Source: http://supreme.nolo.com/us/248/476/case.html
Timestamp: 2019-04-25 15:54:34
Document Index: 8653384

Matched Legal Cases: ['§ 41', '§ 5219', '§ 5219', '§ 5219', '§ 5219', '§ 5219', '§ 5219', '§ 5219', '§ 41', '§ 5219', '§ 5219', '§ 5219', '§ 5219']

BANK OF CALIFORNIA V. RICHARDSON, 248 U. S. 476 - Volume 248 - 1919 - Full Text - US Supreme Court Center - USSC Cases - Nolo
US Supreme Court Center > Volume 248 > BANK OF CALIFORNIA V. RICHARDSON, 248 U. S. 476 (1919) > Full Text
Without considering some modifications made by the Act of February 10, 1868, c. 7, 15 Stat. 34, which are negligible for the purposes of the questions before us, the section is but the reproduction of a provision of § 41 of the Act of June 3, 1864, dealing with the organization of national banks. 13 Stat. 99, 112. The forms of expression used in the section make it certain that, in adopting it, the legislative mind had in view the subject of how far the banking associations created were or should be made subject to state taxation, which presumably it was deemed necessary to deal with in view of the controversies growing out of the creation of the Bank of the United States and dealt with by decisions of this Court. McCulloch v. Maryland, 4 Wheat. 316, 17 U. S. 436; Osborn v. Bank, 9 Wheat. 738, 22 U. S. 867; Weston v. Charleston, 2 Pet. 449.
There is also no doubt from the section that it was intended to comprehensively control the subject with which it dealt, and thus to furnish the exclusive rule governing state taxation as to the federal agencies created as provided in the section. All possibility of dispute to the contrary is foreclosed by the decisions of this Court. People v. Weaver, 100 U. S. 539; Mercantile National Bank v. New York, 131 U. S. 138, 131 U. S. 154; Owensboro National Bank v. Owensboro, 173 U. S. 664; Covington v. First National Bank, 198 U. S. 100.
In Bank of Redemption v. Boston, 125 U. S. 60, it was determined that the stock held by one national bank in another is governed by the power to tax stockholders given by the statute. Hence, the circumstance of the ownership of the stock by the California Bank in the D. O. Mills National Bank in no way deflects the operation of the statute. This being the case, as the taxation of the California Bank as a stockholder in the Mills Bank conformed to the grant of power to tax stockholders of national banks, it results that the assessment for taxation made upon that basis was within the state authority, and was rightly decided so to be.
Cal. 398, denied recovery, and the case is brought here upon the ground that the state constitution and laws, in conformity to which the taxes were assessed, are repugnant to § 5219 of the Revised Statutes of the United States. [Footnote 1]
This Court now holds that, while the California National was taxable as a stockholder in the Mills National Bank (Bank of Redemption v. Boston, 125 U. S. 60), the other taxes imposed against plaintiff in error were repugnant to § 5219 in two respects: (1) in that the valuation of the Mills National shares ought to have been deducted from the estimate of the valuation of the California National shares in making an assessment against the stockholders of the latter bank, and (2) in that plaintiff in error, as a national bank, was not taxable at all as a stockholder in the state bank, and that the tax last mentioned above was altogether erroneous.
Upon the last point, I understand the case to be controlled by the decision of this Court in Owensboro National Bank v. Owensboro, 173 U. S. 664, where it was held that § 5219 had the effect of exempting not only the operations and franchises, but the property of the national banks from
The supreme court of California, in the Roberts case, 173 Cal. 398, 405, held that, since it was decided by this Court in the case of Bank of Redemption v. Boston that § 5219 permits the taxation of the shares of a national bank in the hands of another national bank, a different rule could not be applied to the taxation of shares in a state bank owned by a national bank without violating that provision of § 5219, which prohibits the taxation of national bank shares at a greater rate than is assessed upon other moneyed capital. But this view seems to me untenable; it mistakes an exemption accorded to a particular holder of other moneyed capital for a restriction upon the rate of taxation that may be assessed upon other moneyed capital as a class of property. As we held in Amoskeag Savings Bank v. Purdy, 231 U. S. 373, 231 U. S. 393, the language of § 5219
taxable as a stockholder in the Mills National, it having been determined in Bank of Redemption v. Boston, 125 U. S. 60, 125 U. S. 70, that § 5219 permits the taxation of a national bank owning shares of the capital stock of another national bank, by reason of that ownership, on the same footing with all other shareholders.
