Evening journal., 1891-03-28
NATIONAL BANKS TAX.
PROSPECT OF a COMPROMISE Be
TWEEN THE STATE AND BANKS.

BlSa Fee States Council VIII Get.
Doines Of the General Assembly at Yes
terday's Session.
stan Correspondence EVENING JosRNAL.
DOVER. March % The state is abont
to come out victor in another case in
yolying large amount of money. A
eompromise has been practically effected
between the state and national banks OF
the state in relation to the $50, 600 back
tax due them Rumor has 1t that the
state will receive $40, 900 but the counsel
on both sides refuse to confirm the
rumor
Be this as It may the state viii get
thousands of dollars 1t was never ex-
pected to receive.
History of the rax and Litigation.
February "a, 1855, the General Assem-
bly, passed law which provided: That
each Of the banks that now are. or may
hereafter be, chartered In this state,
shall pay 10 the state treasurer, semi
annually hereafter, on the first day of
July and January, a tax Of one fourth of
one per centum per annum upon all and
every portion OF the surplus or contin-
gent fund OF the said banks. exceeding
20 per cent OF the said surplus or con
tiDgent fund !"
April 8, 1869 the General Assembly
passed law providing: THAT there
shall be pald annually by the owner or
holder thereof, on each share of the
capital stock Of every bank or banking
association now or hereafter incorporated
or organized under the laws Of this state
or OF the United States. and carrying on
business within this state, tax
of one fourth OF / per centum
snare of the capital stock; provided
that the share or shares for any bank OF
banking association iD this state orga
nized under the laws of the United
States, held or owned by any person or
body incorporate. shall not be subject to
any tax exceeding the rate imposed upon
the shares in any Of the banks organized
under the laws of this state, nor at a
greater rate than is assessed upon any
moneyad capital in the haIds of in
dividual citizens of this state,
March 80, 1871, q law was enacted that
| is almost an exact counterpart of the
Ridgely Tax bill now before the House,
providing for the taxation Of all interest
bearing securities and Investments.
For some years prior to 1881 certain
national Banks discontinued paying this
tax. on the ground that the stste had nc
right to tax a national bank after the
repeal OF the tax upon bonds and mort
cages or other investments.
/ The General Assembly, by joint reso-
luton passed January l3, 1881, directed
the state treasurer TO confer with the
attorney. general il relation to the taxes
/ claimed to be due from these national
banks
In October. 1880. the First National
Bank of Wilmington, through Colonel
Benjamin Nields, obtained a preliminary
injunction restraining the state treasurer
from collecting the tax on shares of
naiional banks
On March 9. sS3, the state treasurer
was directed by joint resolution to sus-
1 pend collection of taxes from the
/ Farmers Bank until after the suit which
had been begun against the national
banks, in the United States Courts was
decided
The tax bill Of 1871 was amended in
1898, so as to exempt investments in
securities or stocks of other states, or OF
companies Incorporated by other states
OF by the United States, made or held by
residents, firms. companies, associations
Of persons or corporations of this state
The next step taken by the state was
on April II, 1885. in a Joint resolution
directing the attorney-g general 70 pro
ceed at the earliest practicable date
against the banks that refused to pay
the tax on shares, and directing the
state treasurer 70 employ counsel to as
sist the attorney general
Acting under that resolution State
Treasurer John NJ Houston employed
Levi c. Bird. and William Herbert, his
successor, authorized and empowered
him.
The case of William Herbert, state
treasurer VS. the First National Bank OF
Wilmington, was argued before Judge
Mekennan in the United States Circuit
Court, October 16 and II, 1888, by Lev
c. Bird, Andrew E Sauborn and At
torney General Biggs for the state
Nields for the banks. This was made 8
test case by the national banks.
The case after an argument of two
days was held under advisement by
Judge McKennan for two years. when
J decision was rendered in favor OF III,
state. Thereupon Mr. Nields, OF counse
for the bank, gave notice Of an appeal K
the Supreme Court Of the United States
i
now Ia the Supreme Court.
Since the appeal was taken severa
conferences have been held with this
counsel for the state and the counsel fol
the several national banks, as well IS Q
conference between the counsel for the
state, counsel for the banks and thl
presidents Of the national banks of the
state.
The General Assembly desiring &
know what the charges of the counse
would be, appointed joint committee t,
confer with them with reference to fixing
their compensation. The committee wai
appointed March 90, 1889.
On March 25 a joint resolution wal
passed authorizing Levi G. Bird. Of tn,
counsel, to retain is per cent. Of thu
taxes due at the time Of the ending O.
the suit, should It be decided in favor OIL
the state the same to be in payment foi
all the services of the counsel, and pro
viding further that in the event O
the decision in the case turning
upon the act of the General Assembly
passed March IS, 1888, above referred to
and the court deciding that the sale
law repealed the tax on national banks
and that therefore the taxei
due only up to March 10, 1888, then fl
, that event counsel were directed to col
lect ali Of the said tax up to March 13
1883 and to deduct % per cent. as pay
ment in full, and pay over the balance K
the state. In the event of the suit beinl
decided against the state, the attorney
for the state shall not receive any com
pensation. Levi c. Bird was pai6 re
tainer Of $500, and this to be deducte,
from his fees in event the case is com