First Nat. Bank of Richmond v. City of Richmond
| Decision Date | 15 July 1889 |
| Citation | 39 F. 309 |
| Parties | FIRST NAT. BANK OF RICHMOND v. CITY OF RICHMOND et al. |
| Court | U.S. Court of Appeals — Fourth Circuit |
Johnston Boulware & Williams, for complainant.
C. V Meredith, City Atty., for defendants.
The question in this case is upon the amount of a tax assessed by the city of Richmond upon a national bank, and upon the manner of assessing and collecting it. It was competent for congress to have prohibited any taxation of the national banks by states cities, counties, or towns. Indeed, on general principles of public policy, the mere silence of congress on the subject, in its legislation respecting the national banks, would have been a prohibition of such taxation. But congress was not entirely silent, and provided, in section 5219 of the Revised Statutes of the United States, that nothing in its legislation respecting the national banks should be construed to 'prevent all the shares in any association from being included in the valuation of the personal property of the owner or holder of such shares, in assessing taxes imposed by authority of the state within which the association is located; but the legislature of each state may determine and direct the manner and place of taxing all the shares of national banking associations located within the state, subject only to the two restrictions that the taxation shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such state, and that the shares of any national banking association owned by non-residents of any state shall be taxed in the city or town where the bank is located, and not elsewhere. ' A clause is added, authorizing real estate of national banks to be taxed by the states at the same rate as other real estate. Authority is here given to tax the shares of national banks as part of the taxable estates of the owners of the shares; and, in laying this tax, the state is prohibited from assessing it at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens. It is plain that the tax authorized by congress is a several tax upon the shares of each individual stockholder, as distinguished from a lumping tax, or tax in solido, upon the bank itself. By 'moneyed capital' is evidently meant, either money itself, or negotiable securities readily convertible into money, and having a quotable market value, as distinguished from ordinary property. In substance, therefore, congress declares that national bank shares may be assessed for taxation as the property of the individual owners of them respectively, and that these shares, being themselves moneyed capital, shall not be assessed at a higher rate than is assessed upon other forms of moneyed capital in the hands of individual citizens. The constitution of Virginia requires that taxation shall be equal and uniform; that no species of property shall be taxed higher than any other species of property; and that stocks shall be taxed according to their market value. An ordinance of the city of Richmond provides that any person taxed may deduct from the aggregate value of solvent debts and securities held by him all bonds, securities, liquidated claims, and demands due from him to others, in computing the tax to be assessed against him. The city of Richmond imposes a tax on one and four-tenths per cent. of their market value upon all shares of stock in any bank or corporation of the city whose capital stock is itself not assessed for taxation.
In this condition of the law, the defendant F. W. Cunningham, city collector of the city of Richmond, presented for payment a tax-bill to the First National Bank of Richmond, the complainant here, made out as follows: 1889. Mr. H. C. Burnett, Cashier of the First National Bank of the City of Richmond, to the City of Richmond, Dr.
For taxes upon shares of stock ..
$840,000
Less value of real estate .....
38,320
--------
$801,680 at 1.4 = $11,223 52
Whereupon the bank exhibited in this court its bill of complaint against the city of Richmond and its collector, praying an injunction against the collection of the tax. A temporary injunction was granted, and the case is now heard for a final decree, either of perpetuation or dismissal. The bill recites that the capital of the bank is $600,000, (which seems to have produced a surplus fund of $240,000;) that the par value of its shares (6,000 in number) is $100, and their market value $140; that its capital consists in part of--
Real estate, ( taxed,) worth .........................
$ 38,000
United States bonds, (non-taxable)................................
134,000
Virginia state bonds, (non-taxable)................................
64,500
City of Richmond bonds, (non-taxable,).............................
10,500
--------
Aggregating ..................................................
--all of which property is tax-paid or non-taxable as against the First National Bank.
The bill charges that the city imposes, and requires the bank to pay, the tax of one and four-tenths per cent. upon the market value of its shares, without allowance of any deduction for the non-taxable securities and specifically taxed property thus shown to be held by the bank; and charges also that this tax is so assessed that the owners of the shares thus taxed are deprived of the privilege, allowed other moneyed capitalists, of deducting from the amount of securities held by them, including their shares, respectively, the amount of bonds, securities, liquidated claims, and demands due from them respectively to others. It complains that, besides this discrimination against its own individual shareholders in favor of other moneyed capitalists, the city unlawfully discriminates against the banks of the city, as corporations in favor of corporations which are taxed on their capital stock, all of which latter are allowed to deduct the amount of exempted securities held by them from the values assessed against them. Thus it is charged that, contrary to national state, or municipal law, the tax levied against the shareholders of the complainant, under the present system of taxation enforced by the city of Richmond, discriminates against them in three particulars, viz.: (1) Other corporations get the benefit of relief from taxation upon all non-taxable securities which form part of their capital, in which relief their shareholders participate; whereas, under the method of taxation complained of, this banks's shareholders are deprived of such relief as to nearly half the amount of its original capital. (2) The tax being assessed against the cashier of the bank, and not against the shareholders severally, these latter are deprived of the privilege accorded by the city to the owners of other moneyed capital, of deducting the amount of the debts they owe, from the value of the bonds and securities which they hold, in estimating the amount on which they are taxable. (3) These discriminations against banks in favor of other corporations, and against shareholders of banks in favor of other moneyed capitalists, violate the provision of the state constitution, requiring taxation to be equal...
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