State v. Clement National Bank
| Citation | 78 A. 944,84 Vt. 167 |
| Parties | STATE v. CLEMENT NATIONAL BANK |
| Decision Date | 16 January 1911 |
| Court | United States State Supreme Court of Vermont |
[Copyrighted Material Omitted]
May Term, 1910.
SPECIAL ASSUMPSIT. Plea, the general issue. Trial by court on an agreed statement of facts, at the March Term, may Rutland County, Hall, J., presiding. Judgment. pro forma for the plaintiff. The defendant excepted. The opinion fully states the case.
Judgment reversed and judgment for the plaintiff for $ 3,989.85.
O. M. Barber, M. C. Webber, and R. E. Healey for the defendant.
Present: ROWELL, C. J., MUNSON, WATSON, HASELTON, AND POWER
This case involves the construction and validity of certain provisions of chapter 37 of the Public Statutes, containing sections 804-820, and relating to the taxation of National bank deposits.
Section 804 provides in substance that every person having an interest bearing deposit in a National bank in this State on the first day of April and October shall, within twenty days thereafter, report the amount thereof and the name of such bank to the commissioner of state taxes. Section 805, in connection with 806, provides that every resident of the State having such a deposit shall annually report to the listers of the town wherein he resides, in his tax inventory, the names of all banks located in this State wherein he then has or has had any such deposits during the year next preceding the first day of April, and the amount of such deposits. Section 807 provides that the listers in every town shall, on or before the tenth day of May, report to the commissioner of state taxes the names of all persons whose inventories show that they had interest bearing deposits in a National bank in this State on the first day of the preceding April, together with the amount of each individual deposit, and the name of the bank holding it. Section 808 provides that such reports shall be kept on file for three years after the taxes based on them become due, and be object to the inspection of certain officials, one of whom is the State's attorney of the county wherein such bank has its principal place of business, or wherein said depositor, if a resident of this State, has his domicile. Section 809 provides that every person having such a deposit in a National bank in this State shall semi-annually pay a tax to the State, and assesses such tax at the rate of seven-twentieths of one per cent semi-annually upon the amount of the deposit held by such bank on the first day of April and October, and requires that such taxes be paid to the State treasurer semi-annually on or before the last day of May and November. Section 810 provides that no other tax shall be assessed on such deposits, nor against the depositors on account thereof. Section 811 provides that a depositor who wilfully fails to make such returns or pay such taxes shall forfeit ten per cent of such deposit to the use of the State for each month's delay in filing such return, and that such tax and forfeiture may be recovered in an action on the statute.
It is further provided by sections 814-816 that if a National bank in this State so elects it may pay to the State the taxes provided for as above, and that it shall be lawful for such bank to deduct the taxes so paid from the interest or deposits then or thereafter held by it belonging to the person from whom such tax became due; that if a bank elects to pay such taxes to the State and to make certain returns elesewhere provided for, it shall, semi-annually, on or before the first day of April and October, file with the commissioner of state taxes a stipulation setting forth such fact, and that the commissioner shall thereupon issue to the bank a certificate in duplicate showing such filing; that a bank filing such stipulation shall thereupon become liable to make such returns, and liable to the State for such tax for the six months named in such stipulation, and that no depositor in such bank shall be required to make the returns before specified for such six months period. Section 817 provides that "Every bank filing such stipulation shall thereupon become liable to the State for the amount of such tax of seven-twentieths of one per cent of the average amount of such deposits held by such bank during the six months beginning with the first day of April and October respectively, for which such stipulation was filed."
The returns to be made by a bank, in case it elects to pay such taxes, are specified in section 818, which provides that if a bank files such a stipulation on or before the first day of April, it shall, on or before the thirty-first day of the following October, file with the State treasure and the commissioner of state taxes a return showing the average amount of such deposits for the six months ending on the thirtieth day of September in that year, and shall pay to the State treasurer the amount of such semi-annual tax; and that if a bank files a like stipulation on or before the first day of October, it shall file with said officers, on or before the thirtieth day of the following April, a return showing the average amount of such deposits for the six months ending with the thirty-first day of March next preceding the making of such return, and shall pay the tax for such semi-annual period.
The State sues on a stipulation filed by the defendant under the foregoing provisions on the first day of October, 1908. By this stipulation the defendant agreed with the State that on or before the thirtieth day of April, 1909, it would make sworn returns to the State treasurer and the commissioner of state taxes showing the average amount of all deposits held by it during the six months beginning with the first day of October, 1908, whereon the rate of interest paid or allowed by it to the depositors thereof exceeded two per cent per annum, and that on or before the thirtieth day of April, 1909, it would pay to the State treasurer a tax of seven-twentieths of one per cent of the average amount of all such deposits. This agreement was expressed to be in consideration of and for the purpose of carrying out the statutory provisions which relieve the depositor from the making of returns and the payment of a tax in case such a stipulation is filed.
The case is presented by an agreed statement from which the following facts appear. For several years the defendant has allowed certain depositors interest at a rate exceeding two per cent per annum, payable on the first day of January and July, for such calendar months as their deposits have remained in the bank prior to the days named; but no interest is paid on such deposits unless they are in the bank on January first or July first. The bank has other depositors who receive certificates on which interest is paid at the rate of three per cent per annum for each calendar month during which the deposit remains in the bank. Certain deposits were made subsequent to July 1, 1908, and withdrawn prior to January 1, 1909, and others were made subsequent to January 1, 1909, and withdrawn prior to July 1, 1909, some being withdrawn before and some after April first; and no interest was paid on any of these deposits. Some deposits were made after October 1, 1908, and withdrawn prior to April 1, 1909, part of which were in the bank January 1, 1909, and drew interest at the aforesaid rate. There were also deposits in the bank on October 1, 1908, whereon interest at said rate was then allowed, which were withdrawn prior to March 31, 1909. Some persons who had deposits on October 1, 1908, and some who became depositors after that date, ceased to be depositors before March 31, 1909. Part of the interest-bearing deposits in the bank on April 1, 1908, October 1, 1908, and April 1, 1909, were deposited by persons residing without this State. The aggregate of interest-bearing deposits at the last named date was $ 28,885.01 in excess of the average for the semi-annual period ending March 31, 1909. The defendant has made payments under previous stipulations like the one in question, and in so doing it has treated all these deposits as deposits upon which it would pay or allow interest at the aforesaid rates, notwithstanding some of them, were held and withdrawn as above stated. Under this method of allowing interest on deposits it is impossible for the defendant to determine at the time it is required to make its sworn returns for the periods ending September thirtieth and March, thirty-first semi-annually, on what deposits it will pay or allow interest exceeding two per cent per annum from the first day of January next preceding the thirty-first day of March, and from the first day of July next preceding the thirtieth day of September.
A few obvious considerations present themselves at the threshold of our inquiry. The suit is upon the bank's agreement to pay the taxes of its depositors, and not for the collection of a tax as such. The claim is not contested by the persons whose property is chargeable with the amount to be paid, but by the bank which has assumed the payment under statutory authorization. Those upon whom the tax was imposed have been omitted from the tax list because of this undertaking of their depositary. The substitution of the bank for the depositor as the one responsible for the payment of the tax, was effected by its own act.
The arguments of counsel are based in part upon certain undisputed propositions. The taxing power of the State extends to all persons and property within its jurisdiction not protected therefrom by Federal supremacy. Kirtland v. Hotchkiss, 100 U.S. 491, 25 L.Ed. 558; Catlin v. Hull, 21 Vt. 152. National banks are instrumentalities of the Federal government, and as such are necessarily under the paramount authority of the United States. Davis v. Elmira...
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