Court Opinion

ID: 8194762
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:17:57.326736+00
Date Added: 2024-06-11T16:40:43.846384
License: Public Domain

Vinje, C. J.
(dissenting). The court states that the crucial question raised upon this appeal is as follows: “Are the shares of stock in national banking associations within the state of Wisconsin assessed at a greater rate than is assessed upon other moneyed capital in the hands of. individual citizens of such state ?” This seems to me to be a misconception of the principal question' in the case, for it is a conceded fact that the bank stock in question was assessed at over three pe.r cent., while had it been assessed as other moneyed capital in the hands of private individuals of the state, namely, upon an income basis or' an equivalent thereof, the assessment would have been less than one per cent. Indeed, it was frankly conceded upon the oral argument by the State, as intervener, and by the city of Hartford that the bank stock was assessed at a much higher rate than was moneyed capital in the hands of private individuals of the state and that the rate was discriminatory if it came within the prohibition of the statute as construed by the federal supreme court. The justification sought upon the argument, *326and the justification sought by the opinion of the court, is that there is in the state of Wisconsin outside of state banks and trust companies, which are assessed at the same rate as national banks, no moneyed capital in the hands of private individuals that comes in competition with the business of national banks. This is the basic ground for the conclusion reached by the court. Further on in the opinion it is stated: “There are no concerns or individuals within the state of Wisconsin engaged in enterprises in which the capital employed in carrying on its business is money 'where the object of the business is the making of profit by its use as money’ except banks.” It seems to me that trust companies might well have been included in the exception inasmuch as they are taxed the same as banks and perform to a large extent the function of banks, and for my purpose I shall assume that trust companies were intended to be included in the exception. My difficulty comes not so much in construing the federal decisions as the court construes them, but in arriving at the conclusion upon the evidence in this case, and upon what may be taken judicial notice of, that there is no moneyed capital in the hands of private individuals in the state of Wisconsin that comes in competition with the business of national banks. The undisputed evidence in the case shows that there is such competition so far as the plaintiff bank is concerned. The taxing officer and the State introduced no evidence to rebut that which the bank offered, so that the testimony in the case is undisputed except in so far as it may be in conflict with facts of which the court may take judicial notice. Mr. Liver, the president of the bank, who had been such for seventeen years past, testified among other things that there were four business concerns in the city of Hartford engaged in the loaning business and that he knew that these four concerns had loaned out about $250,000 or $300,000 a year, and that such facts were true as to the year 1921. He further testified that these loaning concerns “compete with the business of the bank in that *327respect the same as other banks would be in competition.” He further states, in answer to a question as to whether the same conditions obtain generally throughout the state, that, judging from his experience and connection with five groups of Wisconsin bankers associations, “the situation is the same. The amounts in some localities are very large, of course. The effect is the same all over. I am familiar with the banking business and I have attended a great many bankers’ conventions. I know the Ziegler Company. Its home office is at West Bend. It is engaged in the real estate and loan business. It does a large amount of business in this city. It has an agency at Hartford. They circularize their loans and solicit in many ways. I know of large loans they have made that run up into thousands of dollars, and the situation I testified-to competed with the business of the First National Bank applied in 1921 as well as it does at the present time. There is no change in the situation.” I agree with the statement of the court that it “is required to take judicial notice of the general conditions to which the law applies. It is either valid in toto or void in toto. Its validity cannot be made dependent upon a particular finding of fact relating to the conditions in a single locality so that, assuming it to be administered as written, the law might be held valid in one place and void in another or valid at one time and void at another.” The difficulty I have is in disregarding the testimony in the case as applied to the particular locality of Hartford, a city containing a little more than four thousand inhabitants, and in coming to the conclusion that the testimony given with reference to the conditions in that locality do not obtain in other cities in the state containing an equal or larger population. It seems to me that the uncontradicted testimony of the president of the plaintiff bank that there are a number of loan companies in the city of Hartford that come in direct competition with the loaning business of the First National Bank is in accordance with facts generallv known to exist in the banking *328and loaning business, and that it is quite probable, as he says, that the condition existing in his locality obtains throughout the state. Indeed, it may be safely said that in larger cities the amount of money loaned by loaning companies in all probability exceeds the amount per capita in the smaller cities. We have one city containing nearly one' half million inhabitants in which there is an immense amount of wealth and in which a large number of loaning companies are doing a profitable business. We have in the state of Wisconsin and did have in 1921 over fifty cities containing a population of more than four thousand people each and in the aggregate a population exceeding one million and a quarter. If we take this condition into account and assume that an equal amount of money is loaned in these urban localities, omitting altogether suburban and agricultural districts, we find that over ninety million dollars in loans would be made in these urban localities throughout the year. Inasmuch as it is a fact that in the state of Wisconsin at least seventy-five per cent, of the net income of national banks is obtained from loans, it seems natural to conclude that the vast amount of loans made by these loaning companies comes in sharp competition with the main gainful business of national banks in this state. The conclusion reached by the court is that outside of state banks and trust, companies there is no moneyed capital in the hands of private individuals that comes into competition with the business of national banks. It is conceded that there must be a substantial competition to some substantial part of the bank’s business; that the federal statute was not intended to make a law invalid where it merely in some minor degree in a minor way may be discriminatory. It is also conceded that the law be construed, prior to its amendment by Congress in 1923, as it was then amended, namely, that this competition must come through some regular permanent business channel and not through individual loans made by individual citizens for their own benefit only, although from some expressions in the decision *329of the supreme court of the United States it may be doubtful that the act prior to its amendment should be so construed. As I interpret the situation, the court has come to the conclusion that there is no moneyed capital in the hands of private individuals in this state that comes in substantial competition with a substantial part of a national bank’s business because in a number of federal cases the evidence showed that as to a particular locality .a particular class of moneyed capital in the hands of private individuals was found not to come in competition with the business of a national bank. It is one thing to say that as to a particular locality this class or that class or several classes of moneyed capital in the hands of private individuals did not come into competition with a national bank situated in that locality. It is quite another thing to come to the conclusion that national banks in the state of Wisconsin have no competition from all classes of moneyed capital in the hands of private individuals within the whole state. Herein lies my disagreement with the result of the court. We all, I think, construe the federal decisions alike. But I am unable to reach the conclusion that under the federal decision the evidence in this case, together with the facts of which we may take judicial notice, can sustain the conclusion that there is no competitive moneyed capital in the hands of private individuals in the state of Wisconsin.
