Court Opinion

ID: 7133191
Source: CourtListenerOpinion
Date Created: 2022-07-24 15:21:08.208483+00
Date Added: 2024-06-11T16:14:26.251957
License: Public Domain

CHIEF JUSTICE PRYOR
delivered the opinion or the court.
The Bank of Kentucky, the Northern Bank, the Fanners Bank and other State banks, the National Bank of Covington and other national banks are in this court by their presidents and directors, some of them appealing from judgments imposing upon them taxation for county and munici*600pal purposes, and others standing as appellees in cases relieving them from such local burdens.
The legislation imposing such burdens is found in the Kentucky Statutes under the title of Revenue and Taxation, and is based on secs. 174 and 175 of the present constitution.
Sec. 174 provides: “All property whether owined by natural persons or by corporations, shall be taxed in proportion to its value, unless exempted by this constitution, and all corporate property shall pay the same rate of taxation paid by individual property. Nothing in this constitution shall be construed to prevent the General Assembly from providing for taxation based on incomes, licenses or franchises.”
Sec. 175 provides: “The power to tax property shall not be surrendered or. suspended, by any contract or grant to which the Commonwealth shall be a party.”
It is manifest by reason of sec. 175 the right of the legislature no longer exists of surrendering the power to tax property, or by contract to bind the State to any other mode of taxation than that found in the constitution, and all property, whether belonging to corporations or individuals, must pay the same rate of taxation.
The appellants in these cases (the banks) are claiming that priorto the adoption of the present constitution a contract had been entered into between them and the State, by which,, in consideration of the surrender by them of certain rights found in their respective charters, and by their consent and agreement to pay a larger State tax than individuals paid, or their charters required, the State agreed not. to impose upon them any local burdens, and the important inquiry in these cases is: Was such a contract entered into between the banks and the State based on a consideration, binding the State on one side and the banks on the other?”
*601The statute under which this contract is claimed to have been made is found in the General Statutes under the title of revenue and taxation, secs. 1 and 4, of art. 2, and known as the Hewitt bill. Counsel for the banks in the discussion of these cases classified the banks as follows: 1. The banks chartered prior to the act of 1856,' when the power to amend or repeal was not a part of the charter or reserved by any general law. 2. Banks chartered after that date, when by a general law the right to amend or repeal the charter was expressly reserved. 3. The national banks. We shall treat all the cases as one in considering the application of the Hewitt act to the banks accepting its provisions.
Prior to the adoption of the'present constitution it seems to have been the settled policy of the State to exempt banking institutions from local taxation, and requiring them to pay a larger tax to the State upon its property than that paid by the individual tax-payer, and this additional tax went into the State Treasury instead of being applied to municipalities in the discharge of local burdens. The framers of the constitution, not approving of this policy, established a fixed rule of taxation and made all taxation alike upon property, whether for State or municipal purposes, applying the rule for municipal purposes to the territory in which the tax is imposed. It is argued, and no doubt true, that a discrimination must exist between banks located where heavy local burdens are imposed, and like institutions in more favored localities, where lighter or no local burden exists, and while the fact that the banks in the commercial centers of the State are taxed two and a quarter dollars on the hundred, under the present system (local and State), and those in an adjoining town or county only one per cent.,may work a hardship, and prevent competition, or drive *602tlie banks thus heavily taxed to locate elsewhere, yet this, under the old system, was a question of policy only, and the framers of the present constitution, in adopting the ad valorem system, left no room for classifying property, so as to make any discrimination in the subjects of taxation, and the suggestion of counsel' can only be considered in determining the intent of the legislature in passing the Hewitt act and that of the banks in accepting it.
It may be well however to ascertain the condition of the banks (and particularly those chartered before the year 1856), with reference to taxation, and the circumstances attending the legislation resulting in tlse passage of the Hewitt bill, in order to ascertain whether or not it was the purpose of the State to surrender in part its power of taxation, and that of the banks to relinquish any right they could have asserted against the State by reason of their charters. The banks in existence prior to the act of 1856 were claiming their charter contracts by which only a tax of fifty cents on each share of one hundred dollars of stock could be imposed.
The national banks claimed they were entitled to be taxed like the State banks, and -were not liable for local burdens, and besides, that their surplus, if in greenbacks or other non-taxable securities, could not be taxed under their charters from the Federal Government.
