Nashville union and American. [volume] (Nashville, Tenn.) 1868-1875, 1874-03-24
THAT FINANCIAL PROBLEM.
shall the Increased Value of Bank
Stock BE Taxed?

SWIM nc Aa4C0s
The question of taxing certain stock of
the Third National Bank of this city, is one
which has occupied the attention of the
Finance Committee of the City Council for
some time. The following are the main
points OF an elaborate and lengthy report
on the subject, by Councilman Gaut,
member of subcommittee of the Finance
Committee, to whom was referred the
petition of Edgar Jones, cashier of said
bank, praying for a reduction of the assess
ment Of the stock of that bank.
Mr.. Gaut says: Does the law require
bank stock to be valued by the tax assessor
at the market price Of such stock, or at its
par nominal value? The assessor adopted
the former mode, and fixed the value of the
stock at S275 per share Of 500.
The constitution of 1884 provides that
GALL lands liable to taxation, held by deed,
grant or entry, town lots, bank stock.
slaves" etc, 'is4iall be taxable;" ssall pop
erty shall be taxed according to its value;
that value to be ascertained in suchmanner
as the legislature shall direct, so that the
same shall be equal and uniform through
out the State. No one species of property
from which tax may be collected shall be
taxed higher than any other piece of
|
Generals Assembly shall have power to
authorize the several counties and incor-
porated towns in this State to impose taxes
for county and corporation purposes res
pectiyely, and in such manner as shall be
prescribed by law, and all property shall be
taxed according to its value upon the prin-
ciples established in State taxation.
The Legislature amended
| THE CHARTER OF THE CITY
of Nashville and provided that sail proper
ty and estate, real. personal or mixed, stu
| ated or belonging in said city, which is
subject to State taxes shall be assessed and
| listed for taxation therein at the fair and
full worth and market value and price of
same"
Tie Constitution of 1870, provides:
''All property, real, personal, or mixed,
shall be taxed, but the Legislature may
except" etc. Gall property shall be taxed
according to its value, that value to be as
certained in such manner as the Legislature
shall direct, so that taxes shall be equal
and uniform throughout the State. No one
species of property from which a tax may be
collected shall be taxed higher than the
same value"
Sec. 20 of the new constitution, author
izing the Legislature to empower counties
and incorporated towns TO levy taxes, is in
| exactly the same words as sec. 20 of the
| constitution OF 1884.
The law does not tax the bank on the
capital stock belonging to il, but taxes the
shares of the stockholders, as their personal
property. The constitution declaring, LIST
that bank stock is taxable property, and I'd,
| that ssall property shall be taxed according
to its value" the Supreme Court having
decided that this principle applied to bank
stock, and the charter of 1868, providing
that all property shall be assessed and
listed for taxation at the fair, full worth
and market price thereof. i would seem
that there is no discretion left the Assessor
as to the mode in which he should make
his assessment.
Sec. 564 of the code says: "All properly
shall be assessed at the same value at
wbichit ought to be appraised in payment
of just debts, in cash, due from a solvent
.dObtor." Would the stockholders of the
Third National Bank be willing to transfer
their stock to any creditor
IN PAYMENT OF 4 DEBT
at its par value, or can any one say that in
paving a debt with it, it ought not be ap-
praised at more than It's par value?
| The 18th section of the national bank act
provides that such shares Of stock shall abe
deemed personal property"
The 4th section provides that ''nOthing
in this act shall be construed to prevent all
the shares in any Of the said associations,
held by any person, or body corporate from
being included in the valuation of the per
sOnal property Of such person, or corpora
ton, in the assessment Of taxes"
Ii has been suggested that, under this
act. because certain banks in this State
chartered before the war, are by their char.
ter, required to pay a "bOnus" in lieu o.
taxes, the State, and consequently the city
was not authorized by the National bank
rIIpt act to tax National bank stock for a
higher amount than such bonus, but the
United States Supreme Court, and the Su.
preme Court of Tennessee have decided tc
the contrary.
The S1st section of the act passed Marcel
-. 1873, which reads: Municipal corpora
tiOns shall not levy a tax upon money, cap
ital loaned, or upon money invested in
any species of manufacturing, or mining
or upon any other corporation. exceed
ing the amount of tax levied by
the State upon such capital This statute
does not affect the question raised by Tx
petition. it applies only to the tar levied
that is; TO the per centage of tax to b'
levied by the City Council, and not to tbs
rule to be followed by the Assessors in de
termining the value of the property as
seSsed.
The section referred to has no applica.
ton to bank stock. The phrase, ''mOney
invested in banking means the capital
stock paid in and employed by the corpora
ton in banking, and not the shares of stock
ownedb y the stockholders. The capital OF
a bank is a separate and distinct thing from
the stock owned by the stockholders. The
one belongs to the bank, and the other to
the individual.
That the Slst section of the act of March
%, 1874 is unconstitutional, would
not seem to admit of a doubt.
At the time of its passage the city charter
and the general law of the State left the
City Council unrestricted as to the amount
of tax which should be levied on every
species of property subject to municipal
taxation. Ii was well known that the city
was compelled to levy much higher tax
upon property than was levied by the State,
but this section would create special eX-
emption in favor of mOneyed capital
loaned or invested in banking, manufac-
turing or mining, by providing that it
should not be taxed by municipal corpora
tiOns higher than by the State.
The Supreme Court of Tennessee, in
the case of Mclaughlin VS.. Caldwell, de-
ceased. Term 1871, sustains my position
on this last point. The court says ::
"What, however, would be the result,
should the Legislature see proper to ex-
empt property from taxation, in violation
| of the spirit of he COnStitutiOnabOve quoted
we do not say. Would it result that all
the tax imposed by the act upon property
would therefore be illegal, and not suScep-
| tible of collection? This would be to give
an unusual effect to an unconstitutional
law because certain property is improper
" exempted, therefore 10 tax can be col
lected from other property that is properly
taxed. Would not a more reasonable view
be, that the part of the law providing for
tie improper exemption be declared void"
| In conclusion, then, upon this point,
state, that in any opinion neither the
National Bank act IOr the act of the Leg
islature of 1873, modify the rule of law re-
quiring all property, bank stock included,
to be taxed according to its market value.
These constitutional principles apply to
bank stock as well as any other kind
of property, and the Supreme Court of
| TarnocSea hos told how the valua of Such