Dutton v. Citizens’ Nat. Bank of Concordia

• Decision Date: 05 May 1894
• Docket Number: 9,582
• Parties: DUTTON, County Clerk, v. CITIZENS’ NAT. BANK OF CONCORDIA.
• Court: Kansas Supreme Court

36 P. 719

53 Kan. 440

DUTTON, County Clerk, v. CITIZENS’ NAT. BANK OF CONCORDIA.

No. 9,582

Supreme Court of Kansas

May 5, 1894

Syllabus

1. The word “credit,” as defined in paragraph 6847 of the General Statutes of 1889, and used in the chapter providing for the assessment and collection of taxes, does not include shares of stock in a national bank, and the owners of such shares have no right to deduct from their assessed value the amount of their debts.

2. The statute of this state which permits debts owing in good faith by any person, company, or corporation to be deducted from the gross amount of credits belonging to such person company, or corporation, in listing their property for taxation, when the owners of shares of stock in a national bank are not allowed to deduct their indebtedness from the value of such shares, is not in conflict with section 5219 of the Revised Statutes of the United States, does not operate to tax such shares at a greater rate than other moneyed capital in the hands of individual citizens, and is valid,-the law providing that all corporate stocks; all moneys secured by judgment, or lien on real estate; all moneys on deposit in any bank, subject to withdrawal on demand; and substantially all moneyed capital, of every description, invested for profit,-shall be subject to taxation without deduction of indebtedness.

3. Injunction cannot be maintained to prevent the collection of a tax which the plaintiff justly ought to pay, for mere irregularities in the proceedings of the assessor, or other taxing officer.

Error to district court, Cloud county; F. W. Sturgis, Judge.

Petition by the Citizens’ National Bank of Concordia against Charles W. Dutton, county clerk of Cloud County, for an injunction to restrain defendant from extending on the tax rolls certain taxes. Judgment for plaintiff, and defendant brings error. Reversed.

The amended petition in this case alleges that the plaintiff is a corporation formed under the laws of the United States, engaged in the business of banking at Concordia; that the authorized capital stock is $100,000, divided into 1,000 shares of $100 each, 96 of which are paid in full; that the defendant is county clerk of Cloud county; that on the first Monday of March, 1893, the assessors of the various townships and cities of Cloud county agreed among themselves to assess taxable property at one-third of its real value; that, on the 9th day of May, J. W. Peterson, cashier of the plaintiff’s bank, returned, under oath, to D. H. Judy, the city assessor of Concordia, a list of the names of the stockholders of the plaintiff bank, and the amount and value of the stock held by each, together with the value of the undivided profits and surplus, and a list of the real estate owned and held by the plaintiff; that thereupon, on the said 9th day of May, said assessor assessed George Palmer, one of the stockholders of said bank, on 10 shares of capital stock, and said Palmer having filed with him an affidavit stating the amount of stock held by him, and that he was in good faith indebted in the sum of $1,000, and had no other credits from which to deduct the same, and that he desired the same to be deducted from said stock so held by him, said assessor set off said indebtedness against said 10 shares of stock, and did not assess said Palmer on account of his being the owner and holder thereof. Then follow similar allegations with reference to the assessment of stock held by various other persons in the plaintiff’s bank. It is then averred: That on said date the plaintiff was owner and holder of 40 shares of its stock, held in its own name, which was not listed by the said Judy for taxation. That the affidavits made and filed by said parties as a part of their statements of personal property set out in full the amount and nature of all the credits owned by such parties, and the amount and nature of the debts sought by them to be deducted therefrom, giving the names of the several creditors to whom they were indebted. That the debts owing by them were bona fide, and were not owing to any person, company, or corporation, as depositors in any bank or banking association, or with any firm engaged in the business of banking, in this state or elsewhere; nor in any bond, note, or obligation given to any mutual insurance company, or deferred payment or loan for a life insurance policy, or on account of any unpaid subscription to any religious, literary, scientific, or benevolent institution or society; nor were said debts, or any of them, created by a loan on government bonds, or other nontaxable securities; nor had any of said stockholders other credits from which said debts, or any part thereof, might have been deducted. It is then alleged that the county commissioners of Cloud county, and the defendant, as county clerk, met as a board of equalization, and that on the 6th of June said board ordered D. H. Judy, as assessor of the city of Concordia, to return the value of the stock of the shareholders of the First National Bank and the Citizens’ National Bank doubly assessed; that thereupon said Judy, without any notice to the parties named as stockholders,-without their knowledge or consent,-entered on the assessment list the words “Doubly assessed,” in the column lesignating the amount of personal property subject to taxation; that said board ordered and directed that no deductions on account of the indebtedness owing by said parties be allowed, and that each of said parties be assessed as the owners of said stock, at the full value thereof; and that the order so made apply to the taxes for the year 1892. It is further stated that, in making the assessment, lists of personal property belonging to the various taxpayers in the several townships and cities of said county for the years 1892-93, it was the custom of the assessors to allow the taxpayers to set off the debts owing by them against the credits owned and possessed by them, the remainder only being returned for taxation. It is then alleged that the defendant, as county clerk, was about to extend on the tax rolls the various taxes levied, and to charge the same against said stockholders, upon the basis of the amount as fixed by the board of equalization. An injunction was sought, restraining the defendant from extending on the tax rolls taxes levied on the several amounts first credited on their assessments for debts due and owing by them, and also on the $4,000 stock owned by the bank, and also on account of the “double assessment” for the taxes of 1892. A general demurrer was interposed to the petition, which the court overruled. The defendant not desiring to further plead, and standing on the demurrer, judgment was entered granting a perpetual injunction, as prayed for, and for costs.

