First Nat. Bank of Guthrie Ctr. v. Anderson

• Decision Date: 17 February 1923
• Docket Number: No. 34664.,34664.
• Citation: 196 Iowa 587,192 N.W. 6
• Parties: FIRST NAT. BANK OF GUTHRIE CENTER v. ANDERSON, COUNTY AUDITOR, ET AL.
• Court: Iowa Supreme Court

196 Iowa 587

192 N.W. 6

FIRST NAT. BANK OF GUTHRIE CENTER

v.ANDERSON, COUNTY AUDITOR, ET AL.

No. 34664.

Supreme Court of Iowa.

Feb. 17, 1923.

Appeal from District Court, Guthrie County; H. S. Dugan, Judge.

Action in equity to restrain the collection of an alleged void tax. A demurrer to plaintiff's petition was sustained and it appeals. Affirmed.

Preston, C. J., dissenting.J. G. Gamble, of Des Moines. and Foster & Foster, of Guthrie Center, for appellant.

Ben J. Gibson, Atty. Gen., B. J. Flick, Asst. Atty. Gen., and Batschelet & Vincent, of Guthrie Center, for appellees.

ARTHUR, J.

This is an action in equity by the First National Bank of Guthrie Center, Iowa, against L. B. Anderson, county auditor, and G. F. Taylor, county treasurer, respectively, of Guthrie county, Iowa, to enjoin the collection of certain taxes which appellant alleges were illegally charged against its shareholders for the year 1920. A general equitable demurrer to the petition was sustained, and appellant, electing to stand thereon and refusing to plead over, judgment dismissing the action was entered in the court below.

The demurrer admits that, on or about January, 1920, appellant furnished to the assessor of Guthrie Center, Iowa, the verified statement required by section 1322 of the Code Supplement, showing the net value of its capital, surplus, and undivided profits, after deducting the value of its real property, to be $91,507.83; that it was the owner of government securities consisting of United States Certificates of Indebtedness, War Savings Certificates and Stamps, and United States Liberty Bonds of the various issues, of the aggregate value of $106,650; that at the request of the officers of appellant, the assessor deducted, or offset, the value of its government securities against its capital, surplus, and undivided profits, in compliance with chapter 257, Acts 38th G. A.; that as the amount of government securities held by appellant exceeded the value of its capital, surplus, and undivided earnings, nothing remained to be assessed to the shareholders; that the verified statement furnished to the assessor by appellant was by him passed to the board of equalization, and the deduction, or offset, allowed by the assessor, approved by said board; that on or about the 1st day of January, 1921, and within the time fixed by law, the county auditor delivered the tax books to the county treasurer; that the tax assessed against the real estate of appellant bank has been paid; that after said tax lists had been turned over to the county treasurer, and on or about February 26, 1921, the county auditor corrected the same by placing thereon the names of the shareholders of the appellant bank, together with the amount of tax properly assessable to each of said shareholders; that the only notice given to appellant by the county auditor of the entries and corrections made upon the tax list in the treasurer's office was a letter addressed “To all Banks in Guthrie County,” dated February 26, 1921, informing said banks that the state auditor had directed that the tax list for 1920 be corrected, and that same would be done in conformity to a decision of the Supreme Court of the state of Iowa. The decision evidently referred to was Des Moines National Bank v. Fairweather, 191 Iowa, 1240, 181 N. W. 459, 184 N. W. 313, which held that chapter 257, Acts 38th G. A., had been illegally passed by the Legislature, and therefore never became operative.

The demurrer further admits that the rate of taxation of Guthrie Center, Iowa, for the year 1920 was 143.5 mills on the dollar, and that a large amount of moneyed capital, charged upon information and belief to exceed $5,000,000 was taxed in Guthrie county in 1920, at the statutory rate of 5 mills on the dollar, and that the total value of the capital, surplus, and undivided earnings of state and national banks in said county in the year 1920 did not exceed $316,852.

The verified statement furnished by appellant to the assessor, in addition to the matters stated above, showed the amount of the bank's assets and liabilities, the names and place of residence of its shareholders, and the number of shares owned by each, together with par value thereof. This document was filed in the auditor's office May 1, 1920.

