Munn v. Des Moines Nat. Bank

• Decision Date: 28 February 1927
• Docket Number: No. 7266-7268.,7266-7268.
• Citation: 18 F.2d 269
• Court: U.S. Court of Appeals — Eighth Circuit
• Parties: MUNN, County Treasurer, v. DES MOINES NAT. BANK. SAME v. BANKERS' TRUST CO. SAME v. IOWA LOAN & TRUST CO.

18 F.2d 269 (1927)

MUNN, County Treasurer, v. DES MOINES NAT. BANK.

SAME v. BANKERS' TRUST CO.

SAME v. IOWA LOAN & TRUST CO.

Nos. 7266-7268.

Circuit Court of Appeals, Eighth Circuit.

February 28, 1927.

Fred W. Lehmann, Jr., of Des Moines, Iowa (Ben J. Gibson, Atty. Gen., Maxwell O'Brien, Asst. Atty. Gen., and Reson S. Jones, of Des Moines, Iowa, on the brief), for appellant.

J. G. Gamble, of Des Moines, Iowa (A. B. Howland and R. L. Read, both of Des Moines, Iowa, on the brief), for appellees.

Before SANBORN, Circuit Judge, and WOODROUGH and SCOTT, District Judges.

WALTER H. SANBORN, Circuit Judge.

These suits were brought by the appellees, the banks, to enjoin the county treasurer of Polk county, Iowa, from collecting taxes from their shareholders on their stocks in these banks in excess of the taxes that would have been levied on account of those shares in the years 1919, 1920, 1921, and 1922, if the taxes on the actual value of those shares had been levied on the same basis that taxes were levied on the actual value of other moneyed capital in the hands of individuals used in competition with the normal moneyed capital of these banks, taxed and taxable in Polk county during these years. The court below found and adjudged that large amounts of other moneyed capital in the hands of individuals in Polk county, Iowa, were used in substantial competition with the normal business of these banks during the years 1919, 1920, 1921, and 1922, that was habitually and intentionally taxed by the taxing officers of Polk county in each of these years, about five or six times as much in proportion to its actual value as the moneyed capital in the hands of individuals used in competition with the moneyed capital of the banks during those years.

The court below held that these excessive taxes were illegal and void because they were prohibited by the equal protection clause of the Fourteenth Amendment to the Constitution of the United States, by section 5219 of the Revised Statutes (section 9784, Comp. Stat.), which provides that the taxation by a state of the shares of national banking associations "shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such state," by section 6 of article 1 of the Constitution of Iowa, which provides that, "all laws of a general nature shall have a uniform operation," by section 2 of article 8 of that Constitution, which provides that, "the property of all corporations for pecuniary profit shall be subject to taxation the same as that of individuals," and by sections 1310 and 1322 — 1a, Supplement to the Code of Iowa, 1913.

These three suits were tried together and after the decrees were rendered were consolidated for record and hearing in this court. The nature of the cases and the issues contended and adjudged are practically identical. The Constitution and statutes of Iowa protect the rights of the shareholders of the other two banks to the same extent as the rights of the shareholders of the Des Moines National Bank are protected by section 5219 of the Revised Statutes and the Constitution of the United States. The court referred the cases to a special master, who took the testimony and presented an exhaustive finding of the facts and the law applicable thereto, the court below reviewed that finding and declaration and found that these banks had suffered the grievances they alleged. It accordingly applied to these cases the established and approved remedy for this wrong; it enjoined the treasurer of the county from collecting the excess of these taxes upon the property of the shareholders of these banks above the amounts of the taxes that would have been levied here if the taxing officers had not discriminated against this property. That remedy is prescribed and fixed by the decisions of the Supreme Court in Sioux City Bridge Co. v. Dakota County, Nebraska, 260 U. S. 441, 445, 446, 447, 43 S. Ct. 190, 67 L. Ed. 340, 28 L. R. A. 979; Raymond v. Chicago Union Traction Co., 207 U. S. 20, 35, 37, 28 S. Ct. 7, 52 L. Ed. 78, 12 Ann. Cas. 757; Cummings v. National Bank, 101 U. S. 153, 160, 25 L. Ed. 903; Taylor v. L. & N. R. R. Co. (C. C. A.) 88 F. 350, 374; L. & N. R. R. Co. v. Bosworth (D. C.) 209 F. 380, 462; Washington Water Power Co. v. Kootenai County (C. C. A.) 270 F. 369, 374.

