First Nat. Bank of Hartford v. City of Hartford

Decision Date13 April 1925
Citation187 Wis. 290,203 N.W. 721
PartiesFIRST NAT. BANK OF HARTFORD v. CITY OF HARTFORD.
CourtWisconsin Supreme Court

OPINION TEXT STARTS HERE

Appeal from Circuit Court, Washington County; C. M. Davison, Judge.

Action by the First National Bank of Hartford against the City of Hartford. Judgment for plaintiff, and defendant appeals. Reversed and remanded, with directions.

Taxation of shares in national banking associations. This action was begun to recover certain moneys paid by the plaintiff under protest to the city of Hartford as taxes levied upon the shares of stock of the plaintiff national bank. Shares of stock in national banking associations are assessed pursuant to section 70.31, Wis. Stats. 1923, printen in the margin.1

By the provisions of section 70.39, Wis. Stats. 1923, any bank is authorized to pay taxes assessed on its shares of stock for its stockholders at its option. The plaintiff bank exercised its option to pay the amount assessed against the owners of its capital stock under protest, and brought this action to recover back the amount so paid.

The case was tried before the court, and at the conclusion of the trial the judge made and filed the following findings of fact:

(1) That the plaintiff is, and at the times herein stated was, a national banking corporation engaged in the banking business at Hartford, Wis., with a paid-up capital stock of $50,000 consisting of 500 shares of the par value of $100, and all owned by various stockholders of said bank.

(2) That the defendant is a city of the fourth class, operating under the general charter law of this state.

(3) That during the year 1921 the taxing officers of the defendant city of Hartford, in form assessed and levied a personal property tax for such year on all of the said shares of stock of the plaintiff bank, at the then prevailing tax rate in the assessment district in which said bank is located, to wit, at the rate of $3.177 on each $100 of the assessed valuation of such stock, which tax on the whole of said stock amounted to $2,859.30. That such taxes were entered upon the tax roll of the defendant city for said year, and in due time the tax roll for said year with the taxes so in form against said shares of stock, spread thereon, and the warrant for the collection thereof, were placed in the hands of the city treasurer of said city for the collection of said taxes.

(4) That said taxing officers of said defendant city did not make any assessment against, or levy any tax for said year, 1921, upon any moneys or moneyed capital in the hands of any individual citizens of said city, or against any debts due or to become due to such individual citizens or against any interest-bearing bonds or against any shares of stock in the hands of any of such citizens, in any corporations except banking corporations, but suffered and permitted the same and the whole thereof to be and remain entirely free from assessment, and exempt from taxation for said year, in accordance with the provisions of subsection 10 of section 70.11 of the Wisconsin statutes.

(5) That during the year 1921 there was a very large amount of moneyed capital in the hands of individual citizens of said city of Hartford, running into many hundreds of thousands of dollars, that was neither assessed for taxation nor taxed, which entered into competition with the banking business, including the banking business of the plaintiff. That during said year 1921 there were vast amounts of moneyed capital in the hands of individual citizens of this state, running into millions of dollars that entered into competition with the banking business, that under the provisions of said section 70.11 subsection 10, were wholly exempted from taxation. That as a result thereof the shares of stock of said plaintiff bank, as well as the shares of stock of other national banking corporations doing business in this state, were taxed or attempted to be taxed at a much greater rate than other moneyed capital in the hands of individual citizens of said city and state, that entered into competition with the banking business, including the banking business of the plaintiff; and the taxation of said shares of stock in said banks, including the plaintiff bank, and the exemption of said amounts of moneyed capital in the hands of individual citizens entering into competition with the banking business, resulted in an unjust, illegal, and discriminating tax against said bank's shares.

(6) That on February 28, 1922, and while said tax roll and warrant with said taxes in form against the shares of said plaintiff bank so spread thereon were in the hands of the treasurer of said city for collection of taxes, the said plaintiff in behalf of its stockholders, as well as in its own behalf and interest, paid said tax under protest to the city treasurer of said city, in the sum of $2,859.30. That at the time plaintiff so paid said tax it accompanied the payment with and said city accepted the same, under a written protest then lodged with said city, stating among other things, that said taxes were unjust, discriminatory, and illegally exacted in violation of the federal and state Constitutions under menace of compulsion and unjust and oppressive penalties, and further stating that the city treasurer to whom the check for such taxes was given was authorized to cash the same, only, as an alternative to the resort to distress or other means provided by law for the enforcement of unpaid taxes. That said bank claimed the right and would seek all available means for the recovery of such taxes.

