Chase Nat. Bank of City of New York v. Spokane County

• Decision Date: 14 May 1923
• Docket Number: 17699.
• Citation: 125 Wash. 1,215 P. 374
• Court: Washington Supreme Court
• Parties: CHASE NAT. BANK OF CITY OF NEW YORK v. SPOKANE COUNTY.

215 P. 374

125 Wash. 1

CHASE NAT. BANK OF CITY OF NEW YORK v. SPOKANE COUNTY.

No. 17699.

Supreme Court of Washington

May 14, 1923

Department 1.

Appeal from Superior Court, Spokane County; Wm. A. Huneke, Judge.

Action by the Chase National Bank of the City of New York against Spokane County. Judgment for plaintiff, and defendant appeals. Judgment reversed, and case dismissed.

William C. Meyer and Albert H. Sundahl, both of Spokane, for appellant.

Wakefield & Witherspoon, of Spokane, for respondent.

BRIDGES J.

The validity of a tax, levied by the authorities of Spokane county, in this state, against certain personal property, is the only question involved in this appeal.

Chronologically the facts are as follows: The Bethlehem Motors Corporation of Pennsylvania, sold eight auto trucks to the North-western Auto Company, of Portland, Or., for shipment to Spokane. These were shipped according to program. The motors corporation drew two drafts on the Northwestern Auto Company one dated June 14, 1920, and the other June 30, 1920, for the total purchase price of the trucks. These drafts were made payable to the respondent, Chase National Bank of the City of New York. Attached to the drafts were the bills of lading. The respondent purchased these drafts, paying the full amount thereof, and credited the account of the motors corporation therewith. The respondent forwarded the drafts and bills of lading to its correspondent at Portland, for collection. The Northwestern Auto Company failed or refused to pay the drafts, and they were returned, together with the bills of lading, to the respondent. In August, 1920, a receiver was appointed for the motors corporation. On September 3, 1920, the railroad, still having possession of the trucks, warehoused them in the city of Spokane, and on September 22, 1920, a written arrangement was made between the respondent and the receiver of the motors corporation, whereby the latter was to undertake to sell the trucks for the account of the respondent. On March 9, 1921, the trucks were assessed for general taxes, as the property of the motors corporation. They were then in the warehouse where they had previously been put. The receiver, being advised of the assessment, wrote the appellant that he had no interest in the trucks and that they belonged to the respondent. On April 30, 1921, the respondent paid the taxes under protest, because the public officers of the appellant were threatening to distrain and sell the trucks for the taxes. Later it brought this action to recover the amount so paid. The lower court found that at the time of the taxation the trucks belonged to, and were the property of, the respondent, and concluded therefrom that the taxes were illegal, and entered jugment for the respondent.

The respondent contends that it owned the trucks at the time they were taxed, and that it being a national bank, incorporated and doing business under and by virtue of the national banking act, the appellant had no authority to levy the tax. On the contrary, the appellant contends that the respondent was at no time the owner of the property, and that, even if it were, it was doing business outside of the state of its principal place of business (which was New York), and any of its personal property found in this state was subject to taxation, and that, in any event, under the national banking act, it had no power to acquire the ownership of these trucks, and for that reason they were taxable here.

It has long since been a well-established rule that states are entirely without power to levy any taxes, directly or indirectly, upon national banks, or any of their property, except such as Congress has expressly authorized. Section 5219, Rev. Stats. U.S. (U. S. Comp. St. § 9784), being a part of the national banking act, authorizes the various states to tax the capital stock of national banks and their real estate.

In Owensboro National Bank v. City of Owensboro, 173 U.S. 664, 19 S.Ct. 537, 43 L.Ed. 850, the court, speaking of this provision of the statute, said:

'This section, then, of the Revised Statutes is the measure of the power of a state to tax national banks, their property or their franchises. By its unambiguous provisions the power is confined to a taxation of the shares of stock in the names of the shareholders and to an assessment on the real estate of the bank. Any state tax therefore which is in excess of and not in conformity to these requirements is void.'

This court, in the cause of Dexter Horton National Bank v. McKenzie, 69 Wash. 314, 124 P. 915, recognizes the principles laid down in the case last cited, by saying:

'However that may be as to state banks, the state has no power to tax national banks except to tax their real estate and their shares of stock, this being the only concession made by the national government to the states upon that subject.'

