Bank of Oxford v. Board of Mayor

• Court: Mississippi Supreme Court
• Writing for the Court: CAMPBELL, C. J.
• Citation: Bank of Oxford v. Board of Mayor, 12 So. 203, 70 Miss. 504 (Miss. 1893)
• Decision Date: 16 January 1893
• Parties: BANK OF OXFORD v. TOWN OF OXFORD

12 So. 203

70 Miss. 504

BANK OF OXFORD v. TOWN OF OXFORD

Supreme Court of Mississippi

January 16, 1893

FROM the chancery court of Lafayette county, HON. W. R. TRIGG Chancellor, presided by interchange.

Appellant Bank of Oxford, filed this bill May 15, 1890, to enjoin an action at law which had been instituted against it by the town of Oxford for the collection of unpaid municipal taxes for the years 1888 and 1889.

The bill alleged that the bank had paid for each of those years a privilege tax of $ 750; that this was the proper tax, since its capital stock was $ 79,000, and its surplus $ 4,000--in all $ 83,000--while $ 10,000 of this was invested in nontaxable state bonds; that the basis for the estimation of its privilege tax was thus reduced to $ 73,000; that afterwards, a doubt having arisen as to the construction of the statute, the bank, as a, matter of precaution, and for the purpose of placing the question of the amount to be paid beyond any doubt, tendered to the sheriff an additional sum of $ 250, and interest thereon, for each of said years, which the sheriff refused to accept. This additional sum complainant still tenders in its bill.

The town answered, denying the sufficiency of the privilege taxes so paid, and denying that the bank had the right to deduct the $ 10,000 invested in non-taxable bonds in computing the basis of the privilege taxes so paid. The answer avered that during the years in question the assets of the bank ranged from $ 175,000 to $ 225,000, and that it should have paid the privilege tax for each year as a bank having that amount of assets. The answer was made a cross-bill, and prayed for an accounting as to the value of the capital stock and the assets for each year, and that whichever be found the larger be adopted as the basis on which to estimate the privilege taxes chargeable against the bank. The cross-bill further alleged that as the bank had paid an insufficient privilege tax, it had failed to secure the exemption from all other taxation--state, county and municipal--provided for by the revenue act of 1888 (Laws, p. 16); and therefore the cross-bill prayed for a decree for the amount of the ad valorem municipal taxes.

The bank answered the cross-bill, repeating its original averments, and denying that its assets amounted to any such sum as that alleged in the cross-bill, alleging that the loans and discounts made by it were largely made up of moneys due depositors; that prior to 1888 it had invested $ 6,682 of its capital stock in real estate, which had been assessed and on which it had paid ad valorem taxes for the years in question; that the basis upon which it had paid privilege taxes was found by adding to the whole capital the reserve fund, and then deducting the non-taxable bonds and real estate.

From the undisputed testimony it appeared that for 1888 all the resources of the bank, including loans and discounts, real estate, cash on hand etc., aggregated $ 207,559.92; that as against these resources the capital stock amounted to $ 79,000, the undivided profits to $ 4,043.32, the amount due depositors $ 124,516.60. The totals for the year 1889 varied very slightly from those of 1888. It was further shown that the municipal taxes for 1888 were ten mills, and for 1889 fourteen mills, on the dollar.

At the May term, 1892, the case being ready for hearing, complainant asked leave to file an amended bill, setting up the act of March 7, 1892 (Laws, p. 31, granting relief from penalties incurred by failure to pay privilege taxes. This act provides that any person or corporation liable to a privilege tax, and having failed in whole or part to pay the same, might, within sixty days after the passage of the act, pay the true amount or the balance remaining unpaid, with twenty-five per cent additional; that persons or corporations making such payments shall "be relieved from all the pains and penalties imposed by § 589 of said code 1880, or any law of like import in respect of the effects of such non-payment of such privilege tax on contracts made by such persons or corporations; and all contracts made by such persons or corporations as shall avail themselves of the benefits of this act shall be enforceable in all the courts, the same as if such privilege taxes had been paid when the same were required by law to be paid." Complainant, by its proposed amended bill, sought to show compliance with said act, and to avail of its provisions as granting relief against the demands asserted by the town. The court refused to allow the amended bill to be filed.

