Ashland Cnty. Bank v. Vill. of Butternut

• Citation: 241 N.W. 638,208 Wis. 90
• Parties: ASHLAND COUNTY BANK ET AL. v. VILLAGE OF BUTTERNUT (THREE CASES).
• Decision Date: 08 March 1932
• Court: United States State Supreme Court of Wisconsin

208 Wis. 90

241 N.W. 638

ASHLAND COUNTY BANK ET AL.

v.VILLAGE OF BUTTERNUT (THREE CASES).^a1

Supreme Court of Wisconsin.

March 8, 1932.

Appeals from the Circuit Court for Ashland County; G. N. Risjord, Circuit Judge.

Three separate actions by the Ashland County Bank and others against the Village of Butternut which were consolidated for purposes of trial. From separate judgments for plaintiffs, defendant appeals.--[By Editorial Staff.]

Affirmed.

These appeals involve three separate actions commenced by the plaintiff to recover certain taxes for the years 1923, 1925, and 1926, based on ad valorem assessments of its shares of stock. All three actions were consolidated for the purposes of trial. From three separate judgments in favor of the plaintiff and against the defendant for the full amounts of the taxes paid, entered on the 12th day of February, 1931, the defendant separately appealed.

These appeals were heard by this court at the same time and they will be disposed of by one opinion.

At all times material to this controversy the plaintiff was a state bank having its banking house and place of business in the village of Butternut in Ashland County. Its capital stock consisted of three hundred shares, each of the par value of $100. In the years 1923, 1925, and 1926, its shares of stock were assessed on the ad valorem basis pursuant to section 70.37, St. 1921 as amended by Laws 1923, c. 391. In 1923 the stock was valued on the assessment roll at $32,075, from which was deducted the value of the bank's real estate, leaving a net assessment of $30,000. In 1925 the stock was assessed at $32,200, from which was deducted the value of the real estate, leaving a net assessment of $30,065. In 1926, the stock was assessed at $36,255.61, from which was deducted the value of the real estate, leaving a net assessment of $26,989.55. The taxes which were levied for each of such years were paid under protest.

At the time of the payment of the taxes the plaintiff filed with the village treasurer a written protest in which it was stated, among other things, that the assessment was excessive and unjust; was in violation of the provisions of section 5219 of the Revised Statutes of the United States (12 USCA § 548); was void as to national banks and was a denial of the equal protection of the law guaranteed to the plaintiff by both the State and Federal Constitutions.

The taxes paid under protest for the three years mentioned were as follows: 1923, $1,236, or $4.12 per share; 1925, $1,095.35, or $3.64 per share; 1926, $1,052.57, or $3.51 per share.

The court found the facts substantially as stated, and, in the action relating to the taxes for the year 1923, specifically found as follows:

“9. That there was on May 1, 1923, and throughout that year, both within the said defendant village of Butternut and throughout the state of Wisconsin, a substantial amount of moneyed capital in the hands of individual citizens, as well as corporations and associations other than banks and trust companies that came into competition with the business of national banks and state banks, including the plaintiff bank, and intentionally not taxed by the taxing officers on the ad valorem basis. That it was the policy of the Tax Commission and the taxing authorities throughout the State of Wisconsin, including the defendant Village of Butternut, at that time not to tax such moneyed capital so coming into competition with that of national and state banks on an ad valorem basis.

10. That in 1923 the assessment on the shares of stock of banks, including the plaintiff bank, was at a higher rate than other moneyed capital in the hands of individual citizens and corporations and associations other than banks coming into competition with the business of the state and national banks, including the plaintiff bank.”

The court made identical findings as to the years 1925 and 1926. The trial court concluded in each of said actions that the Wisconsin statutes of 1921 and the amendment made thereto in 1923 were invalid as to both national and state banks, and entered judgment for the recovery of the taxes paid by the plaintiff for the three years mentioned.

C. E. Lovett, of Park Falls (Bundy, Beach & Holland, of Eau Claire, of counsel), for appellant.

Miller, Mack & Fairchild, and Leon F. Foley, all of Milwaukee (John Fordyce, of New Ulm, Minn., of counsel), for respondents.

NELSON, J.

