Citizens Bank of Louisiana v. Caleb Parker

• Decision Date: 15 October 1902
• Docket Number: No. 2,2
• Citation: 48 L.Ed. 346,24 S.Ct. 181,192 U.S. 73
• Parties: CITIZENS' BANK OF LOUISIANA, Plff. in Err. , v. CALEB H. PARKER, Tax Collector of the First District of the City of New Orleans
• Court: U.S. Supreme Court

192 U.S. 73

24 S.Ct. 181

48 L.Ed. 346

CITIZENS' BANK OF LOUISIANA, Plff. in Err.,

v CALEB H. PARKER, Tax Collector of the First District of the City of New Orleans.

No. 2.

Argued October 15, 1902.

Ordered for reargument December 8, 1902.

Reargued October 28, 1903.

Decided January 4, 1904.

This suit was instituted in the civil district court for the parish of Orleans for the recovery of the sum of $2,400, claimed to be due from the bank for the year 1894 as a license tax for carrying on a banking business. The license is claimed to have been authorized by the following provision of act No. 150 of the general assembly of Louisiana of 1890: 'That for each business of carrying on a bank, banking company, association, corporation, or agency, the license shall be based on the declared or nominal capital and surplus, whether said capital and surplus is owned, or in use, or on deposit in the state or elsewhere, as follows, to wit: . . . Ninth class. When the said declared or nominal capital and surplus is four hundred thousand dollars or more, and under six hundred thousand dollars, the license shall be four hundred and fifty dollars ($450.)' [La. Rev. Laws, p. 835.]

The bank pleaded the general issue and that it was exempt from paying such license by the provisions of its charter, granted in 1833, and by § 4 of the act of January 30, 1836, amending the charter, by which it was provided that 'the capital of said bank shall be exempt from any tax laid by the state, or by any parish or body politic, under the authority of the state, during the continuance of its charter.' It was alleged that the charter of 1833 and the amendment of 1836 were granted for a valuable consideration, and constituted a contract between the state and the bank, and that the act imposing the license impaired the obligation of the contract, and was therefore violative of the Constitution of the United States. Certain judgments were also pleaded as res judicata and introduced in evidence, one of which was the decree of this court in New Orleans v. Citizens' Bank, 167 U. S. 371, 42 L. ed. 202, 17 Sup. Ct. Rep. 905.

The trial court sustained the defense of the bank, based on its claim under its charter, but did not pass on the plea of res judicata. The court observed: 'I pass only on the main issue raised, without reference to the defendant's plea of res judicata. Inasmuch as it does not appear that the issue of exemption from a license tax has been presented in any of the cases and judgments relied on to support the plea.'

Judgment was entered, dismissing the demand of the state. It was reversed on appeal to the supreme court, the court, however, dividing. 52 La. Ann. 1086, 27 So. 709. Elaborate opinions were delivered both by the majority and minority of the court. All of the contentions of the bank were held to be untenable, but the members of the majority did not agree upon the grounds. Mr. Justice Monroe, with whom concurred the Chief Justice, placed his decision on three grounds: (1) The plea of res judicata could not be sustained, because the validity of a license tax was not involved in the decrees or judgments pleaded. (2) License taxes were distinguishable from taxes on property, and the bank was not exempt from the former by its charter. (3) The act of 1874, extending the charter from 1884 to 1911, was to take effect in 1884, from which it was deduced: 'First, that the extension thus granted could add nothing not authorized by the constitution of 1868, under the dominion of which the act was passed, and which required the payment of a license; second, that the grant, to take effect in 1884, became subject to the constitution adopted in 1879, which also required, or authorized the legislature to require, the payment of the license.' (4) Even if this were not so, the acceptance by the bank of the act No. 79 of 1880 'specifically and in terms subjected it to the constitution of 1879, and thereby placed it out of the power of the legislature to exempt it from the payment of the license imposed on other institutions of the same class.'

Mr. Justice Watkins delivered a separate opinion, and placed his concurrence on the distinction between a license tax and a property tax, and said that 'the conclusion is perfectly clear that a property tax was only in contemplation of the legislature in framing that exemption.' And also said that the license law under which the state proceeded 'does not conflict with the contract clause of the Federal Constitution by impairing the contract rights of the defendant bank under its charter.' Concluding his opinion, the learned justice observed:

'In my view, it is unnecessary for this court to go into any discussion of the constitutional questions raised and adverted to in the opinion of the majority, for the reason that, on the face of the charter exemption, which the bank pleads, its liability is apparent.