The State claimed the old banks were taxed for too small an amount, and the banks chartered since the year 1856 were resisting any discrimination between such institutions and the old banks. Under these circumstances the legislature devised a mode of taxation that prevented a discrimination that would'otherwise’exist, and by the provisions of the Hewitt bill said to all the banks, State and national, we will impose a tax of seventy-five cents on each share of *603your capital stock equal to one hundred dollars, and in addition a tax on your surplus, and this shall be in full of all tax, State, county and municipal, provided you will accept the act imposing the tax with the conditions annexed.
This act reads: “Shares of stock in State and national banks and other institutions of loas and discount, and in all corporations required by law to be taxed on their capital stock, shall be taxed seventy-live cents on each share thereof, equal to one hundred dollars of stock therein, owned by individuals, corporations or societies, and said banks, institutions and corporations shall, in addition, pay on each one hundred dollars of so much of their surplus, undivided surplus, undivided profits, or undivided accumulations, as exceeds an amount equal to ten per cent, of their-capital stock, the same rate of taxation that is assessed upon real estate, which shall be in full of all tax, State, county and municipal.” The seventh section of the act further providing that “nothing herein contained shall be construed as exempting from taxation for county or municipal purposes anj' real estate or building owned and used by said banks or corporations for conducting their business, but the same may be taxed for county and municipal purposes as other real estate is taxed.”
Section 4 of this act provides: “That each of said banks,, institutions, and corporations, by its proper corporate authority with the consent of a majority in interest of a quorum of its stockholders at a regular meeting thereof, may give its consent to the levying of said tax, and agree to pay the same as herein provided, and to waive and release all right under the act of Congress, or under the charters of the State banks, to a different mode or smaller rate of'Wxation, lohich consent or agreement with the State of Kentucky shall be evidenced by writing under the seal of such bank, and' *604delivered to the Governor of this Commonwealth, and upon such agreement and consent heing delivered and in consideration thereof, such bank and its shares of stock shall be exempt from all other taxation whatsoever, so long as said tax- shall be paid, during the corporate existence of such bank.”
Section 5 of this act provides: “The said banks may take the proceedings authorized by sec. 4 of this act, at any time, until the meeting of the next General Assembly: Provided, they pay the tax provided in sec. 1, from the passage of the act.”
Section G provides: “This act shall be subject to the provision of sec. 8, chap. 68, General Statutes.”
The banks involved in this litigation accepted in writing ¡the provisions of the act and filed their written acceptance with the Governor under their corporate seals. The banks incorporated before the act of 1856 surrendered what they ¡claimed to be their charter contracts, by which they were taxed only fifty cents on their- shares of stock of one hundred dollars. The national banks yielded their right to deduct from the value-of their stock their surplus consisting of non-taxable securities, and their claims to be taxed as the old banks, and most of the State banks uniting to prevent any discrimination, all accepting the proposition made by the State and agreeing to pay seventy-five cents on each share of stock of one hundred, dollars in value, and the additional tax mentioned in the article.
It is conceded by -counsel *or the city of Louisville (and we think it clear) that prior to the passage of the Hewitt bill, in the year 1886, the Bank of Kentucky had an irrevocable contract to be taxed at the rate of fifty cents on each share of one hundred dollars, and the same may be said of all the banks chartered prior to the act of 1856; but it is *605further contended that the act, as well as the contract under it, were both subject to repeal by reason of the reserved power contained in sec. 6 of art. 2. Again it is contended by counsel for the city of Frankfort that the grant to the-banks was without any consideration, and the renewals of' the charter of the old banks, as they are designated, placed, them within the provisions of the act of 1856, and by the attorney-general that the State had no power to surrender-this right of taxation, and the contract, if made, is not binding.
This court, in the case of the Franklin County Court v. Bank of Kentucky reported in 87 Ky., 370, in an. opinion delivered by Chief Justice Bennett, held that the renewals of those charters did not affect the contract made-with the State under the original grant, and if disposed to reconsider the decision rendered in that case, it could not affect the issue involved on the present appeals. At the date of the passage of the Hewitt bill the Franklin Circuit Court had decided that the charter contract still existed, and after the-acceptance by the banks of the provisions of the Hewitt bill that court affirmed that judgment. It is apparent that art. 2 in the Hewitt bill was adopted by the legislature with a view of equalizing the burdens of taxation as between the banks andto relieve them from the burden of local' taxation during their corporate existence, but it is insisted, there was no consideration for this partial exemption.
