First National Bank v. Marion County

• Decision Date: 20 October 1942
• Citation: 130 P.2d 9,169 Or. 595
• Parties: FIRST NATIONAL BANK OF PORTLAND <I>v.</I> MARION COUNTY ET AL.
• Court: Oregon Supreme Court

169 Or. 595

130 P.2d 9

FIRST NATIONAL BANK OF PORTLANDv.

MARION COUNTY ET AL.

Supreme Court of Oregon.

Argued June 18, 1942.

Reversed October 20, 1942.

Rehearing denied November 17, 1942.

Taxation — National banks

1. "National banks" are "agencies of the United States", created under its laws to promote its fiscal policies, and the property of such banks may not be taxed under state authority except as Congress consents, and then only in conformity with such restrictions as Congress may impose.

Taxation — Bank fixtures and equipment

2. Since Congress has not consented to the taxation by states of personalty of national banks, banking fixtures and equipment of national bank, if taxable at all by the state as the property of the bank, could be taxed only as realty.

Taxation — Trade fixtures

3. If trade fixtures are classified as personalty for purpose of taxation, they must be taxed, if at all, as personalty and not as realty, and, if such fixtures are a part of the realty and are to be taxed as realty, the assessors have no authority to assess them as personalty.

Taxation — National banks

4. National bank's trade fixtures and equipment all, or practically all, of which could be removed from leased premises without any substantial injury to building, could not be taxed to the national bank as "realty".

                  See 26 R.C.L. 109
                  61 C.J., Taxation, 272
                

Before KELLY, Chief Justice, and BAILEY, LUSK, RAND, ROSSMAN and BRAND, Associate Justices.

Appeal from Circuit Court, Marion County.

L.G. LEWELLING, Judge.

Suit by The First National Bank of Portland against Marion county, A.C. Burk, as sheriff of Marion county, R. Shelton, as assessor of Marion county, and Earl L. Fisher, Charles V. Galloway, and Wallace S. Wharton, as members of and constituting the State Tax Commission of the state of Oregon, to enjoin the foreclosure of an alleged tax lien against property owned by the plaintiff, and for a decree declaring assessment of the tax null and void. From a judgment in favor of the defendants, the plaintiff appeals.

REVERSED. REHEARING DENIED.

V.V. Pendergrass and R.R. Bullivant (Pendergrass, Spackman & Bullivant), all of Portland, for appellant.

Miller B. Hayden, District Attorney, of Salem (George L. Belt, of Salem, on the brief), for respondents Marion county, A.C. Burk, and R. Shelton.

Ralph R. Bailey and James G. Smith, Assistant Attorneys General, on the brief, for respondents Earl L. Fisher, Charles V. Galloway, and Wallace S. Wharton, as members of State Tax Commission.

Platt, Henderson, Warner & Cram, of Portland, for United States National Bank of Portland, amicus curiae.

BAILEY, J.

This suit was instituted by The First National Bank of Portland against Marion county, the sheriff and the assessor of Marion county, and the individual members of the state tax commission, to enjoin the foreclosure of an alleged tax lien against property owned by the plaintiff, and for a decree declaring the assessment of the tax null and void. From a decree in favor of the defendants the plaintiff has appealed.

The property here involved, which was attempted to be assessed by Marion county, consists of banking fixtures and equipment located on the first and mezzanine floors and in the basement of the First National Bank building in Salem, Oregon. The purported tax lien covers attempted assessments of such property for the years 1929 to 1939, inclusive. The banking fixtures and equipment were assessed as real property, to the plaintiff's vendor and later to the plaintiff. The land on which the building is located, together with the building, was during those periods assessed as real property to T.A. Livesley, Inc., an Oregon corporation, the owner of the fee.

1, 2. National banks are agencies of the United States, created under its laws to promote its fiscal policies, and the property of such banks may not be taxed under state authority except as Congress consents, and then only in conformity with such restrictions as Congress may impose: 12 U.S.C.A., § 548; First National Bank of Guthrie Center v. Anderson, 269 U.S. 341, 70 L.Ed. 295, 46 S.Ct. 135. Congress has not consented to the taxation by states of the personal property of national banks; hence the banking fixtures and equipment involved herein, if taxable at all by the state of Oregon as the property of national banks, may be taxed only as real property.

