First Nat. Bank v. Lindsay

• Decision Date: 01 January 1891
• Parties: FIRST NAT. BANK v. LINDSAY et al., ASSESSOR.
• Court: U.S. District Court — Western District of Louisiana

45 F. 619

FIRST NAT. BANK v. LINDSAY et al., ASSESSOR.

United States Circuit Court, W.D. Louisiana.

February Term, 1891

Syllabus by the Court

The article of the state constitution which provides that all property shall be assessed at a uniform rate is violated when it is shown that assessing officers assess in any considerable amount property at one-third or one-half, and other property at two-thirds, of its cash value. National banks, like any other tax-payer against whom discriminations are made, are entitled to the protection of article cited.

National bank shares are taxable, under section 5219, Rev. St. U.S as other personal property, against the shareholders provided 'that the taxation shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens.'

That statute permits the state to tax such shares under named conditions. Without such permission, a bank could not be taxed; but the state constitution, aside from such conditions, fully protects plaintiff from unequal taxation.

When section 5219 is substantially observed, such bank shares are not exempt from taxation, though the bulk of the bank's moneyed capital may be held in federal or state bonds; that is, the shares may be valued for taxation as they are rated or related to the whole of the bank's moneyed capital.

When it is shown that the assessing officers fail, refuse, or omit substantially to subject the moneyed capital of individual citizens not exempted by state laws as far as practicable to uniform taxation, or when it is shown that, as a matter of fact, such officers assess only a few tax-payers on such capital, and those only for comparatively trifling amounts leaving several hundred thousands of such values not subjected to taxation, then it follows that the enforcement of the state tax-laws operate practically so as to impose unequal and oppressively burthensome taxation on such banks as have their moneyed capital subjected to taxation, and said federal statute and article of the constitution are violated. Held that, under such facts as show a discrimination against such banks, the shares should not be assessed at their commercial value, but their value for taxation should be fixed, after taxing or deducting from the banks' moneyed capital all federal securities which may be included in the mass of the banks' moneyed capital. In fixing this value the shares, after such reduction, should be rated or related to the remaining amount of capital.

In applying section 27, under which national bank shares are taxed, and section 28 of the revenue act of 1888, under which moneyed capital in the hands of individual citizens is taxed it appears that an inequality and discrimination is particularly wrought out against the complaining bank, and plaintiff is entitled to adequate relief. Held, if it be shown that the assessing officers wrongfully, or through gross negligence, failed, refused, or omitted to subject moneyed capital, known by such officers to be in the hands of individual citizens of the taxing district in any large sum,-- say several hundred thousand dollars of such values,-- or for any such cause, they, as a matter of fact, subjected only a trifling amount of such values to taxation, the plaintiff is entitled to relief to the extent of having the whole assessment C against the bank annulled.

A. H. Leonard, for plaintiff.

A. D. Land and J. H. Shepherd, for defendants.

BOARMAN, J., (charging jury.)

The plaintiff, a national bank, sues to have the assessment and taxation made by defendants against the bank shares entirely annulled or adequately reduced. The moneyed capital of the bank is $200,000, divided into 2,000 shares, at $100 a share. Said capital is shown to be made up largely of United States and state bonds, and other rights and credits. Besides, the bank, for itself, owns some property, which, if taxable, should be listed and assessed against the bank. As the case presents itself to us, after hearing the pleadings and evidence, it may be well, for the purpose of analysis and consideration of the suit, to divide our consideration of the issuable facts under two headings or questions: (1) The bank complains that, considering the shares as the law would consider any other personal property of the shareholders, the valuation put upon the shares for taxation imposes a greater, an unequal, and more burthensome taxation than is in fact borne throughout the parish and state by others owning personal and real property. That said shares are assessed at two-thirds of their cash commercial value, when, as a matter of fact, other property listed for taxation is assessed at not more than one-third or one-half of such value. Further, the tax is unequal and oppressively burthensome, because a large sum, amounting to several hundred thousand dollars, consisting of moneyed capital, such as rights, credits, open accounts, money loaned at interest, mortgages, was not listed for taxation in the parish at all, because of the willful omission or gross negligence of the assessing officers. (2) That the tax-laws of the state in their application, enforcement, and effect, and the acts of omission and commission on the part of the policy jury and assessor, acting under their official authority, violates, to the injury of plaintiffs, the constitution of the state, as well as the conditions under which congress permitted the states to tax the shares of national banks, in this: that, under the state laws, and their enforcement by the assessing officers, the assessment and taxation of such shares is at a greater rate of taxation than the tax assessed and collected upon the moneyed capital in the hands of corporations or private banks, whose moneyed capital is not represented by shares, or in the hands of individuals; that the state, in exercising the permission given by congress, discriminates against national bank shares, in this: that the revenue act of 1888 in its application and enforcement necessarily subjects to one rule of taxation all moneyed capital not held in shares by corporations, private banks, and the like capital in the hands of individuals, and the moneyed capital of national banks which is held in shares to another and different rule or process of taxation. The discrimination complained of results from the application by the assessing officers of the two rules laid down in the state laws.

Now, taking up the first question, you will remember the bank officials in July, 1889, went before the police jury, then sitting, under state laws, as a board to review and adjust the tax-lists and assessments for that year, to have the inequalities complained of corrected. The officials failed to get the relief sought. So this suit, particularly as to the inequality as to valuation of shares suggested, comes to you as if on appeal from the refusal of the reviewing board to make the reductions asked by the bank officers. Then, under this view, you should, after hearing the evidence, do what you believe that board was authorized to do, and should have done, under the facts and law in the premises. On this issue plaintiffs, in addition to the large number of witnesses whom he examined, read to you as evidence the following resolution, passed by the policy jury at or about the time plaintiff went before that board for relief: 'That the property in the parish be assessed at two-thirds of its cash value, unless deemed advisable by the jury to assess in some instances at its full cash value. ' This resolution shows the official animus of the assessing officers. Aside from showing the animus of the parochial board, to whose supervision the law intrusts the listing and taxation of all property in the parish and city of Shreveport, the resolution may be valuable to you in supplementing other evidence, offered by plaintiffs, as to whether, as a matter of fact, the assessing officers endeavored, in good faith, to make a uniform assessment, and as to whether the assessment was in fact made uniformly, upon a basis of one-third, one-half, or two-thirds of the cash value of listed property. These matters are put at issue in the pleadings and evidence. The plaintiffs contended that the weight of evidence makes up proof that the assessing officers acted arbitrarily, as the resolution suggested their purpose so to do, in making assessments. He contended that those officials made great and oppressive inequalities in their assessments, and that, as a rule, much, if not the bulk, of the taxable property in the parish was not assessed for more than one-third or one-half of its cash value. The defendants' counsel contended that the assessment was not arbitrarily made, that no property was assessed for its cash value, and that the assessments were uniformly, as far as practicable in the nature of things, made on the basis of two-thirds cash value. These contentions of counsel were elaborately argued. You must, in determining this issue for yourselves, keep in mind the state constitution, which provides that all property shall be assessed at a uniform rate.

Having considered so much of the first question, it may be best to take up the matter as to the willful omission or gross negligence of the assessing officers in not listing and subjecting to taxation several hundred thousand dollars of moneyed capital, consisting of rights, credits, notes, money loaned at interest, etc., when we have discussed the second complaint.

In the second complaint the bank presents a more difficult question of law and fact. In this complaint the bank says the tax-law of 1888 and its enforcement by the parish officers violates the conditions under which congress permits the state to tax its shares. Section 5219, Rev. St. U.S., under which the state is...