The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1877-04-13
TAXING NATIONAL BANKS.

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| IMPORTANT DECISIONS By THE UNITED STATES
SUPREME COURT IN THE GALLArIN AND
TRADEsMEN's NATIONAL BANK sUITs-NEw
YORK CITY VICTORIOUS IN BOTH ACTIONS
SETTLEMENT OF QUESTION or GRAVE IN
| rEREsT TO ALL OUR BANKS.
| The city has recently gained Two very important
suits which have put at rest several mootcd points
concerning taxation by the municipal government
OF the shares OF stock Of national banks The FIRST Of
those cascsThe People cx rel The Gailatin Nationa
Bank vs.. The Commissioners OF Taxcs--added some
Sll 900 TO the assessment rolls Of the city, and the
other case-The People ex rel. The Tradesmen's Ma.
t,ona Bank vs. The Com m issioners OF Taxcs-added
over 81 000 900 Below given carefully pre-
pared abstracts of decisions in these cases.
given by the Supreme Court OF the United Siatcs:--
THE GALLArIS NATIONAL BANK SUIT
The Of The People cx rcl. Tho Gailrtin National
Bank VS.. The Commissioners Of Taxes, in which Mr.
d. ID. Lord appeared tor the relator and Mr. Hugh L.
Cole for the respondents, was an appeal by the bank
from an order Of the Court OF Appeals, Affirming
an order OF the General Term Diminishing
. writ Of oertiorari which had been granted
Tor the purpose Of reviewing the action OF the Tax
Commissioners in the vainaton by them OF the shares
Of the capital stock OF the bank for the purpose
taxation The Commissioners had assessed the shares
at their actual value instead Of heretofore their
par value Tho REALTORS claimed that the shares could
not lawfully ''be taxed Of their par valuc
three reasons-1rst because the Enabling chapter
81 Of tho Laws OF 1851 provided that there should be
no taxation stock OF national banks
OF the par value OF the shares which ard The
organizations under OF the bank (which before had
boon a State bank a national bank created legis-
lst,ve tho State and the bank which
coul be
banks required by law 10 keep pUrtion of
IN United states bonds and also 10 keep reserve
out Of their earnings, which ought TO be deducted
from tho total value OF tho shares ana tnrd because
The Inclusion Of the said reserve and the said United
States bonds in the assessment Of national banks,
whereas State banks are not required TO keep such
reserve and 10 invest In any particular class Of &C.
curities In effect TO tax the national banks at
greater than other moncyed capital In the hands
Of individuals OF the state, contrary to the statute
The respondents contended-hrst that the actual
value and not tho par value Ia tho standard to be
adopted by the Commissioners IN assessing tho shares
second that Tho stockholders cannot avoid taxation
tho total value OF their shares because part or even
the whole OF the capital OF the bank was Invested
United States securites third tnat such taxation was
illegal discri minntion against the national banks
and fourth, that In effect this was no specific
taxation OF surplus" or RESERVE" because there
such entity as tho SO called 'surpins' or rc
serve" which could possibly be separated for the pur
pose from the Other elements which 60 to
make up The value oil the sharez
0PiRioy
Mr.. Justice Hunt delivered the opinion OF the Court
as iollows-The laws Of tbs State OF Now York pro.
vide that shares ike these we refer shall DO assessed
value OF the share AT their full and true value,
the assessors would appralsc the same In payment
OF u Just debt from solvent debtor CHAP II OF Laws
Of 1856, Rel 393, 17 The justified
under this authority in fixing the value as we have
stated. Tho appraisal Included the reserve fund,
which Is much part OF the property OF the bank,
COOS 1x the value Of shc shares equally II II
not called by that name, but remained as part
OF the specie bills discounted other funds Of the
bank undistinguished from the general mass
States may tax tue shares OF national banks 70
two nstruconshrst, that this taxation shall not DO
tut greater rate than is assessed upon other moncycd
capital IN the hands Of citizens OF such State and,
second, '.that tho tax imposed shall rot exceed the
rate imposed upon State banks" rs Stat Ut Large,
1l2) In Heburn The School Commissioners this
Court decided that In making The assessment OF bank
shares by this authority II was competent TO assess
them amount above the par value t23 Wall.