On January 22, 1927, First National Bank in Salem, a national banking association, leased from T.A. Livesley, Inc., for a period of twenty-five years, "the first story and mezzanine floor in the rear or south end" of an eleven-story building, "together with convenient space for a vault, stairway, corridor and lavatory in the basement thereof, and ingress and egress thereto," for the purpose of conducting a general banking business. In a supplemental agreement entered into February 19, 1927, it was provided that "the said lessee is empowered and authorized to remove from said premises so leased all furniture and movable equipment and all improvements and furnishings placed in said premises by said lessee, including oak and walnut woodwork, marble work, lighting fixtures, bronze and iron grillwork, vault doors and all other vault equipment, and the same shall not be considered for the purposes of such lease as fixtures." The premises leased to First National Bank in Salem comprised the entire ground floor of the structure known as the First National Bank building, with the exception of that part thereof used as a general lobby and entrance to the upper floors of the building.

Shortly after entering into this lease, First National Bank in Salem proceeded to install in the leased premises various trade fixtures, including counters, desks, tellers' cages, wickets, partitions, files and lighting fixtures, a vault door and vault equipment, including safe-deposit boxes, also marble work, including marble counters and check desks, benches and wainscoting on the vestibule walls.

After conducting a banking business on the leased premises for five or six years, First National Bank in Salem went into liquidation. Sometime during the summer of 1933 The First National Bank of Portland, plaintiff herein, purchased from First National Bank in Salem certain assets of the latter bank, including notes, bonds, bank accounts, furnishings and banking equipment. Among the assets so purchased were the following:

"8 upright steel lockers 2 lobby benches 2 marble and bronze glass top lobby check desks approximately 3' 2" x 8' 8" 1 drinking fountain 3 large and 2 small chandeliers All cage and counter fixtures, comprising 8 marble front, glass and bronze top cages, with returns, partitions, shelving, backs and doors, and approximately 70 lineal feet of marble front and top counter railing, together with doors, gates and glass plate, forming a part of such fixtures; also safe-deposit booths, bookkeeping room partitions, and all wainscoting, both marble and wood, and mezzanine rail partition, consisting of metal, wood and glass paneling.

One electric wall clock

1 12-inch Herring Hall Marvin Safe Co. circular vault door, four movement time lock, together with frame, casings and architraves.

1 9-inch emergency entrance vault door with Sargent and Greenleaf, 3 movement time lock, together with frame and casings."

The plaintiff is a national banking association with its principal place of business in Portland, Oregon. It operates a branch bank in Salem in the quarters formerly occupied by First National Bank in Salem, which premises on September 25, 1933, it leased from T.A. Livesley, Inc., for a period of ten years with an option for ten additional years. The leasing agreement contains this provision:

"The lessee has purchased from the First National Bank in Salem all the fixtures, equipment and appurtenances, of every kind and nature, installed by said bank in the leased premises, including, among other things, all oak and walnut woodwork, marble work, lighting fixtures, bronze and iron grillwork, vault doors and vault equipment. All of said fixtures, improvements or appurtenances of every kind and nature, including any that may be hereafter installed in any portion of the leased premises by the lessee, shall belong to the lessee and may be removed by it at any time either prior to the termination of this lease or within a reasonable time thereafter."

In the erection of the First National Bank building, T.A. Livesley, Inc., constructed a vault with concrete walls, ceiling and floor. The vault door was supplied by First National Bank in Salem, and with its frame or vestibule was delivered to the premises as a unit. It was installed in the vault opening by the tenant bank, by placing about two inches of sand and cement (not concrete) between the vault walls and the door frame. The door and its frame or vestibule weighed between fifteen and seventeen tons and could be removed by chipping away the sand and cement between the frame and the main walls of the vault, without injury to the building.

The evidence is to the effect that it is customary for banks to remove such vault doors to replace them or to set them up in new quarters. The installation of vault doors is well described by the opinion in San Diego Trust & Savings Bank et al. v. San Diego County et al., 16 Cal. (2d) 142, 105 P. (2d) 94, 133 A.L.R. 416.

Chandeliers furnished by the tenant bank were fastened to the ceiling in the usual manner required by their varying sizes. Much of the banking equipment was fastened to the floor with anchors or bolts of bronze or other metal and was readily removable by unscrewing or cutting the bolts. A large part of the equipment has been moved about by the plaintiff. All, or practically all the banking fixtures and equipment involved herein can be removed without any substantial injury to the building.

At the time First National Bank in Salem leased from T.A. Livesley, Inc., that part of the building which it later...