me, should be ral persons who might happen to own shares of regarded as settled beyond doubt. It is that stock in the corporations. It is true that in seva tax upon a corporation proportioned to the eral of the charters the corporations are required capital stock, or to the number of shares of its to pay a tax on each share of capital stock subcapital stock, is a different thing from a tax scribed, and in one upon the amount of capital upon the individual shareholders of stock in the stock paid in. Hence it has been argued the corporation. The capital stock, and the shares Legislature had shares in view; and from this of that stock in the hands of stockholders, are the further inference is sought to be drawn, different properties, and consequently distinct that the purpose was to tax alike the corporasubjects for taxation. An exemption of the one tions and the stockholders, and to exempt both is not of itself an exemption of the other, nor from all other taxation. Such a construction is the taxation of the one a tax upon the other is, however, directly in conflict with the ruling in such a sense as to interfere with any exemp-in R. R. Tax [supra] and with the expressed tion the latter may have from taxation. In R. R. declaration that the company or institution shall Co. Tax, 18 Wali., 206 [85 U. S., XXI., 888], pay the tax to the State, which was to be in lieu a clause in a charter providing that a company of other taxation. Besides, the reference to should, in addition to other taxes, pay to the each share of capital stock subscribed is easily treasurer of the State, for its use, one fourth of accounted for, without holding that the shareof one per cent. upon the actual cash value of holder, as well as the companies, were intended every share of its capital stock, was held to be to be exempted. The amount of capital stock not a tax upon the shares of the individual authorized for each company was fixed by its stockholders, but a tax on the corporation, de- charter, and divided into shares. It was quite termined by a rule, which, though arbitrary, possible that the whole stock authorized might was yet approximately just. So, in Van Allen v. not be subscribed. In view of this, the comAssessors, 3 Wall., 573 [70 U. S., XVIII., 229], panies were required to pay a tax, not upon this court said a tax on shares of stock is not a tax their entire authorized capital, but to the exon the capital of a bank, and that the shares tent of the shares subscribed. If such was the are a distinct, independent interest or property intent of the Legislature, reference to the shares held by the stockholder, and, like any other was necessary, and it raises no implication that property, that may belong to him, subject to the tax imposed was designed to be for the intaxation. dividual interest of the shareholders in the corporations, and that the exemption from further taxation was granted to them. If, now, these two acknowledged doctrines are allowed to have their just effect upon the decision of these cases, I cannot see how the stockholders in the several corporations whose charters we are requested to construe can claim an exemption from taxation upon their individual shares of stock. The exemption clause in the charters of two of the companies is: "Said institution shall pay to the State an annual tax of one half of one per cent. on each share of cap ital stock subscribed, which shall be in lieu of all other taxes." The exemption clause in two other of the charters is in substantially the same words, except that the word "company is substituted for the word "institution." The clause in the 5th charter reads thus: "That there shall be levied a State tax of one half of one per cent. upon the amount of capital stock actually paid in, to be collected in the same way and at the same time as other taxes are by law collected, which shall be in lieu of all other taxes and assessments." I agree with the majority of the court that After all, the true question in these cases is, whether a contract in express terms between the State and a corporation, to exempt its property and franchises from taxation, shall, by construction, extend to and exempt the property of individual stockholders; property which, for the purposes of taxation, is entirely dif ferent from that of the corporation. I think there is no ground for such a construction; none for any such implication. If, however, I am mistaken, it is certainly true that such a construction is not necessary. The words of the charter granting the exemption are fully satisfied by confining their operation to the corporations themselves; and I do not feel at liberty to give them a broader significance, in view of the settled rule I have noticed, that a State's right of taxation will not be held to have been surrendered unless the intention to surrender is manifested in words too plain to be mistaken. Had the Legislature intended to extend the exemption beyond the companies themselves, it would have been easy to place the intent beyond doubt, by simply saying the tax should be in lieu of all other taxation of the company or its stockholders. But nothing like this, or equivalent to it, is found in the charter. I find nothing in Gordon v. Appeal Tax Ct., 3 How.,133, so much relied upon by the plaint iffs in error, necessarily inconsistent with what I have said. That case has not been well understood. The circumstances were peculiar, and the decision rendered should be considered with reference to the peculiar facts which appeared-in it. What was, in