City of New Orleans v. Mary Stemple

Decision Date04 December 1899
Docket NumberNo. 65,65
Citation20 S.Ct. 110,44 L.Ed. 174,175 U.S. 309
PartiesCITY OF NEW ORLEANS, Board of Assessors for the Parish of Orleans, and George B. Penrose, Treasurer of the City of New Orleans, Appts. , v. MARY G. T. STEMPLE (Wife of Edward Stemple), Guardian of the Infants Fannie Tobin McCan et al
CourtU.S. Supreme Court

This case comes on appeal from the circuit court of the United States for the eastern district of Louisiana. It is a suit brought by the appellee to restrain the collection of taxes levied upon certain personal property which she claims was exempt from taxation. The important facts are these: The plaintiff, as well as the infants whose guardian she is, and for whose benefit she brings this suit, are residents of the state of New York, in which state she has been duly appointed the guardian of their estates. The infants inherited certain property from their grandfather, a resident of Louisiana, whose estate was duly settled in the proper court of that state. By regular proceedings these infants had been adjudged his legal heirs, and she, as guardian, had been put in possession of their property thus inherited. The order of the court, in this respect, was rendered February 14, 1896, and the taxes which were sought to be restrained were those for that year. The assessment, as appears by the assessment roll, was in the name of 'the estate of D. C. McCan;' was of $15,000, 'money in possession, on deposit, or in hand,' and of $800,000, 'money loaned on interest, all credits and all bills receivable, for money loaned or advanced, or for goods sold; and all credits of any and every description.' The principal contentions of the plaintiff were: First, that included within this personal property was some $228,000 of bonds of the state of Louisiana taxation of which by the state or any of its municipalities was void, as impairing the obligation of a contract made by the state. Second, that the situs of the loans and credits was in New York, the place of residence of the guardian and wards, and, therefore, being loans and credits without the state of Louisiana they were not subject to taxation therein.

Messrs. F. C. Zacharie and J. J. McLoughlin for appellants.

Mr. E. Howard McCaleb for appellee.

Mr. Justice Brewer delivered the opinion of the court:

A preliminary question made by the plaintiff is that she had applied to have the assessment in the name of the estate of D. C. McCan stricken off on the ground that the administration of the estate had been finally closed and the property put into the possession of the heirs, which application was denied; that, therefore, the assessment was in the wrong name and could not be sustained. We are of the opinion, however, that there was no error in the ruling of the circuit court in this respect, for, conceding that as a matter of fact the assessment was technically in the wrong name, the error is not one that will justify the equitable relief by injunction.

The important question is whether the property was subject to taxation. With regard to the contention that certain bonds were included in the assessment which were not subject to taxation on account of the supposed contract of the state of Louisiana, it is sufficient to say that the assessment does not purport to include any bonds. The assessment roll is prepared so as to show in separate columns the different kinds of property included in the assessment. One column is entitled 'bonds of all kinds, specifying each kind and their value,' and under this heading there is no mention of any property. So, while it would seem probable from the testimony as to the amount of personal property belonging to the estate that the assessor may have in fact included the bonds, yet upon the face of the record the only assessment is of credits and money. It may be a case of overvaluation of assessable property, but under the issue presented by the pleading that question was not before the court.

Under the circumstances disclosed by the testimony, were the money and credits subject to taxation? It appears that these credits were evidenced by notes largely secured by mortgages on real estate in New Orleans; that these notes and mortgages were in the city of New Orleans, in possession of an agent of the plaintiff, who collected the interest and principal as it became due and deposited the same in a bank in New Orleans to the credit of the plaintiff. The question, therefore, is distinctly presented whether, because the owners were domiciled in the state of New York, the moneys so deposited in a bank within the limits of the state of Louisiana, and the notes secured by mortgages situated and held as above described, were free from taxation in the latter state. Of course, there must be statutory warrant for such taxation, for if the legislature omits any property from the list of taxables the courts are not authorized to correct the omission and adjudge the omitted property to be subject to taxation. We need not extend our inquiries back of the year 1890, for in that year the legislature passed an act amending the revenue statutes of prior years, and the questions, therefore, are whether, under that statute, as interpreted by the supreme court, these properties were subject to taxation, and, if so subjected, whether any rights secured by the Federal Constitution were thereby infringed. That act is chapter 106 of the Statutes of 1890 (La. Acts 1890, 121.)

