First Nat. Bank of St. Joseph v. Buchanan County

• Citation: 205 S.W.2d 726,356 Mo. 1204
• Decision Date: 10 November 1947
• Docket Number: 40314
• Parties: The First National Bank of St. Joseph, Missouri, a Corporation, the American National Bank of St. Joseph, Missouri, a Corporation, the Tootle-Lacy National Bank of St. Joseph, Missouri, a Corporation, the Empire Trust Company of St. Joseph, Missouri, a Corporation, the First Trust Company of St. Joseph, Missouri, a Corporation, the Farmers State Bank of Inza, a Corporation, Mechanics Bank of St. Joseph, Missouri, a Corporation, the Drovers And Merchants Bank of St. Joseph, Missouri, a Corporation, the Park Bank of St. Joseph, Missouri, a Corporation, Plaintiffs-Appellants, Missouri Valley Trust Company, a Corporation, Intervenor-Appellant, v. Buchanan County, Missouri, B. A. Stanton, Charles W. Gardner and John E. Smith, as Members of and Constituting the County Court of Buchanan County, Missouri, the School District of St. Joseph, Missouri, a Corporation, State of Missouri, M. E. Morris, Director of Revenue of the State of Missouri, J. E. Taylor, Attorney General of the State of Missouri, Defendants-Appellants, City of St. Joseph, a Corporation
• Court: United States State Supreme Court of Missouri

205 S.W.2d 726

356 Mo. 1204

The First National Bank of St. Joseph, Missouri, a Corporation, the American National Bank of St. Joseph, Missouri, a Corporation, the Tootle-Lacy National Bank of St. Joseph, Missouri, a Corporation, the Empire Trust Company of St. Joseph, Missouri, a Corporation, the First Trust Company of St. Joseph, Missouri, a Corporation, the Farmers State Bank of Inza, a Corporation, Mechanics Bank of St. Joseph, Missouri, a Corporation, the Drovers And Merchants Bank of St. Joseph, Missouri, a Corporation, the Park Bank of St. Joseph, Missouri, a Corporation, Plaintiffs-Appellants, Missouri Valley Trust Company, a Corporation, Intervenor-Appellant, v. Buchanan County, Missouri, B. A. Stanton, Charles W. Gardner and John E. Smith, as Members of and Constituting the County Court of Buchanan County, Missouri, the School District of St. Joseph, Missouri, a Corporation, State of Missouri, M. E. Morris, Director of Revenue of the State of Missouri, J. E. Taylor, Attorney General of the State of Missouri, Defendants-Appellants, City of St. Joseph, a Corporation

No. 40314

Supreme Court of Missouri

November 10, 1947

Appeal from Buchanan Circuit Court; Hon. Sam Wilcox, Judge.

Affirmed in part and reversed and remanded in part.

Culver Phillip, Kaufman & Smith, Ben Phillip, Brown, Douglas & Brown, and R. L. Douglas for plaintiffs and intervenor-appellants.

