Semi-weekly standard. [volume] (Raleigh, N.C.) 1853-18??, 1856-10-04
The State to the of the Public Treasurer VS. |
william ID. PetWay.

william ID. Petway.
The Act which incorporates 80 The presiacht anu
Directors of the Commercial Bank OF Wilmington,
TACT of 1916, CHI ~ after comforting upon it the
usual powers, privileges and immunites OF Bank,
with a capital stock OF 100000 provides, in the
18th section that the President or Cashier OF the
said Bank shall annually pay into the Treasury OF
the State twenty-five cents on each share OF SAID
capital stock, which may have been subscribed for
and paid in and the first payment of the said tax
shall he made twelve months after the said Bank
shall have commenced operations" The Revised
Code, in chapter 80, section %, imposes a tax OF
three cents upon every dollar more than SIX dollars
OF net dividend profit upon money vested :" IN
stocks of any kind, i'll shares OF any Incorporated
trading company, whether in or out OF the otase
and herein shall be included all bank dividends,
bonds and certificates of debt of any other State or
country or of any public corporation created by
this or any other State"
The question presented by the pleadings in this
case is whether the Legislature had the power after
the reservation of twenty-five cents on each share
of the actual capital stock of the Bank, to impose
an additional tax on the dividends received by the
individual stockholders
The counsel for the defendant contends that it had
not and his argument is, that the grant by the Leg
islature of the Bank charter created contract be-
tween the State and the corporation; that, 10y far
construction, term of that contract was that
the Bank should pay into the Public Treasury twen-
ty.ve cents each share of its actual capital stock,
in consideration of which no other or further tax
should ever be imposed upon it. OF upon the divi-
dends profits of any OF Tie individual members
who composed it; and that the constitution OF the
United States prohibits the State from passing any
law to impair the obligation of the contract, or of
any essential part oi it.
We admit that the grant by the Legislature of a
charter 10 banking corporation, creates contract
between the State and the corporation which brings
it under the protection OF the constitution OF the
United States. This conservative principle has been
repeatedly recognised by this Court in decisions, OF
which it is necessary to refer only to the o t
Mills rs. Williams, IL Ired. Rep. o5S, and the State
ps. Uatthens, 3 Jones. The same protection which
is extended to the whole contract must be extended
to every essential part of it, and ii it be term OF
the contract that the State shall not impose any other
: tax upon the capital stock of the Bank upon the
dividends or profits of the stockholders than that
which is expressly mentioned i'll the charter, then
We freely admit that the clause of the Revenue act
to which have referred is imperative in its APP
pcation to the holders of stock in the Commercial
Bank of Wilmington. The question, then, ceases
to be of constitutional power, and becomes one
of construction merely. The question which has
been thus presented has, in late years. been so often
the subject of discussion decision in the Supreme
Court of the United States and in the Courts of the
several States, that it would be work of superelc-
cation to go into an extended argument. We shall
confne ourselves to brief enuncation of the prin-
is founded.
1t is now we'll settled rule Of construction, that
1.-The grant of privileges and exemptions to corpo-
ration strictly construed against the corporation,
and in favor OF the public. Nothing passes but
what is granted in clear and explicit terms. And
neither the right of taxation any other power OF
sovereignty which the community have an interest
in preserving undimnshed, will be held to be sur
rendered. unless the intention to surrender is mani.
tested in words too plain to be mistaken" Ohio
Life insurance and Trust Company Debolt, l6
Haw GU 81 Rep. 435-Billings rs Tile Precedence
Bank, Peters Rep. SOL Charles Rirer Bridye rs
The Warren Bridge, II Peters Rep. $40. 1t can
not be denied that the taxing power is of the
highest and most important attributes of sovereign
ty 1t is essential to the establishment and the con-
tinued existence of government Without it all po-
ltcal institutions would be dissolved-the social
fabric would be broken up, and civilization would
relapse into barbarism. No government can, then,
dlvest itself altogether of power which is essential
to its existence,-t cannot commit political suicide;
but it is conceded that it may, by contract for an
adequate consideration, bind itself, for longer or
shorter period, not to exercise its taxing power at
all, not bcyor certain extent, upon certain per-
sons or things. This is, however, often dangerous
restriction upon its power, because the necessities of
the government not always be foreseen In the
changes and chances of time and things, those who
have charge of the administration may have need OF
all the possible of the country to it
from great disaster if not from ruin These consid
erations force upon the mind the proprcty-nay,
the absolute necessity of the rule that every grant
from the Legislature by which the integrity of the
power to raise revenue is impaired, must be con-
strued strictly in favor of the public and against the
grantee. Let us apply this rule to the before
lis. The Legislature has granted charter to the
Bank in question, in which there is stipulation for
a certain tax to be paid by the officers of the bank,
upon each and every share Gifts actual capital stock
into the treasury of the State. There is express
provision that no other higher tax shall ever be
exacted; but it is contended that thereis an implied
one to that effect. Why should there be? 1t is
certainly not so, in very analogous to this.
citizen takes grant from the State for tract of
land and pays the stipulated price. lie has nne-
diately to pay tax of twelve cents every hun.
dred dollars value of it by the general law
of the State. That is precisely the Il tax
to that amount were reserved in the grant The
State cannot violate its contract contained in the
grant, any more than it can violate its contract in
v0lved in the grant of bank charter; and yet, who
ever doubted that the Legislature may from time to
time, increase the tax upon the land? The same
may be said of any taxable personal chattel which
the State may sell to individual. Why should
money vested in corporation be more favored p
1t would be difficult to assign good reason for the
preference.
But if be admitted that the capital stock of the
bank is by its charter exempted from additional tax
alton, it by follows that the dividends or
profits of the individual stockholders shall be ex.
empt Bank stock, or stock owned by individuals
in bank is different thing from the capital stock
Of the bank. by the first is meant "the individual
interest in the dividends as they are declared anda
right to pro sata distribution of the effects of the
bank on hand at the expiration of the charter The
capital stock of the bank is the whole undivided
fund paid in by the stockholders the legal right to
which is vested the corporation, to be used and
managed in trust for the benefit of the members"
Lnion RINK 0f Tennessee r. The State q Vera Pen,
4sO tax on the first is very different from one
OH the latter and the property is listed and the tax
paid in very different manner. The tax on the
dividends Of bank stock varies, of course, with the