Counsel for the appellant have devoted much time and labor to an endeavor to convince that the evidence in these cases was insufficient to sustain the finding and conclusion that material and substantial amounts of moneyed capital in the hands of individuals were used in Polk county in competition with the moneyed capital or business of these banks during the four years in question and were taxed at the rate of five mills on the dollar of their actual value while the moneyed capital of the banks was taxed at about five or six times that rate on their actual value. We have carefully read the brief of counsel upon these subjects and have examined the evidence in the record, which contains the testimony of more than 200 witnesses, and we are convinced that there was ample evidence before the master and the court below to sustain their findings and conclusions. The finding of a special master who takes the testimony and sees the witnesses upon conflicting evidence in a suit in equity, and which is subsequently reviewed and confirmed by the chancellor, is buttressed by a very strong legal presumption, and it ought not to be reversed or modified by an appellate court, unless some serious or important mistake of fact has been made in the consideration of the evidence, or a controlling error of law has been committed in the application of the law to the case. We find neither in this case. Tilghman v. Proctor, 125 U. S. 136, 8 S. Ct. 894, 31 L. Ed. 664; Warren v. Keep, 155 U. S. 265, 267, 15 S. Ct. 83, 39 L. Ed. 144; Crawford v. Neal, 144 U. S. 585, 596, 12 S. Ct. 759, 36 L. Ed. 552; Moffatt v. Blake (C. C. A.) 145 F. 40, 41; Coder v. Arts (C. C. A.) 152 F. 943, 946, 15 L. R. A. (N. S.) 372; Boswell Nat. Bank v. Simmons (C. C. A.) 190 F. 735, 736; Paulus v. Buck Mfg. Co. (C. C. A.) 129 F. 594, 597.

The law applicable to this case has been clearly established, and the record satisfies that the court below considered and decided this case in accordance with these opinions and declarations of the Supreme Court. Speaking of other moneyed capital in competition with that of the banks, the Supreme Court said:

"The terms of the act of Congress, therefore, include shares of stock or other interests owned by individuals in all 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. The moneyed capital thus employed is invested for that purpose in securities by way of loan, discount, or otherwise, which are from time to time, according to the rules of the business, reduced again to money and reinvested. It 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." Mercantile Bank v. New York, 121 U. S. 138, 157, 7 S. Ct. 826, 836 (30 L. Ed. 895).

In First National Bank v. Anderson, 269 U. S. 341, 347, 348, 46 S. Ct. 135, 138 (70 L. Ed. 295), opinion January 4, 1926, that court said:

"1. The purpose of the restriction is to render it impossible for any state, in taxing the shares, to create and foster an unequal and unfriendly competition with national banks, by favoring shareholders in state banks or individuals interested in private banking or engaged in operations and investments normally common to the business of banking. Mercantile Nat. Bank v. New York, 121 U. S. 138, 155, 7 S. Ct. 826, 30 L. Ed. 895; Des Moines Nat. Bank v. Fairweather, supra 263 U. S. 103, 116, 44 S. Ct. 23, 68 L. Ed. 191.

"2. The term `other moneyed capital' in the restriction is not intended to include all moneyed capital not invested in national bank shares, but only that which is employed in such way as to bring it into substantial competition with the business of national banks. Mercantile Nat. Bank v. New York, supra, 157; Aberdeen Bank v. Chehalis County, 166 U. S. 440, 461, 17 S. Ct. 629, 41 L. Ed. 1069.

"3. Moneyed capital is brought into such competition where it is invested in shares of state banks or in private banking, and also where it is employed, substantially as in the loan and investment features of banking, in making investments, by way of loan, discount or otherwise, in notes, bonds or other securities with a view to sale or repayment and reinvestment." See Merchants' National Bank v. Richmond, 256 U. S. 635, 41 S. Ct. 619, 65 L. Ed. 1135.

Counsel argue that the decrees below should be reversed, because the banks are estopped from maintaining their suit by the fact that they loaned money to some of their competitors in Polk county. But we discover nothing in that fact, if it existed, which in any way estops them from maintaining the suits before the court below and before us. The objection to the decrees on that account is in our opinion untenable.

Counsel also contend that the court below had no jurisdiction in equity to grant any relief to these banks or their shareholders: (a) Because they had an adequate remedy for the wrongs inflicted upon them here through the board of review, provided by section 1373, Code Supplement of Iowa 1913; (b) because they did not take advantage of that statutory remedy and pursue it to a favorable adjudication; (c) because they did take advantage of that remedy and pursued it to an adverse adjudication of the decisive issues in these cases; and (d) because they have been guilty of fatal laches.

The adequate...