Section 1 enumerates among the property subject to taxation 'all rights, credits, bonds, and securities of all kinds, promissory notes, open accounts, and other obligations; all cash.'

Section 7 (p. 124), after declaring 'that it is made the duty of the tax assessors throughout the state to place upon the assessment list all property subject to taxation,' closes with this provision:

'And this shall apply with equal force to any person or persons representing in this state business interests that may claim a domicil elsewhere, the intent and purpose being that no nonresident, either by himself or through any agent, shall transact business here without paying to the state a corresponding tax with that exacted of its own citizens; and all bills receivable, obligations, or credits arising from the business done in this state are hereby declared assessable within this state, and at the business domicil of said nonresident, his agent, or representative.'

This statute came before the supreme court in Liverpool & L. & G. Ins. Co. v. Board of Assessors, 44 La. Ann. 760, 16 L. R. A. 56, 11 So. 91, where the question was whether a foreign insurance company could be taxed for the amount of the premiums due from its insured living in Louisiana, and it was held that those premiums were simply credits and therefore not taxable, the court saying (page 765):

'We are dealing exclusively with the question of credits as assessed, and we hold, as decided in Meyer v. Pleasant, 41 La. Ann. 645, 6 So. 258, Barber Asphalt Paving Co. v. New Orleans, 41 La. Ann. 1015, 6 So. 794, 'that debts have their situs at the domicil of the creditor,' because debts are property and have a value, which is inseparable from the creditor, and because the state has no greater power or jurisdiction to tax debts due to nonresident creditors than it has to tax any other personal property of such nonresidents which is not situated in the state.'

The same proposition was affirmed in the succeeding case, Railey v. Board of Assessors, 44 La. Ann. 765, 11 So. 93, the court, however, calling attention to this distinction (page 770):

'There is no doubt of the legislative power to modify the rule of comity, mobilia personam sequuntur, in many respects. Movables having an actual situs in the state may be taxed there, though the owner be domiciled elsewhere. Even debts may assume such concrete form in the evidences thereof that they may be similarly subjected when such evidences are situated in the state, as in the case of bank notes, public securities, and, possibly, of negotiable promissory notes, bills of exchange, or bonds.

'But as to mere ordinary debts, reduced to no such concrete forms, they are not capable of acquiring any situs distinct from the domicil of the creditor, and no legislative power exists to change that situs so far as nonresident creditors are concerned. As said by the Supreme Court of the United States: 'To call debts property of the debtors is simply to misuse terms. All the property there can be in the nature of things, in debts, belongs to the creditors to whom they are payable, and follows their domicil wherever that may be. Their debts can have no locality separate from the parties to whom they are due.' State Tax on Foreign-held Bonds, 15 Wall. 300, sub nom. Cleveland, P. & A. R. Co. v. Pennsylvania, 21 L. ed. 179.'

In Clason v. New Orleans, 46 La. Ann. 1, 14 So. 306, the court affirmed the same proposition in respect to a deposit in a bank to the credit of the nonresident, saying: 'We cannot distinguish between the debt due to the plaintiffs by a bank as arising from a deposit to the credit of the firm in money and that due to it from any other cause.'

This decision was, however, qualified in Bluefield Banana Co. v. New Orleans Bd. of Assessors, 49 La. Ann. 43, 21 So. 627, the court there saying that the decision rested upon the special facts of that case; that there was really no general deposit, but that the local bank was simply a medium through which the funds of the nonresident kept at the place of his residence were drawn against for the purpose of making payments in Louisiana, and in this latter case it was held that, where a nonresident had an agent in New Orleans who disposed of the property of his principal as it was forwarded in the course of business, and deposited the proceeds thereof in bank to the credit of his principal, the sum thus deposited was subject to taxation. This is the language of the court after its reference to the Clason Case, 46 La. Ann. page 48...

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