fact, decided, we had occasion to observe in People v. Comrs., 4 Wall., 244 [71 U. S., XVIII., 344], where Nelson, J., directed attention to the circumstances that more or less controlled the judgment. For these reasons, which I have not time to elaborate, I think the judgments of the Supreme Court of Tennessee should be affirmed. I am authorized to say that my brethren Justices Clifford and Field concur in this dissent. Cited 96 U. S., 196: 1 McCrary, 526; 19 Blatchf., 179; 93 N. Y., 157; 35 Ohio St., 477; 36 Ohio St., 35; 38 Am. Rep., 549. Supreme Court of Illinois, Chic. Leg. N., Vol. IX., p. 374; Ins. Co. v. Vaughan, 92 Ú. S., 516 (XXIII., 740); Yeaton v. Fry, 5 Cranch, 342. Messrs. John C. Gage and C. F. Peck, for defendant in error: The policy of insurance and the application of Oldham, taken together, contain a full and perfect warranty on the part of the assured, in point of form, that the building insured was of the value of $15,000, and the machinery of the value of $15,000. Nothing in either instrument or in both construed together, in any manner tends to impair or control the ordinary meaning of the word "warranty," which is used in both. The warranty of value thus effected was an absolute and unconditional warranty that the property was of the value stated in the application, and was not limited by the phrase contained in the application, so far as the same are known to the applicant, and are material to the risk. The plain meaning and intention is to make an absolute warranty of all matters stated in the warranty. The value of the property insured is a legitimate and proper subject of a warranty in a contract of insurance. It matters not, in considering this question, whether the statement of the value be material to the risk or not, nor THE FIRST NATIONAL BANK OF KAN- whether the warranty was made in good or bad SAS CITY, Plff. in Err., v. THE HARTFORD FIRE INSURANCE COMPANY. (See S. C., 5 Otto, 673-679.) faith. Bk. v. Ins. Co. of N. A., 50 N. Y., 45; Ripley v. Ins. Co.,30 N. Y.,136; Owens v. Ins. Co., 56 N. Y., 565; Ins. Co. v. France, 91 U. S., 510 (XXIII., 401); Jeffries v. Ins. Co., 22 Wall., 47 (89 U. S., XXII., 833); LeRoy v. Ins. Co., 39 N. Y., 90: Conover v. Ins. Co., 3 Dill., 217; Construction of insurance application-rule as Miles v. Ins. Co.. 3 Gray, 580; Campbell v. Ins. to-policy. 1. Where the application for insurance contains the covenant of the assured that he has in that instrument made a just, full and true statement of all material facts in regard to the condition, situation, value and risk of the property, so far as known to him, it is only a covenant of good faith on the part of the assured, and is not broken, so far as it relates to the value of the property, unless the estimates by the assured are intentionally excessive. 2. When a policy of insurance contains contradictory provisions, or has been so framed as to leave room for construction, rendering it doubtful whether the parties intended the exact truth of the applicant's statements to be a condition precedent to any binding contract, the court should lean against that construction which imposes upon the assured the obligations of a warranty. 3. The company's own words in its policy should be construed most strongly against itself. [No. 167.] Argued Dec. 21, 1877. Decided Jan. 21, 1878. The case is stated by the court. Messrs. John K. Cravens and Nelson Cobb, for plaintiff in error: The application and survey made by the assured, and the policy of insurance issued there on by the Company, when taken together as one contract, do not constitute the answer of the assured (as to the value of the mill building and machinery) an express warranty as to the truth of that answer. May, Ins., secs. 156, 160, 164, 166, 169; Elliott v. Ins. Co., 13 Gray, Mass., 139; Fitch v. Ins. Co., 59 N. Y., 557; Ins. Co. v. Castile, Co., 98 Mass., 381; Cooper v. Ins. Co., 50 Pa., 299. Mr. Justice Harlan delivered the opinion of the court: This is an action on a policy of insurance issued by the Hartford Fire Insurance Company, on certain mill property, building, and machinery. The parties, by written stipulation. waived a jury; and, upon a special finding of facts, the Circuit Court gave judgment for the Company. The court can only inquire whether the facts support the judgment. It appears from the special finding, that, by required to state separately "The estimated the terms of the application, the assured was value of personal property and of each building to be insured, and the sum to be insured on each; *** the value of the property being estimated by the applicant." The applicant condition, situation, value and risk of the property to be insured, so far as the same are known to the applicant, and are material to the risk." The policy refers to the application in these words: to a warranty. There is no intimation anywhere in that instrument that the exact truth of the answers was a condition precedent, either to the consideration of the application or to the issuing of a policy. On the contrary, the ap Special reference being had to assured's application contains the covenant of the assured plication and survey, No. 1462, on file, which is his warranty, and a part hereof." The policy further recites: "If an application, survey, plan or description of the property herein insured is referred to in this policy, such application, survey, plan or description shall be considered a part of this policy, and a warranty by the assured; and if the assured, in a written or verbal application, makes any erroneous