ing to individual citizens of the State, and not in excess of the rate of taxation imposed upon the shares of banks organized under authority of the State. They are the property of the individual shareholders, and not the property of the corporation, or bank; while, on the other hand, the capital of the bank is the property of the corporation or bank itself. Inasmuch as such taxation of the shares of national bank stock is not to be in excess of that levied upon shares of banks existing under the law of the State, it has been held that if none be enforced on the shares of the local banks, therefore none can be imposed upon the shares of national banks for the time being. Thus, where the local banks were taxable on their capital, the shares not being taxed as such, the ruling was that no tax could be enforced upon the shares of the national banks.2 This, however, is a matter so easily obviated by the States resorting to taxation of the individual shares of the local or State banks, that the obstacle in that respect to taxation of shares of the national banks is merely temporary.

The Shareholder Tax May be Collected Through the Bank. The tax thus authorized to be enforced upon the shares of national bank stock is, by the act of Congress, made payable where the bank is situated;3 and, to that end, it is lawful to require payment thereof at the hands of the bank itself; for as such tax is allowable upon the shares as well of non-residents as residents of the State, there would be difficulty in enforcing the tax direct from the non-resident owner of a share or shares.4

It is the general method of State taxation of shares of local banks, to which like taxation of shares in national banks is

1 Morseman v. Younkin, 27 Iowa, 350; Hubbard v. Supervisors, 23 Iowa, 130; Lauman v. Des Moines County, 29 Iowa, 310. But such State taxation of shares cannot be enforced under a law of the State subjecting the capital of such banks to taxation. The power to tax the capital the State does not possess, and the power to tax the shares, though it exist, cannot be enforced without a law providing therefor.-Ibid. Van Allen v. The Assessors, 3 Wall. 573; People v. The Commissioners, 4 Wall. 244; Bradley v.

required to conform, and exceptionable cases do not deprive a State of power to tax under the act of Congress.1 It is not understood that the power thus to tax the shares of stock in the national banks is conferred upon the States by said act of Congress, but that such power being concurrent in the State and Federal governments, as to corporations created under authority of the latter, when the paramount right of the latter is not asserted, that by the act of Congress merely the intent of Congress not to exercise the power, but to leave it with the States for the time being, is avowed; thus leaving in the State the exercise of the privilege until Congress, as it may at any time do, asserts and assumes to exercise the national paramount authority and jurisdiction over the subject.

II. STATE TAX ON NATIONAL BONDS OR CREDIT.

Likewise, State laws taxing bonds of the national government, or other means devised or employed by it for carrying out its constitutional powers and functions, are unconstitutional and void. This inhibition against State taxation applies to every species and form of indebtedness of the national government resorted to or used for the purpose of carrying out, or in the course of executing the powers invested in it by the Constitution.4

The power of the States to impose and collect taxes is co-extensive only with their sovereign power over property interests and things within their own territorial limits, and constitutional sphere of action. That is, to every thing and interest that exists by State authority or permission, but does not extend to those means originated and employed by Congress to carry into execu tion those powers conferred on that body and the national gov ernment by the Constitution and people of the United States. Among those powers is the power to borrow money on the credit

1 Lionberger v. Rouse, 9 Wall. 468. 2 Van Allen o.The Assessors, 3 Wall. 573, 585.

Gilman v. Philadelphia, 3 Wall. 713, 731, 732. But "Congress may interpose, whenever it shall be deemed necessary, by general or special laws." Ibid. 732.

4 Weston v. Charleston, 2 Pet. 449;

McCulloch v. Maryland, 4 Wheat. 316; Brown v. Maryland, 12 Wheat. 419; The Banks . The Mayor, 7 Wall. 16; Bank of Commerce v. Commissioners of Taxes of New York, 2 Black, 620, 628; Bank Tax Case, 2 Wall. 200; Bank v. The Supervisors, 7 Wall. 26 See, further, Cooley on Taxation, 56, et seq.

of the United States. To allow State taxation of government stocks or bonds in the hands of individuals, or other means resorted to by the government to carry out its functions and maintain its constitutional authority, would put it in the power of the States to obstruct, retard and cripple the national power, by depreciating the credit of the government and placing local difficulties in the way of its constitutional action.1 The case of Weston v. The City of Charleston, cited above, originated in an attempt of that city to tax United States stocks issued for money loaned, in the hands of Weston. The supreme court of the United States, MARSHALL, J., say, in delivering the opinion in that case: "The tax on government stock is thought, by this court, to be a tax on the contract, a tax on the power to borrow money on the credit of the United States, and consequently to be repugnant to the Constitution."

1 McCulloch v. Maryland, 4 Wheat. 316; Weston v. Charleston, 2 Pet. 449.

$2 Pet. 469.

