Bressler v. County of Wayne

• Decision Date: 16 September 1891
• Citation: 49 N.W. 787,32 Neb. 834
• Parties: JOHN T. BRESSLER v. COUNTY OF WAYNE
• Court: Nebraska Supreme Court

49 N.W. 787

32 Neb. 834

JOHN T. BRESSLER v. COUNTY OF WAYNE

Supreme Court of Nebraska

September 16, 1891

REHEARING of case reported 25 Neb. 468.

AFFIRMED.

Northrop & Welch, for plaintiff in error:

When the laws of any state permit a citizen thereof to deduct the sum of his credits, etc., the owner of shares of stock in a national bank situated in such state is entitled to deduct from the value of said shares his bona fide debts, and be taxed upon the residue only (People v. Weaver, 100 U.S. 539; Bank v. Britton, 105 U.S. 322; Wasson v. Bank, 8 N.E. [Ind.] 97; Natl. Bank v. Paducah Thomp. Natl. Bk. Cases, 300; Supervisors v Stanley, 105 U.S. 305; Hills v. Bank, 105 U.S. 319, 15 Otto 319, 26 L.Ed. 1052; Boyer v. Boyer, 113 U.S. 689; Ruggles v. Fond du Lac, 10 N.W. 565 [Wis.]; Richards v. Rock Rapids, 31 F. 505 [Ia.]; Whitbeck v. Bank, 8 S.Ct. [O.] 1122; Miller v. Heilbron, 58 Cal. 133; Wasson v. Bank, 8 N.E. [Ind.]; 97). In all matters affecting national banks the law of congress is paramount, and state legislation must be construed with reference thereto. (Bank v. Dearing, 91 U.S. 29; People v. Weaver, 100 U.S. 539; Boyer v. Boyer, 113 U.S. 689; Ruggles v. Fond du Lac, 10 N.W. 565 [Wis.]; Wasson v. Bank, 8 N.E. [Ind.] 97; Flint v. Alderman, 99 Mass. 141.)

Wm. Leese Attorney General, and J. D. King, contra, cited, as to the meaning and proper use of the term "moneyed capital": Banking Co. v. Newark, 121 U.S. 163; Bank v. Davenport, 123 U.S. 83; Hepburn v. Sch. Directors, 90 U.S. 482; People v. Weaver, 100 U.S. 539; Bank v. Britton, 105 U.S. 322; Wasson v. Bank, 8 N.E. 97 [Ind.].

OPINION

NORVAL, J.

This case is on rehearing, the opinion being reported in 25 Neb. 468. The question involved is the right of the owner of shares in a national bank, having no other credits or moneyed capital, to have deducted, in the assessment and taxation of such shares, his bona fide debts. On the former hearing it was held that under section 5219 of the Revised Statutes of the United States he was entitled to such deduction.

Said section 5219 permits state taxation of the shares of stocks in national banks, subject only to two restrictions: First, "That the taxation shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such state;" and second, "That the shares of any national banking association, owned by non-residents of any state, shall be taxed in the city or town where the bank is located, and not elsewhere."

The second limitation is not important in this case. But it is claimed that by not allowing bona fide debts to be deducted in the assessment of shares in national banks the state thereby places a higher burden of taxation upon money invested in national banks than is imposed upon other moneyed capital, and therefore contravenes the first restriction imposed by congress in the section above referred to.

The supreme court of the United States has, in many cases, considered and construed the provisions of the act of congress which limit the power of the states in the taxation of national bank shares. A reference to some of these decisions will aid in the determination of the question involved in this case.

In People v. Weaver, 100 U.S. 539, 25 L.Ed. 705, it is held that the statute of the state of New York, which permits a taxpayer, in listing his property for taxation, to deduct the amount of his debts from the valuation of all his personal property, including moneyed capital, except his bank shares, is in conflict with the act of congress, in that shares of national banks are required to be assessed higher in proportion to their real value than other moneyed capital in the hands of citizens of the state is valued for taxation. It is further held that the rule of uniformity in the taxation of such shares applies to the valuation of the shares, as well as to the ratio of percentage laid on such valuation. To the same effect is Supervisors v. Stanley, 105 U.S. 305, 26 L.Ed. 1044.

