The weekly clarion. [volume] (Jackson, Miss.) 1863-1882, 1876-06-21
IMPORTANT DECISIONS OF THE ST.
PREIE COU8F.
Holly springs :. & ms. Co, vs.. Board Su-
per.isorI Narshali Comfy.

Po,rcr Of .Stote ani Comfy 10 tar a bdah7rg
institution ,rhoee means are inrested ia ord y
IN ,sea8e fardti0n 1eL0llg IN United StdfeS
T,els,l5v Mites aiR lands, trhtch are Ho,t-
fs1abhs. Ik1J, that the neans are sHtyco
t. tIratiaa.
Ooiajon Of he Court By CHALMrEs, }.
The Holly Spring savings and Insurance
COMPANY seek 10 escape payment OF taxi
zion on So 600 oil its capital, upon the
Ground that the same was, on the lst OF jan
nary. 1873. invested wholly in United
states Treasury notes ard bonds, "Ai.h
are non-taXablc BY the law then in force,
taxes We're 10 be assessed upon all property
subject t. taxation held 10y the owner on
the irst day OF January preceding the "7-
sessnvnt 1t appears that the investment
in dis case WAS made few days before
January ist for the express purpose OF
avoiding taxation and that the securities
we're re-eonvcrted few days subsequently
into curren. finds, and re-em arkcd IN the
business Of the concern.
The question presented i, whether
banking institution can avoid taX4tion by
an investment in the non-taNablc securities
OF the government, under such cir-um-
stances.
We thni, think the court below did not
err in holding the capital stock OF Tlain-
tits in error To be taxable under the stateof
facts disclosed by the record. In Mitchell
Vs. the Commi ssioners of Loaycnworth
county, it was held by the United States
Supreme Court, in Il case strikingly similar
to the one at bar, that where the taxpayer
was seeking to enjoin the sale Of his prop
erty for unpaid taxes, Il court of equity
would refuse its relief to him because Ofthc
fact that his investment in government $50
curilies had been temporary, and with the
express purpose of avoiding the burdens oi
taxation. Chiet-J ustice Waite held that
court OF chancery would not lend lis sane
tiOn and aid to Il scheme so improper and
fraudulent in its character, and he there
fore RENTED the complainant to his legal
rights, ifany he had. We think the learned
ChieiJ Justice and our Kansas brethren
might well have gone further, and declared
that party cannot, in this manner, ac-
qulre rights which a court either of law or
ofequity will enforce.
1t is argued that the State cannot inquire
BY what means the institution disposseSsed
itself OF the property or what are its intcn-
tions with regard to re-possessing itself of
it. In the first place, the institution pro-
cecds upon TOO liberal Interpretation of the
statute requiring it to make out lstof its
taxable property, and, in the second place
it overlooks the principle that fraud viii
ates every thing into which it enters, and null
liiies the advantages which fair dealing
would have conferred. When the State
imposes the burden OF taxation upon he
property possessed by the citizen, il means
both that Of which he is the open holder,
and that which he has sccIcted and conceal
ed His cunning may IN practice defeat
the imposition upon tile latter, but it is legal
ly no less liable to the burden, and when dis .
covered, the duty viii be exacted, no mat |
ter what the shifts and devices which may
have been resorted to in order to escape
That party can derive no advantage in |
any court from 4 fraud confessed or exposed /.
may be considered automatic. Shall the /
State alone be debarred from asserting .
against a fraudulent taxpayer this whole /
some principle which protects the rights of !
the private litigInt? Was not the conduct |
of plaintiff in error i'm the case at bar pal /
Pable fraud upon the revenue of the State.
and Is the State powerless to guard against
it?
1t is shown by tho poor, that for three
DAYS the institution invests its means i'm
government securities, and claims thereby
TO escape taxation for the remaining 362
days Of the year, coniessng, at the same
time, that this momentary investment was
made to escape taxation. SUoh conduct f.
4 fraud IN fact, as well IS intention.
1t IS freely conceded as general propo-
,ttiun, that the nun-taXabilty of the nation
1t securities cannot be infrinued by the
state, no matter what are the circumstances.
lnder which they are held, vet this cannot
IiIect the question involved because there
till remains power in the c0,..ts to inyesti-
.ate whether tho hoiaing is actual and 6oaq
~ % cotofablc only and fraudulent. nj
ieid IN the latter aspect, the courts will
ook through the sham, and measu.a the I
tights Of the parties by the zeal nature of
he transaction. r..
1t : Lot Lcid chat government bonds arc
aNable, merely because the motive for their ,
purchase Was to escape taxation nor does .
10 court intimate that they must b. held
o.: any particular time, or be bought with =
ny intention Of holding them for any peri !
d Whatever But the court does icalarr Il
hat when the capital Of banking instftu- 3
ION l~ coH.cr.vd f5r q few days into govern 81
lent securities for the express purpose oi 1
eteatIng the imposition of any or ali taxes
Il h investment is colorado and lraudulrrt, T
nd its capital remains tayabso 10 the il
anne extent aGd la the manner q. y
.ne Conversion had not taken place. ~
4 such case, the tenure bv wh.a,
hey are held, being a fraud and a cheat <
ill be disregarded, and the haaLe,s will be ',
onsldered as still tx owners Of that propcr-
4 l.isieh, iof the moment, they have at +
tmpted to hide beneath the protection of =
nc general government d
The Judgment Of the ocuts below is az
rmed. Z