Cent. Nat. Bank v. City of Lynn

Decision Date12 March 1927
CourtUnited States State Supreme Judicial Court of Massachusetts Supreme Court


Exceptions from Superior Court, Essex County; J. F. Quinn, Judge.

Complaint by the Central National Bank against the City of Lynn for refusal by the assessors to grant an abatement of a tax and action of contract by the Central National Bank against the City of Lynn to recover a tax alleged to have been illegally assessed. Cases heard together. Finding for defendant in complaint to abate the tax and for plaintiff in action to recover the tax, and both parties except. Plaintiff's exceptions overruled, defendant's exceptions sustained.H. R. Mayo, of Lynn, for plaintiff.

S. H. Hollis, of Lynn, for defendant.


These are proceedings to recover a tax for the year 1921 paid under protest by the plaintiff to the defendant. One is a complaint under G. L. c. 59, § 65, for refusal by the assessors to grant an abatement of the tax; the other is an action of contract to recover the tax under G. L. c. 60, § 98. Both rest on the ground, as alleged, that the tax was illegally assessed. Each proceeding was seasonably brought.

The complainant and plaintiff is a national banking association established under the statutes of the United States, having its usual place of business at Lynn. Its contention is that, although the provisions of our statutes respecting the taxation of shares in national banks as they existed prior to 1917 had been held to be valid and in conformity to the provisions of the controlling act of Congress, in Bank of Redemption v. Boston, 125 U. S. 60, 8 S. Ct. 772, 31 L. Ed. 689, yet since the passage of the income tax law, now G. L. c. 62, which became effective as to taxation for the year 1917, the previously established method of taxation of shares of stock in national banks has become illegal, because other moneyed capital in the hands of individual citizens of the commonwealth employed in competition with national banks now is taxed at a much lower rate.

[1][2] I. The complainant is not entitled to relief upon the complaint for abatement. The reason is that there has been no compliance with all the statutory mandates which must be met before there can be an abatement. It is provided by G. L. c. 63, § 4, that the cashier of every national ‘bank shall make and deliver to the assessors * * * a statement on oath showing the name of each shareholder’ in such detail as is there specified. The cashier of the complainant bank in fact did file with the assessors a list satisfying the statute in every particular except that it was now sworn to. The oath is imperative under our statutes. The requirement for the oath was not enacted for the benefit of the assessors, but for the protection of the public and in the general interest. It cannot be waived by any act of the assessors. Winnisimmet Co. v. Chelsea, 6 Cush. 477, 483;Amherst College v. Amherst, 193 Mass. 168, 79 N. E. 248;Boston Rubber Shoe Co. v. Malden, 216 Mass. 508, 511, 104 N. E. 478;Parsons v. Lenox, 228 Mass. 231, 117 N. E. 197;Dexter v. Beverly, 249 Mass. 167, 169, 143 N. E. 904. The filing of the ‘statement on oath’ is a condition precedent to the maintenance by the taxpayer of a petition for an abatement. The right to maintain a complaint for abatement does not come into existence until the sworn statement described in the statute has been filed. No tribunal has jurisdiction to consider the question whether an abatement ought to be made unless such sworn statement has first been filed. Otis Co. v. Ware, 8 Gray, 509, 511;Charlestown v. County Commissioners, 101 Mass. 87, 90;Sears v. Nahant, 205 Mass. 558, 569, 91 N. E. 913;Boston Rubber Shoe Co. v. Malden, 216 Mass. 508, 512, 104 N. E. 478;Dexter v. Beverly, 249 Mass. 167, 169, 143 N. E. 904. Compare Sterling v. Leyland & Co., Ltd., 242 Mass. 8, 13, 136 N. E. 60;Miller v. Rosenthal, 257 Mass. --, 155 N. E. 3;William Danzer & Co., Inc., v. Gulf & Ship Island Railroad, 268 U. S. 633, 636, 637, 45 S. Ct. 612, 69 L. Ed. 1126. The words of G. L. c. 59, § 61, are that ‘a person shall not have an abatement’ unless the required list has been filed with the assessors. Language hardly can be more explicit. ‘Person’ as thus used includes a national bank. National Bank of Commerce v. New Bedford, 155 Mass. 313, 316, 29 N. E. 532. Said section 61 comprehends and is applicable to the statement on oath to be filed by the cashier of a national bank. While this was not categorically decided in the case last cited, it there was held that the filing of the list by the cashier of the bank was sufficient basis for a petition for abatement by the bank. As disposing of the argument that the list must be filed by the shareholders, it was said at page 316 (29 N. E. 534) that--

we are of opinion that the substitution of the bank for the shareholders is more thoroughgoing than is recognized by this argument. The bank is the person to file the list, as it is the person to pay the tax, to petition for abatement, and to take an appeal.’

