Citizens Nat Bank of Cincinnati v. Durr

• Decision Date: 07 November 1921
• Docket Number: No. 27,27
• Parties: CITIZENS' NAT. BANK OF CINCINNATI v. DURR et al
• Court: U.S. Supreme Court

257 U.S. 99

42 S.Ct. 15

66 L.Ed. 149

CITIZENS' NAT. BANK OF CINCINNATI

v DURR et al.

No. 27.

Argued Oct. 7, 1921.

Decided Nov. 7, 1921.

Mr. Murray Seasongood, of Cincinnati, Ohio, for plaintiff in error.

[Argument of Counsel from pages 100-105 intentionally omitted] Mr Charles S. Bell, of Cincinnati, Ohio, for defendant in error.

Mr. Justice PITNEY delivered the opinion of the Court.

A suit for injunction brought in a state court by Anderson against Durr, then auditor, and Cooper, then treasurer, of Hamilton county, Ohio, raised the question whether a certain property tax imposed under authority of the state of Ohio upon plaintiff, a resident of that state, by reason of his owning a membership—figuratively termed a 'seat'—in the New York Stock Exchange, infringed his rights under the commerce clause of the Constitution of the United States or the 'due process of law' or 'equal protection' provisions of the Fourteenth Amendment. His assault upon the tax was sustained by the court of first instance (20 Ohio N. P. [N. S.] 538), but overruled by the Court of Appeals (29 O. C. A. 465), and finally by the Supreme Court of the state (100 Ohio St. 251, 126 N. E. 57). Until the decision of the latter court the federal right had been asserted merely as a claim of immunity from the tax under the constitutional provisions referred to, without drawing in question the validity of any statute of, or authority exercised under the state on the ground of their being repugnant to those provisions. After the final decision, in an application to the Supreme Court for a rehearing, plaintiff for the first time asserted that the decision, if adhered to, rendered the Ohio taxation statutes invalid because of such repugnance. This application was denied without reasons given, and hence must be regarded as having come too late to raise any question for review by this court. Loeber v. Schroeder, 149 U. S. 580, 585, 13 Sup. Ct. 934, 37 L. Ed. 856, Fullerton v. Texas, 196 U. S. 192, 193, 25 Sup. Ct. 221, 49 L. Ed. 443; Corkran Oil Co. v. Arnaudet, 199 U. S. 182, 193, 26 Sup. Ct. 41, 50 L. Ed. 143. Therefore a writ of error, allowed by the Chief Justice of the Supreme Court, must be dismissed because not the proper mode of review under section 237, Judicial Code, as amended by Act of September 6, 1916, c. 448, 39 Stat. 726 (Comp. St. § 1214). But an application for the allowance of a writ of certiorari, made to this court under the same section, consideration of which was postponed until the hearing on the writ of error, will be granted, and the case determined thereunder.

The essential facts are as follows: Plaintiff holds a membership or seat in the New York Stock Exchange for which he paid $60,000, and which carries valuable privileges and has a market value for the purposes of sale. The Exchange is not a corporation or stock company, but a voluntary association consisting of 1,100 members, governed by its own constitution, by-laws and rules, and holding the beneficial ownership of the entire capital stock of a New York corporation which owns the building in which the business of the Exchange is transacted, with the land upon which it stands, situated in the city of New York and having a value in excess of $5,000,000. A member has the privilege of transacting a brokerage business in securities listed upon the Exchange, but may personally buy or sell only in the Exchange building. Membership is evidenced merely by a letter from the secretary of the Exchange notifying the recipient that he has been elected to membership. Admissions to membership are made on the vote of the committee on admissions. Membership may be transferred only upon approval of the transfer by the committee, and the proceeds are applied first to pay charges and claims against the retiring member arising under the rules of the Exchange, any surplus being paid to him. On the death of a member, his membership is subject to be disposed of by the committee; but his widow and descendants are entitled to certain payments out of a fund known as the 'gratuity fund.' In the business of brokers in stocks and bonds a differentiation is made between members of the Exchange and nonmembers, in that business is transacted by members on account of other members at a commission materially less than that charged to nonmembers. A firm having as a general partner a member of the Exchange is entitled to have its business transacted at the rates prescribed for members.

That a membership held by a resident of the state of Ohio in the Exchange is a valuable property right, intangible in its nature but of so substantial a character as to be a proper subject of property taxation, is too plain for discussion. That such a membership, although partaking of the nature of a personal privilege and assignable only with qualifications, is property within the meaning of the bankrupt laws, has repeatedly been held by this court. Hyde v. Woods, 94 U. S. 523, 524-525, 24 L. Ed. 264; Sparhawk v. Yerkes, 142 U. S. 1, 12, 12 Sup. Ct. 104, 35 L. Ed. 915; Page v. Edmunds, 187 U. S. 596, 601, 23 Sup. Ct. 200, 47 L. Ed. 318. Whether it is subjected to taxation by the taxing laws of Ohio is a question of state law, answered in the affirmative by the court of last resort of that state, by whose decision upon this point we are controlled. Clement Nat. Bank v. Vermont, 231 U. S. 120, 134, 34 Sup. Ct. 31, 58 L. Ed. 147.

The chief contention here is based upon the due process of law provision of the Fourteenth Amendment: it being insisted that the privilege of membership in the Exchange is so inseparably connected with specific real estate in New York that its taxable situs must be regarded as not within the jurisdiction of the state of Ohio. Louisville & Jeffersonville Ferry Co. v. Kentucky, 188 U. S. 385, 23 Sup. Ct. 463, 47 L. Ed. 513, is cited. It is very clear, however, as the Supreme court held, that the valuable privilege of such membership is not confined to the real estate of the Stock Exchange; that a member has a contractual right to have the association conducted in accordance with its rules and regulations, and incidentally, has the right to...