First Nat. Bank v. Louisiana Tax Commission, 31528

CourtSupreme Court of Louisiana
Writing for the CourtO'NIELL, C. J.
Citation175 La. 119,143 So. 23
PartiesFIRST NAT. BANK et al. v. LOUISIANA TAX COMMISSION et al
Decision Date23 May 1932
Docket Number31528

143 So. 23

175 La. 119

FIRST NAT. BANK et al.
v.
LOUISIANA TAX COMMISSION et al

No. 31528

Supreme Court of Louisiana

May 23, 1932


Rehearing Denied June 20, 1932

Appeal from First Judicial District Court, Parish of Caddo; E. P. Mills, Judge.

Suit by the First National Bank and others against the Louisiana Tax Commission and others. From an adverse judgment, defendants appeal.

Judgment annulled, and demands of plaintiffs rejected in part.

Percy Saint, Atty. Gen., and Robert J. O'Neal, Aubrey M. Pyburn, and Blanchard, Goldstein, Walker & O'Quin, all of Shreveport, for appellants.

Lewell C. Butler, J. P. Wallace, Barksdale, Bullock, Warren, Clark & Van Hook, and Thatcher, Browne, Porteous & Myers, all of Shreveport, for appellees.

O'NIELL, C. J. ROGERS, J., takes no part.

OPINION [143 So. 24]

[175 La. 123] O'NIELL, C. J.

The First National Bank, the Commercial National Bank and the American National Bank, being all of the national banks in Shreveport, brought this suit to avoid payment of the taxes levied on their capital stock, for the year 1930, under the provisions of Act No. 14, Extra Session of 1917, as amended by Act No. 116 of 1922 and Act No. 221 of 1928. The complaint has reference to the statute itself; the contention being that the taxes imposed on the shares of bank stock are at a greater rate than the rate of taxes assessed upon other moneyed capital in the hands of individual citizens of the state coming into competition with the business of national banks. If the complaint is well founded, the statute is violative of one of the conditions on which the Congress, by section 5219, U.S. R. S., as amended (12 USCA § 548), has given the states permission to levy taxes on shares of stock in national banks. The Commercial National Bank paid the city taxes before filing the suit, and, alleging that the payment was made in error, prayed that the city should be ordered to refund the taxes so paid. That part of the Commercial National Bank's demand was dismissed on an exception of no cause of action; and from that decision the bank appealed. See Commercial National Bank v. Louisiana Tax Commission et al. (La. Sup.) 175 La. 149, 143 So. 32. [1] The three suits were [175 La. 124] consolidated for the purpose of the trial of the main issue, which resulted in a judgment in favor of the banks, annulling the taxes, as being violative of section 5219, U. S. R. S., as amended. The defendants, Louisiana tax commission, police jury, assessor, tax collector, and city of Shreveport, have appealed from the decision.

The plaintiffs contend that the method of levying taxes on national bank stock violates not only the provision in section 5219, U.S. R. S., as amended, section 548 of title 12 USCA, but also the equal protection clause of the Fourteenth Amendment of the Constitution of the United States, and the clause in section 1 of article 10 of the Constitution of Louisiana, requiring that "all taxes shall be uniform upon the same class of subjects throughout the territorial limits of the authority levying the tax."

Act No. 14, Extra Session of 1917, as amended by Act No. 116 of 1922 and by Act No. 221 of 1928, provides, not only for the levying of taxes on shares of stock of national banks, but provides, indiscriminately, "for the levying of an annual assessment on the shares of stock and real estate of all banks, banking companies, firms, associations, or corporations engaged in the banking business, chartered under the laws of the State of Louisiana, or the United States, doing business in the State of Louisiana." It is conceded, therefore, that, if the method of taxing complained of in this suit is violative of section 5219, U.S. R. S., as amended, with regard to national banks, it is violative also of the equal protection clause of the Fourteenth Amendment of the Constitution of the United States, and the clause in the State Constitution requiring equality of taxation, with regard [175 La. 125] to state banks, notwithstanding they are not charging discrimination in favor of moneyed capital in the hands of individual citizens coming into competition with the business of the banks.

The state levies taxes on every other corporation, other than those engaged in the banking business, by assessing the property of the corporation in the name of the corporation, just as the property of an individual is assessed in his name. But, to avoid double taxation, the capital stock of corporations other than those engaged in the banking business is not assessed for taxes. On the other hand, the capital stock of corporations engaged in the banking business is assessed for taxes, at the book value of the stock, less the value of the real estate owned by the bank, which real estate is also assessed for taxes; but no other property of such corporations is assessed for taxes.