It seems to me quite plain that Congress, when using the term “other moneyed capital in the hands of private individuals,” meant something besides money in state or private banks or trust companies. If those were the only classes of capital Congress had reference to, it would have been, easy to have so stated in the law, especially in the amendment of 1923. ' But we find there the identical phraseology retained, and it seems to me that from that fact it cannot be said that Congress was of the view that in any one state such as Wisconsin no other moneyed capital in the hands of private individuals could or did come in competition with national *330banks except state banks, trust companies, or private banks. I cannot escape the conclusion that by using the phrase “other moneyed capital in the hands of private individuals” it was intended to include all forms of moneyed capital where money as such was used as capital for the purpose of making a gain or profit, and that whenever a business of that kind, conducted by an individual or by a partnership, or otherwise, came in direct competition with a substantial part of the business of a national bank it was included in the condemnation of the statute. Where, as here, our law taxes loaning companies less than one third of what it taxes national banks for doing the same kind of business, it seems to me that it must be said that the law is discriminatory and comes within the condemnation of the federal statute. It is idle to say that national banks have prospered in the past under our system of taxation. That is not the question. The question is, Does our system of taxation operate to discriminate against national banks as compared with other moneyed capital engaged in the same or like business? Of course it goes without saying that private individuals in our state cannot engage in all the kinds of business that a national bank engages in, because private individuals in our state cannot do a private banking business without being organized as state banks and thus coming within the same class as to taxation. But as was said in Mercantile Bank v. New York, 121 U. S. 138, 7 Sup. Ct. 826, a part of the legitimate business of a national bank is “the discounting of commercial paper, making loans of money on collateral security, and negotiating loans, dealing in bonds,” etc. Now it is a well known fact that in our state there are numerous private individuals and partnerships and corporations that can and do engage in this class of business just mentioned which is a part of the business of a national bank, and the money invested in such enterprises runs into the millions of dollars and the business transacted by them runs into the hundreds of millions of dollars annually.
*331The crux in this case is whether or not there is moneyed capital in the hands of private individuals of this state that comes in competition with the business of national banks or any substantial part thereof within the meaning of the federal statute as construed by the supreme court of the United States. The case of Merchants’ Nat. Bank v. Richmond, 256 U. S. 635, 41 Sup. Ct. 619, is the latest expression we- have upon this question from the federal supreme court. In that case it was found that there was money to the extent of upwards of twenty million dollars coming into competition with the business of national banks, and, as the court said:
“By repeated decisions of this court, dealing with the restriction here imposed, it has become established that while the words ‘moneyed capital in the hands of individual citizens’ do not include shares of stock in corporations that do not enter into competition with the national banks, they do include something besides shares in bank corporations and others that enter into direct competition with those banks. They include not only moneys invested in private banking, properly so called, but investments of individuals in securities that represent money at interest and other evidences of indebtedness such as normally enter into the business of banking.”
And further on it is said that this “moneyed capital” “includes money in the hands of individuals employed in a similar way, invested in loans or in securities for the payment of money, either as an investment of a permanent character or temporarily with a view to sale or repayment and reinvestment. In this way the moneyed capital in the hands of individuals is distinguished from what is known generally as personal property.” It would seem to be clear from this, expression of opinion that it was the idea of the federal supreme court that the competitive moneyed capital spoken of in the statute was not limited to the competitive moneyed capital of a bank or even of a trust company, but that it might be competitive though in the hands of private *332individuals and though doing only a part of the business which a national bank transacts.
My conclusion is that not only does the undisputed testimony show that there was moneyed capital in the hands of private individuals in large amounts coming in direct competition with the loaning business of the plaintiff bank, but that in my judgment, taking into account the business of national banks within the state as transacted and the business of loaning and bonding companies and other private businesses in which money is used as capital for the purpose of making a profit thereon, it can be said that there are hundreds of millions of dollars in this state that come in direct competition with some form of the'business transacted by national banks, and therefore it is contrary to the federal statute to tax the national banks over three times as much as these other private businesses are taxed. For the reasons stated I am unable to concur in the view of the majority of the court, and in my opinion the judgment of the trial court should have been affirmed.
I am authorized to state that Mr. Justice Eschweiler and Mr. Justice Jones concur in this dissenting opinion.
A motion for a rehearing was denied, with $25 costs, on June 22, 1925.