Buie v. The Comm'rs of Fayetteville
| Decision Date | 30 June 1878 |
| Citation | 79 N.C. 267 |
| Court | North Carolina Supreme Court |
| Parties | JOHN BUIE and others v. THE COMMISSIONERS OF FAYETTEVILLE and others. |
MOTION for an Injunction heard on the 27th of February, 1878, at CARTHAGE, before Moore, J.
The plaintiffs are citizens and residents of this State, and owners of a certain number of shares of stock in the Peoples National Bank of Fayetteville, but are not residents of the town of Fayetteville, nor do they carry on any business in said town. They alleged among other things that the defendant assessed their shares of said stock for municipal taxation, and had authorized the town tax collector, the defendant Mallett, to proceed to collect the same-- after his term of office expired--under the tax list for 1876, who had levied upon certain personal property to secure payment of the same, and had advertised it for sale; and upon their application an order was granted by Buxton, J., restraining the defendant corporation from further proceeding.
The defendants alleged among other things that under their charter they had the power to tax for municipal purposes all such subjects of taxation as are taxed by the State, and that their tax collector had the same powers, and was subject to the same penalties in collecting the town taxes, as was the sheriff in collecting State taxes, and that the amount of tax levied upon the plaintiffs' shares of stock is uniform with the tax upon similar property owned by citizens of the town, and is the same as that made by the township board of trustees.
Upon the hearing, His Honor was of opinion that the assessment of the bank stock of the plaintiffs made by the authorities of the town of Fayetteville, and all the proceedings had thereon were without authority of law, and granted the motion for an injunction, from which ruling the defendants appealed.
Mr. B. Fuller, for plaintiffs .
Messrs. Guthrie & Carr, and W. F. Campbell, for defendants .
In the case of Kyle v. Comm'rs. of Fayetteville, 75 N. C., 445, it is decided that the shares of stock held by non-residents in a national bank can only be taxed in the city or town wherein the bank is located. The decision rests upon the provision in the State constitution by which all property, except such as may be exempted, is required to be taxed, and upon a clause in the act of Congress under which they are formed, permitting the State to impose upon the shares of stock a tax which shall not exceed that levied upon other moneyed capital in the hands of its own citizens, and restricting the tax on non-resident share holders to the town or district in which the bank is located. A State can not impose a tax upon these corporations as such, nor upon the property and interest of the share holder therein, unless authorized by Congress, and then only in the manner and to the extent allowed. The effect of the act for purposes of taxation is to sever the stock as property from the person of the owner, and to impart to it a new legal situs, that of the bank itself. Unless the shares of non-residents are taxed at the place where the corporation is formed, and their dividends intercepted and applied to the payment of the tax, they would be beyond the reach of the taxing power altogether. But by affixing to the property of the non-resident share holder the situs of the bank itself, of whose capital his shares represent a part, his interest is subjected to the exercise of the taxing power, and through the corporation, as his trustee, the payment of his tax enforced out of his part of distributed funds.
But another and different question is now presented, not disposed of in the decision of that case. The plaintiffs here are citizens and residents of the State, some of them living in Cumberland, and others, in Robeson county, and none of them residing or doing business within the town, so as to subject their persons to its corporate jurisdiction. They are all liable to State and county taxation on their property of every kind except lands and farming utensils and other articles used in their cultivation at the places of their actual residence under the laws of the State.
The inquiry now is,--whether the shares of resident stock holders can be assessed and taxed like those of non-residents in the town where the bank is located and carries on its business. The question will be first considered as affected or controlled by the legislation of Congress:--
Soon after the passage of the national bank act, a controversy arose as to the true meaning of the clause which permitted shares to be taxed under State authority “at the place where the bank is located and not elsewhere.” In some of the States it was held that the restriction confined the exercise of the taxing power to the town or district in which the corporation conducted its business, while in others it was decided to apply to the State and not to any of its territorial divisions, and that such tax could be assessed upon a resident stock holder at the place of his residence wherever it might be within the State. Burroughs on Taxation, 127, 128; Austin v. Aldermen of Boston, 14 Allen 359; Clapp v. Bushington, 42 Ver., 579.
The controversy was solved by an amendatory act passed in 1864, declaring the word “ place” to mean the “ State” wherein the bank is located. The only restraints imposed upon a State in the exercise of its taxing power over shares in national banks are:
1. That such tax shall not be at a greater rate than is assessed upon other moneyed capital in the hands of its individual citizens.
2?? That the tax on shares of non-resident owners shall be imposed in the city or town where the bank is located.
Subject to these limitations, it is left to the legislature of a State to “determine and direct the manner and place of taxing all the shares” of banking associations within its limits. U. S. Rev. Stat., § 5219. It follows therefore that a State may prescribe and regulate under the restraints mentioned, as well the place as the manner of making its assessments upon this kind of property according to its own discretion. A reference to some adjudged cases will support this view.
In Nat. Bank v. Commonwealth, 9 Wall. 353, the State of Kentucky levied a tax “on bank stock, or stock in any moneyed corporation of loan or discount, of fifty cents on each share thereof equal to one hundred dollars,” and required the cashier of the corporation to pay the tax, and the Court held the enactment to be valid, and said: ...
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