The complaint of the plaintiffs in this suit, stated broadly, is that, by assessing the capital stock of banks, instead of assessing their property, and by assessing the property of corporations that compete with the banks in some parts of their business, instead of assessing their capital stock, the state is discriminating against the banks, in that they do not have the benefit of the exemptions from taxation, provided for in the Constitution, and the corporations competing with them in a part of their business do have the benefit of such exemptions. The plaintiffs have reference, particularly, to the exemptions (in section 4 of article 10) of cash on [143 So. 25] hand or on deposit; loans or other obligations secured by mortgage on property located exclusively in the state, and the notes or other evidences thereof; loans by life insurance [175 La. 126] companies to policyholders, secured only by their policies; loans by homestead associations to their members, secured only by the stock of such associations; debts due for merchandise or articles of commerce or for services; and obligations of the state or its political subdivisions. The plaintiffs contend also that there is a discrimination against them in that, in the assessment of credits, meaning, particularly, promissory notes, bills and accounts receivable, not exempt from taxation, a deduction is made of bills and accounts payable, not exempt from taxation as the property of the party to whom they are payable. Act No. 24, Extra Session of 1918. The purpose of that is to avoid double taxation. New Orleans Securities Co. v. City of New Orleans, 173 La. 1097, 139 So. 635. That is the purpose also of the exemption of promissory notes or other evidences of debt secured by mortgage on property which bears its just proportion of taxes, and debts due for merchandise or articles of commerce.

At first thought it seems that, if the capital stock, instead of the property, of a corporation is taxed, as in the case of corporations engaged in the banking business, the stockholders do not have the benefit of the exemptions which we have mentioned, or the benefit of the right to offset their bills and accounts receivable by the bills and accounts payable, not exempt from taxation. But that is not true. As a matter of mathematics, it is certain that there is no discrimination, in that respect, against the banking corporations, whose capital stock is assessed for taxes, or in favor of the corporations whose property is assessed for taxes. The reason why there is no such discrimination is that the book value of bank stock, which value (after [175 La. 127] deducting the value of the bank's real estate) is the value at which the stock is assessed for taxes, is the difference between the value of the bank's assets and the amount of its liabilities. In other words, in computing the value at which bank stock must be assessed, all of the bank's bills and accounts payable are deducted. It is true that, among the assets that go to make up the book value of bank stock, there are included bills and accounts receivable which, if they belonged to a corporation not engaged in the banking business, might be exempt from taxation; but, among the liabilities which go to lessen the book value of bank stock, are all of the bills and accounts payable, whether exempt or not exempt from taxation; whereas, in the assessment of the bills and accounts receivable belonging to all other corporations, except those engaged in the banking business, the only bills or accounts payable that are deducted from the amount of the bills and accounts receivable are those that are not exempt from taxation, as the property of those to whom they are payable. It is impossible, therefore, for the exemptions from taxation, which the plaintiffs complain of, to operate as a discrimination against the stockholders of corporations engaged in the banking business, or in favor of the stockholders of corporations competing for a part of the banking business, merely because the banks are taxed by the assessment of their capital stock and the other corporations are taxed directly by the assessment of their property.

The restriction put upon the right of the states to tax shares of stock in national banks, by section 5219, U.S. R. S., is expressed thus:

"In the case of a tax on said shares the tax imposed shall not be at a greater rate than is [175 La. 128] assessed upon other moneyed capital in the hands of individual citizens of such State coming into competition with the business of national banks: Provided, That bonds, notes, or other evidences of indebtedness in the hands of individual citizens not * * * engaged in the banking or investment business and representing merely personal investments not made in competition with such business, shall not be deemed moneyed capital, within the meaning of this section."

The proviso, declaring that bonds, notes or other evidences of debt in the hands of individual citizens not engaged in the banking or investment business, and representing merely personal investments not made...

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2 practice notes
  • Natalbany Lumber Co., Limited v. Louisiana Tax Commission, 31568
    • United States
    • Supreme Court of Louisiana
    • 23 Mayo 1932
    ...state in his official capacity, owes any costs. Lyon Lumber Co. v. Louisiana Tax Commission, 158 La. 990, 105 So. 39; State v. Succession [175 La. 119] of Taylor, 33 La.Ann. 1270; State v. Taylor, 34 La.Ann. 978; Succession of Townsend, 40 La.Ann. 66, 3 So. 488; Brown v. Pontchartrain Land ......
  • Commercial National Bank of Shreveport v. Louisiana Tax Commission, 31233
    • United States
    • Supreme Court of Louisiana
    • 23 Mayo 1932
    ...the judgment was reversed and the plaintiffs' demands were rejected. See First National Bank et al. v. Louisiana Tax Commission et al., 175 La. 119, 143 So. 23, decided today. For the reasons given in that case, the judgment appealed from in this case is affirmed. ROGERS, J., takes no part. ...
2 cases
  • Natalbany Lumber Co., Limited v. Louisiana Tax Commission, 31568
    • United States
    • Supreme Court of Louisiana
    • 23 Mayo 1932
    ...state in his official capacity, owes any costs. Lyon Lumber Co. v. Louisiana Tax Commission, 158 La. 990, 105 So. 39; State v. Succession [175 La. 119] of Taylor, 33 La.Ann. 1270; State v. Taylor, 34 La.Ann. 978; Succession of Townsend, 40 La.Ann. 66, 3 So. 488; Brown v. Pontchartrain Land ......
  • Commercial National Bank of Shreveport v. Louisiana Tax Commission, 31233
    • United States
    • Supreme Court of Louisiana
    • 23 Mayo 1932
    ...the judgment was reversed and the plaintiffs' demands were rejected. See First National Bank et al. v. Louisiana Tax Commission et al., 175 La. 119, 143 So. 23, decided today. For the reasons given in that case, the judgment appealed from in this case is affirmed. ROGERS, J., takes no part. ...

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