If there was a binding contract between the old banks and-the State to pay a tax of only fifty cents on each share of stock, and these banks surrendered their contract, or their right under it, and agreed to pay seventy-five cents to the State instead of forty-two and one-half cents, it seems to us this would be a wise consideration, sufficient to uphold any such contract with the State, if the power existed with. *606the State to make it, and the fact that such a power existed' has been too often decided by this court, as well as the Supreme Court, to require authority in support of it. It is plain also that these banks, including the national banks, surrendered their rights, not only to settle the question as to local taxation, but to prevent competition or any discrimination between banks located in the commercial centers of the State and those outside of such localities, while no heavyburdens for local taxeswere being levied,and therefore the consideration moving from the old banks was for the benefit of all the banks accepting the terms of the contract. The legislature was attempting to avoid all discrimination between these monied institutions and, therefore, its exactions from the- old banks and the national banks being acceded to, it resulted to the benefit of the banks organized after as well as before the act of 1856, as to such banks uniting with the old banks in accepting the Hewitt bill. In this statute, imposing the tax of seventy-five cents and its acceptance on the conditions proposed, there exists every element of a contract between the State and the banks, and with such a consideration as will uphold it, no reasonable doubt can be entertained that such was the purpose of the parties to it.
It is contended that if a contract was' entered into, the provisions of the present constitution, and subsequent legislation under it, operated to repeal not only the statute, but the contract made by virtue of its provisions, and this power existed by reáson of the sixth section of the article, making it subject to the provisions of sec. 8, chap. 68, General Statutes, declaring- that this “shall be subject to amendment or repeal at the will of the legislature, unless a contrary intent be plainly expressed: Provided, That whilst privileges and franchises so granted may be changed *607or repealed, no amendment or repeal shall impair other rights previously vested.”
Assuming, and as we think was the legislative intent, the word act in section 2 of the Hewitt bill was used as synonymous with thewordcw'ficZc,and,therefore,the reservationof the power on the part of the legislature was the right to amend or repeal the article in which is contained the proposition by the State to the banks, in reference to taxation, it by no means follows that a contract made by virtue of its provisions can be abrogated at the will and pleasure of the legislature. The distinction between the power of the legislature to repeal an act, and the right to annul by repeal or otherwise a contract made under it, is manifest, and while under our present constitution the State can make no contract, by which the exercise of the taxing power can be lessened or any part of its sovereign power in that regard relinquished, under the former constitution property might not only be classified in imposing taxation, but the State could discriminate between the classes when providing the rate of taxation, and this doctrine has been recognized by numerous decisions of this court and sustained in like cases by numerous decisions of the Supreme Court.
The general rule in regard to legislation is, that one legislative body can not bind a subsequent legislature to its action in purely legislative matters, but when it comes to matters of contract, if the State has the power to make it, its terms and conditions are as obligatory on the State as if entered into between two of its citizens, and an attempt to cancel such a contract, without the consent, of the party with whom it is made, is in direct violation of that clause of the Federal Constitution providing that “no State shall . . . pass any law impairing the obligation of contracts.” (Sec. 10, art. 1, TJ. S. Const.)
*608That the State may enter into such contracts was held by this court as early as the year 1839, in the case of Johnson v. Commonwealth, reported in 7 Dana, 342, where there was an effort to tax the shares of stock in a bank, in excess of the terms of the contract, and this court held that the contract placed a limitation on the power.
In the case of the Farmers’ Bank v. Commonwealth, reported in 6 Bush, 127, it was held the bank could not be taxed beyond its charter rate, as fixed by the contract, and in the late case of the City of Frankfort v. The Bank of Kentucky, and others, reported in 87 Ky., 370, the same doctrine was announced.