(1) The court erred in adjudging valid the city tax for 1946 levied by Spec. Ord. 12723, which was enacted and approved April 29 1946. Before that date the city had been deprived of its power to levy a property tax, or any tax on bank shares or other intangible personalty. 1945 Constitution, Art. X, Secs 1, 4 and 11; Laws 1945, pp. 1253, 1782, 1799, 1914, 1921. (2) The repeal of Sections 10959 and 10960, Revised Statutes 1939, destroyed the prior power of the state and its subdivisions to levy ad valorem taxes on bank shares; if Section 6306 Revised Statutes 1939 relied on by the city, had any effect thereafter, that section was "destroyed" by repeal April 19, 1946, ten days prior to the levy of the tax. St. Louis v. Kellerman, 235 Mo. 689, 139 S.W. 443. (3) There was no fixed liability for a property tax on bank shares in existence when Section 6306, Revised Statutes for 1939 was repealed by Senate Bill 372 on April 19, 1946. McAnnally v. Little River Drain. Dist., 325 Mo. 348, 28 S.W.2d 650; State ex rel. v. Childress, 345 Mo. 495, 134 S.W.2d 136; State v. Snohomish County, 71 Wash. 320, 128 P. 667; United States v. Certain Land, 29 F.Supp. 92; State ex rel. Hinson v. Nickerson, 156 N.W. 1039; In re Freund's Estate, 128 N.Y.S. 48. (4) There was no legislative authorization for assessment of bank shares or any other intangible personal property on an ad valorem basis for taxes payable in the year 1946, when the city attempted to levy the tax in question. State v. Garner, 340 Mo. 107, 101 S.W.2d 57; State ex rel. Koln v. Lesser, 237 Mo. 310, 141 S.W. 888; State ex rel. K.C.P. & L. Co. v. Smith, 342 Mo. 75, 111 S.W.2d 513; State ex rel. v. Waddill, 330 Mo. 1118, 52 S.W.2d 476. (5) There cannot be two valid taxes on National Banks at the same time. U.S.C.A., Title 12, Sec. 548; First Natl. Bank v. Buder, 8 F.2d 883; Buder v. First Natl. Bank, 16 F.2d 990; First Natl. Bank v. Adams, 258 U.S. 362, 66 L.Ed. 661; Des Moines Natl. Bank v. Fairweather, 263 U.S. 103, 68 L.Ed. 191; Central Natl. Bank v. McFarland, 20 F.2d 416; Gulley v. First Natl. Bank in Meridan, 81 F.2d 502. (6) The same rule applies in Missouri to state banks and trust companies because of the policy of the state to maintain them on a parity with competing national banks. State ex rel. Orr v. Buder, 308 Mo. 237, 271 S.W. 508. (7) Special Ordinance No. 12723, assessing the tax in litigation is void because the city had no power to tax personal property on a valuation greater than that made for state and county purposes. 1945 Constitution, Art. X, Sec. 11; Laws 1945, p. 1782; Wright v. Stilz, 27 Ind. 338. (8) If the city tax in litigation is valid, then the court must hold that the Bank Tax Act, known as House Bill 888, is inoperative for the year 1946. Authorities cited under Points (1), (2), (3) and (4), supra; State ex rel. Union Trust Co. v. Buder, 308 Mo. 237, 271 S.W. 508; State v. Hannibal & St. Joseph R. Co., 37 Mo. 205; State ex rel. v. Gehner, 325 Mo. 24, 27 S.W.2d 1; Ex parte Seamens v. Shrove, 317 Mo. 736, 296 S.W. 415. (9) If the 1946 tax levied by the city is valid, then the question of when and to what extent appellant banks are entitled to credit for that tax upon the taxes computed under House Bill 888, remains undetermined. Laws 1945, p. 1921, sec. 3-E.

