Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1905-02-10
An Interesting Decision by
Judge Mcpherson of the
Federal Court of Iowa
uPHoLDs THE IOWA LAW
Decision Was in Favor of the Bank,
But 1t Creates a Precedent That the
Banks May Not Prize-The Differ
ence Between Shares and Govern
ment Bonds.
Special to Times Republican.

Des Moines. Feb 10.--That there is
one way in which government bonds
may be taxed in Iowa by indirection
is shown in the opinion of Judge Smith
Mcpherson of the United States cir
cult court in the case wherein County
Treasurer Charles MurroW is enjoin-
ed from assessing local savings banks
for omitted assets.
Judge Mcpherson in his decree has
restrained the county treasurer from
assessing taxes on bonds held by the
assessment was first made by an as
SCISSOR without fraud and that as the
matter was not called before Il board
Of review it Is settled. He upholds the
Iowa law, however, which provides for
the taxation of shares in savings banks
to the bank and admit7 that govern
ment bonds should be considered as
bank stock wherein shares are taxed.
Thus, while the defendant. represented
by Attorney Howard Clark, was de-
feated in his special case, a notable
victory was won in having established
beyond a doubt the right of the county
treasurer to tax in the future the
shares held in savings banks regardless
Of whether the stock is i'll government
bonds or real estate or cash. The rul-
ing affects savings banks and trust
companies only.
Power of Taxation.
In rendering his opinion Judge Nc
Pherson after reciting the question in
volNed, says:
That the constitution is the supreme
law OF the land need only be stated.
And that the government has the pow
er to borrow money, by issuing its
bonds and selling them is denied by no
one. And that the bonds cannot be
taxed by any state, county, or munich
pality is agreed to by all, and by none
with more emphasis than by counsel
for the defendant herein. Men often
deny this for the reason, as 1t appears
to them, that ii allows the bondholder
to escapes taxation. But all informed
men we'll know that the power to tax
is the power to destroy, and II state
or any subdivision thereof should tax
United States bonds, then the power of
the government to borrow money would
either be destroyed or impaired, ac-
cordingly as the rate of taxation would
be fixed. In any event the ability of
the government to borrow money at Il
nominal rate of interest, is because
OF three things, all of which are con-
trolling-First, the length of the time
before the bonds mature; second, the
integrity Of the government in observ-
ing it's contracts. 1t never repudiates.
1t never tlunks, as do SO many states,
political, municipal and other corpor-
ations. 1t pays it's debts as agreed;
third, the fact that it's bonds are never
taxed.
Stocks and Shares.
'Section 1922 of the Iowa code pro-
vides that all shares of stock of nat
ional banks shall be assessed to the
individual stockholders at the place
where the bank is located But shares
Of stock Of state and savings banks,
and loan and trust companies shall be
assessed to such banks and not to the
individual stockholders.
"That United States bonds are not
taxable is not, and has not been dis
puted since John Marshall wrote the
opinion in the case Of Mccullough VS..
Maryland. 1t is no longer debated. II
the individual has his resources inves-
ted in government bonds he cannot be
taxed. II the capital stock of these
banks were being assessed, deductions
could be made for such bonds. But
the capital stock is not being assessed.
1t cannot be presumed that the asses
sor did that which he had no author
ity to do. The shares Of stock are
what are assessed The difference be-
tween taxing capital stock and the
shares of stock, may or may not be
easily discernibe.
II conclude under the Iowa statute
that it was the shares of stock that
were assessed and from these shares
the bank could not deduct it's United
States bonds"
Taking up his reasons for enjoining
the Polk county treasurer, Judge Nc
Pherson continues: THE bank was as
sessed on the supposed value of the
shares of stock. The assessor made
returns to the county auditor. There
was no review as might have been, by
the local board of equalization, and
that board having taken no action. of
course there was no review of the dis
trict court. The auditor made up the
tax books, and annexed thereto his
warrant directing the county treasur
err to make the collections on twenty
five per cent of the assessors assess
ment, multiplied by the tax levy. This
the treasurer did and gave his receipt
therefor.
."In making the assessment there
Vas no fraud practiced upon the asses
scr. He was acquainted with all the
facts. All therefore, was truthfully
disclosed on the verified statement by
the cashier Of the bank. The cashier
called attention to the asset of gov
eminent bonds and claimed the exemp-
ton. The assessor. thu q mistake of
law, conceded the claim.
"That the assessor in a part at least
acts judicially, there can be no doubt.
After hearing the testimony and seeing
all evidence he makes his findings
and adopts his conclusions, Surely that
Is Judicial act.
"The assessor assesses a house or
stock of merchandise ut $4,000. In fact
t is worth $500. But the assessor
saw 1t. He looked it all over. He act
I'd with honest purpose. The owner
concealed nothing. All that can be
said is that he erred in his judgment.
Ferrets' Harvest.
ut cannot be possibly said in my
Judgment that county treasurer on
the motion of a tax ferret five years
thereafter can re-assess the property
md again collect taxes. If this is not
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