At the outset it should be stated that we have carefully examined the record for the purpose of determining whether there is evidence to support the findings of the court numbered 9 and 10, recited in the statement of facts, with the result that we conclude that such findings are well supported by the evidence.

We therefore start out with the findings that in each of said years, in the village of Butternut, and throughout the state of Wisconsin, there existed, in the hands of individual citizens, as well as corporations and associations other than banks and trust companies, a substantial amount of moneyed capital that came into competition with national and state banks; that such moneyed capital in the hands of individual citizens was intentionally not taxed by the taxing officers on the ad valorem basis; that it was the policy of the tax commission and the taxing authorities throughout the state of Wisconsin, including the defendant village, not to tax such moneyed capital so coming into competition with that of national and state banks on the ad valorem basis; and that the assessment of shares of stock of banks, including the plaintiff bank, was at a higher rate than other moneyed capital in the hands of individual citizens, corporations, and associations other than banks, coming into competition with the business of banks.

This court might well take judicial notice of the fact that ever since the year 1911, when the Income Tax Law was enacted (St. 1911, § 1087m--1 et seq.), up to the year 1927 (Laws 1927, c. 396, § 1), when sections 70.31, 70.37, 70.38, 70.39, 70.40, and 70.404, all of which related to the taxation of bank shares on the ad valorem basis, were repealed, shares of stock in banks were assessed on the ad valorem basis and all other moneyed capital in the hands of individual citizens, corporations, and associations, other than banks and trust companies, was assessed on a basis of income. We might also well take judicial notice of the fact that assessments of bank shares on the ad valorem basis result in a higher tax than one computed on the basis of income under the income tax rates which existed during those years, or at least in an inequality of taxation.

People ex rel. Hanover Nat. Bank v. Goldfogle, 234 N. Y. 345, 354, 355, 137 N. E. 611, 614: “When it appears on the face of the statute that bank shares are taxed on valuation at a flat rate and that the owner of competing moneyed capital relatively material in amount is taxed on income only, the court is powerless to say that equality of taxation has been secured and injustice prevented. We are forced to compare two methods which are wholly unlike. How can equality be established or presumed as the necessary result of the taxing statutes? In a very considerable number of cases the valuation tax must inevitably be the heavier burden. It is fixed and certain. The income tax is variable and dependent on income and amount of income. It is conceivable that when returns on such capital are low, the bank stock would be taxed and the competing capital would be exempt. In no event would equality exist, unless the income on competing capital were large beyond the dreams of avarice and the usual returns on investments.”

It must be remembered that the plaintiff is a state bank, not a national bank. If the plaintiff were a national bank there would be little difficulty in determining its rights under the rules laid down in First National Bank of Hartford v. City of Hartford, 273 U. S. 548, 47 S. Ct. 462, 71 L. Ed. 767, 59 A. L. R. 1. As we view this case, the crucial question for decision is whether the assessment of the plaintiff's shares of stock on the ad valorem basis resulted in a violation of plaintiff's constitutional rights.

Plaintiff earnestly contends that chapter 391, Laws of 1923, violated section 5219 of the Revised Statutes of the United States because it failed to provide for taxation of moneyed capital in the hands of individuals not engaged in a business in competition with national banks. Section 5219 was originally enacted in 1864 (13 Stat. 111), amended in 1868 (15 Stat. 34) and again amended in 1923. Act of March 4, 1923, chap. 267, 42 Stat. 1499. So much of section 5219 (12 USCA § 548) as is material to this controversy is as follows:

“Sec. 5219. The legislature of each State may determine and direct, subject to the provisions of this section, the manner and place of taxing all the shares of national banking associations located within its limits. The several States may tax said shares, or include dividends derived therefrom in the taxable income of an owner or holder thereof, or tax the income of such associations, provided the following conditions are complied with:

1. (a) The imposition by said State of any one of the above three forms of taxation shall be in lieu of the others.

(b) In the case of a tax on said shares the tax imposed shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such State coming into competition with the business of national banks: Provided, That bonds, notes or other evidences of indebtedness in the hands of individual citizens not employed or engaged in the banking or investment business and representing merely personal investments not made in competition with such business, shall not be deemed moneyed capital within the meaning of this section. * * *

3. Nothing herein shall be construed to exempt the real property of associations from taxation in any State or in any subdivision thereof, to the...