First Nat. Bank of Raton v. Mcbride

• Citation: 20 N.M. 381,149 P. 353
• Decision Date: 24 May 1915
• Docket Number: No. 1690.,1690.
• Parties: FIRST NAT. BANK OF RATON ET AL.v.MCBRIDE, COUNTY TREASURER.
• Court: Supreme Court of New Mexico

20 N.M. 381

149 P. 353

FIRST NAT. BANK OF RATON ET AL.

v.MCBRIDE, COUNTY TREASURER.

No. 1690.

Supreme Court of New Mexico.

May 24, 1915.

Syllabus by the Court.

National banks are not protected against discriminatory taxation in favor of other “moneyed capital” by section 5219, R. S. U. S., 5 Fed. Ann. 157 (U. S. Comp. St. 1913, § 9784), unless such other “moneyed capital” is employed in a business which is competitive with that of national banks.

Relief in equity by injunction against discriminatory taxation may be obtained, in a proper case, notwithstanding the discrimination is accomplished, not by overvaluation of the property of the complaining taxpayer, but by the undervaluation of the property of other taxpayers, and where the discrimination is willful and intentional.

Before resort to a court of equity can be had for relief against discriminatory taxation, even in cases where the same is willful and intentional, the complaining taxpayer must have either no adequate legal or statutory remedy, or he must have first exhausted the same without avail.

Appeal from District Court, Colfax County; T. D. Lieb, Judge.

Action by the First National Bank of Raton, a corporation, and others, against Thomas McBride, Treasurer of Colfax County, N. M. From judgment for plaintiffs, defendant appeals. Reversed and remanded.

Discriminatory taxation will not be enjoined, though willful and intentional, where the complaining taxpayer has adequate legal or statutory remedy which he has not exhausted without avail.

F. W. Clancy, Atty. Gen., and Ira L. Grimshaw, Asst. Atty. Gen., for appellant.

E. C. Crampton and O. L. Phillips, both of Raton, and C. A. Spiess, of East Las Vegas, for appellees.

PARKER, J.

This is a suit in equity to restrain a tax sale. Three national banks and one state bank join as plaintiffs. The plaintiffs allege that, in pursuance of a notice by the county assessor that all property must be returned at 35 per cent. of its actual value, they returned their property at 35 per cent. of its actual value, while many other taxpayers of the county returned their property at a much less rate. They allege that the said notice and requirement of the assessor was “intentionally, systematically, and arbitrarily” made and promulgated for the purpose of causing plaintiffs to pay a larger tax than other taxpayers, and that said scheme was effectuated by means of various acts of the assessor, which may be summarized as follows: That he intentionally and willfully failed to assess or to require to be returned credits, mortgages, and other monied capital in the hands of individuals to an amount of over $100,000; that he assessed the real estate of plaintiff at 50 per cent. of its value, while the real estate of other taxpayers was assessed at a rate not exceeding 35 per cent.; that he directed owners of live stock to return only two-thirds of the number of animals, and assessed the same at 35 per cent. of their value; that he added to the returns of plaintiffs their undivided profits, and assessed the same at 35 per cent. of the amounts. They further allege that thereafter the board of county commissioners, sitting as a board of equalization, reduced the assessment of plaintiffs in certain named amounts for the purpose of equalizing the taxes of taxpayers. They allege that thereafter an appeal on behalf of certain taxpayers was perfected and presented to the state board of equalization, requesting that the valuation of the property of the First National Bank of Raton and the National Bank of New Mexico, of Raton, plaintiffs herein, be restored to that fixed by the assessor, which appeal was sustained, and said valuations restored; that thereafter the state board of equalization made a general order which is as follows:

“Inspection of the tax rolls disclose the fact that there is great variation and lack of uniformity in the assessment of banks in the different counties in the state, such assessments having been made in some cases lower and in others higher than the valuation fixed by this board at its meeting in February last, and it therefore becomes the duty of the board to equalize the assessment of banks in the different counties. It is therefore ordered that all banks in the state shall be assessed at the uniform rate of fifty (50) per cent. of their capital stock, surplus, and undivided profits, as directed by the board at its February meeting, and this is to be construed as including the whole of the capital stock, surplus, and undivided profits, as they existed on the 1st day of March, 1912; and the treasurers of the respective counties are directed to change the assessments of all banks, by raising or lowering the same, so as to conform with this order.”