representation, or omits to make known any fact material to the risk, *** then, and in any such case, this policy shall be void. * * Any fraud or attempt at fraud, or any false swearing on the part of the assured, shall cause a forfeiture of all claim under this policy." * * * * The policy also declares that it is made and accepted upon the above, among other express conditions. It is found by the court that when the policy was issued, as well as at the date of the destruction of the property by fire, the cash value of the building, aside from hand and water power, was $8,000, and no more; and the cash value of the machinery, at the same dates, was $12,000, and no more. The court also found that "The answers made by the assured to the questions contained in the application were made by him in good faith, without any intention on his part to commit any fraud on the defendant." It is further declared in the special finding, that, "Under the provisions of the policy and application, made part thereof, the court finds, as a conclusion of law, that the answers of the assured as to the value of the property insured defeat the right to recover on the policy." that he had in that instrument made a just, full and true exposition of all material facts and circumstances in regard to the condition, situation, value and risk of the property, so far as known to him. The taking of that covenant, at the threshold of the negotiations, was, in effect, an assurance that a frank statement of all such material facts as were within the knowledge of the applicant would meet the requirements of the Company. It was a covenant of good faith on the part of the assured-nothing more; and, so far as it related to the value of the property, was not broken, unless the estimates by the assured were intentionally excessive. If the case turned wholly upon the construction to be given to the application, it is quite clear that the overvaluation of the property would not defeat a recovery upon the written agreement, since the assured, by the special finding, is acquitted of any purpose to defraud the Company. That is equivalent to saying that the assured did not withhold any material fact within his knowl edge, concerning the condition, situation, value or risk of the property. But the difficulty in the case arises from the peculiar wording of the policy, considering the application as a part thereof. While the assured in one part of the written agreement is made to stipulate for a warranty, and in another the policy is declared to be void if the assured "makes any erroneous representation, or omits to make known any fact material to the risk," in still another part of the same agreement-the application-he covenants that, as to all material facts within his knowledge, respecting the 'condition, situation, value and risk of the property, he has made a full, just and true exposition. If the purpose of the Company was to secure a warranty of the correctness of each statement in the application, and if the court should adopt that construction of the contract, there could be no recovery on the policy, if any one of these statements were proven to be untrue; and this, although such statement may have been wholly immaterial to the risk, and was made without any intent to mislead or deAfter a careful examination of the authori- fraud. Such a construction, according to esties, and upon mature consideration of the sug- tablished doctrine, might defeat the recovery, gestions of counsel, our conclusion is that the even if the overvaluation had been so slight as plaintiff in error, who is the beneficiary of the not to have influenced the Company in acceptpolicy, is entitled to a judgment, notwithstanding the risk. But if such was the purpose of ing the overvaluation of the property by the On behalf of the Company, it is contended that, under any proper construction of the contract, the assured warranted, absolutely and without limitation, the truth of the several statements in the application, including the statement as to the value of the property. If this view be sound, the judgment of the Circuit Court must be affirmed; otherwise, it must be reversed. assured. The entire application having been made, by express words, a part of the policy, it is entitled to the same consideration as if it had been inserted at large in that instrument. The policy and application together, therefore, constitute the written agreement of insurance; and, in ascertaining the intention of the parties, full effect must be given to the conditions, clauses and stipulations contained in both instruments. Looking first into the application, we find no language which, by fair construction, was notice to the assured that, in answering questions, he was assuming, or was expected to assume, the strict obligations which the law attaches the Company, why did it not stop with the express declaration of a warranty? Why did it go further, and incorporate into the policy a provision for its annulment in the event the assured should make an "erroneous representation, or omit to make known any fact material to the risk "?-language inconsistent with the law of warranty. Still further, why did the Company make the application a part of the policy, and thereby import into the contract the covenant of the assured, not that he had stated every fact material to the risk, or that his statements were literally true, but only that he had made a just, true, and full exposition of all material facts, so far as known to him. It is the duty of the court to reconcile these |