The question then arises: Did the reservation of the power to amend or repeal this article of the Hewitt law empower the legislature, or the framers of the constitution,' to disregard this contract between the banks and the State? We are satisfied, after a careful consideration of this question, that the parties making it never contemplated or intended that the act of 1856 should apply to this contract after its acceptance by the banks, and that such an acceptance was necessary to make the contract complete between the parties. The legislature, at the time this contract was made, recognized the right of the Bank of Kentucky, and the banks chartered prior to 1856, to stand upon their charter rights, or if not the right óf the banks as against the State on this subject of taxation had found its way to the courts, and had been decided adversely to the State. The legislature thought the tax of fifty cents too small. The old banks claimed an irrevocable contract. The national banks could only be taxed as authorized by the federal congress. The new State banks were subject to such taxation as the State might see proper to place upon them, and to make them liable for these local burdens would be *609to end their existence, or cause them to seek shelter under the Federal banking act, and with a view of placing the entire matter at rest, and placing the banks on an equal footing, the legislature said to all oí the banks: “If you will agree to pay seventy-five cents on each share of stock equal to one hundred dollars, etc., it shall be in full of all tax, State, county and municipal.” It said to the old banks: “You must relinquish your right to a smaller rate of tax, and this must be done, not by your president and directors, but by the consent of the stockholders, in writing, and delivered to the Governor as evidence of your good faith.” The banks accepted the proposition made them in the manner pointed out by the act, and from that time to the adoption of the present constitution, the contract was adhered to by both the State and the banks. It is now argued the banks, and particularly those with charter contracts for a smaller rate of taxation, surrendered those charter rights and agreed to pay a higher rate of tax under an act that authorized any subsequent legislature to repeal the contract at its will and pleasure. No rational view of this agreement should lead: to the conclusion that business men at the head of these institutions would relinquish every right they had acquired under their charters, that an increased burden might be placed upon the banks they represented.
In the contention that the sixth section of the article reserves this power of repeal, counsel overlook the fact, that by the express terms of the section by which this reserved power is retained, it is provided that “no amendment or repeal shall impair other rights previously vested.” The execution of the agreement between the State and the banks, based on a consideration such as appears from the act itself connected with its acceptance by the banks, vested in the latter rights of which they could not be divested with*610out their consent, the chief of which was the payment of a specified tax to the State during their corporate existence.
The State waived its right to tax these banks for local purposes (except their realty), and required in lieu thereof an additional tax to be paid into the State treasury. In this way the State granting the franchise derived the benefit instead of the municipal government, while under the present system, the difference between forty-two and one-half cents and seventy-five cents, with tax on surplus amounting to one hundred and twenty-five thousand dollars, is taken from the revenue proper, and applied to the municipalities where the banks are located.
In the case of Commissioners of Sinking Fund v. Green & Barren River Navigation Company, reported in 79 Ky., 73, this court held, with the act of 1856 in full force, that the State had no power to annul a contract that had beeh executed between the State and the company, and that the repeal of the charter to the extent it deprives the company of its contract rights acquired under it was in violation of the constitution. In that case the court said: “We can not assent to the doctrine that will allow the State to alter or abolish such contracts, whenever, in the opinion of the legislature, the necessities of the public or the interest of the State require it.”
' The case of The Commonwealth v. Owensboro, &c., R. Co., 95 Ky., 60, determines in effect the question involved here. In the year 1884 the legislature passed an act to encourage the construction of railroads, and in doing so relieved them from taxation for a limited period. The act provided: “That all railroads which may hereafter be built within this Commonwealth under existing charters, or under charters which may hereafter be granted, shall be exempt from all taxation under the laws of this Common*611wealth for the period of five years, from the date of the beginning of the construction of the new roads.”
The State claimed the right under the act of 1856 to repeal the law, claiming this had been done by legislation, as in the case before us, and attempted to coerce payment of taxes, when the five years from the beginning of the construction of these roads had not expired. •
The court, in response to the argument to exact the tax, and the application of the act of 1856 to its provisions, said “It is sufficient to say of this proposition, which even at first blush strikes us as extraordinary and unjust, if attempted to be applied to those of the appellees who accepted the offer of the State, and expended their money on its exemption pledge, that tin- act of 1856, reserving the right to repeal or amend- charter privileges granted by the legislature to particular persons, has no application to the law -of 1884, which, as said before, was a general law and affected all alike who accepted its provisions or acted on the strength of them.”
Counsel for the local governments argue the questions involved as if there was a perpetual grant to these corporations, and, therefore, the power of repeal must of necessity have been reserved. The limitation of the grant extends to the life of the corporate charter, and with the banks existing prior to the act of 1856 their charters expire in ten or twelve years, and hence the policy of the State, if viewed in that light, was wise, because it was increasing the State revenue from fifty to seventy-five cents for a fixed and certain period.