(7) That on January 27, 1923, the plaintiff, in behalf of itself and its said stockholders, filed with the city clerk of said city its verified claim in writing against said city for the refund and repayment of the amount of said taxes and interest, a copy of which claim is annexed to the complaint herein. That on the 16th day of February, 1923, the common council of said defendant city upon consideration of said claim, affirmatively disallowed the same.”

And upon the facts so found concluded that the tax so levied and assessed against the shares of stock of the plaintiff bank was unauthorized, illegal and void in its inception, in violation of and repugnant to the provisions of section 5219 of the Revised Statutes of the United States (U. S. Comp. St. § 9784); that the tax had not been voluntarily paid; and that the plaintiff was entitled to recover judgment against the defendant city as demanded in the complaint. The findings were excepted to and proper findings were requested to sustain the contention of the defendant, which requests were denied by the court, and to the denial of such requests there were proper exceptions. Judgment was thereafter entered in accordance with the findings of fact and conclusions of law in favor of the plaintiff and against the defendant for the sum of $3,190.84 damages, together with the costs and disbursements taxed at $113.50 from which judgment the defendant appeals.

Vinje, C. J., and Eschweiler and Jones, JJ., dissenting.

J. C. Russell, City Atty., of Hartford, for appellant.

Frank C. Stewart, of Oshkosh, Ralph E. Smith, of Merrill, George H. Kelly, of Neenah, R. H. Morris, of Clintonville, and H. M. Ferguson, of Sturgeon Bay (Edward J. Dempsey, of Oshkosh, and Edward M. Smart, of Milwaukee, of counsel), for Cities of Oshkosh, Merrill, Clintonville, Neenah, and Sturgeon Bay, amici curiæ.

E. W. Sawyer, of Hartford (Sawyer & Gehl, of Hartford, and Miller, Mack & Fairchild, of Milwaukee, of counsel), for respondent.

Weed & Hollister, of Oshkosh, for Banks, amici curiæ.

H. L. Ekern, Atty. Gen., and Franklin E. Bump, Asst. Atty. Gen., for the State.

ROSENBERRY, J. (after stating the facts as above).

Counsel for the defendant claims that there can be no recovery, because there is no showing that the tax levied was in fact inequitable. The contentions of counsel upon this branch of the case fail because, if the principal contention made by the plaintiff is sustained, the city of Hartford had no power or jurisdiction to levy an assessment upon the shares of stock of the plaintiff bank, and under the provisions of section 74.73, the plaintiff having made payment under protest, it is entitled to maintain an action to recover back any sum paid by it on account of taxes so illegally assessed and levied. It is not claimed that the taxing authorities acted irregularly or in violation of the provisions of the laws of the state of Wisconsin, but that there was no authority whatever in the taxing authorities of the city of Hartford to assess and levy the tax in question.

This brings us to a consideration of the principal question raised upon this appeal. This question may be stated in the language of the statute 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? The solution of this question depends upon the interpretation of section 5219, Revised Statutes of the United States (Act of June 3, 1864, c. 106; Act of Feb. 10, 1868, c. 7), being U. S. Comp. St. § 9784. In determining the proper construction and interpretation of that section, some fundamental matters may properly be adverted to. In the first place, the state of Wisconsin may not tax shares of stock in national banking associations, such associations being instrumentalities of the federal government, except by the consent of the United States. Adams v. Nashville (1877) 95 U. S. 19, 24 L. Ed. 369;Mercantile Bank v. New York (1887) 121 U. S. 138, 7 S. Ct. 826, 30 L. Ed. 895;McCulloch v. Maryland (1819) 4 Wheat. 316, 4 L. Ed. 579.

State taxation of national bank shares was first permitted by act of Congress June 3, 1864 (13 Stats. at Large 99, 112 [National Banking Act]), subject to the restriction that it should not be--

“at a greater rate than is assessed upon...

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