Document: 349 U.S. 143 75 S.Ct. 607 99 L.Ed. 950 SOCIETY FOR SAVINGS IN THE CITY OF CLEVELAND, OHIO, Petitioner,v.Stanley J. BOWERS, Tax Commissioner of Ohio. FIRST FEDERAL AND LOAN ASSOCIATION WARREN, Petitioner, v. Stanley Nos. 204, 220. Argued March 28, 1955. Decided May 16, Mr. Robert F. Maskey, Cleveland, Ohio, for appellant Society Savings in City Cleveland. G. Day, Warren, First Fed. and Loan Assn. Joseph S. Gill, Columbus, appellee. Justice HARLAN delivered the opinion Court. 1 In 1829 this Court decided Weston Council Charleston, 2 Pet. 449, 7 481, that obligations Federal Government are immune from state taxation. This rule, aimed at protecting borrowing power United States encroachment, was derived 'Borrowing' 'Supremacy' Clauses Constitution,1 constitutional doctrines announced McCulloch State Maryland, 1819, 4 Wheat. 316, 579. It subsequently embodied a succession federal statutes, existing statute being R.S. § 3701, 31 U.S.C. 742, U.S.C.A. 742.2 The rule has been carried forward to embrace indirect taxation such through their inclusion tax imposed on all property taxpayer. is quite immaterial does not discriminate against obligations. People New York ex rel. Bank Commerce Commissioners Taxes City, 1863, Black 620, 17 451; re Case, 1865, Wall. 200, 793; Farmers Mechanics Minneapolis Minnesota, 1914, 232 516, 34 354, 58 706; Jersey Realty Title Ins. Co. Division Appeals, 1950, 338 665, 70 413, 94 439. two cases now before us involve application somewhat novel situation. Cleveland Association Warren,3 mutual savings banks having no capital stock or shareholders, located attack validity an Ohio tax, as assessed them, ground they were required include values upon which computed bonds held security portfolios. Had these excluded, entire would have wiped out both instances.4 thought government excludable. Board Appeals reversed. Supreme sustained each instance. here by appeal judgment case.5 argued together, so treated opinion. 3 question names under §§ 5408, 5412 5638—1 General Code,6 book value 'capital employed, representing it', 'at aggregate amount capital, surplus reserve fund undivided profits', 5412. rate mills dollar, 5638—1. No claim made taxes constituted franchise some other kind privilege tax. Cf. Educational Films Corp. America Ward, 1931, 282 379, 51 170, 400. recognized based it obligations, fall if directed banks. Texas, supra; supra. though, considered be Holding depositors bank interest similar shareholders banks, court found instead 'intangible interests' (161 St. 122, 118 N.E.2d 661) owners bank. banks' profits, we will refer surplus, regarded themselves subject matter but simply measure depositors, tax-collecting agents rather than taxpayers. 5 deciding relied gloss immunity stated above. may impose stockholders' interests corporation, measured corporate asset values, without making any deduction account securities corporation. doctrine had its origin involving national stock. There, congressional consent certain conditions, held, over strong dissent, permit exclusion owned Van Allen Assessors, 1866, 573, 18 229; National Commonwealth Kentucky, 1870, 9 353, 19 701; Des Moines Fairweather, 1923, 263 103, 44 23, 68 191. result reached part theory corporation represent separate corporation's ownership assets, included property. rationale state-created thus though assets offend immunizing Trust Lander, 1902, 184 111, 22 394, 46 456. Further, levying require payment collecting agent. Corry Baltimore, 1905, 196 466, 25 297, 49 556. when, usually case, shareholder solely difficult distinguish itself, far practical impact types corporate-owned concerned. Nevertheless, exception general firmly embedded law. 6 focal point appeals whether regard or, legislature intended, depositors. Were free construe Ohio's de novo might difficulty reaching conclusion did. Suffice say point: barren language expressly imposing contains provision giving right recover expected mere By contrast, laid Code (a) shares incorporated financial institutions whose divided into shares, (b) unincorporated (c) deposits, 'of stockholders', deposits 'as taxable depositors'. 