Montgomery County sentinel. [volume] (Rockville, Md.) 1855-1974, 1907-06-28

Criticised for Arbitrary Action.
The Court Of Appeals decided on Tues.
day that Baltimore city stock held by ma
tional banks in Maryland cannot be credited
by the State Tax Commissioner against the
assessment on the shares of such banks for
purposes of local taxation. The decision is
Of far.reaching importance and settles q
point which has long been in doubt, but
which doubt has for some years been resolv-
ed by the Tax Commissioner In favor OF the
banks. The Court, in effect, holds that the
shares for only tax-paying investments.
Real estate owned by bank is deductabe
both from the State and local assessment
basis because 1t is directly taxed for State
and local purposes. City stock, however, in
the hands Of the banks, being subject only to
a direct tax for State purposes-paid by the
city of Baltimore through the City Register
lis not entitled TO be offset against the
shares of the bank, so far as the local tax Is
concerned.
The opinions of Tuesday, written by Judge
Schumacher, were handed down in two cases
In which State Tax Commissioner Buchan-
an Schley was defendant below and appel.
liant in the higher Court. The opposing par
ty in one case was Senator Blair Lee, tax
payer, individually and as trustee; In the
other suit the County Commissioners of
Montgomery county were parties. The
appeals were from preliminary injunctions
granted last March by Judge Revell, of the
Circuit Court for Anne Arundel County.
The decisions affirmed the action OF Judge
Revell in restraining the Tax Commissioner
from deducting the Baltimore city stock from
the local basis Of assessment in the cases
of two national banks of Montgomery
county.
The Court also crticises the Tax Com
missioner's action in arbitrarily valuing
bank stock at only a fraction of its shook
value," without taking into account the
earnings Of the bank and other elements
contributing to the value of its stock.
In the case in which Senator Lee was
puttyy O00ko oAt5SoO AStOhAo dtScCht w
some of the conclusions OF the Court.
The opinion holds that the Courts clearly
have Jurisdiction in the matter, the question
rot being one of the discretion vested in an
official, but his power; or, in other words,
the legality of the method which he pur-
sued.
The opinion says that section 159 OF arti.
Gle 81 of the Code makes no specific provis.
ion as 10 the manner In which the value OF
the shares is to be ascertained. "How.
ever" it states, "the method pursued by the
Tax Commissioner of accepting the book
value as the criterion of the value OF shares
Ia inadequate"
In the case in which Blair Lee is a party
the Court of Appeals also In the main finds
against the State Tax Commissioner, though
the Court holds that the three corporations
which are interested In the suit should have
been made party defendants. This omis-
sion, the Court holds, is not fatal, and that
the corporations may be made parties when
the suit is remanded to the lower Court for
additional proceedings. The corporations
10 questions are the Montgomery County
National Bank of Rockville, the First Ma.
tional Bank of Gaithersburg, and the Mutual
Fire Insurance Company of Montgomery
County, located at Sandy Spring.
In this opinion the Court holds, in part,
as follows:
The shares of capital stock Of the Mont
gomery County National Bank and the First
National Bank Of Gaithersburg owned by
residents Of Montgomery county and nom
residents of the State constitute property
taxable In said county, as do also the prop.
erty and assets OF the Mutual Fire Insur-
ance Company OF Montgomery county. The
bill AYERS that the appellant contends that
he as State Tax Commissioner is required
by law TO return to the County Commits
sloners for county and municipal taxation
the identical assessment of the stock Of the
said corporations that he returns to the State
Comptroller for State taxation and has in
formed the appellant that he intends in
making said assessment for the year 1907 to
deduct from the value of the capital stock of
each of the said two banks the face value of
Of the Baltimore city stock held by it.
Section 149 requires the State Tax Com.
missioner before the 18th of May in each
year to assess for State purposes the shares
Of capital stock of all its banks, State or Ma
tional, etc. Section 1852 requires the Tax
Commissioner to certify and return his as.
sessment OF the shares Of stock of banks, etc.,
to the Comptroller, who is required to notify
the president or other proper officer.
The opinion further states that the vari.
GUS provisions Of the code afford simple
and effective method for the assessment Of
State and local taxes upon shares of stock
The only disturbing element is introduced
by Section 100, which provides for the al
lowance of credit of Baltimore city stock
or other shares on which the payment Of the
State tax is already provided. The question
is, the opinion says, in what way the credits
provided In this section are to be applied.
Continuing, the opinion states "Under
the system Of taxing property Of corpora
tons in force In this State the Investments
held by them, exclusive Of real estate, are
not directly taxed, but the contribution Of
those Investments to the funds raised by
taxation is made through the taxes levied
on the capital stock Of the corporation own.
ing them. Any investments therefore Tex
elusive OF real estate) held by corporation
which are deducted from the aggregate
value of the shares Of Its capital stock by
the Tax Commissioner, in making bis as.
sessment, practically escapes taxation, IN
less some other provision has been made by
law for the payment Of the taxes thereon
The law does make provision for the pay
ment OF State taxes on Baltimore city stock
by requiring the City Register to pay them
over directly to the State Comptroller, but