See, also, First National Bank v. Albright, 208 U.S. 548, 28 S.Ct. 349, 52 L.Ed. 614; 37 Cyc. 830; 26 R. C. L. 85.

The principle which we are discussing is so well established that we deem it unnecessary to cite more of the cases.

The fact that the trucks which were taxed happened to be in the state of Washington, and the fact that the respondent was indirectly transacting business outside of the state of its principal place of business, cannot affect the question under discussion. Whatever interest the respondent acquired in the trucks was acquired through a transaction had at its principal place of business in New York. We conclude, therefore, that if the respondent was the owner of the trucks, the appellant was without any authority to tax them.

But, to our mind, the more serious question is whether respondent was such an owner of the trucks as deprived the appellant of power to tax them.

The respondent in its brief asserts its ownership because 'title to the trucks vested in respondent immediately upon the discount of the drafts and the indorsement of the bills of lading.' After supporting the foregoing assertion with argument and authorities, it says:

'But it is unnecessary to determine whether the legal title thus transferred was absolute and unqualified in respondent from the moment of discount and indorsement. If the property was special at that juncture, it became absolute when the Northwestern Auto Company refused payment of the drafts.'

In support of these assertions, it cites Commercial Bank of Port Huron v. Elliott, 92 Wash. 357, 159 P. 377, and Wickens v. Scheuer, 118 Wash. 614, 204 P. 780, as decisive in this jurisdiction, and the following cases from other jurisdictions: American Thresherman v. Citizens' Bank of Anderson, 154 Wis. 366, 141 N.W. 210, 49 L. R. A. (N. S.) 644; Fourth National Bank v. Bragg, 127 Va. 47, 102 S.E. 649, 11 A. L. R. 1034; Gibson v. Stevens, 8 How. 384, 12 L.Ed. 1123; 10 C.J. 204; 4 Encyc. 548; Third National Bank v. Hays, 119 Tenn. 729, 108 S.W. 1060; Farmers' & Merchants' National Bank v. Sprout, 104 Kan. 348, 179 P. 301 .

In the case of Vickers v. Machinery Warehouse & Sales Co., 111 Wash. 576, 191 P. 869, we held that where a shipper drew a draft and attached it to a bill of lading covering the goods shipped and discounted the draft at a bank, and the proceeds were put to his credit, the bank became the absolute owner of the draft, and the unqualified owner of the proceeds to be collected therefrom.

We do not think the case of Commercial Bank, etc., v. Elliott, supra, from this court, supports the contention of the respondent. There the facts were that the bank discounted a sight draft with bill of lading attached, and before the draft was paid, another party attached the property covered by the bill of lading. We said:

'The court correctly held as a matter of law, that the bank, by reason of owning the bill of lading, had a right to all property covered by this bill of lading, superior to appellant whose only claim to the property was by virtue of a subsequent attachment.'

This case would seem to be better authority for the proposition that when a bank purchases a draft, taking a bill of lading attached thereto, it takes the property covered by the latter as security for the payment of the draft, than for the assertion that the bank, by the transaction, became the absolute owner of the property involved.

Nor do we consider that the case of Wickens v. Scheuer, supra, from this court, is conclusive here. The facts are rather complicated, and we will not undertake to state them fully; but there were involved the issuance by a bank of letter of credit and the purchase by it of a draft, attached to which was a bill of lading. We said:

'It is contended by appellant that the transaction is simply a purchase of goods by Scheuer [one of the respondents] with a pledge of title to the respondent banks as security, and that, the legal title being in Scheuer, the goods would be subject to attachment for debts owing by them. The effect to be given an endorsement upon a bill of lading depends upon the intention of the parties. * * * And where the title is intended to be passed, this will be the effect of the transaction.'

The court then proceeds to arrive at the intention of the parties as disclosed by the fact that the bill of lading was attached to the draft, by the language of the letter of credit and by the provision for insurance, and states that these things 'satisfy us that it was the intention of the parties to vest title in the banks advancing the money,' and it was held that the attachment would not lie.

These two cases from this court go no farther than to hold that the bank holding the bill of lading had a better and superior right in the property covered by the bill of lading than an attaching creditor, and this view is in lien with most of the...