lS0l But the REALTORS insist tina. by the act tho
Legislature Of the State OF New York. passed May Q,
1868 it was enacted that the shares could not be as
sessed greater amount than The par value thereof
that statute created contract with the banks
organized under Il which could not be altered
by q subsequent Legislature. Had this stat
been Q valid one we might have been
called upon TO- discuss the poiDt raised.
573) that statute fatally defective, that IL
did not contain proviso' TINT the tax authorized
Tho system OF taxation devised by the 1865
adjudged 10 be illegal and void. Tho clause now
laid hold Of BY tho relaor was simply pIoyso Or
There was, legally speaking, ANY such proviso
or enact ment tho realor claims the benefit Of OF
there could be no such ,hDg rs violation OF
contract contracted in provs0 which existed.
Warren The I'd Gray, sS; scdgwick stat, 4la)
TIE TRADEsxEN's NATIONAL BANK
The suit Of Tho People cx roll The Tradesman's Ma
tional Bank The Commissioners Of Taxes, IN which
Mr. Horace Barnard appeared the relator and Mr..
Hugh /. Cole tho respondents up by ccrlio-
rarL Tho only question involved was as 10 the
amount which the Commissioners were bound to de-
duct from gross value OF the shares account OF
the real estate OF tho bank The statute tchapter FOL,
Laws Of 1861 provides that lin making such Asscss
mont there shall be deducted from the value OF
share such Ii IN the same proportion to such
value the value Of the real estate 10 the whole
that the deduction or the value OF the real
snould be made from the nominal capital and not from
tho actual capi.al-. z the aggregate value .. tho
tion should DO made IRON the actual capital
OPINION MILLER.
Tho Court held, Mr.. Justice Miller delivering the
opinion, iollows:-rhe evident object and purpose
OF the which tho foregoing provision cited.
wns to provide system Of taxation Of tho stockhoId
srs Of national banks by which they should be assessed
for their shares In the tame method and have the
same burdens as are arc upon property
and thus be ompelled thor and just pro-
portion OF 10 be levied When the assessors lad
liked upon the value Of sucn shares then the deduction
was to made from the vaGe of the shares Of the
value of the real esate aud here the real point OF
the CONTROVERSY IS presented as 70 what the deduction
shalt be- IL Is 10 be proporonae and the assessed
value OF the real estate Is 10 the capital stock. The
phraseoogy last employed must DO considered In tho
connection with the ''vnlue OF the shares" which
have previously inserted Ia the statute and when
the speaks of the whoc emount Of the capital
stock reasonable suppose that II has reference
value and not to the nominal amount OF the cap
naL IL certainly includes the value ne that constitutes
the actual amount and the Important element which
was 10 taken INTO consideration IN the assessment
OF the shares Sucn being The principle upon which
the assessment Is based, Il s not apparent in what
man a deduction be made from the value OF tho
shares proportion to the nominal capital instead OF
real capital According its value. The word nominal"
Is not used, aud while the amount oil the capital may
be nominal may also, when II has Increased in value
profits earned. be lar beyond that and when II has
thus become actually moro valuable than tho nominal
amount there Is no valid ground Tor holding that
the latter should be the criterion. In fact. the
language cited would seem TO Indicate that IL was III
tended by tho Legislature TO exclude any such con-
struction. II II were otherwise banking institute
which had been prosperous and successful, and whose
shares had raised far above the par value might
escape upon large portion Of the amount OF
their capital whfic those which had been unfortunate
and reduced in value might be taxed upon q Far
greater amount Than their entire capital, upon an
tireIy fictitious basis Of values and upon property
which In fact had existence. This clearly never