They allege that thereafter the assessor extended the valuations of plaintiffs' property upon the tax rolls as fixed by the state board of equalization, and did so “arbitrarily, willfully, and intentionally, for the purpose of compelling plaintiffs to pay a larger tax in proportion to the value of their property” than other taxpayers in the county; that he failed and refused to raise the valuations of other taxpayers in like proportion, and again failed and refused to assess credits, mortgages, or other monied capital in the hands of individuals to the amount of at least $100,000, and failed and refused to add the one-third in number of the live stock theretofore omitted from the tax rolls. They allege that thereafter the board of county commissioners approved the action of the assessor, and approved the tax rolls as so prepared, and the same were delivered to the defendant, as treasurer and ex officio collector, for the collection of the taxes. They allege that they have paid the amount of taxes due, according to the valuations as fixed by the board of county commissioners, but that the defendant, notwithstanding, has advertised a tax sale, and is about to sell plaintiffs' property for the balance of taxes unpaid, to the irreparable injury of plaintiffs, unless restrained by order of the court. Aside from the alleged illegality of the taxes, plaintiffs allege, as a basis for equitable interference, that said sale, unless restrained, will create a cloud upon the title of plaintiffs; that said sale will result in irreparable injury to the three national banks, plaintiffs, but in what manner is not pointed out; and that plaintiffs will be compelled to bring a multiplicity of suits in order to recover the money paid, owing to its distribution to the various funds to which it would belong, and which funds are under the control of various public officers. They pray for an injunction to restrain the sale.

The substance of the complaint may be summarized as follows: The national banks, plaintiffs, are illegally taxed because “credits, mortgages, or other moneyed capital in the hands of individuals” are not taxed; all of plaintiffs are illegally taxed because they are taxed at a higher valuation than other taxpayers similarly situated; and that said condition is the result of arbitrary, willful, and intentional acts of the taxing officers done for the purpose.

A demurrer to the complaint was interposed and overruled by the court, and, the defendant electing to stand upon his demurrer, a permanent injunction was awarded as prayed. The demurrer went upon the ground that the complaint failed to state facts sufficient to constitute a cause of action, and specified many particulars in this regard. It is deemed sufficient in form to raise all but one of the questions which will be discussed

[1] 1. The three national banks, plaintiffs, make a contention applicable to them only, and it is that, being banking corporations organized and existing under the federal banking laws, they are protected against discriminatory taxation by the terms of section 5219, R. S. U. S., 5 Fed. Stat. Ann. 157, which prohibits taxation of national banks “at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such state.” This section of the federal statute has been carefully interpreted by the federal courts, and some state courts, and has come to have a clear and definite meaning. An examination of these cases will clearly demonstrate that the words “moneyed capital” do not include all moneyed capital in the hands of individuals, but include only such moneyed capital as is employed in a buisness which is a competitive business with that of national banks. Thus, in First National Bank v. Chehalis County, 166 U. S. 440, 17 Sup. Ct. 629, 41 L. Ed. 1069, the same state of facts practically as the facts made out by the complaint in this case was before the Supreme Court of the United States. In that case the same complaint was made that capital in the form of money, invested in loans and securities, existed in the state of Washington, in the sum of $14,000,000; that the same was purposely omitted from the assessment and from taxation whatsoever by all of the taxing officers throughout the state of Washington; that the omission by the taxing officers to tax said moneyed capital was in pursuance of an agreement between them, and was in pursuance of an opinion rendered by the Attorney General of that state; that such omission necessarily operated as a discrimination in favor of other moneyed capital in the hands of individual citizens against shares of stock of national banking corporations in the state; and that such discrimination was well known to, and most wrongfully intended by, the state taxing officers. The case was before the Supreme Court of the United States on demurrer to the complaint. The court, after reviewing most of the previous decisions of that court, said:

“The conclusions to be deduced from these decisions are that money invested in corporations or in individual enterprises that carry on the business of railroads, of manufacturing enterprises, mining investments, and investments in mortgages does not come into...