The San Francisco call., 1897-06-29
MANY DOLLARS
ARE INVOLVED
Objections Made to Paying
Taxes for Cash on
Hand.
Important Suit Brought by the
First National Bank Of
This City,.
Assistant Attorney Borden DisclOses
Inadequate Assessment on
Real Estate.

Judge Seawen spent yesterday listening
to an argument in the suit of the First
National Bank against the City and
County of San Francisco for the recovery
of $500 paid as taxes under protest
Attorney W. 5. Wood, representing the
bank, urged that an error had been made
by the municipa authorities because .hey
assessed the money on hand and the
banks furniture, whereas they were al
lowed under the United States banking
act to tax the shares of stock of the cor
poration. The answer Of the bank form
ally set forth that the plaintiff was Ma
tionaI banking association organized
under the National bank act and that by
the provisions of that,act it is aIlowa ole to
tax only its real estate, and that all its
personal property and assets are repre-
sented by its shares, which are made tax
able to the holders, and that the plaintiff,
as such National bank, was not liable 10
be taxed on account OF said personal prop
erLy.
In its answer the City. represented by
Assistant City and County Attorney
Rhodes Borden, alleges that the real es-
tate of the bank, at the northwest corner
of Bush and Sansome streets, is worth
1897 OCT, and that it is assessed at only
$209, 400; that the shares OF stock are not
taxed at all; that when the assessment
was levied the bank had on hand $3.50, 333
in cash, and that the fixtures OF the bank
were worth $4,000; that the paid up capital
OF the bank was and is 81, 100000. the sur,
plus Is $780, 900, the undivided profits $95,-
942. ana the solvent credits greatly In ex-
cess of the banks liza bilities.
Meeting the assertions of the complaint
the City and County of San Francisco aI-
leges that none of the shares of the stock
of the bank have been assessed or taxed in
any manner whatever and under the deci-
sion OF the California Supreme Court can
not be taxed, and if the tax on the money
on hand and the office fixtures be not sus-
tanned the bank and It's whole capital and
property, except its real estate, will escape
all State or municipal taxation. The real
estate constitutes less than tenth of the
banks assets.
The City also admits that the shares OF
the bank are by the act of Congress made
taxable to the holder of such shares; but
the City alleges that taxing the shares is
merely an in0irect method of taxing the
property and assets oil the bank, and that
when under the tax laws of the State of
California said shares cannot be taxed the
tax involved in this action upon part of
the tangible property of the bank is not in
violation. of the provisions of said act of
Congress.
Mr.. Borden argued that the banking act
does not give any new right The first
banking act was passed in 1868 aud the
public mind became 1ndoctEinaJed with
the idea that shares OF National banks
could not be taxed. To correct this
new section was enacted in 1864 and in
1868 this was further extended. He inter
preted the law as it now stands, to be 10
the effect that no tax shall be imposed
which shall operate as license to carry
on the banking business.
Judge Seawell suggested that it might
have been better plan if the tax had
been imposed on the shares of stock. He
seemed inclined to think that the express
sion heretofore credited to the Supreme
Court of this State in this regard may
been mere dictum. since the point did not
appear to be involved in the case decided.
Mr. Borden responded that here was a
difficulty that the City met. If an effort
was made to tax the shares solely the
banks would object on the ground that
the shares were eXem pied by decision OF
the California Supreme Court. and If an
attempt is made TO collect on the cash on
hand and personal property then a suit
similar to the present one is instituted
Mr. Wood retOrted that ii was not the
fault of his client If the Legislature OF this
State has failed to make provision for the
collection of this tax.
Mr.. Wood was inclined to insist on a
+.
Borden said that the history OF litigation
OF this character showed that courts had
not adhered TO strict Interpretation; that
in almost all the cases where the law
allowed the taxing of a banks real estate
the real estate had not been taxed as such,
but the property had been LEVIED ON in
the form of the stock of the company, as
probR bly, would have been done here were
it not for the opinion expressed by the
Supreme Court OF this State. He held the
law to mean that reasonable tax only
should be levied, and that when the real
estate is assessed separately the amount
Uf such assessment must be ded ucted and
the further assessment is to be levied on
the capital stock, as is allowed by the
Federal law, provided the assessment be
no higher than the assessment on similar
State property. The State originally had
the right 10 assess all tang Bile property
and that right has never been surren-
dered; therefore, that right is still pos
sessed by the State.
Judge Seawell said he would examine
the authorities cited by the attorneys and
would render a decision hereafter.
Many other similar suits against the
City are pending, the total amount in
volveG aggregatlng more than $l25, ,000