Deposit Bank of Owensboro v. Daveiss County, Etc.
| Decision Date | 24 March 1897 |
| Citation | 102 Ky. 174 |
| Parties | Deposit Bank of Owensboro v. Daveiss County, Etc. Farmers & Traders Bank v. City of Owensboro. Owensboro Savings Bank v. Same. Citizen's Saving Bank v. Same. Deposit Bank v. Same. City of Carlisle v. Deposit Bank. Same v. Farmers' Bank. Nicholas County v. Deposit Bank. Simpson County Bank v. City of Franklin. |
| Court | Kentucky Court of Appeals |
These cases were pending either in this or the lower courts when the cases known as the bank tax cases were decided. (97 Ky.)
From that opinion the writer of this one dissented in which Judges Lewis and Guffy concurred.
The questions of law involved in these cases are similar to those in cases mentioned. We therefore re-examine and reconsider the question as to whether the opinion of the majority shall stand as the law regulating the taxation of the banks of the State. The conclusion which we have reached is that the shares of stock, etc., in the banks are subject to county and municipal taxation, hence the opinion referred to should be and is overruled.
So is the case of Franklin County Court, etc., v. Deposit Bank of Frankfort, etc., 87 Kentucky, 370, overruled for the reasons which will hereinafter appear. The conclusion of the court renders it necessary to discuss the questions of law in the other "Bank Tax cases," and we will consequently use parts of the dissenting opinion without quotation marks. There were four banks in the State commonly designated as the "old banks," and they were the Bank of Kentucky, chartered in 1834, the Northern Bank in 1835, the Bank of Louisville in 18__, the Farmers' Bank of Kentucky in 1850. The charters of the first three banks named were extended by the same act of the General Assembly in 1858, and each of the charters were extended by subsequent legislative acts. In neither of the acts of extension is reference made to the act of 1856, nor does either contain express limitations upon the taxing powers of the State.
The charter and amendments of the Farmers' Bank of Kentucky were extended by an act of the General Assembly in 1876, but the right to repeal the charter and its amendments "either by general or special act" was reserved in the act.
The charters of all banks operating under charters were granted after the act of 1856. This was the situation when the revenue bill of 1886, generally called the "Hewitt Bill," became a law. The provision of it relating to the taxation of banks is article 2, chapter 92, General Statutes, and reads as follows:
Section 1. "That shares of stock in State and national banks, and other institutions of loan or discount, and in all corporations required by law to be taxed on their capital stock, shall be taxed seventy-five cents on each share thereof equal to one hundred dollars, or on each one hundred dollars of stock therein owned by individuals, corporations or societies, and said banks, institutions and corporations shall, in addition, pay upon each one hundred dollars of so much of their surplus, undivided surplus, undivided profits or undivided accumulations as exceeds an amount equal to 10 per cent. of their capital stock, which shall be in full of all tax, State, county and municipal."
* * * * * *
Sec. 4. "That each of said banks, institutions and corporations, by its corporate authority, with the consent of a majority in interest of a quorum of its stockholders, at a regular or called meeting thereof, may give its consent to the levying of said tax, and agree to pay the same, as herein provided, and to waive and release all right under the acts of Congress, or under the charters of the State banks, to a different mode or smaller rate of taxation, which consent or agreement to and with the State of Kentucky shall be evidenced by writing under the seal of such bank, and delivered to the Governor of this Commonwealth; and upon such agreement and consent being delivered and in consideration thereof, such bank and its shares of stock shall be exempt from all other taxation whatsoever, so long as said tax shall be paid during the corporate existence of such bank."
Sec. 5. "The said banks may take the proceeding authorized by section 4 of this act at any time until the meeting of the next General Assembly: Provided, They pay the tax provided in section 1, from the passage of this act."
Sec. 7. "If any bank, State or national, shall fail or refuse to pay the tax imposed by this act, or shall fail or refuse to make the consent and agreement as prescribed in section 4, the shares of stock of such bank, institution or corporation, and its surplus, undivided accumulations and undivided profits shall be assessed as directed by section 2 of this act, and the taxes, State, county and municipal, shall be imposed, levied and collected upon the assessed shares, surplus, undivided profits, undivided accumulations, as is imposed on the assessed taxable property in the hands of individuals: Provided, That nothing herein contained shall be construed as exempting from taxation for county or municipal purposes any real estate or building owned and used by said banks or corporations for conducting their business, but the same may be taxed for county and municipal purposes as other real estate is taxed."
Sec. 6. "This act shall be subject to the provisions of section eight (8), chapter sixty-eight (68) of the General Statutes."
Section 8 of chapter 68, referred to in section 6 above is as follows: "All charters and grants of or to corporations or amendments thereof, enacted or granted since the 14th of February, 1856, and all other statutes shall be subject to amendment or repeal at the will of the Legislature, unless a contrary intent be therein plainly expressed: Provided, That whilst privileges and franchises so granted may be changed or repealed, no amendment or repeal shall impair other rights previously vested."
These statutes were in force when the constitutional convention met to frame the present Constitution. This instrument was adopted on the 28th day of September, 1891.
Section 174 is as follows:
Section 175 provides: "The power to tax property shall not be surrendered or suspended by any contract or grant to which the Commonwealth shall be a party."
In pursuance to these provisions of the Constitution the General Assembly enacted laws under which the taxes were levied on the shares of the capital stock, etc., for county and municipal purposes, about the imposition of which these controversies arose. The General Assembly, by the laws imposing the taxes for county and municipal purposes, reduced the amount which the banks had been paying the State so as to only collect forty-two and one-half cents on each one hundred dollars of the value of the property interest in the bank assessed. This is the rate of taxation paid by individual property. The rate under the "Hewitt Bill" was seventy-five cents on each share of the capital stock equal to one hundred dollars or on each one hundred dollars of stock therein; and in addition thereto, pay upon each one hundred dollars of so much of their surplus, undivided surplus, undivided profits or undivided accumulations as exceeded an amount equal to ten per cent. of their capital stock which was in full of all tax, State, county and municipal. We assume the banks filed their written consent as provided for in section 4 of article 2.
It is claimed that the banks have irrevocable contracts with the State from which it can not recede without their consent; that the constitutional convention and the State had no power to change the mode or fix a higher rate of taxation than was imposed in the act of 1886.
It is gravely asserted that when those who gave the State its organic law and statutory law, seek to impose the burden of taxation equally on those who should bear it, that a contract is attempted to be violated and the State is acting in bad faith. We fully realize the wisdom of that provision of the Federal Constitution, which declares that no State shall pass any law "impairing the obligation of contracts." The State should deal honestly with its citizens, thus setting an example worthy of the imitation of those who constitute the State.
It has been well said,
While this is true we...
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