Delaware gazette and state journal. (Wilmington, Del.) 1883-1902, 1890-10-16

S,atos Circuit Court-EEIs Opinion
in Fun.
The long pending suit OF the FRS
National Bank VS.: State Treasurer William
Herbert, In the United Ststes circuit cour
for this district, was ended last week by
the decision OF Judge McKennan, which
afiirms the right of the State to colleo
the tax imposed on the banks Of this city
and State.
Although the First National Bank IL
the complainant, ell tho banks in The
State are interested. The State tax Law
imposes tax OF one-tourth Of per cent
on the paid up capital of each bank
About 10 years ago the banks Iesiaied
payment and the First National, on be.
half of ell applied in the circuit court
for an injunction restraining the State
treasurer from collecting this tax. P nd.
ing decision the tax haa not been col.
lected, and the back taxes nov amount tc
about 81 5000. The annual revenue
from this source will be about SIS, 900.
Judge McKepna's decision was to ths
effect that there was no unjust discrimi
nation exercised by the State, in the i'm.
position OF this tax, as had been claimed,
aud the application for the restraining
injunction wss denied. Il ia likely thai
the case will ne appealed TO the United
States Supreme Court.
The full text OF Judge McKsnnan's
opinion is as follows;
In the Circuit court OF the unltad States
State of Delaware; Whe First National
Bank of Wilmington, vs. William Herbert
siEte TFeaNursr, in equity, BicKsnnan,
| Esq, eircuit Judge.
This suit Is brought to relieve the com.
plainant from the levy and collection OF a
! tax imposed by the State of Della ware upon
certain OF its Shares as national bauk In
corporated under the laws Of the United
states and held by corporate or individual
cltizens Of the STATE.
This question is to be resolved by the
true meaning and construction of the act
! OF Congress defining and limiting the
power OF the states In taxlng national bank
shares.
The only portion OF the act OF Congress
to which It ID necessary to refer at length is
the section 52l9 of the Revised Statute1,
| which tB az follows;
Nothing hareln shall prevent all the
| shares IN any association from being In.
cluded In the valuation of the personal
property OF the owner or holder OF such
| snnres IN assessing taxes imposed by
authority OF the S,ate within which the
association Is located; but the legislature
OF each state may determine and direct tho
manner and place OF taxing all the shares
OF national banking associations located
within the State, suhjact only 10 The two
restrictions that the taxation shnll not be
at a greater rate than Is assessed upon
other mopeyed capital in the hands OF indl-
ViduRl citizens OF such state, and that tho
shares OF any national banking association
owned by non-residenrs OF any state shall
be taxed In the city or towl where the
bank is located and not elsewhere. Moth ng
herein shall be construed TO exempt the
real property OF associations from either
state, county or municipal taxes, to the
same extent, according to Its value as other
real property Is taxed"
The only property in the State OF Della
ware which Is the subject OF taxation 10
real estate, live stock and national bank
shares, and the object of this section OF the
act OF Congress, as was said by MIR. Justice
Miller, In People W.. Warner, 100 N. =. Il.
bS9, was TO confer upon the states u power
Wnich they coIld not otherwise have had,
and ltmitiRg Its exercise 80 as to prevent a
discrimination against national bank shares
as compared with other moneyed capital.
In permitting the states to tax these
shares-thar ls the shares OF national banks
1t was loreseen that the authorities might
be disposed to tax the capital Invested In
these banks oppressively." SO therefore In
the Mercantile Bank vs. New York, l2I N.
3. II. l55, where the construction and IN san.
lug OF the act OF Congress came before the
Supreme Court and 1t was necessary to in-
terpret II as 1t related to the taxation OF
national bank shares, the court says: "a
tax upon the money Of individuals Invested
In the form OF shares OF stOcs In national
banks would diminish their valus as an In
ve9tment and drive the capital so invested
from this employment, Il, at the same time
slmllar Investments and similar employ
ments under the authority OF State
laws were exempt from an equal
burden. The main purpose OF Congress
therefore, in fixing limits to State taxation
on Investments in the shares of netiohnl
banks was to render 1t Impossible fos the
state, Ia levying such a tax to create and
foster an unequal and unfttendly competi-
tton by favorinR institutions or individuals
carrying on similar business and opera.
tions aud investments OF q ike character.
The language OF the act OF Congress Is to
be read In the light of this policy. Apply |
ing this rule OF construction, We arc led, In |
the Hrst place to eonsi ler tbs meaning |
the words other moneyed capital" sas |
used In the statute. OF course 1t includes |
shares In national banks; the use OF the |
word "other'' requires that If bank shares
wera NOT moneyed capital, the word |
"other" would be without significance.
This case may then be regarded as i'm |
pressing determinate import upon the |
words OF the act OF Congress. BY this judi |
clel detlultion OF them, moneyed capital |
meaus national bunk shares held by indi-
viduals as an investment, and the tax com.
planned OF is subject to the restrictive |
power of the State 10 impose tax upon 1t
not exceeding the burden upon similar
property In the State.
1t is undeniable that national bank shares
are subject only TO a tax OF Que fourth OF
One per cent, which Is the same rate i'm
posed upon each share OF the cash valus OF
the shates OF the capital stock OF every
banking Institution Incorporated by or or
.:anizsd under the laws OF tho State of
Delaware.
1t follows, therefore, that the complain
ant Is not entitled TO the relief prayed for
ard its bill Is dismissed With costs.
Aud 1t is 80 ordered.
Benjamin Nields represents the banks
md tine State Ia represented by Attorney
GENERAL John Biggs, Levi o. Bird and A.
b. Sanoorn.
The State authorities now feel conf
lent the suit will eventually result in
heir favor. BY joint resolution
ADOPTED at the last session of the Legis-
atule, the counsel for the State, in the
went Of winning the Case, will receive 10
per cent of the amount involved, which
will make fee OF nearly $50, 900.
This Gaze was dragging along aloWly
or several years until State treasurer
Herbert entered upon the duties OF his
'hioe. He Immediately took steps for an
iotive prosecution of the stair, and it is
low reaching satisfactory conclusion.
The result will, in oil probability, be
handsome addition TO the funds in the
State treasury.