The Wallace miner. [volume] (Wallace, Idaho) 1907-current, 1920-11-04
Local Bank Loses
Case in Federal
Court
SUIT AGAINST COUNTY
Claim Large Refund on Ac-
count of Investment in
Non-taxable Bonds

q TOCKHOLDERS of a bank can
not escape paying taxes on
T., their stock on the ground that
the capital stock and surplus of
the bank, which fix the value of their
holdings, are invested in Liberty
bonds of the first issue which are ex-
empt from taxation. This is the rul-
ing of Judge DIETRICH, of the United
States court for the district of Idaho,
i'm the case of the Wallace Bank &
Trust company against Shoshone
county The action was filed by the
bank in the federal court last July and
was for the purpose of recovering
S675O5O paid to the county in taxes on
shares owned by its stockholders. The
county demurred to the complaint and
in the memorandum decision render
ed on October q Judge DIETRICH sus-
tains the demurrer and orders the
case dismissed. The Wallace Bank &
Trust company was represented by
lsham n. Smith. an attorney formerly
residing in Wallace and James A.
Wayne, of this city. was attorney for
Shoshone county. The case is in
teresting as showing the possibilities
that would be open to stockholders if
the court had held in favor of the
plaintiff 1t would only be necessary
for the bank to keep its capital and
surplus invested in non-taxable Sc
curities in order to escape paying
taxes on practically everything ex-
cept its holdings of real estate The
decision follows:
Judge Deitrich's decision.
1.-THE plaintiff, a banking and trust
corporation organized under the laws
of the state of Idaho, brings this suit
TO recover from the defendant county
S675O.5O paid as taxes upon it's shares
of stock held and owned by its stock
holders. The latter have severally
assigned their claims to it, and it
sues as assignee. Admittedly without
such assignments it had no interest.
Under the laws of the state a banking
corporation is made the agency for
the assessment and collection of taxes
upon its shares of stock, but such
taxes are assessed against the shares
and against the holders thereof, and
not against the corporation.
1.-THE contention of the plaintiff is
that the value of the shares is based
upon the capital stock paid in and a
surplus. and that most of such stock
and surplus were at the time of the
assessment complained of invested in
Liberty bonds of the first issue, which.
it is conceded by defendant, are ex-
empt from taxation; and therefore the
real question is whether the value of
such bonds is to be deducted from the
cash value of the shares of stock for
assessment purposes. Provision is
made for the assessment of shares of
stock in banking corporations by Sec
tons 1927 to 1908 inclusive of the Ida
no compiled statutes. 1t is the intent
of the law that the assessment be
made upon shares of stock, as dis
tinguished from the capital or capital
stock of the corporation. The capital
or capital stock is, of course, owned
by the corporation, whereas the shares
of stock are owned by the several
Weiser National Bank
v Jeffreys, IA Idaho $50; 95 pac. %.
This construction of the statutes is
really UtclSlNt OF tit ISSUE SuDmlLlGu
here, for admittedly, if not merely in
form but in substance the assessment
is made upon the shares of stock, the
case is ruled in favor Of the defendant
by Van Allen V. The Assessors, 70 U.
s. 57S and Home Savings Bank VS.
Des Moines. POS u. s. SOB. See also
Hager " American n. B., 159 Fed
1896, 4O1; Elliott n B. V. Gill, 21O Fed
$685. National Bank of Commerce V.
Allen. 22S Fed. 472.
On support of its contention the
plaintiff cites only Iowa L. & T. Co V.
Fairweather 252 Fed sos. But in
view of the Idaho statutes the case
can hardly be deemed to be in point
While the complaint here is so franz
ed as to make the bank appear to be
an interested party, as already sug-
gested, it has no interest of its own,
and it must be regarded as suing in
the capacity of assignee. and not 9TH