The herald., 1898-11-01
SAVINGS BANK SURPLUS
BELONGS TO DEPosIToRs AND
MAY NOT BE ASSESSED
THE SUGAR FIGHT STILL ON
Copper Mining Boom-Plate Glass
Insurance-The Cattle Situation.
Dividend Notes
THE SUGAR FIGHT STILL ON
OFFICE OF THE HERALD,

Los Angeles, Oct. 81, lS9S
| A recent decision Of the New York court
Of appeals in the case Of the Newbury Saw
ings bank affirms the decision of the lower
court, which prohibited the assessment OF
the banks surplus funds.
II ia estimated that over 800 600, 900 OF such
surplus funds are thus made exempt in the
state of New York from tax aggregating
about 81, SOC, 900 annually.
An opinion of the court, written by
Judge Gray, was concurred in unanimously
and reads, in part, as follows:
The important question which TINS ap-
peal brings UP for consideration is whether
the surplus fund held by savings bank in
this state is liable to taxation or not. Inc
question is of very considerable Importance,
inasmuch as the aggregate of the amounts
of surplus funds held by the savings banks
of this state is upward Of $l0O, 900, and
their exemption from taxation necessarily
affects materially the body of taxpayers.
think the banking lay can only be regarded
as declaratory of the ownership OF all the
funds by the depositors.
The assessment in this case necessarily
proceeded upon the theory that the surplus
fund belonged to the bank itself, and that
what was due I'd the depositors was only
the aggregate of the sums credited to them
on their pass books. The word deposits
used in the statute of exemption means, by
a just Interpretation, the total amount re-
ceiyed for which the bank is accountable
and not merely the identical moneys received
from particular depositors.
The surplus which has accumulated, is
part of fund which represents the original
deposits, and it's creation is authorized in
contemplation that it may be needed to be
used I'd repay the depositors the amounts
put in by them.
tt is difficult to see upon what theory the
appellants contention could be sustained,
that only the actual deposits which are re-
turnable to depositors on demand, are ex-
empt from taxation. The surplus does not
belong to the bank, for it holds it for the
security of the depositors, to whom it is
due contingently upon the occurrence Of
circumstances requiring its payment to
them. 1t seems to be fair, if not plain in
ference from the course of legislation, that
while the legislature at one time authorized
the local taxing authorities to reach the
surplus held by savings banks, and subse-
quehtly withdrawing that authorization, it
must be regarded as adopting policy of
n-taxation in the case of savings institu-
tions. The purpose to allow local taxation.
for the benefit of the community, is to be
deemed abandoned
1t is to be presumed that considerations
Of public policy have dictated the exemption
and that the legislative body has been
actuated by the chief motive of assuring the
protection of depositors against the contin-
gencies of losses, or of depreciation in values.
The only apparent reason for questioning
the policy of such exemption is the magni-
tude Of the amount Of property affected;
but that is a reason which must be left to
the consideration of the legislature, and
which does not bear upon the construction
of the law.