In Pelton v. National Bank, 101 U.S. 143, 25 L.Ed. 901, it is held that where a state statute provides for the valuation of all moneyed capital for taxation at its true value, including shares of the national banks, and the taxing officers intentionally assess such shares at their actual value, while other moneyed capital was assessed far below its real value, such assessment of national bank stocks was in violation of section 5219 of the Revised Statutes.

In Evansville National Bank v. Britton, 105 U.S. 322, 26 L.Ed. 1053 it is ruled that under the statute of Indiana, which allows deductions of bona fide debts to be made from all credits in listing the same for taxation, the assessing of national bank shares, without permitting the shareholder to deduct from their value the amount of his bona fide debts, is a discrimination forbidden by congress.

In the more recent case of the Mercantile Bank v. Mayor, 121 U.S. 138, 30 L.Ed. 895, 7 S.Ct. 826, the court in an able and exhaustive opinion construed the meaning of the words "other moneyed capital," as used in the act of congress. We quote from the opinion: "The key to the proper interpretation of the act of congress is its policy and purpose. The object of the law was to establish a system of national banking institutions, in order to provide a uniform and secure currency for the people, and to facilitate the operations of the treasury of the United States. * * The main purpose, therefore, of congress, in fixing limits to state taxation on investments in the shares of national banks, was to render it impossible for the state, in levying such a tax, to create and foster an unequal and unfriendly competition, by favoring institutions or individuals carrying on a similar business and operations and investments of a like character. The language of the act of congress is to be read in the light of this policy.

"Applying this rule of construction we are led, in the first place, to consider the meaning of the words 'other moneyed capital,' as used in the statute. Of course it includes shares in national banks; the use of the word 'other' requires that. If bank shares were not moneyed capital the word 'other,' in this connection, would be without significance. But 'moneyed capital' does not mean all capital the value of which is measured in terms of money. In this sense, all kinds of real and personal property would be embraced by it, for they all have an estimated value as the subjects of sale. Neither does it necessarily include all forms of investment in which the interest of the owner is expressed in money. Shares of stock in railroad companies, mining companies, manufacturing companies, and other corporations are represented by certificates showing that the owner is entitled to an interest, expressed in money value, in the entire capital and property of a corporation, but the property of a corporation which constitutes its invested capital, may consist mainly of real and personal property, which, in the hands of individuals, no one would think of calling moneyed capital, and its business may not consist in any kind of dealing in money, or commercial representatives of money.

So far as the policy of the government in reference to national banks is concerned, it is indifferent how the states may choose to tax such corporations as those just mentioned, or the interest of individuals in them. Or whether they should be taxed at all. * * * The business of banking, as defined by law and custom, consists in the issue of notes payable on demand, intended to circulate as money, where the banks are banks of issue; in receiving deposits payable on demand; in discounting commercial paper; making loans of money on collateral security; buying and selling bills of exchange; negotiating loans; and dealing in negotiable securities issued by the government, state and national, and municipal and other corporations. These are the operations in which the capital invested in national banks, is employed, and it is the nature of that employment which constitutes it in the eye of this statute 'moneyed capital.' Corporations and individuals carrying on these operations do come into competition with the business of national banks, and capital in the hands of individuals thus employed is what is intended to be described by the act of congress. * * *

"The terms of the act of congress, therefore, include shares of stock or other interests owned by individuals in all enterprises in which the capital employed in carrying on its business is money, where the object of the business is the making of profit by its use as money. The moneyed capital thus employed is invested for that purpose in securities by way of loan, discount, or otherwise, which from time to time, according to the rules of the business, reduced again to money and reinvested. It includes money in the hands of individuals employed in a similar way, invested in loans, or in securities for the payment of money, either as an investment of a permanent character, or temporarily with a view to sale or repayment and reinvestment. In this way the moneyed capital in the hands of individuals is distinguished from what is known generally as personal property."

It follows from these decisions that any method of assessment of taxes which prohibits the owner of national bank shares, who owns no other credits or moneyed capital, from deducting his bona fide indebtedness from the value of such shares, and permits the deduction of such debts in the assessment of like property similarly situated, conflicts with the act of congress.

Was the rule of uniformity prescribed by the federal statute violated in the assessment of the plaintiff in error? In determining this question it will be necessary to examine some of...