5673—2.7 case those taxes, involved, given full rights reimbursement stockholders be, clear institution paying acting only collection Gen.Code 5672, 5673, 5673—1, 5673—2.8 And beyond considerations, one same basis taxed. asserted bank, primarily losses secondarily repository earnings. So long remains solvent, receive return element paid deposits. To maintain intangible interest, must If depositor withdraws he receives his interest. continues, chance getting anything more unlikely event solvent liquidation, possibility hardly rises level expectancy. stretches imagination very attribute real remote contingency, when coupled with fact represents nothing can readily transfer, theoretical reduces almost vanishing point. Collett Springfield Society, 13 Cir.Ct.Rep. 131, affirmed, 1897, 56 776, N.E. 1109. 8 court, however, depositors.9 But end us. We judge true nature terms liabilities statute, construed, creates. assessing law, bound state's even court's decision what establishes characterization 'Where concerned courts Legislatures, relieved duty considering effect asserted. Carpenter Shaw, 1930, 280 363, 367, 50 121, 123, 74 478. See also supra, page 674, 418; 387, 171. 'Neither ingenuity calculation nor form words enactments deprive owner exemption established benefit States.' Missouri Gehner, 281 313, 321, 326, 328, 870. Therefore, proceed examine note, first, should unable pay after assessed, there entitling collect A recoverable looks like ultimate economic passed Home Moines, 1907, 205 503, 519, 27 571, 576, 901. 10 Next, appears relieve interest' who assessment date withdrawn date. former depositor's account, him. observed deposit contain provisions 5412, 5673—2.10 11 Finally, perhaps most important, find somewhere make itself whole account. upholding express implied presupposed. 610, As already observed, right, 5673—2.11 present right. where less contemplates necessary. If, example, $100,000 intends $75,000 obligation $10,000, makes difference pays $65,000 recovering back them $75,000, later recovers $10,000 Under either method comes whole, net payment.12 declared due, give deduct payment, conceivably exceed payable left short, absent excess 12 charging reality reducing depositors' described 'owned' therefore circumstance difficulties proposition. means fiction disregarded, since hypothesis then On hand, referring equitable seems likely, recoupment well bears Without burdens cannot assume statute's operation infringe adequate merely suggest entitled common For common-law called our attention. Rather, indicates reimbursement.13 14 conclude name only, purposes themselves. Accordingly, judgments 15 Reversed. 16 BURTON took consideration cases. Art. I, 8, cl. 2; VI, 2. 'Except otherwise provided stocks, bonds, Treasury notes, States, shall exempt municipal local authority.' Owners' Act 1933, amended, 48 Stat. 128, 1461 et seq., seq. Nothing turns origins. view take unnecessary consider status Federal, claimed exempt. 1954, 161 651; 149, 667. noted probable jurisdiction, 348 807, 49. 'Sec. 5408. * All institution, state, organized laws excepting defined 'deposits' section 5324 Code, it, stock, listed thereof, taxed manner chapter.' Upon receiving report commissioner ascertain assess employed profits shown report, county maintained office offices receipt Such amounts wholly within times mentioned 5411—2 separately set forth subtracted respective constitute exclude thereof shown.' Annual hereby levied kinds classes property, hereinafter enumerated, list auditor duplicate treasurer following rates, wit: dollar; institutions, *.' note pages 611, infra. 5672. nonwithdrawable lien first day January year until paid. 'It every due several failing said herein provided, liable way penalty gross additional hundred dollars delay taxes.' 5673. hands respectively, next preceding section, dividends thereafter become funds possession belonging time come possession, legal interest; enforced appropriate manner.' 5673—1. person fixed commission listing withdrawable chapter four title, fixed. and/or respect 5673—2. accounts, may, notice charge depositor, becomes thereon, deposit, shareholder, payable, six months treasurer.' construed tax' applied different did 'deposit' involving, see duplication overlapping between taxes. Section provides part: 'Upon (That is, bank's date, received, 1.) depositors.' 5673—1 5673—2, Even so, comparable situation arose connection statute. stated: 'In opinion, (an reimbursement) necessary enable secure reimbursement.' 136, 659. statement mean existed went hold 'the (the depositors') always able reimburse ones taxed.' Id., 137, 659—660. course proper sense term.

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