Boise City Nat. Bank v. Ada County

• Decision Date: 04 January 1930
• Docket Number: No. 1394.,1394.
• Citation: 37 F.2d 947
• Parties: BOISE CITY NAT. BANK v. ADA COUNTY et al.
• Court: U.S. District Court — District of Idaho

37 F.2d 947 (1930)

BOISE CITY NAT. BANK v. ADA COUNTY et al.

No. 1394.

District Court, D. Idaho, S. D.

January 4, 1930.

Richards & Haga, of Boise, Idaho, for plaintiff.

Carl A. Burke and Clarence T. Ward, both of Boise, Idaho, for defendants.

CAVANAH, District Judge.

The Boise City National Bank, a national banking association, seeks to recover from Ada county and its treasurer and tax collector the sum of $7,537.37, which it had paid under protest to the tax collector as taxes levied and assessed for the year 1928 against the capital shares of its stock, on the ground that such taxes are in violation of section 5219 of the U. S. Revised Statutes, as amended (12 USCA § 548), and the Fourteenth Amendment to the federal Constitution guarantying to the plaintiff the equal protection of its laws.

The questions for decision are presented upon defendant's demurrer to the complaint, where it is contended that the plaintiff is not the proper party to bring the action, and that the complaint does not state sufficient facts to entitle it to recover. The statutes of Idaho make the bank liable for the payment of the taxes assessed to its stockholders under penalties, as it is compelled to pay the same (section 3302, Ida. Comp. Stats. 1919; Shainwald v. First Nat'l Bank, 18 Idaho, 290, 109 P. 257), and the owners of the shares are liable to the bank for the taxes so paid, and the bank is given a lien on the stock for the amount paid. Section 3303, Ida. Comp. Stats. 1919. As the liability is imposed on the bank for the payment of the tax, and it was paid by it under protest, it seems clear that, such amount now held by the collector being the money of the bank, the bank is the real party in interest in a suit to recover its own funds which it claims is illegally held by the defendants. Hannan et al. v. First National Bank of Council Bluffs (C. C. A.) 269 F. 527.

The principal question for decision is, Are the facts disclosed by the complaint sufficient to show a violation of the federal statute authorizing the taxation of national bank shares within the restriction often considered by the Supreme Court in First National Bank v. Anderson, 269 U. S. 341, 46 S. Ct. 135, 138, 70 L. Ed. 295; First National Bank v. Hartford, 273 U. S. 548, 47 S. Ct. 462, 71 L. Ed. 767, 59 A. L. R. 1; State of Minnesota v. First National Bank of St. Paul, 273 U. S. 561, 47 S. Ct. 468, 71 L. Ed. 774; Montana National Bank v. Yellowstone County, 276 U. S. 499, 48 S. Ct. 331, 72 L. Ed. 673; Brotherhood Co-op. National Bank v. Hurlburt (D. C.) 21 F.(2d) 85, and Id. (D. C.) 26 F.(2d) 957, and Bonaparte v. American-First National Bank (Okl. Sup.) 281 P. 958?

It clearly appears from the complaint that at the time this assessment was made, the plaintiff, in the course of its business, made loans in large amounts aggregating $2,000,000 in the state on notes or personal obligations of the borrowers, and on notes secured by mortgages on both real and personal property, and also purchases, sells, and deals in bonds and commercial paper; that on January 9, 1928, and ever since, it had had capital surplus and undivided profits aggregating $457,722.22 and also loans and discounts in the sum of $2,762,183.89, a large amount of which consists of mortgages on real and personal property; that on and ever since that date it has owned bonds issued by the United States aggregating $450,000, and treasury notes in excess of $420,000, which notes and bonds provide that they shall be exempt from taxation by the state; and that it further owned, on that date, municipal bonds and warrants in the sum of $144,000 and stock in the Federal Reserve Bank to the amount of $13,500, and its capital, surplus, and undivided profits were invested in that class of securities, except what is invested in real estate and its furniture and fixtures.

It is further alleged that during the year 1928 the assessor of the county, pursuant to an act of the state Legislature approved February 28, 1927 (Laws 1927, c. 84), amending section 3297 of the Compiled Statutes, relating to the assessment of bank stock for taxation, assessed 3,750 shares of the capital stock of plaintiff, on the basis of the actual value of such stock as shown by the capital and surplus of plaintiff on January 9, 1928; and that the only deduction from its capital stock and surplus allowed by the assessor was its real estate, furniture and fixtures, which were separately assessed as other property. Its capital and surplus was $456,822.72, and the value of its real estate, furniture, and fixtures was $253,346.25, leaving $203,476.47 of its capital and surplus invested in its bonds, warrants, notes, and mortgages, which was assessed by the assessor under the state law in question, and the tax of $7,537.37 was levied on the capital shares of stock of the plaintiff. The total of the capital, surplus, and undivided profits of the national banks in the state on January 9, 1928, was the sum of $5,000,000, and of which amount there is $1,400,000 of such banks doing business in Ada county. On January 9, 1928, there was in the state $30,000,000, of which amount of $5,000,000 was in the hands of and owned by individuals, partnerships, corporations and other forms of associations of capital not classified as banks or embraced within the provisions of section 3297 of the state statutes as amended, and that such capital was moneyed capital employed by individuals and came into substantial competition with the plaintiff and other national banks, and no tax was levied on the same, for under chapter 145, Session Laws 1927 of the state, they are exempt from taxation; but, notwithstanding such provision exempting...