The irresistible inference from this decision is that the filing of a list as required by chapter 63, § 4, is a condition precedent to the maintenance of a petition for abatement under chapter, 59, § 61, by a national bank.

This is the reasonable construction of the statutes. There is nothing to indicate that the Legislature intended to except national banks from a general requirement as to filing sworn lists resting upon other members of the community. While a complaint for abatement may be maintained where the tax is wholly illegal, the filing of the list is nevertheless a condition precedent to the existence of the right to abatement. Milford Water Co. v. Hopkinton, 192 Mass. 491, 498, 78 N. E. 451. The cases of Lowell v. County Commissioners, 146 Mass. 403, 16 N. E. 8, and Essex Company v. Lwarence, 214 Mass. 79, 100 N. E. 1016, afford no support to any contrary theory because they relate to a different statute and divergent facts.

It follows, from the terms of the governing statutes and the decisions rendered touching them already cited, that the circumstance that the chairman of the board of assessors of the defendant accepted, within the time specified in the statute and without objection and in accordance with a practice of many years, the unsworn statement of the cashier of the complainant containing the requisite information is of no consequence in this connection. Plainly the soveregn power may create reasonable conditions as prerequisites to the enforcement of rights in the courts. No further discussion is needed to demonstrate that a statement under oath is a reasonable condition precedent to judicial inquiry into the legality of taxes. The rulings that the list filed by the complaint did not comply with the law, and that the complaint for refusal of the assessors to abate the tax be dismissed, were right.

II. The pertinent facts respecting the action of contract to recover the taxes here in question as displayed in the record are in effect that the capital stock of the plaintiff is $200,000, divided into two thousand shares; that the assessors of the defendant determined as of April 1, 1921, that the value of each share of the capital stock of the plaintiff was $245, and levied a tax on all the stockholders of $28.48 on each $1,000 of fair cash value of share owned by them, that being the rate fixed for the year 1921 on real estate and tangible personal property in Lynn. The tax thus levied, amounting to $13,916, was seasonably paid by the plaintiff (G. L. c. 63, § 2) under sufficient written protest (G. L. c. 60, § 98). Carleton v. Ashburnham, 102 Mass. 348, 350. It is stated in the exceptions:

‘During the years 1920 and 1921 said bank paid dividends to its shareholders at the rate of $10 per share for each year, said dividends aggregating $20,000 per year. Taxes on all taxable bonds, notes, taxable securities and other moneyed capital in the hands of individual citizens of Massachusetts were assessed and levied in the year 1921 under G. L. c. 62; and in this connection see section 49 et seq. of said chapter 62. A substantial part of such moneyed capital was in the hands of individual taxpayers, and the tax levied and collected on such bonds, securities and moneyed capital was very considerable and was material in amount, and such moneyed capital came into competition with the money of said plaintiff bank and in competition with the money of national banks in the commonwealth in general. There was evidence that moneyed capital in bonds, notes and stocks competed with the plaintiff bank in 1921, and that money in the hands of individual bankers during the year 1921 and for a period of years prior to the date of trial had competed with the money of the plaintiff bank and with the plaintiff bank, and that many private individuals and bankers were loaning money in competition with the plaintiff bank and its money. There was evidence to the effect that the tax assessed in 1921 under G. L. c. 62, amounted to approximately $8,000,000, on ‘interest and dividends'; and while there was no evidence as to what percentage of that total represented six per cent. tax on interest alone, there was testimony from the assistant director of the income tax division, department of corporations and taxation of the commonwealth, that the tax levied and collected on interest apart from dividends was a very considerable amount-was a comparatively large amount. There was also evidence that in the year 1921 the number of tax returns of income filed in the commonwealth under G. L. c. 62, was 286,400, of which number 257,372 were filed by individuals on ‘Form I,’ so called, of the income tax return blanks issued by the income tax division.'

[3][4][5][6] An action of contract, such as is the one at bar, to recover a tax under G. L. c. 60, § 98, cannot be maintained unless the tax is wholly void. That has been frequently determined. Harrington v. Glidden, 179...

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