It is further claimed by appellant that the demurrer also admits that the allowance by the assessor, and the approval thereof by the board of equalization of the deduction of the $106,650 in government securities left nothing to be assessed to the shareholders, and that no entry was made by the assessor upon the assessment rolls or books furnished him by the county auditor, and that no liability was directly or indirectly imposed upon appellant or its shareholders, other than that arising out of the assessment of its real estate to the bank.

Based upon the foregoing facts and some legal conclusions alleged in its petition, appellant urges that the tax claimed to have been levied against its shareholders, and which it is charged the county treasurer is threatening to collect, is wholly void for the following reasons: (1) That no assessment of the shares of stock of appellant bank was made by the assessor, the board of equalization, or other taxing authority for the year 1920; (2) that the authority conferred upon county auditors by section 1385b of the Supplement to the Code to correct errors in the assessment or tax lists, is limited to the current year, and that the auditor of Guthrie county exceeded his authority when he corrected the tax lists which he had delivered to the county treasurer on or prior to December 31, 1920; (3) that before such correction of the tax list or omitted property could be assessed by the county auditor, notice as prescribed by said section 1385b must be given, and that without such notice the correction of errors in the assessment or tax lists is illegal; (4) that the entries made by the auditor upon the tax list in this case are not such as come within the meaning or purview of the statute which authorizes the auditor to “correct any error in the assessment or tax list,” but was, in effect, an attempt to assess omitted property without notice; (5) that the exemption allowed by the assessor and approved by the board of equalization was final, and could only be corrected on appeal to the district court; (6) that if the county auditor acted within the scope of his authority in making the entries complained of upon the tax lists, the tax demanded is nevertheless void for the reason (a) that it was an attempt to subject nontaxable securities of the United States to taxation, and (b) that the statute providing for a tax of 5 mills on the dollar of moneyed capital, loaned and invested in competition with national banks, discriminates against the same, and is void under section 5219 of the Revised Statutes of the United States (U. S. Comp. St. § 9784).

Do the facts admitted by the demurrer entitle appellant to relief in equity, or was the demurrer properly sustained?

Although not so recited in the petition, it is a matter of common knowledge that the verified statement made by the bank is upon blanks furnished to the assessor and by him to the bank. The copy of the statement attached to plaintiff's petition discloses every fact necessary to the assessor in assessing shares of stock of national and state banks, and contains the certificate of the assessor of the assessment and taxable value of such shares.

Conceding that the assessor did not enter the list of shareholders upon the assessment roll, designated by section 1360, and that no assessment was entered upon the assessor's books, the omission was clearly due to the fact that chapter 257, Acts 38th G. A., provided that government securities owned by a bank in good faith shall, before assessing the same to the shareholders, be deducted from the amount of its capital, surplus and undivided profits. As the former sum in this instance exceeded the latter, there was no occasion for making an assessment roll, or of entering the names of the shareholders upon the assessor's books. The deduction of the government securities owned by the bank from the value of the capital, surplus, and undivided profits by the assessor and board of equalization was at the request of appellant, and no doubt under the belief that chapter 257, Acts Thirty-Eighth G. A., had been legally enacted.

The opinion in Des Moines National Bank v. Fairweather, supra, was not filed until February 12, 1921. Until the announcement of the decision by the court in that case, the taxing authorities were ignorant of the fact that the exemptions had not been properly allowed.

[1] The method of assessing the property of national and state banks is wholly distinct and different from that of assessing other property. The verified statement furnished by the bank to the assessor contained a blank space in which it was his duty to enter a list of the bank's shareholders, the number of shares and the taxable value thereof. The blank thus provided was not filled out by him, but the statement, as we have already said, included a complete list of shareholders, giving their post office address and the number of shares held by each. The deductions allowed exceeded the total value of the capital, surplus and undivided profits of the bank, and there was nothing to enter in the blank space on the statement. Although this statement was not in the precise form of assessment rolls prescribed by section 1360 of the Supplement to the Code, it was in effect the same, and may be so treated. It was made the basis of whatever action was taken by the board of equalization, and, when filed in the office of the county auditor, disclosed to him the exact situation as to the taxable property of the bank. together with the names of its shareholders and the number of shares of stock held by each. The property in controversy was property of the bank assessable to its shareholders,...