First Nat. Bank of Estherville v. City Council of Estherville

• Citation: 136 Iowa 203,112 N.W. 829
• Parties: FIRST NAT. BANK OF ESTHERVILLE ET AL. v. CITY COUNCIL OF ESTHERVILLE.
• Decision Date: 03 July 1907
• Court: United States State Supreme Court of Iowa

136 Iowa 203

112 N.W. 829

FIRST NAT. BANK OF ESTHERVILLE ET AL.

v.CITY COUNCIL OF ESTHERVILLE.

Supreme Court of Iowa.

July 3, 1907.

Appeal from District Court, Emmet County; A. D. Bailie, Judge.

This is an appeal by the First National Bank of Estherville and its several stockholders from the action of the city council of Estherville, sitting as a board of review and equalization of assessments made for the purposes of taxation. On trial of the appeal, a decree confirming the action of the board was entered, and therefrom this appeal is prosecuted. Affirmed.Soper, Allen & Alexander and C. W. Crim, for appellants.

Byron M. Coon and Myerly & Davidson, for appellee.

BISHOP, J.

Following the docketing of the appeal from the board in the court below, the appellants appeared and filed a pleading, containing a recital of facts and making demand for relief. Of the facts so recited the following were not disputed on the trial, and we set them forth as part of the history of the case: The appellant bank is a corporation organized under the national banking act of the United States, having a paid-up capital stock of $100,000, divided into shares of $100 each. In January, 1906, an officer of the bank furnished to the city assessor a statement of the financial condition of the bank, together with a list of the stockholders. On its face the statements so furnished disclosed that the resources of the bank, including real estate valued at $12,500, amounted to $479,911.46, and that this sum was balanced by the aggregate of the liabilities; the latter including the capital stock, a surplus fund of $20,000, undivided profits, $1,994.90, and an undistributed quarterly dividend amounting to $2,500. After excluding the value of the real estate owned by the bank, the assessor made assessments against the several stockholders on the basis of the par or face value of the stock. The work of the assessor coming on for review before the board, a raise in the assessment to $1.30 per share was ordered and entered. These facts having been set forth, two matters of contention were then presented by the pleading: (1) That the value of the stock as shown by the books of the bank did not exceed $112 per share, and hence the raise in assessment was exorbitant and unjust; (2) that the assessment as raised was unfair and inequitable, in that the stock was not valued in proportion to other like personal property in the city of Estherville, but grossly in excess of the assessed value of such other property. And the pleading contains an allegation that these were the matters of contention presented to the board. An answer was filed on behalf of the board, and therein it was denied that the assessment as raised was unjust; that, quite to the contrary, the actual and market value of the stock was even greater than that fixed in the raised assessment. And it was denied that the assessment was unfair as related to assessments on other like property.

On the trial of the appeal, it was conceded that the statement furnished by the bank to the assessor was correct in its figures, according to the books of the bank. This concession having been made, the bank rested thereon that branch of its case having to do with the value of its stock. It then introduced evidence showing that three other banks--one a state, one a savings, and one a private bank--were doing business in the city. By such evidence it was made to appear that these banks also furnished statements to the assessor, and that the assessments as made by him were predicated on such statements, respectively. In the case of the savings bank, the statement showed capital stock $50,000, surplus $10,000; and from the aggregate of these deducted an item of $15,000, designated under the head of liabilities as “Amount of Notes.” In the case of the state bank, the statement showed capital stock $50,000, surplus $10,000; and from the aggregate of these was deducted an item of $20,000, designated as “Total Amount of Debt.” In the case of the private bank, the statement showed the bills receivable and money in bank on one side of the account, and the bills payable and deposits on the other side. And the value for assessment was arrived at by simply striking a balance. It will thus be seen that the stocks of the state and savings banks were assessed on a basis of valuation below par, while the private bank was assessed on the basis of book value. And it may be added in this connection that the record discloses that the assessments as made against the state and savings bank, respectively, were raised by the board to $120 per share. Over objection, the board was allowed to make proof that at or about the time in question several blocks of the stock of the appellant bank had changed hands on a basis of $175 per share cash; that one of the officers of the bank had recently purchased 10 shares at that price; and, further, that transfers of the savings bank stock had been made at $137 per share.

What is said foregoing comprehends sufficiently in detail the fact situation of the case, and accordingly we may now pass to a consideration of the questions presented by the appeal. In doing so we shall first dispose of a matter of contention brought forward for the first time in argument in this court. This contention is through the action of the defendant board, as complained of, there was worked a violation of section 5219 of United States Revised Statutes [U. S. Comp. St. 1901, p. 3502] having to do with the subject of state taxation of national bank shares. As confessedly such matter was not presented to the board, or suggested on the trial in the court below, we cannot give consideration thereto on merits in this court. And this is to follow our repeated decisions bearing on the subject. Railway Co. v. Cedar Rapids, 106 Iowa, 476, 76 N. W. 728;Trust Co. v. Fonda, 114 Iowa, 728, 87 N. W. 724.

Stated in simple form, the question first in order is thus: Are assessors, board of review, and, on appeal, the courts, bound by the showing of the books of a national bank in arriving at the value of the stock of such bank for the purposes of assessment for taxation? Naturally enough, we turn first to the statutory provisions on the subject, for it is there that the measure of the power to assess and tax must be found. By Code, § 1305, it is provided that all property subject to taxation shall be valued at its actual value, and “actual value of property as used in this chapter shall mean its value in the market in the ordinary course of trade.” And by section 1322--being part of the same chapter--it is provided that shares of stock of national banks shall be assessed to the individual stockholders at the place where the bank is located. To aid the assessor in fixing the value of such shares, the bank is required to furnish him with a verified statement of its financial condition, and “from such statement and other information he can obtain” he shall fix the value of such stock, “taking into account the capital, surplus and undivided earnings.” The duty of the board of equalization is defined in Code, §§ 1370, 1371. It “shall adjust assessments * * * by raising or lowering the assessment of any person * * * corporation * * * as to any or all the items of his assessment, in such manner as to secure the listing of property at its actual value,” etc.; and “the board shall * * * raise or lower the same as in their opinion will be just.” In our view these provisions...