First Nat. Bank of Estherville v. City Council of Estherville
Decision Date | 19 January 1911 |
Parties | FIRST NAT. BANK OF ESTHERVILLE ET AL. v. CITY COUNCIL OF ESTHERVILLE. |
Court | Iowa Supreme Court |
OPINION TEXT STARTS HERE
Appeal from District Court, Emmet County; A. D. Bailie, Judge.
Action in equity to cancel the assessment of the shares of stock of the plaintiff bank. The relief asked was denied, and the plaintiffs appeal. Reversed.
Byron M. Coon, for appellee.
The bank and its coplaintiffs, who are the stockholders therein, appealed to the district court from the action of the city council, sitting as a board of equalization, in raising the assessment on the shares of its capital stock from $110 per share to $130 per share, exclusive of real estate, and in ordering the same assessed and taxed for the year 1907 upon the latter valuation.
In the district court the appellants pleaded that the assessment in question was excessive and inequitable and a discrimination against the stockholders of the bank, and, further, “that the statutes of Iowa do not authorize, require, or permit taxation upon the shares of stock of state, savings, or private banks, or loan or trust companies, and that the taxation of shares of stock of national banks, is special, unequal, and discriminates against shares of stock of national banks only, and imposes taxes upon such shares which are wholly void and, as to the entire amount thereof, at a greater rate than is assessed upon the moneyed capital in the hands of individual citizens of said state in the form of shares of stock of such state, savings, and private banks, and loan and trust companies, and such taxes on shares of stock are wholly void under section 5219 of the Revised Statutes of the United States [U. S. Comp. St. 1901, p. 3502].”
The appellants urge that the assessment of their bank stock is wholly void under section 5219 of the United States statutes, for the reason that by the statutes of this state shares of stock of national banks are assessed to the owners thereof, while no taxation is levied upon shares of stock in state banks, savings banks, or loan and trust companies.
If the appellants' contention that the shares of stock in state and savings banks cannot be taxed under the state statutes must be sustained, we think it settled by authority, binding upon us in this and similar cases, that the assessment of the shares of national bank stock is a discrimination against such shares and banks prohibited by section 5219 of the United States statutes.
The vital question in this case, then, is whether under our statutes, Code, §§ 1321-1325, the shares of stock in state and savings banks are taxable. The appellee practically concedes that they are not, and in Home Savings Bank v. Des Moines, 205 U. S. 503, 27 Sup. Ct. 571, 51 L. Ed. 901, the Supreme Court of the United States, speaking through Mr. Justice Moody, so held.
In that case the question now under consideration was directly involved, and it was held that under the state statutes a tax is imposed upon the property of the corporation, and not upon the shares of stock therein, as the property of the owners of such stock. It was urged that, where a tax is levied upon a corporation, measured by the value of the shares of stock in it, it is equivalent in its effect to a tax upon the stockholders in respect of their shares, because, being paid by the bank, the burden thereof eventually falls upon the shareholders, and in answer to such contention the court said: So far as the language quoted was meant to apply to the state's taxation of its own corporations, or the shareholders therein, it is evidently not sound, because the state may determine whether it will tax in one form or another. But, if the language used by the learned justice referred to the taxation of national banks by the states, the conclusion announced was but a reiteration of the holding of the United States Supreme Court on the same question in former cases, and of this court in an early case. Owensboro National Bank v. Owensboro, 173 U. S. 664, 19 Sup. Ct. 537, 43 L. Ed. 850;Hubbard v. Supervisors, 23 Iowa, 130. We are not ready to assent to the construction given our own statute in the Home Savings Bank Case, but, in so far as such construction affects the question of the taxation of shares of national bank stock, we consider it binding upon us because a federal question was involved, the final determination of which rests with that court.
We are brought, then, to the question whether a state revenue law which authorizes and requires the taxation of national bank shares as such, but does not provide for or permit the taxation of shares of stock in state banks, is in contravention of section 5219 of the statutes of the United States, and therefore invalid. And to this question we think there can be but one answer. When it must be conceded, as it must be here, under the decision in the Home Savings Bank Case, that shares of stock in state banks are not taxable under our statute, the conclusion is inevitable that the taxation of shares of stock in national banks is a discrimination against such stock, which is prohibited by section 5219. Under said section any discrimination against national bank shares of stock, in the matter of taxation, in favor of other moneyed capital in the hands of individual citizens of the state which comes into competition with the business of national banks, is forbidden. Mercantile Bank of New York, 121 U. S. 152, 7 Sup. Ct. 826, 30 L. Ed. 895;People v. Commissioners, 94 U. S. 418, 24 L. Ed. 164;People v. Weaver, 100 U. S. 539, 25 L. Ed. 705;Bradley v. People, 4 Wall. 462, 18 L. Ed. 433;Van Allen v. Assessor, 3 Wall. 581, 18 L. Ed. 229; Bank of Commerce v. Seattle, 166 U. S. 463, 17 Sup. Ct. 996, 41 L. Ed. 1079; Aberdeen Bank v. Chehalis County, 166 U. S. 440, 17 Sup. Ct. 629, 41 L. Ed. 1069;San Francisco Nat. Bank v. Dodge, 197 U. S. 70, 25 Sup. Ct. 384, 49 L. Ed. 669; Citizens' Nat. Bank v. Burton, 121 Ky. 876, 90 S. W. 944, 28 Ky. Law Rep. 864, 10 L. R. A. (N. S.) 947. And see, Hubbard v. Supervisors, 23 Iowa, 130. That the taxation of shares of stock in national banks, when no taxation of shares of stock in state banks is required or permitted, would be such a discrimination as is prohibited by section 5219 is settled beyond controversy.
In the Mercantile Bank Case, in 121 U. S., 7 Sup. Ct., 30 L. Ed., Mr. Justice Mathews said: See, also, on the same point, First National Bank v. Chapman, 173 U. S. 205, 19 Sup. Ct. 407, 43 L. Ed. 669; San Francisco National Bank v. Dodge, supra; Citizens' Nat. Bank v. Burton, supra; Bradley v. Illinois, 4 Wall. 459, 18 L. Ed. 433; People v. Commissioners, supra; McHenry v. Downer, 116 Cal. 20, 47 Pac. 779, 45 L. R. A. 737; Van Allen v. Assessors, supra.
It seems to us that it can hardly be questioned that the exemption from taxation of the shares of stock in state and savings banks, and the taxation of the shares of stock in national banks, cannot fail to discourage investments in the stock of national banks and to create and foster an unequal and unfriendly competition between such banks. Under the decision in the Home Savings...
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