L. J. Crans and W. H. Savary, for plaintiff in error.

Caldwell & Ellis, for defendant in error.

OPINION

ALLEN, J. (after stating the facts).

The principal question in this case is as to the right of the holder of stock in a national band to deduct his indebtedness from the value of the stock where he has no other credits from which such deduction can be made. In support of this contention, two claims are made: (1) That the term "credit," as defined in paragraph 6847, includes stock in a national bank. (2) That section 5219 of the Revised Statutes of the United States prohibits taxation of national bank shares at a greater rate than other moneyed capital in the hands of the individual citizens of the state, and that, as individual citizens are allowed to deduct their debts from their credits of a certain class, like deductions must be allowed holders of national bank stock. We will consider these questions in the order stated:

1. The statutory definition of the word "credit," as given in paragraph 6847, is as follows: "The term credit when used in this act shall mean and include every demand for money, labor or other valuable thing, whether due or to become due, but not secured by lien on real estate." The clause under which exemption is claimed, being the last part of paragraph 6851, reads as follows: "Debts owing in good faith by any person, company or corporation, may be deducted from the gross amount of credits belonging to such person, company or corporation, provided, such debts are not owing to any person, company, or corporation, as depositors in any bank, or banking association, or with any person or firm engaged in the business of banking in this state or elsewhere, and the person, company, or corporation, making out the statement of personal property to be given to the assessor claiming deductions herein provided for, shall set forth both the amount and nature of his debts sought to be deducted, but no person, company or corporation shall be entitled to any deduction on account of any bond, note or obligation given to any mutual insurance company, or deferred payment or loan for a policy of life insurance, nor on account of any unpaid subscription to any religious literary, scientific, or benevolent institution, or society, provided, that in deducting debts from credits no debt shall be deducted where said debt was created by a loan on government bonds or other non taxable securities." Paragraph 6846 provides "that all property in this state, real and personal, not expressly exempt therefrom shall be subject to taxation in the manner prescribed by this act." By the various articles in chapter 107, on "Taxation," provision is made for the assessment and taxation of the various classes of property. Article 6, as amended by chapter 84 of the Laws of 1891, provides for the assessment of stock in banks and other corporations. No hint is contained in any part of this article that such stock is to be treated as a credit in the hands of the...