East Helena State Bank v. Rodgers

Decision Date20 April 1925
Docket Number5579.
Citation236 P. 1090,73 Mont. 210
PartiesEAST HELENA STATE BANK v. RODGERS, County Treasurer.
CourtMontana Supreme Court

Appeal fro District Court, Lewis and Clark County; W. H. Poorman Judge.

Action by the East Helena State Bank against Leslie M. Rodgers Treasurer of Lewis and Clark County, Mont. Judgment for plaintiff, and defendant appeals. Affirmed.

L. A Foot, Atty. Gen., and C. N. Davidson, Asst. Atty. Gen., for appellant.

A. W O'Rourke, of Forsyth, and Stewart & Brown, of Helena, for respondent.

HOLLOWAY J.

On the first Monday of March, 1922, the value of the moneyed capital of the East Helena State Bank was $43,765, but of this amount $12,000 was invested in bonds of the United States. The return made by the bank to the county assessor disclosed these facts and the further fact that the bank claimed that the $12,000 should be deducted and its moneyed capital assessed at $31,765 only. The assessor declined to recognize the claim, but fixed the valuation at $43,765, and the taxes were thereafter levied and extended. The tax computed upon the statutory precentage of $12,000 was paid under protest, and an action was instituted by the bank against the county treasurer to recover it. A like controversy arose in 1923 and like proceedings were had. The two actions were then consolidated and tried as one, with the result that a judgment was rendered and entered in favor of the bank, and the county treasurer appealed.

The two questions presented are: (1) Is the protested tax a tax upon property of the bank; and (2) is the tax valid?

1. Our Constitution contemplates and our Codes declare that all property in this state not exempt shall be subject to taxation, and that all taxable property shall be assessed at its full cash value. By section 1999, Revised Codes, all taxable property is divided into seven classes for the purpose of taxation, and class 6 includes the "moneyed capital" of state banks.

In their briefs counsel devote much attention to the definitions given the words "moneyed capital" by courts of other states, but the definitions are not of any consequence here. As the words are used in section 1999 above, their meaning is made plain. The section declares that such moneyed capital is to be ascertained by deducting from the moneys and credits of the bank the amount of deposits and any money borrowed for use in the conduct of the bank's business.

Bearing in mind that the statute (section 1997) declares that all nonexempt property is subject to taxation; that section 1999 comprehends all taxable property in this state of whatever kind or character; and that there are not any provisions of law for the assessment and taxation of the property of a state bank, except the provisions applicable to its real estate, furniture and fixtures, and moneyed capital, we have then in effect a legislative declaration that these items, (1) real estate, (2) furniture and fixtures, and (3) moneyed capital, constitute the property of the bank and all of its taxable property.

But counsel for the treasurer insist that a tax upon moneyed capital is not a tax upon property, but upon the use to which the property is devoted; in other words, that it is an occupation or franchise tax. This argument condemns our entire tax statute, for, if a tax on moneyed capital is not a tax on property, then our statute relieves a state bank from taxation, except upon its real estate, furniture and fixtures, in violation of the provisions of section 7, article 12, of our state Constitution. We agree with counsel that the name by which a given imposition is designated is of little consequence and that the real character of the exaction determines whether it is a property tax or an occupation or franchise tax, but we are unable to agree with counsel that the real character of the tax in question is open to serious controversy.

"Taxes are either (1) capitation or poll taxes; (2) taxes on property; or (3) excise taxes." 1 Cooley on Taxation (4th Ed.) § 38. "An excise tax, using the term in its broad meaning as opposed to a property tax, includes taxes sometimes designated by statute or referred to as privilege taxes, license taxes, occupation taxes, and business taxes. * * * In the case of corporations, such taxes are often referred to as franchise taxes." Id., § 45.

Our Classification Act (sections 1999 and 2000, Rev. Codes) deals exclusively with property taxation, and furnishes the only basis upon which property taxes can be imposed. It classifies all property for the purpose of taxation, and provides that the taxes shall be computed upon the "percentage of the true and full value of the property of each class" designated in section 2000. Our corporation license tax statute (sections 2296-2304, Rev. Codes) imposes an occupation or franchise tax upon every state bank doing business in this state, but that tax is altogether distinct from the tax imposed under sections 1999 and 2000. Furthermore, the tax in question lacks the essential elements of an occupation or franchise tax. In 26 R. C. L. 35, the distinction between a property tax and an occupation tax is pointed out as follows:

"The distinction between property taxes and excises is an important one, since in many of the Constitutions there are different limitations upon the power of the Legislature with respect to the two classes of taxes. * * * An excise and a property tax, when the two approach each other, ordinarily may be distinguished by the respective methods adopted of laying them and fixing their amounts. If a tax is imposed directly by the Legislature, without assessment, and its sum is measured by the amount of business done or the extent to which the conferred privileges have been enjoyed and exercised by the taxpayer, irrespective of the nature or value of the taxpayer's assets, it is regarded as an excise; but if the tax is computed upon a valuation of property, and assessed by assessor either where it is situated or at the owner's domicil, although privileges may be included in the valuation, it is considered a property tax. A license tax imposed upon those who engage in a particular occupation is clearly an excise. So also a tax on a corporate franchise proportioned to the amount of its capital stock is an excise."

The "moneyed capital" of the East Helena State Bank was assessed by the county assessor. The tax in question was not imposed directly by the Legislature, but was computed upon the statutory percentage of the value of such moneyed capital, by the proper officer of the county.

Counsel for the treasurer argue that, if the tax be held to be a property tax, our Classification Act is invalid because it imposes a greater burden of taxation upon the property of a state bank than upon the same character of property in the hands of an individual not engaged in banking business. We think the fear expressed is groundless, and we are not impressed by the argument. The validity of the act is not involved in this controversy, however, and will not be considered. But, even if the result anticipated by counsel should follow, it could not affect the character of the tax in question. That our Classification Act provides only for property taxes is too plain to admit of doubt. The words "moneyed capital" are simply convenient terms employed by the Legislature to designate the property of a state bank, other than its real estate, furniture and fixtures, and the tax computed upon the value of that property is a property tax.

2. The property of the East Helena State Bank to the extent of $12,000 being represented by bonds of the United States, the question remains: May the state impose a tax upon that property?

From 1818 to the present time the states and their taxing officers have resorted to every device that human ingenuity could suggest to subject the public securities of the national government to taxation for state and local...

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