J. E. Taylor, Attorney General, O. R. Newcomer, Bart M. Lockwood, and Alva F. Lindsay for defendants-appellants.

(1) The levy of taxes against appellant banks by the State of Missouri made subsequent to July 1, 1946, under House Bill No. 888, is a valid exercise of the sovereign power of the state to levy such taxes. The 1945 Constitution vested the exclusive power to assess, levy and collect intangible taxes after July 1, 1946, in the State of Missouri, and to distribute the same as provided in the Constitution. Par. 3, Sec. 4, Art. X, Constitution of Missouri; Schedule, Sec. 2, Constitution of Missouri. (2) Any act of the legislature before or subsequent to July 1, 1946, extending the power of a municipality to assess, levy or collect intangible taxes beyond July 1, 1946, is unconstitutional and void. State ex rel. Dengel v. Hartman, 96 S.W.2d 329, 339 Mo. 200; Marsh v. Bartlett, 121 S.W.2d 737, 343 Mo. 526; Schedule, Sec. 2, Constitution of Missouri. (3) The people of this state, by their constitution, could and did withdraw from the legislature the power to delegate to municipalities the authority to assess, levy and collect intangible taxes after July 1, 1946; and they could and did, by the adoption of the Constitution, withdraw the power of the legislature to determine the distribution of the tax collectible after July 1, 1946. Marsh v. Bartlett, 121 S.W.2d 737, 343 Mo. 526; Par. 3, Sec. 4, Art. X, Constitution of Missouri. (4) All existing statutes providing for any method of taxation or of tax distribution different from or inconsistent with the method of taxation and manner of distribution provided for in the Constitution, were repealed as of July 1, 1946, by the 1945 Constitution and were absolutely void and of no effect from and after that date. State ex rel. Dengel v. Hartman, 96 S.W.2d 329, 339 Mo. 200; Marsh v. Bartlett, 121 S.W.2d 737, 343 Mo. 526. (5) House Bill No. 888 (now 1945 Laws of Mo., page 1922), provided the method of the State of Missouri making such assessment and levy after July 1, 1946, and the state exercised such power. House Bill No. 888 (now 1945 Laws of Mo., p. 1922, sec. 3). (6) If the City of St. Joseph can legally collect an intangible tax against appellant banks as assessed in September, 1945, and levied in April, 1946, then Paragraph E of Section 3 of House Bill No. 888, permitting such banks to take credit for such payment to the city, in subsequent taxable years, is unconstitutional, in that the effect of such credit would be to distribute the intangible tax collected after July 1, 1946, in disproportion to the respective rates of levy of the local political subdivision of the state, contrary to the express provisions of the Constitution. Par. 3, Sec. 4, Art. X, Constitution of Missouri. (7) The Constitution requires the state to return to the various local political subdivisions, the amount of such tax collected (less 2%) in proportion to their rates of levy, whereas, such Paragraph E authorized a "credit" on the tax imposed by the act on the appellant banks, thereby, contrary to the provisions of the Constitution, diminishing the amount returnable to the other local political subdivisions, viz., the school district and the County of Buchanan. (8) The effect of such "credit" would be to permit the city to retain practically the entire amount of the intangible tax on appellant banks for that taxable year. (9) The only power the legislature had, in this connection, other than to select one of the four methods of assessing national banks; to prescribe the method of collecting the tax; and fixing the rate not to exceed 8%, was to define the term "yield." Paragraph E of Sec. 3 of House Bill No. 888 has no relation to that part of the bill, viz., Section 5, which defines the method of determining the "yield" but is plainly, in this case, a diversion of the funds coming to the school district and the county under the mandate of the constitution. Marsh v. Bartlett, 121 S.W.2d 737; Par. 3, Sec. 4, Art. X, Constitution of Missouri.

Ronald S. Reed, City Counselor, and Milton Litvak, Assistant City Counselor, for respondent.

(1) The trial court correctly held that the city tax against bank shares of stock for the fiscal year 1946, assessed in September 1945, and levied by Special Ordinance No. 12723 was a valid tax. To hold otherwise would be to give effect to a retroactive or retrospective law, which is prohibited by both the Constitution of Missouri and the Constitution of the United States. Sec. 13, Art. I, Constitution of Missouri, 1945; Sec. 9, Art. I, Constitution of the United States; Graham Paper Co. v. Gehner, 59 S.W.2d 49, 332 Mo. 155; State ex rel. Koehn v. Southwestern Bell Tel. Co., 316 Mo. 1008, 292 S.W. 1037. (2) The General Assembly did not have the power to release or extinguish, or to authorize the releasing or extinguishing, in whole or in part, without consideration, the indebtedness, liability or obligation of the owners of shares of stock in plaintiff banks due the City of St. Joseph. Sec. 39 (5), Art. III, Constitution of Missouri, 1945; Graham Paper Co. v. Gehner (supra). (3) The Constitution of Missouri, ...