Source: http://supreme.nolo.com/us/273/548/case.html
Timestamp: 2019-12-13 15:30:26
Document Index: 4233543

Matched Legal Cases: ['§ 5219', '§ 237', '§ 5219', '§ 5219', '§ 5219', '§ 24']

FIRST NATIONAL BANK V. CITY OF HARTFORD, 273 U. S. 548 - Volume 273 - 1927 - Full Text - US Supreme Court Center - USSC Cases - Nolo
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FIRST NATIONAL BANK V. CITY OF HARTFORD, 273 U. S. 548 (1927)
First National Bank v. City of Hartford, 273 U.S. 548 (1927)
3. The requirement of approximate equality in taxation (R.S. § 5219) is not limited to moneyed capital invested in state banks or to competing capital employed in private banking; it applies wherever capital, substantial in amount compared with the capitalization of national banks, is employed in a business, or by private investors, in the same sort of transactions as those in which national banks engage and in the same locality in which they do business. Pp. 273 U. S. 555-557.
The trial court held the assessment illegal and gave judgment for the plaintiff. On appeal, the Supreme Court of Wisconsin reversed the judgment with a direction to the court below to enter judgment in favor of the defendant, dismissing the complaint. 187 Wis. 290. The case comes here on writ of error under § 237 of the Judicial Code. Merchants' National Bank v. Richmond, 256 U. S. 635, 256 U. S. 637; First National Bank v. Anderson, 269 U. S. 341, 269 U. S. 347.
First National Bank v. Anderson, supra, 269 U. S. 347; Des Moines Bank v. Fairweather, 263 U. S. 103, 263 U. S. 106. Congress,
by appropriate legislation, has permitted the taxation of shares in national banks subject to certain restrictions. Section 5219 sanctions such taxation in the state where the bank is located, subject to the restriction that "the taxation shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such state." By decisions of this Court construing this language, it is established that the phrase "other moneyed capital" does not embrace all moneyed capital not invested in bank shares, but "only that which is employed in such way as to bring it into substantial competition with the business of national banks." First National Bank v. Anderson, supra, 269 U. S. 348. Hence, the question presented by this record is whether the tax imposed upon the shares of stock of plaintiff under the Wisconsin statutes is at a greater rate than that imposed upon other moneyed capital in the hands of individual citizens of Wisconsin employed in substantial competition with national banks.
The question thus raised involves considerations both of fact and of law. To answer it, it is necessary to ascertain the nature and extent of the moneyed capital in the hands of individual citizens within the state and the relation of its employment, in point of competition, to the business of plaintiff and other national banks. It is necessary also to ascertain the precise meaning to be given the statute as applied to the facts in hand in order to determine whether the particular moneyed capital and the particular competition with which we are here concerned are moneyed capital and competition within the spirit and purpose of the statute. The question is thus a mixed one of law and fact, and in dealing with it we may review the facts in order correctly to apply the law. Truax v. Corrigan, 257 U. S. 312, 257 U. S. 325; Kansas City Southern Ry. v. Albers Commission Co., 223 U. S. 573, 223 U. S. 591; Northern P. Ry. v. North Dakota, 236 U. S. 585, 236 U. S. 593; Jones National Bank v. Yates, 240 U. S. 541, 240 U. S. 552-553. Cf. Merchants' National Bank v. Richmond, supra, 256 U. S. 638. The opposite view expressed in Jenkins v. Neff, 186 U. S. 230, 186 U. S. 235, must be considered discarded by the later cases. Also, as the case is brought here from a state court for review on the ground that a federal right there set up
was denied, this Court is not concluded by a finding of the state court that the asserted right is without basis in fact. Aetna Life Ins. Co. v. Dunken, 266 U. S. 389, 266 U. S. 394; Southern P. Co. v. Schuyler, 227 U. S. 601, 227 U. S. 611.
First National Bank v. Anderson, supra, 269 U. S. 348. In so doing, it followed the holding in Mercantile Bank v. New York, 121 U. S. 138, 121 U. S. 157, that:
(Italics ours.) It is said that this enactment is a legislative interpretation of § 5219 as it stood prior to the amendment, that consequently a narrower interpretation must be given to this section than in earlier cases, and that, under the section before and as amended, personal investments of individuals should under no circumstances be deemed included in the term competing capital. But, as was pointed out in First National Bank v. Anderson, supra, 269 U. S. 350, the amendment did no more than put into express words that "which, according to repeated decisions of this Court, was implied before." By its terms, the amendment excludes from moneyed capital only those personal investments which are not in competition with the business of national banks.
as is here contended for. To so restrict the meaning and application of § 5219 would defeat its purpose. It was intended to prevent the fostering of unequal competition with the business of national banks by the aid of discriminatory taxation in favor of capital invested by institutions or individuals engaged either in similar businesses or in particular operations or investments like those of national banks. Mercantile Bank v. New York, supra, 121 U. S. 155. With the great increase in investments by individuals and the growth of concerns engaged in particular phases of banking shown by the evidence in this case and in Minnesota v. First National Bank of St. Paul, post, p. 273 U. S. 561, discrimination with respect to capital thus used could readily be carried to a point where the business of national banks would be seriously curtailed. Our conclusion is that § 5219 is violated wherever capital, substantial in amount when compared with the capitalization of national banks, is employed either in a business or by private investors in the same sort of transactions as those in which national banks engage and in the same locality in which they do business.
of banking "by discounting and negotiating promissory notes, drafts, bills of exchange, and other evidences of debt." Section 5136, Revised Statutes. They are authorized, with certain limitations, to loan money on real estate mortgages. Act Dec. 23, 1913, supra; Act Sept. 7, 1916, supra; Act Feb. 25, 1927, § 24. Here, plaintiff is shown to have investments in real estate mortgages and to be engaged in selling them. The sale of mortgages and "other evidence of debt" acquired by way of loan or discount with a view to reinvestment is, we think, within the recognized limits of the incidental powers of national banks. Compare First National Bank v. Anderson, supra, 269 U. S. 348; Mercantile National Bank v. New York, supra, 121 U. S. 156. To that extent, the business of acquiring and selling such mortgages and evidences of debt, carried on by numerous individuals, firms, and corporations in Wisconsin, comes into competition with this incidental business of national banks. That the exercise of this incidental power has become of great importance in the business of national banks appears from the Report of the Comptroller of the Currency for 1924, 44 et seq., showing that approximately one-third of the investment of national banks consist of government, railroad, public service corporation, and other bonds, and "collateral trust and other corporation notes."
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