the year 1862 decided that a state tax, imposed upon a bank according to the valuation of its capital and surplus as upon the property of individual citizens, was invalid insofar as it was based upon an investment in the stocks, bonds, and securities of the United States themselves exempt from taxation by the state (Bank of Commerce v. New York City, 2 Black 620), and having held two years later that the same rule must be applied to a state tax imposed against a bank under another statute which made banks liable to "taxation on a valuation equal to the amount of their capital stock paid in or secured to be paid in, and their surplus earnings," etc. (Bank Tax Case, 2 Wall. 200), the question was raised in the year 1865, in Van Allen v. Assessors, 3 Wall. 573, 70 U. S. 584, etc., whether under § 41 of the National Bank Act of June 3, 1864, c. 106, 13 Stat. 99, 112, from which the present § 5219 Rev.Stats. is derived, a state possessed the power to authorize the taxation of shares of national banks in the hands of stockholders where the capital was wholly invested in stock and bonds of the United States. Bank of Commerce v. New York City, 2 Black 620, and Bank Tax Case, 2 Wall. 200, were referred to as calling for a negative answer, but the Court sustained the tax upon the ground of the very distinction between the stockholders and the bank that is now under consideration, the language of the opinion being (pp. 70 U. S. 583-584):
In the same case, the Court found in the context of the National Bank Act most cogent reasons for holding that Congress intended to permit the states to tax the entire interest of the stockholder, without regard to the character of the investments held by the bank. After referring to certain of the provisions of the act respecting the amount of the capital stock, its division into shares, and the responsibility of the shareholders for the debts of the bank, the opinion proceeds as follows (pp. 70 U. S. 587-588):
This distinction between bank and shareholder has been recognized consistently in the decisions of this Court from that time until the present. It will not be necessary to analyze the cases, since the principal ones (People v. Commissioners, 4 Wall. 244, 71 U. S. 258; National Bank v. Kentucky, 9 Wall. 353, 76 U. S. 359; Farrington v. Tennessee, 95 U. S. 679, 95 U. S. 687; Tennessee v. Whitworth, 117 U. S. 129,
117 U. S. 136; Bank of Commerce v. Tennessee, 161 U. S. 134, 161 U. S. 146; New Orleans v. Citizens' Bank, 167 U. S. 371, 167 U. S. 402) were summarized and quoted from in the opinion of the Court in Owensboro National Bank v. Owensboro, 173 U. S. 664, 173 U. S. 677-682, where the distinction was employed to demonstrate the substantial want of equivalency either in law or in fact between a tax on the franchise or property of the bank, such as had been imposed by the state in that case, and a tax upon the shares of stock in the names of the shareholders, permitted by § 5219 Rev.Stats.
The solid basis of the distinction may be further emphasized by considering the practical effect of according to the stockholders of the California Bank, in the estimation of the value of their shares for the purpose of taxation, a deduction of the entire value of the stock held by this bank in the Mills National. This value, according to the admitted facts, is $625,546.30, which is about 4 percent of $15,775,252.67, the entire estimated value of the 85,000 shares of California National stock (excluding real estate from the computation). It is incorrect to take the latter sum as the value of all the assets of the California National. There is nothing in the record to show the value of its entire assets, but, as the case comes before us as on a demurrer to plaintiff in error's own pleading, and since the $15,775,252.67 represents but the excess of its assets over its outstanding liabilities, it is reasonable to assume that the entire assets are much greater, it being evident that there must be assets to counterbalance all outstanding liabilities, including especially the amounts due to depositors. Let us take, for illustration, the very moderate assumption that plaintiff in error's total assets were four times as much as its capital and surplus, or say $63,000,000. [Footnote 2] Of this amount,
As we have seen, the decisions of this Court establish that, under § 5219, the holder of shares in a national bank is not entitled to have the estimate of their taxable value reduced by reason of the fact that the capital and surplus of the bank are invested in securities that are exempted from state taxation. It also is clear that, while the section in terms permits the real property of the bank to be taxed against it, this does not entitle the shareholder to an allowance from the assessed value of his shares by reason of the fact that the bank is thus taxed. It is true that many of the states, when authorizing the taxation of real estate against the bank, make an allowance for this by deducting the value thus taxed when computing the amount at which the shares shall be taxed; but this is not because of any requirement in the federal statute. In Commercial Bank v. Chambers, 182 U. S. 556, 182 U. S. 561, this Court expressly so held with respect to a claim for a deduction from the value of national bank shares because of real estate owned by the bank situate outside of the taxing state. In People's Natl. Bank v. Marye, 107 F. 570, 579, it was held that § 5219 contemplates that the tax on real estate may be imposed independently
of the tax upon the shares of the stockholder (affirmed upon another ground, 191 U. S. 191 U.S. 272). And in Amoskeag Savings Bank v. Purdy, 231 U. S. 373, we sustained a tax imposed upon a shareholder under a statute that, while not exempting the real estate of the bank situate in the same state, allowed no deduction of its value in the computation of the taxable value of the shares.