The evening telegraph. [volume] (Philadelphia [Pa.]) 1864-1918, 1867-03-23
LEGAL INTELLIGEN CE.
THE STATE TAX ON BANK STOCK.


John +. Hartranft, Auditor IL A14uiOS'
General, William II, Kemble, I,o,,,,ror 90
State Treasurer, and the Ma A W
tional Bank of Commerce OF ,,oi,t,os, ,,t,
philadelphia, and John A. '-'''A'-A O'-''
Lewis, Cashier.
The PLANTING bill seeks TO restrain the Au-
ditor- General and State Treasurer from set
tling an account, and collecting the tax
imposed by the act of 2Sd February, 1865, in
these words--
"That from and after the passage of this act
II shall be the duty of the cashier of every bank
in this Commonwealth, whether incorporated
under the laws OF this State of the United
states, to collect annually from every stock
holder of said bank tax OF one per centum
upon the par value of the stock held by said
stockholders, and pay the same into the State
Treasury on or before the first day of July in
every year thereafter, commencing on the first
day Of July, A. d. 1866, and the said bank shall
be exempt from all other taxation under the
laws of this commonwealth"
The defendants have demurred to the whole
bill on three grounds
/. Want Of Jurisdiction.
2. Tue existence of a complete remedy at law.
3. Want of equity on the merits.
. The INST cause of demurrer Will depend on
the determination OF the last l shall therefore
consider the grounds argued in their inverse
order.
The able argument of the Attorney General,
when analysed, presents the authority to tax
under the act OF 1866 in this aspect:-That the
State, by its Enabling act OF 22d August, 1864,
permitted the State banks to surrender their
charters and come in under the Federal Bank
act of 3D. June, 1854. upon the faith that the
capital of its citizens in those banks should re-
main subject to State taxes; thatthe right OF the
State TO impose the tax, reserved to ii under the
4lst section OF the act of Congress, carries with
it all the means; and that the act of 1866 was
therefore valid exercise OF the State authority.
The error in this argument lies in its over
sight of the incompatability of the mode of
taxation presented by the act OF 1866 with the
mode authorized by the act of Congress. This
will appear by considering the questions upon
l. The subject reserved by Congress tor State
taxation.
2. The mode prescribed for its exercise.
3. The mode adopted in tn act of 1866
he faaln n fnv 10 1l flXy fntn
the first proviso of the 4Ist section OF the
vidual shareholder. The personal interest of
the stockholder in the shares he owns, as con-
tradistlnguished from that of the corporation
in it's capital and property, was considered and
determined by the Supreme Court of this State
in the case of McKeen vs. Northampton County,
13 Wright, 5l9 and accords with the doctrine OF
the later decisions of the supreme Court of the
before me-. This interest is personal, goes with
him, and its succession when he dies is gov
erned by the law or his domicll. II is clearly
the corporation, which are vested in 1t as the
legal or artificial entity and owner, and are
subject to the laws of the Stale whicn gave it
being The dist section of the Bank act of 1864
is framed in view of this distinction. 1t first
imposes certain taxes upon the corporation
association, as it is termed-"in lieu of all ex-
isting taxes" Then the first proviso declares
that nothing in the act shall be construed to
prevent all the shares in any of the said corpora
lions held by any person from being included in
the udLltdtiOT of the personal property of such
person in the assessment Of tGGeS imposed by
under State authority. After this comes the third
provso, subjecting the real estate of the aSSocia
tiOn corporate body to that taxation.
The individual character of this personal inte-
rest in the shares OF these associations, as tax
able apart from the institutions Them
selves, is fully sustained by the Bank
States, Wallace SIS, SIS, $50; and is reasserted
by Justice Nelson in the People of New York
snitin9 rom this distinctionl that the owner
ship of the shares so clearly different from
hn1 Obtain 1aHnpfinn
valuation for that portion OF the capital in
vested in United States bonds.
The nature of the taxable interest in the
shares bears directly upon the mode OF taxation
provided by Congress, which is the second
will read thus-"That nothing in the act shall
prevent the indivduaI personal interest of the
shareholder IN his means from being included
in the valuation of the personal property of
such person in the assessment OF taxes imposed
by or under State authority" We cannot reject
these words "rOm being included in The udlstatiOa
Ofhe personal properly Of such person." Congress
meant something by this language. 1t did not
say that nothing shall prevent such share from
being taxed by or under State authority. That
would have left the mode of exercising this
are, nothing shall prevent them from being
included in the valuation of the personal pro-
perty OF the person holding the shares" Here
is a defined mode authorized, and this and nc
other can be pursued. The state must, there
fore, proceed by taxation directly upon the
shareholder. by Including his stock In the valu.
alton of his other personal estate.
But not TO stick in the letter, there Is good
reason for adopting this mode. II by emitting
TO prescribe mode, the authority to tax the
shares in the national banks could be exercised
by compelling the payment OF the tax over the
counter of the bank itsell, 1t would subject the
bank to quasi foreign and sometimes hostile
Jurisdiction. This is evidently not intended by
Congress. 1t would also subject the citizens o.
other States and counties TO taxation upon 9
moneyed capital never brought within State
Jurisdiction, otherwise than by the purchase o.
the shares. 1t might also subject these non.
resident shareholders 10 double taxation-at
home, by including their shares in the valua-
tion Of their personal estate. and here; by pay.
ment over the counter oil the bank. The effect
of this would be also to drive foreign capita
from use in institutions located in our midst
Impartiality in the exercise of the Fedora
power, therefore, required that the States
should be limited in the mode az we'll as in tht
under this proviso In the clause liking thi
extent, the mode Is again referred to. 1t Is Il
be at no greater, rate than is asses'ec
individual citizens of the State. To this is t.
be added the provision In the 10th section 70
the keep6g OF and the u Of hos,seS SG ~ III
the stock holders, which the section declare
shall be subject TO the Inspection or the othcer
authorized to assess taxes under State authority
Thus the precise duty OF the bank, In referenc
to the taxation OF shares, Is denned TO be tina
OF furnishing to the State ofncers the means {
making the assessment by inspection, but tn
assessment of the shares is clearly referred
the officer authorized to assess. L have, so IA
left out Of view those Sopqs @ u IN ESs vaSa m
elsewhere." It ts very dtfhcult TO assign IN
true connection and relation of these words 1
the sentence. think, however, thelr purpos
is not To IocaIize the assessment of the taxes
the place where the bank Is located, put
localize the authority which imposes the Ia
no iocalize the assessment at the place whel
fhe hank Is. would be either to contne u
assessment 70 the bank itself on behalf or ]
shareholders, or TO confne 1t to the shar
bank is located. The former is inconsi
tent with the express words OF tne 4 7
malnde. otoolnded I'm Inc vaIuationso al tb