The framers of the constitution in adopting that instrument were not looking to past legislation on this particular subject, but were creating an original law for the future welfare of the State, leaving the rights of those protected *612by either the State or Federal constitutions undisturbed,, and if the attempt to repeal vested rights had been made, the framers of the present constitution would have been as powerless to accomplish such a purpose as the legislature-in session after its adoption.
The Supreme Court decided a somewhat similar question on a writ of error to the Court of Appeals of New Jersey, in the case of New Jersey v. Yard, reported in 95 U. S., 110. By an act of the legislature, passed in March, 1865, the legislature of New Jersey enacted that the Morris & Essex Railroad Company should, pay a tax of one-half of one per cent., to be paid by the company to the State whenever the-net earnings of the company amount to seven per cent. on. the cost of the road, to be paid at the expiration of one year-from the time when the road shall be open; and in use to Philipsburg, and annually thereafter, which tax . shall be-in lieu and satisfaction of all other taxation and imposition udiatever, by or under the contracts of this State.
The twentieth section of the original act of incorporation reserved to the legislature the right to alter, amend or repeal the act whenever it should think proper. The act of 1865 was an amendment to the original grant and in regulating the amount of taxation contained this proviso." “Provided, That this section shall hot go into effect, or be-binding on- the company, until the said company, by an instrument duly executed under its corporate seal, and filed in the office of the Secretary of State, shall have signified its assent thereto, which assent shall be signified within sixty days after the passage of this act, or this act shall', be void.”
Chief Justice Miller in delivering the opinion in that case-said : “The main question here is, did the legislature intend to- make such a contract,” and held that “its meaning and its; *613terms are clear enough, and, taken alone, no one denies but that it is a contract which would be protected by the constitution of the United States.” And in like manner will the contract in question be upheld.
And as said by Mr. Justice Miller in New Jersey v. Yard: '“The legislature was not willing to rest this contract in the usual statutory form alone, depending on its validity as a contract upon some action of the corporation under it to bind it to its terms; but they required of the company a formal written acceptance within sixty days, else it became wholly inoperative.” And it may be said in the New Jersey ■case there was no consideration other than is found in ordinary railroad charters.
It is said, however, in that case, the repealing clause, or what is known in this State as the act of 1856, was appended to the original charter, and when amended it formed no part of the amendment, as is found in this case, and, therefore, the court concluded the amendment was not subject to repeal.
The question is asked, why the necessity of making the act of 1856 apply to article 2, if the legislature did not intend to reserve the right of annulling the contract? In response to this it might be asked, if such was the legislative intent, why the necessity of having a formal written acceptance from the banks surrendering all their respective charter rights, and in consideration therefor agreeing to tax them seventy-five cents on the hundred dollars, so long as their charters continued, if the power was reserved of abrogating the contract at any moment. If such was the legislative purpose there could have been no necessity for any consideration moving from the banks, or any formality attending the execution of the contract.
The act of 1856 was enacted to avoid the effect of the de*614cisión of the Supreme Court in the Dartmouth College case, reported in 4 Wheat, 518, to enable the sovereign power to amend and repeal charter provisions that had theretofore been regarded as beyond the power of the legislature, without such a reservation, but under this act of 1856, it has been held by this court, as well as every other court having the question before it, that property rights or contract rights, acquired by virtue of the charter in exercising the privileges conferred, could not be interfered with by legislation, and, in fact, the act expressly provides “that whilst ■privileges and franchises so granted may be changed or repealed, no amendment or repeal shall impair other rights previously vested.”
The old banks had contract rights sustained by the adjudications of the courts of the State that exempted them from local taxation, and the same adjudication was had in regard to national banks, although the cases as tc the national banks were decided subsequent to the passage of the Hewitt bill. (City National Bank of Paducah v. The City of Paducah, 10 Ky. L. R., 221; Covington City National Bank v. City of Covington, 21 Fed. Rep., 484.)
