Daily State sentinel. [volume] (Indianapolis, Ind.) 1861-1865, 1865-10-28
billy OF Nation l BANK stock
Decision 81 the court OF Appeals.

one OF the most Important decisions ever pro
nounced by our highest State tribunal has JUS,
been delivered by the Court of Appeals. IL az
firms the taxabiiity Of the shares Of the new Ma
tional Banks, AID thus adds a hundred millions
TO the tax able property OF the State.
The question thus decided being c1e of na-
tional interest and far-reaching consequences, il
has been considered by the Court with a care
proportional to its magnitude: and tho opinion OF
Judge DEMO Gin which the who'd court coucur, }
is perhaps the clearest, ablest and most cogent
ever delivered by that eminent and experienced
magistrate.
This kind Of property. like ali other personal
property is tsxabls 10y State authority, unless
exempt by some superior federal law. Exemp-
ton has been claimed only on these two grounds
l. That the NATIONAL Banks are instruments
OF the Federal Government for the execution
OF certain Of its functions, and therefore not tax
able.
2 That the property of these banks consists
in part OF United States securities, and as these
arc exempt from taxation, the banks, so far as
their property consists in these securities, cannot
be taxed.
With regard to the frst of these points. Judge
DEMO demonstrates. both by the language of
the Supreme Court in q famous analogous deci-
zion. and BY the terms Of the act Of Congress
creating these banks, that although the opera
tons Of tie National Banks may not be taxed
their real and personal property and the shares OF
their stockholders. ere no more exempt than any
other kind OF property.
The second point is the stronghold of the OBJ
lection, and on this, accordingly, the stress Of
Judge Denio's reasoning is expended. He sd-
mits. with entire frankness and candor, that the
bonds Of the United States cannot be taxed.
The bonds contained" he says. lit is true,
provisions on their face them from
state taxation but this, | presume, did not add
anything to thor immunity ia that respect which
they enjoyed under the Constitution as settled by
the Federal judiciary" A State tax. therefore.
cannot be lard upon the bonds in the hands of
sheir actual holders. But is q stockholder in a
national bank il any strict aud proper sense an
owner OF these bondsf THIS question il easily
answered by an inquiry into the nature Of his
shares. They are a SORT OF what is called. in
legal parlance, chooses in sctioD; they merely
entiue their holder 10 a distributive proportion
OF the profits or dividends Of the bank. Their
holders no more own the property of the
bank than do its creditors and bill-holders:
nor indeed so much; for il the bank is
compelled TO wind up its affairs. the claims OF
its creditors must FIRST be satisfied. and what .
lett, II anything. - then divided among the
stockholders. The bsuk. as a body corporste
owns the United States in which it has invested,
as II does is other property, but lis creditors do
not own il; IL shareholders do not own IL; though
both have claims which tie bank is under oblisa-
tons to meet. To the one the bank must pay
its deots as they become due-Lhe claims for
dvdends being always subordinate 10 tbs claims
for deots. Now If ownership OF the prior and
paramount clAim against the bank carries with il
10 exemption from taxation, how can the owner
ship OF the residusry and subordinate clsims
Ii = man swns fifty thousand dollars of the
notes Of National Bank. nobody pretsnds tia,
this property is exempt from state tax ,tion on the
ground that the holder OF these notes I'll ,sally
that much of the property OF the bank,
shch consists in federal bonds. Why. then. il
q man owns fifty thousand dollars of the shares
OF National Bank. should this property be
exempt irom taxation on the gr0snd
OF his o~nership OF the federal stocks which the
osnx holds, when the shareholders have only q
subordinate claim ID rssiduary divldeads, or to
the residue of the property Of the banks after
elaine of its creditors are satisfied
We have thus selected and restated What seems
10 us TIE @.in point OF J udgs Denio's able op;n-
lon, think ng u Of such force that all Who are
in the subject will be drawn BY il 70
10 TIE opinion itself, the other reason
,ng ey shich il 10 supported and fortified
New York World.