Atlanta tri-weekly journal. [volume] (Atlanta, Ga.) 1920-19??, 1921-10-04
STATE CANNOT TAX
FEDERAL SECURITIES
EVEN INDIRECTLY

| So much Of the capital, surplus
and undivided profits of the state and
/ national banks in Georgia as is in
vested in Liberty bonds or other
! United States securities, is exempt
! from taxation by the state of Geor-
gia, in the opinion Of Judge John B.
/ Hutchinson, of the Stone Mountain
| circuit.
Judge Hutcheson's far-reaching
| opinion was rendered Saturday morn
ing in the case of the Bank of Clay
! ton County against E. A. Daniel, tax
| collector of Clayton county. The
! judge signed an order permanently
restraining the tax collector from as
sessing or collecting taxes on $33,-
! 600 of the capital, surplus and undi-
vided profits Of the bank. which sum
! IS invested in Liberty bonds.
| The Bank of Clayton County has
a capital of $4,000; it's surplus is
| Sill, 900; and it's accumulated undi-
vided profits of $4,370-a total of
| $40,470, which. under the Georgia
| law, is subject to taxation by the
state at the legal rate.
Under Judge Hutcheson's decision,
however, the bank is liable for taxes
in the sum of SOTO, which represents
the actual difference between it's ag
gregate capital surplus and undivided
profits and the s33,600 it has invest
ed in Liberty bonds.
Under provisions of the act of
congress authorizing the issuance of
Liberty bonds, and also under the
general provisions of law, Liberty
bonds and other securities of the
United States government are exempt
from state, county and municipal
taxes, and Judge Hutcheson's deci-
sion is predicated upon the legal
principle that that which cannot
be accomplished directly cannot be
accomplished Indirectly"
In a word, Judge Hutcheson holds
that since Liberty bonds and other
securities Of the United States are
exempt from state, county and mu-
nicipal taxation. it is contrary to law
to attempt to levy a tax against
such securities by indirection. The
fact that such securities represent
a part of the capital, surplus and
undivided profits of banks. which as
sets are subject to taxation under
the state law, does not alter the case.
The state and national banks and
trust companies in Georgia hold gov
eminent securities to the amount or
S31, OOO, 900, according to State Super
intendent of Banks T. r. Bennett.
Under Judge Hutcheson's decision
this sum of money is exempt from
taxation.
Judge Hutcheson's decision ap-
plies only to the Bank Of Clayton
County, since this institution STOOD
alone in it's attack on the validity OF
the tax levy. 1t is understood, how
ever, that the Bank Of Clayton was
selected to make the test case, and
that if the supreme court sustalns
the decision of Judge Hutchinson ev-
ery state and national bank and trust
company in Georgia will be relieved
of the payment of taxes upon SO
much of their capital as may be In
vested in Liberty bonds and other Sc
curities of the United States gov
eminent.
In the litigation before Judge
Hutchesen, the Bank of Clayton was
represented by the firm of Smith,
Hammond & Smith. Atlanta attor-
neys, and the state was represented
by Attorney George M. Napier and
Assistant Attorney General Seward
Smith.
The case will be appealed directly
to the supreme court of Georgia, and
eventually will find it's way to the
United States supreme court.