The legislature saw the obstacle in the way of increasing the taxation on these banks, and the national banks, standing on the same footing with State banks, it became apparent that it was to the interest of the State to hold out inducements to all the banks, that equality as between them might exist, and at the same time increase the taxation.. The banks had not asked for any amendments to their charters, nor was the effort made by the legislature to repeal or amend the charters. The State was attempting to enact a general law, entitled Revenue and Taxation, applying-to all subjects of taxation, and to all kinds of property. The ¡tax in regard to banks, under this general title, was fixei *615at seventy-five cents as to all banks, and as to all corporations, required by law to be taxed on tlieir capital stock, and as to the old banks and the national banks, the surrender of these rights was made to depend upon their acceptance of the proposition made to them by the State, by the terms of which they were to pay the tax imposed by the Hewitt bill, and be released from other taxation, so long as their charters continued.
Why, then, did the legislature annex to article 2, of the revenue bill, the provisions of the act of 1856? No contract had been made when the bill passed, as there had been no acceptance by the banks, and not until the adjournment of the legislature was the contract consummated. It was provided in article 2 that the acceptance had to be made before the' legislature again assembled, and the act of 1856 could only have authorized the reservation of power to repeal or withdraw this proposition, if, wichin the period fixed, there was no aceptance by any of the banks of its provisions.
The right to the franchise or the exercise of the privileges granted was not involved in the legislation, but the banks, with their charters in full force, were asked by the legislature to make an agreement as to a rate of taxation, that could not have otherwise been enforced against either the old banks or the national banks.
The corporations had the right to contract by reason of their charters, and, dealing at arm’s length with the State, accepted the terms and conditions offered in good faith, and the question here is, not the right of the State to repeal or amend their charters, but the right of the State to cancel this contract without the consent of the banks.”
The right of the State to repeal the franchise, or amend the charter, is not here questioned, when subject to the act *616of 1850, but the repudiation of a contract will not be sanctioned.
There was, in fact, necessity for the State to apply the act of 1856 to article 2. Other corporations, as well as banks organized since 1856, were liable to this tax, whether they accepted the provisions of the Hewitt bill or-not; and section 4 was inserted for the express purpose of creating a contract between the old banks and the national banks on the one side, and the State on the other, by which the taxation on these banks might be increased, and, at the same time, placing all the banks accepting its terms on the same footing. If no acceptance had been made there was no reason why the act could not have been enforced as against these corporations coming within the act of 1856, but neither the banks nor the State ever intended to perform such an idle act as entering into this solemn agreement that might be disregarded by the State whenever its representatives saw proper.
The rule is, if a statute is susceptible of two constructions, that which is consistent with public policy will be followed, and no meaning given a statute that will lead to an absurdity.
The case before us is much stronger for the banks than that of New Jersey v. Yard. Here, the old banks had contract rights sustained by the ' adjudication of the courts of the State, to the effect that they were not liable to local taxation, and the same adjudication followed in reference to national banks. The contract was not only executed, but based on a valuable consideration. If there were any doubt as to its meaning, that doubt would be construed for the State; but when considering the entire article, the intention of the legislature, it seems to us, is manifest. ' This increased tax, under the former constitution, as *617before stated, went to tbe State, and not to the municipalities. Such was the policy of the State when the contract was made, and we perceive no reason for abrogating its terms, so as to withdraw from the State treasury this additional tax the banks have been paying amounting to $125,000 annually, and transfer it to the cities to aid in discharging-local burdens.
It requires no judicial utterance to show that, under the national banking act, where the. rate of interest is fixed at six per cent, (or as the State law provides), and a forfeiture of the entire interest if more is charged, that these banks, by the imposition of local burdens, can not be taxed as much as two and one-half per cent, in any locality, when the average taxation of State banks will not exceed half that sum.
In the case of Lionberger v. Rouse, reported in 9 Wall., 468, after the national banking system went into effect, the legislature of Missouri passed a law authorizing the banks of issue in that State, ten in number, to enter into the new’ system. Eight of those banks became national banks, and two of them declined to do so. The two old banks, as the Supreme Court of the United States held in that case, had a contract right with the State not to be taxed exceeding one per cent., and the State was powerless to increase this tax. The assessment of the plaintiffs’ shares of stock in the national bank was at the rate of nearly two per cent. It was contended that this was an unjust discrimination in favor of the two State banks, and the Supreme Court said, as the national bank, or its shares, was not taxed for a greater sum than other moneyed institutions of the State, and the State was powerless to change its contract wdth the two remaining banks of issue, it was not such a discrimination as would authorize the court to interfere.
