296 U.S. 497 (1936), 114, Posadas v. National City Bank

Docket Nº:No. 114
Citation:296 U.S. 497, 56 S.Ct. 349, 80 L.Ed. 351
Party Name:Posadas v. National City Bank
Case Date:January 06, 1936
Court:United States Supreme Court

Page 497

296 U.S. 497 (1936)

56 S.Ct. 349, 80 L.Ed. 351



National City Bank

No. 114

United States Supreme Court

Jan. 6, 1936

Argued December 11, 12, 1935




1. Capital and deposit taxes levied by the Philippine Government, in addition to the taxes permitted by R.S., § 5219, upon branches of a national bank lawfully established in the Philippine Islands under § 25 of the Federal Reserve Act, as amended, are invalid. P. 499.

2. The Philippine Islands are a "dependency of the United States" within the meaning of § 25 of the Federal Reserve Act, originally and as amended by the Act of September 7, 1916. Pp. 500, 502.

3. Section 26 of the Organic Act of August 29, 1916, which provides:

That the laws now in force in the Philippines shall continue in force and effect, except as altered, amended, or modified herein, until altered, amended, or repealed by the legislative authority herein provided or by Act of Congress of the United States,

is to be taken distributively -- i.e., as conferring power on the local legislature to deal only with local laws, and not to alter, amend, or repeal any Act of Congress. P. 501.

4. The declaration of §§ 6 and 31 of the Philippine Organic Act of August 29, 1916, continuing in force laws applicable to the Philippines which were not amended or repealed by that Act or in conflict with any of its provisions, applies to § 25 of the Federal Reserve Act of 1916. P. 501.

5. The Act of September 7, 1916, which amended § 25 of the Federal Reserve Act "to read as follows," repeating the words of the original section and adding a provision authorizing national banks to invest in the stock of certain other banks, did not repeal and immediately reenact the old provisions, but left them continuously in force, and speaking from the time of their first enactment. P. 502.

6. Section 5 of the Philippine Organic Act of August 29, 1916, which declares that the statutory laws of the United States "hereafter

Page 498

enacted" shall not apply to the Islands except when they specifically so provide or it is so provided in that Act, does not apply to those provisions of § 25 of the Federal Reserve Act of 1913 which were copied into and retained by the Act of September 7, 1916. Pp. 501, 505.

7. Where there are two acts on the same subject, effect should be given to both, if possible. P. 503.

8. Repeals by implication are not favored, and will not be adjudged unless the legislative intention to repeal is clear. P. 503.

9. The mere fact that a later statute covers the whole subject of an earlier one and embraces new provisions does not demonstrate an intention completely to substitute the new for the old. A repeal will be implied only so far as the later enactment is in conflict with the earlier, or so far as it is plainly intended as a substitute for the earlier. United States v. Tynen, 11 Wall. 88. P. 503.


Certiorari to review a judgment ordering the Collector to refund to the Bank a sum of money which the Bank had paid to him, under protest, as taxes, and had sued to recover. The judgment of the Court of First Instance, directing recovery of only a part of the taxes, was reversed by the one here under review.

SUTHERLAND, J., lead opinion

MR. JUSTICE SUTHERLAND delivered the opinion of the Court.

The National City Bank of New York is organized under the National Banking Act, as amended from time to time since its enactment. In 1930, the bank, after complying with the requirements of § 25 of the Federal Reserve Act of December 23, 1913, c. 6, 38 Stat. 251, 273, as amended September 7, 1916, c. 461, 39 Stat. 752, 755,

Page 499

infra, established branches at Manila and Cebu in the Philippine Islands. A tax was levied by and paid to the Philippine government on the net income of these branches for the first six months of the year 1931 (R.S. § 5219),1 about which there is no controversy. The Philippine Government, however, in addition, levied capital and deposit taxes not permitted by § 5219, and, these having been paid by the bank under protest, this action was brought in the Court of First Instance of Manila to recover the amount. That court gave judgment in favor of the bank for only a part of the additional taxes; but the Philippine Supreme Court, upon appeal, reversed the judgment insofar as it was against the bank, and ordered a refund of the entire amount.

Section 25 of the Federal Reserve Act of 1913, supra, reproduced in the margin so far as it is pertinent here,2

Page 500

authorizes the establishment of branches of national banking associations "in foreign countries or dependencies of the United States." It cannot be doubted that, viewing this section without regard to later legislation, the branches here in question were lawfully established, for, as will appear at a later point in this opinion, the Philippine Islands are included by the words "dependencies of the United States." In that view of the matter, the additional taxes imposed by the Philippine Government are invalid under Domenech v. National City Bank, 294 U.S. 199, 204; Talbott v. Silver Bow County, 139 U.S. 438, and, were it not for the asserted effect [56 S.Ct. 351] of legislation subsequent to the passage of the Federal Reserve Act in 1913, which we shall examine in a moment, this case would be disposed of without further detail upon the authority of those cases. In the Domenech case, we held that the national banking laws extended to Puerto Rico; that a tax on a branch of a national bank is a tax on the bank, and that Puerto Rico, being a dependency of the United States, could not, except as permitted by R.S. § 5219, tax a national bank, since it is an agency of the United States. The Talbott case involved the power of a territory to impose a tax upon a national bank. This Court held, in the first place, that the same power of taxation in respect of national banks exists in the territories as in the states, and, in the second place, that this power of taxation in the territories was limited by the provisions of § 5219, although, in terms, that section refers only to the states. 294 U.S. 204. We find nothing in the original Organic Act or in any of the early statutes relating to the Philippines referred to by petitioner which take those islands out of the controlling rule of the Domenech case that a "dependency may not tax its sovereign," and we come to the only remaining point which we deem it necessary to discuss.

Page 501

Petitioner contends that subsequent legislation has the effect of repealing and abrogating § 25 of the 1913 act, permitting the establishment of national bank branches insofar as the Philippine Islands are concerned. This later legislation consists of certain provisions in the Organic Act for the Philippine Islands of August 29, 1916, c. 416, 39 Stat. 545, and the Act of September 7, 1916, supra, amending designated sections of the original Federal Reserve Act.

We examine these statutory provisions in their chronological order. By § 25 of the 1913 act, as we have seen, national banks were authorized to establish branches in the Philippine Islands. The Organic Act of 1916 provides:

Sec. 5. That the statutory laws of the United States hereafter enacted shall not apply to the...

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