CHAPTER XXXI.

BANKRUPTCY.

I. EFFECT ON JURISDICTION OF STATE Court.

II.

FIXED LIENS.

III. STATE INSOLVENT OR BANKRUPT LAWS.

IV. STATE INSOLVENT LAWs. How AFFECTED BY NATIONAL BANKRUPT

LAW.

I. EFFECT ON JURISDICTION OF STATE COURTS.

Proceedings in

Civil Proceeding Arrested in State Court. bankruptcy in the district court of the United States arrest all ordinary civil proceedings pending and undecided in the State courts, except those upon contract liens and upon attachments, where the latter have been commenced not less than four months next preceding the inception of the proceedings in bankruptcy.1

Attachments. Attachment proceedings against the bankrupt, commenced more than four months before the commencement of the proceedings in bankruptcy, are no further affected thereby than to prevent a judgment in personam against the defendant for the time being, before decision as to his final discharge; and if discharged, then to prevent such personal judgment entirely; but the attached property, if liability be established, may be sold, or enough thereof, to discharge such liability and costs, by judgment of the State court, as in case no bankrupt proceedings were pending.2

In attachment proceedings in a State court instituted less than four months before the commencement of the bankrupt proceedings in the Federal court, the effect of the latter is to dissolve the

114 U. S. Stat. at Large, 522; R. S. of U. S. of 1874, § 5044; In re Patterson Nat. Bank. Reg. Sup. to Vol. 1, 27; Hatch v. Seeley, 37 Iowa, 493; Blumenstiel on Bankruptcy, 187.

Bates v. Tappan, 3 Nat. Bank. Reg.

159; Same Cases, 99 Mass. 376; Sampson v. Burton, 4 Nat. Bank. Reg. 1; Bowman v. Harding, 56 Maine, 559; Leighton v. Kelsey, 57 Maine, 85; Hatch v. Seeley, 37 Iowa, 493; Blumenstiel on Bankruptcy, 189.

attachment and arrest the proceedings in the State court, and to bring under jurisdiction of the United States court the subject matter thereof, placing the plaintiff in attachment on the same footing of equality as other creditors, who have no lien, and vesting in the assignee in bankruptcy the property which was previously held by the attachment.1

II. FIXED LIENS.

Creditors having fixed liens on property of the bankrupt, as mortgages, for instance, or judgment liens acquired in good faith, may enforce them in the State court, if not redeemed by the assignee; but the assignee may redeem the property from such lien for the benefit of the general fund and creditors, or the bankrupt court may proceed to sell such property, subject to the lien.3 But no personal judgment can be taken in the State court against the bankrupt during pendency of the bankrupt proceedings in the United States court.4

III. STATE INSOLVENT OR BANKRUPT LAWS.

The several States may pass bankrupt or insolvent laws, provided they do not conflict with such as are passed by Congress; but no State can, by any such law, release or impair, or provide for the release or impairing, of the obligation of contracts. Such State laws may act upon the person of debtors, so as to discharge from duress of law, or liability to arrest or duress for existing debts or obligations, but cannot destroy the obligation or release the subsequently acquired property of the debtor from liability to pay the same. This statement of the general law, however,

114 U. S. Stat. at Large, 522; R. S. of U. S., 1874, § 5044; In re Preston, 6 Nat. Bank. Reg. 545; Corner v. Mallory, 31 Md. 368; In re Patterson, 1 Nat. Bank Reg. Sup. p. 27; Bates v. Tappan, 3 Nat. Bank. Reg. 159; Leighton r. Kelsey, 57 Maine, 85; Bowman v. Harding, 56 Maine, 559; In re Brand, 3 Nat. Bank. Reg. 85; In re Housberger, 2 Ibid. 33; In re Joslyn, 3 Ibid. 118; In re Williams, 3 Ibid. 74; Hatch v. Seeley, 37 Iowa, 493; Stuart v. Hines, 33 Iowa, 60.

2 Bates v. Tappan, 3 Nat. Bank. Reg. 159; Brown v. Gibbons, 37 Iowa, 654, 657; Bowman v. Harding, 4 Nat. Bank. Reg. 5; S. C, 56 Maine, 559; Blumenstiel on Bankruptcy, 293; Bump on Bankruptcy, 594.

3 Brown v. Gibbons, 37 Iowa, 654, 657; Reed v. Bullington, 11 Nat. Bank. Reg. 408.

McKay v. Funk, 37 Iowa, 661, 663. 'Sturges v. Crowninshield, 4 Wheat. 122, 196, 197; McMillan v. McNeill, 4 Wheat. 209; Ogden v. Saunders, 12