Beard v. People's Sav. Bank

• Decision Date: 28 March 1913
• Docket Number: No. 8,448.,8,448.
• Citation: 53 Ind.App. 185,101 N.E. 325
• Parties: BEARD et al. v. PEOPLE'S SAVINGS BANK.
• Court: Indiana Appellate Court

53 Ind.App. 185

101 N.E. 325

BEARD et al.

v.PEOPLE'S SAVINGS BANK.

No. 8,448.

Appellate Court of Indiana, Division No. 2.

March 28, 1913.

Appeal from Circuit Court, Vanderburg County; A. C. Hawkins, Special Judge.

Action by the People's Savings Bank against Charles P. Beard, Auditor, and others. Judgment for plaintiff, and defendants appeal. Affirmed.Hiram M. Logsdon, Albert J. Veneman, George A. Cunningham, and Daniel H. Ortmeyer, all of Evansville, for appellants. James T. Walker and Henry B. Walker, both of Evansville, Stuart, Hammond & Simms, of La Fayette, H. J. Baker, of Terre Haute, and Osborn, McVey & Osborn, of La Porte, for appellee.

LAIRY, J.

Appellee brought this action in the Vanderburg circuit court to enjoin appellants, as auditor and treasurer of the county, from assessing and collecting certain taxes on its surplus fund and on the cash in the bank on the 1st day of March, 1911. A demurrer to the complaint was filed and overruled, and, the appellants declining to plead further, judgment was rendered in favor of appellee perpetually enjoining the assessment and collection of such taxes.

[1][2][3] The complaint discloses, in substance, that the plaintiff is and has been for many years a savings bank incorporated under the laws of this state, and is situated at Evansville, Ind. On the 8th day of March, 1911, the bank, by its proper officers, presented to the township assessor a tax schedule in which was stated the total amount of its personal property upon which according to its contention, it is required to pay taxes for the year 1911. This personal property consisted of banking furniture, file cases, safes, and fixtures, valued at $4,000. There was also assessed against the bank at this time real estate of the value of $26,810. In July of the same year, the county board of review, upon a hearing, assessed against the bank, in addition to the property described, the sum of $21,000, which sum represented the amount of cash in the bank on March 1st. The bank appealed from this assessment to the State Board of Tax Commissioners, and a few days later a citizen taxpayer of the county appealed to the same board from this assessment, alleging that the bank owned a large surplus which was likewise taxable. On August 1, 1911, the State Board of Tax Commissioners sustained the assessment as made by the county board of review, and in addition thereto assessed the surplus of the bank in the sum of $215,000. The complaint further discloses that the $21,000 cash in the safe of the bank on the 1st day of March, 1911, was a part of the deposits of the bank, and that the surplus fund was on said date all invested in bonds and securities which, by the law of the state of Indiana, are exempt from taxation.

The objections to the sufficiency of the complaint are based solely upon the ground that one or both of these items was subject to taxation. We are thus called upon to determine whether or not the bank could be taxed upon either of such items. If it could, the demurrer should have been sustained; but, if it could not, the demurrer was properly overruled.

Appellee was organized and is being operated as a savings bank under the act of May 12, 1869, and the amendments thereto. The act, as amended, is found in Burns 1908, §§ 3348 to 3401, inclusive. Savings banks organized under the provisions of this statute have no capital stock and no stockholders. Their business is managed by a board of trustees who have no interest in the assets of the bank, except to control, invest, and manage such assets for the benefit of the depositors. The trustees have power to purchase, hold, and convey real estate under certain prescribed conditions. The savings bank is authorized to receive deposits and invest the same in such securities as are specified by the act. All deposits shall be repaid to the depositor when required by him, but at such times, and with such dividends from profits, and under such regulations, as the board of trustees may prescribe, not inconsistent with the provisions of the act. Section 28 of the act makes it the duty of the board of trustees to provide a sinking fund by setting aside from the gross profits annually not less than one-half of 1 per cent. of the deposits. This shall be continued until the sinking fund amounts to 10 per cent. of the deposits; and it is lawful to accumulate such surplus until it shall amount to 25 per cent. of the amount of all deposits held by such bank. This fund shall be invested and held to meet any contingency which may arise in the business of the bank, and it cannot be used for the payment of dividends to depositors. All savings banks shall make up their accounts semiannually on the 1st day of January and July of each year, and all dividends and profits shall be divided, credited, or paid to the depositors on or before the 31st day of January and July, respectively. In making these dividends, it is the duty of the trustees to divide, as nearly as may be practical, all of the profits remaining after deducting the necessary expenses and the reserve for the surplus fund from the gross profits; but it is unlawful to declare any dividend, except from profits earned during the time for which such dividend is declared. If a residue of profits remains after making the dividends provided for, the accumulation of such undivided profits shall be distributed to the depositors as often as once in three years.

We have given the substance of those provisions of the act which in our opinion bear upon the question to be determined in this case. We shall first consider the taxability of the surplus fund. When viewed in the light of the statute, we think it is apparent that this fund is held by the trustees of the bank in a quasi trust capacity. It does not belong to the trustees, and it does not belong to any particular depositor or class of depositors of the bank. The depositors of such a bank, during any dividend period, are entitled to share in the net profits earned during that period under such regulations, with respect thereto, as may have been adopted by the board of trustees; but they have no interest in the surplus fund by which they can compel distribution, either as a dividend or otherwise. This fund must be preserved to meet any emergency which may arise in the business, and, in case no emergency arises, must be maintained so long as the bank continues to transact business. Upon the dissolution of the bank, it would, no doubt, belong to the depositors; but whether it would be distributed to those who happened to be depositors at that time, or to all who have been depositors and entitled to dividends at any time while the bank was in existence, must be left to be determined when such a question is presented. It is apparent, we think that the surplus fund in such a bank as this cannot be taxed to the depositors, and that, if it is taxable at all, it must be taxed to the bank.

The Constitution of this state provides that: “The General Assembly shall provide, by law, for a uniform and equal rate of assessment and taxation; and shall prescribe such regulations as shall secure a just valuation for taxation of all property, both real and personal, excepting such only, for municipal, educational, literary, scientific, religious or charitable purposes, as may be especially exempted by law.” Article 10, § 1, Constitution of Indiana.

The General Assembly has enacted various statutes on this subject, among which is...