While there are exceeding sixty State banks, the Bank of *618Kentucky and its branches, the Northern Bank and its branches, the Bank of Louisville, and the Farmers Bank of Kentucky and its branches were, at the time of the passage-of the Hewitt bill, and are now, regarded as the prominent banking institutions of the State, and if, with their capital and business rank placed before the Supreme Court with a tax of only one per cent., and the tax on the national banks placed at two per cent., the judgment of the Supreme Court upon such a state of fact, doubtless, would have been similar to the decision of the court in the case of the National Bank v. The City of Paducah, 10 Ky. L. R., 221.
The case of Lionberger v. Rouse, 9 Wall, 468, has no bearing on this question of contract. Here the State was not powerless to remedy the evil, or prevent the discrimination complained of in the Missouri case. The legislature devised a mode by which this discrimination could be removed, however great, or even insignificant, the difference in taxation might have been. The national banks recognizing the fact they could be taxed as other moneyed capital, and desiring uniformity of taxation, and not one rate for one bank, and a different rate for another, surrendered their right, or claim, to be taxed as the old banks were taxed, and entered into this agreement by which a uniform system of taxation was adopted for all banks, such as the State désired.
The claim of the old banks and the national banks, as to the mode of taxing them, was, certainly, not without foundation, for- the reasons already given, and the proposition oy the legislature to settle these differences, and its acceptance, was a wise and just solution of the whole question.
The case presented by this legislative repeal is the opposite of the legislation in the Missouri bank cases. In the one case there was no legislation making the discrimination, while in the case before us, the State, after placing *619the banks, State and national, on the same footing as to taxation, by the consent and agreement of all the parties to the contract, is now insisting upon a' legislative rescission of the contract, and placing the old banks at least in a position where they are to pay only fifty cents on the shares of a hundred dollars, and leaving the national banks subject to a greater rate of taxation.
This repeal, if sustained, is in effect the creation of three or more new banks with a rate of taxation much less than that imposed on the national banks, and making a discrimination in favor o'f the old banks and their branches that gives them a monopoly of the banking business of the State.
The old banks, with a capital of five millions, at the time the Hewitt bill passed, will be relegated to the condition they were when the contract was made, as was held by the Supreme Court in the case of The Water Company v. Clark, reported in 143 U. S., 1, and that is an exemption from local burdens, with a tax of one-half of one per cent, to the State. The national banks, with a capital of ten millions when the Hewitt bill was enacted, and now increased to twenty millions, will also be exempt from local burdens, because the State, in the exercise of the power it now claims, has abandoned the contract under which taxation was equal and uniform, and voluntarily made an unjust discrimination, when in its power to prevent it. Such consequences would be disastrous to both the State and the municipalities, the State losing the increased tax, and the municipalities (or the legislature for them) without power to impose on national banks iocal burdens.
The banks have all, practically, accepted the provisions of the Hewitt bill, and the legislation repealing or canceling the contract, being in violation of both the State and Federal constitutions, leaves the-Hewitt bill, as to the banks, *620in full fórce, and they must be taxed under its provisions, until the contract terminates..
These moneyed institutions are now paying, including tax on surplus and realty, eighty cents, or about that sum, on each share of stock of one hundred dollars, while the citizen tax-payer is paying only forty-two and one-half cents, and at last it is a question whether this difference in the taxation is to be paid by the banks into the State treasury, as under the old constitution, or to the municipalities, under the new constitution.
In the absence of this contract it would go to discharge local burdens, but with this contract in full force, it must be paid, as to the amount and manner, as provided by the Hewitt bill of 1886, into the treasury of the State.
It results, therefore, that the judgments in the case of the Louisville Banking Co. v. City of Louisville, Third National Bank v. City of Louisville, Northern Bank of Kentucky v. Bourbon County, Deposit Bank v. Franklin County, Bank of Kentucky v. Armstrong, Bank of Kentucky v. City of Frankfort, Farmers Bank v. City of Frankfort, Same v. Franklin county, and Same v. City of Henderson are reversed; and the City of Louisville v. Bank of Kentucky, Commonwealth v. State National Bank, Same v. Frankfort National Bank, Same v. Deposit Bank, Same v. Bank of Kentucky, City of Covington v. German National Bank, Same v. First National Bank, and Commonwealth v. Farmers Bank are each and all affirmed.