'It is my view, also, that the better course of decision is, and one more in harmony with the general jurisprudence of this court, to avoid discussion of Federal questions which only arise incidentally, and are unnecessary to the decision of the principal question at issue.

'Entertaining this view, I think it is preferable to pass the constitutional question under consideration, and reverse the judgment of the district court, and sustain the license on the face of the charter and the law.'

Mr. Justice Breaux and Mr. Justice Blanchard dissented, each filing an opinion.

Messrs. Henry Denis, Eugene D. Saunders, Branch K. Miller, and Murphy j. Foster for plaintiff in error.

Messrs. E. Howard McCaleb, Jr., and E. Howard McCaleb for defendant in error.

Statement by Mr. Justice McKenna:

Mr. Justice McKenna, after stating the case, delivered the opinion of the court:

1. A motion is made to dismiss. The ground of it is that, even if the charter of 1833 and the amendment of 1836 exempted the bank from license taxes, the bank, by accepting the act of 1880, which enabled the bank to make compromises with its mortgage creditors, became subject to the constitution of 1879, which, it is contended, authorized or required the legislature to impose a license tax. And, besides, the act of 1874, extending the charter, was subject to the constitution of 1868, and that required the payment of a license. Upon those grounds Mr. Justice Monroe based his opinion, and they, it is urged, involved state questions sufficient to sustain the judgment. But those grounds only had the concurrence of the Chief Justice. Mr. Justice Watkins did not assent to them and Justices Breaux and Blanchard dissented from them. The judgment of the court, therefore, does not rest upon them. The judgment rests upon the construction of the original charter,—that is, upon the contract between the state and the bank,—but to construe that is also our function.

But assuming that the judgment rests upon the grounds stated, we nevertheless have the power of review. The Federal question presented is, Did the bank, at the time of the imposition of the license tax sued for, have a contract with the state exempting it (the bank) from such tax? The elements of that question are the original contract and all subsequent legislation relating to the contract and which it is claimed modifies or changes it. The motion to dismiss is, therefore, denied.

2. The question presented on the merits has been simplified by the case of New Orleans v. Citizens' Bank, 167 U. S. 371, 42 L. ed. 202, 17 Sup. Ct. Rep. 905. The origin and history of the bank are there detailed, its charter and its exemptions are construed, its litigations with the city are recited, and their effect declared. We need only apply and extend the reasoning of that case to decide this.

It came here from the circuit court of the United States. It was brought in that court by a bill in equity to enjoin the taxing officers of the state and of the city of New Orleans from taxing the bank under certain provisions of a statute of the state for the assessment of the capital of banks. Under the statute the capital stock of banks which were represented by shares were not assessed by that name, but the shares were required to be assessed to the stockholders at their actual valuation as shown by the books of the bank, and the taxes assessed were required to be paid by the bank, which was given the power to collect the amount from the shareholders or their transferees. The real estate owned by the bank was directed to be assessed directly to it and the tax 'proportioned to each share of capital stock' and deducted from the amount of taxes of that share under the statute. The statute also contained provisions for its administration, and required property which had been omitted from the assessment rolls to be assessed for the current year and for three years back. The court adjudged the bank to be exempt from the taxation, and granted an injunction against the collection of the taxes for the designated years by the state of Louisiana, and the city of New Orleans, 'upon the capital, property, or shares of stock of the shareholders of said bank, whether assessed against the bank or its shareholders.'

The writ also enjoined the demanding or collecting from the bank of any state or city license tax. Commenting on the decree, this court said:

'The exemptions to which the decree below held the bank to be entitled related, therefore, to distinct objects of taxation, one not necessarily connected with or dependent upon the other, and may be summarized as follows: First. That the bank was not subject to taxation on its capital shares of stock or real estate, and furniture actually used for the carrying on of its banking business, and that the bank could not be lawfully obliged to pay the sum of any tax assessed on its shareholders. Second. That the stockholders of the bank were not liable for assessment on their shares of stock. Third. That the bank was also not subject to taxation on any real estate held by it...