On final hearing, the court held that the bank had failed to pay sufficient privilege taxes for the years 1888 and 1889, and that it was, therefore, liable to pay the municipal taxes ad valorem, and directed an account to be taken of the gross assets held by the bank on the first of February in each of said years, less the non-taxable securities and the deposits on which basis ten mills for 1888 and fourteen mills for 1889 should be calculated; that the sum so ascertained should be credited with the amount of municipal taxes paid on the real estate for said years, and the balance thus ascertained, with six per cent. interest thereon, should be reported as the amount for which a decree would be rendered. The town objected to so much of the decree as authorized the deduction of deposits from the gross assets. The amount thus found to be due, and for which a personal decree was rendered in favor of the municipality, was $ 2,208.54, which sum included the attorney's fee consequent upon the dissolution of the injunction. The bank prayed an appeal from this decree, and the town prosecutes a cross-appeal, alleging error in the order of the court directing the gross assets of the bank to be credited with the amount of its deposits.

Reversed and remanded.

H. A. Barr and Howry & Falkner,

Filed separate briefs, citing in the main the same authorities, and making the following points:

Independently of the tender of $ 250, with interest thereon, the bank was not in default as to the tax of 1888. And the tender of $ 250, and interest thereon, saved it from default as to the tax of 1889. Besides, the bank had the right to avail of the "condonation act" of 1892. The amended bill as to this was presented at the earliest possible time. The refusal to allow it to be filed was error. Jeffries v. Jeffries, 66 Miss. 216; Code 1880, § 1881.

The remark in Vicksburg Bank v. Worrell, 67 Miss. 47, that a bank failing to pay a sufficient privilege tax under the act of 1888 did not secure the exemption, is an obiter dictum. The true construction of the act is that such a bank is liable for what it failed to pay, especially where the failure to pay is a mistake. There is nothing in the act which looks to a forfeiture of exemptions.

It is a general rule that when the public is to be charged with a burden, the intention to do so must clearly appear. Cooley on Tax., 266-269; 2 Story, 369; 62 Wis. 32. Forfeitures are never presumed.

The deposits were properly excluded from the taxable assets. Horne v. Green, 52 Miss. 452. Duplicate taxation is inadmissible under our constitution, which requires equality and uniformity. Cooley on Tax., 225. Deposits constitute indebtedness of a bank. Debts are not property. Murray v. Charleston, 96 U.S. 432. See also 59 N.H. 288; 59 Ib., 621; 47 Am. Rep., 202.

Non-taxable state bonds were properly excluded from the taxable assets. Cooley on Tax., 80, 81. Murray v. Charleston, supra.

The act of 1888, in making the stock and assets the basis of taxation, in effect taxes them. It does not matter whether the person or thing be considered as taxed, it is the property that is the criterion. The tax is in respect to the property and to value. Bank Tax Case, 2 Wall., 200; 2 Black, 620. The tax here is a privilege tax only in name. In reality it is a tax on the assets, and the non-taxable securities cannot be included. Welton v. Missouri, 91 U.S. 275; Brown v. Maryland, 12 Wheat., 425.

Edward Mayes, for appellee.

If either the capital stock or the assets of the bank exceeded $ 75,000, the privilege tax paid by it was insufficient under the act of 1888. This must be conceded, unless the value of the state bonds or the real estate can be subtracted. Neither subtraction is allowable.

A privilege tax imposed, as in this case, in the nature of a commutation, is not a tax on property, but on the franchise, and is measurable by elements which would not be of themselves taxable. For the distinction between a tax on a business or a privilege and a tax on capital or property, and the right to tax the business regardless of how its funds are invested, see People v. Tax Commissioners, 2 Black, 620; Society v. Coite, 6 Wall., 594; Provident Institution v. Massachusetts, Ib., 611; 9 Wheat., 859. That the tax in question is a franchise tax, see Temple v. Sumner, 51 Miss. 13; Carter v. State, 60 Ib., 456; Folkes v. State, 63 Ib., 81; Harness v. Williams, 64 Ib., 600; Vicksburg Bank v. Worrell, 67 Ib., 47.

It is immaterial that the assets adopted as a measure of the privilege tax include non-taxable funds or securities. 32 Conn. 173, s.c. 6 Wall., 594; Ib., 611; Burroughs on Taxation, 174. See also Bank Tax Case, 2 Wall., 200; Holly Springs Savings Co. v. Marshall County, 52 Miss. 281.

Having failed to pay a sufficient privilege tax, the bank failed to secure exemption from other taxes. Vicksburg Bank v. Worrell, supra. The decision in that case is right in law and in morals.

Even if deposits are not to be taxed ad valorem, they are part of the bank's assets, and to be computed in determining the amount of its privilege tax. But I contend deposits cannot be deducted, even in ad valorem taxation.

As to the subsequent tender, it is...