Goodwin v. Citizens & Southern Nat. Bank

• Decision Date: 09 June 1953
• Docket Number: No. 18210,18210
• Citation: 209 Ga. 908,76 S.E.2d 620
• Parties: GOODWIN, Tax Collector, v. CITIZENS & SOUTHERN NAT. BANK.
• Court: Georgia Supreme Court

Page 620

76 S.E.2d 620

209 Ga. 908

GOODWIN, Tax Collector, v. CITIZENS & SOUTHERN NAT. BANK.

No. 18210.

Supreme Court of Georgia.

June 9, 1953.

Rehearing Denied July 15, 1953.

Syllabus by the Court.

1. The State can lawfully tax national banks only as provided by Federal law. 12 U.S.C.A. § 548.

2. By Code, § 92-2406, Georgia has elected to adopt the method of taxing shares of stockholders of national banks as provided by Federal law and, hence, as provided in the Federal statute, cannot adopt any of the other alternative methods of taxation.

3. The abortive attempt by Code, § 92-2406 to tax branch national banks on the capital employed therein cannot be construed to mean taxation of the shares of stockholders, and, being in violation of the Federal statute and in contradiction of the portion of the same section which forbids taxation of banks, is void.

4. The assessment of Richmond County against the Augusta branches of Citizens and Southern National Bank, as provided in the foregoing void statute, was illegal, and the petition of the bank seeking to enjoin the enforcement of that assessment and to declare it void was not subject to general demurrer.

5. Previous voluntary returns and payment of taxes by the branch bank, as provided in State law but contrary to the Federal statute, do not estop the bank from maintaining an action to prevent taxing authorities from requiring payment of taxes contrary to the Federal law.

Citizens and Southern National Bank, the defendant in error, filed a petition in three counts against J. Bland Goodwin, as Tax Collector of Richmond County, Georgia, the plaintiff in error, to declare null and void the assessment of taxes for the year 1952, to cancel such assessment, and to enjoin the collection of such taxes. A temporary restraining order was granted, restraining any further action against the petitioner for the collection or issuance of any execution for the collection of the tax. Count I alleges that the assessment was made upon the bank's capital, surplus, undivided profits, and personal property, in violation of congressional permission, 12 U.S.C.A. § 548, and of certain specified sections of the Constitutions of Georgia and the United States, in that the assessment constituted the levy of a direct tax upon the capital of a national banking association rather than a tax on its shares. Count II alleges that the assessment was made as shown above beyond the purview of Code, § 92-2406, was in violation of congressional permission (see above), and in violation of certain specified sections of the Constitutions of Georgia and the United States, in that the assessment constituted the levy of a direct tax upon the capital of a branch of a national banking association rather than a tax on its shares, while the only situs for taxation of the petitioner was fixed by its charter issued by the Comptroller of the Currency. Count III alleges that the assessment is at a higher value than similar property in Richmond County, in that the custom in that county was to assess the capital of banks on the basis of 50% of its true value and the assessment here is more than 70%, thereby constituting discrimination in violation of certain specified sections of the Constitutions of Georgia and the United States. Tender of the amount of tax which would be due if taxable at all on a proper valuation was made by the bank.

General and special demurrers were filed to each count of the petition and, after a hearing, the court below issued an order overruling each and every demurrer. The exceptions here are to this judgment.

Franklin H. Pierce, Augusta, Eugene Cook, Atty. Gen., M. H. Blackshear, Deputy Asst. Atty. Gen., F. H. Boney, Asst. Atty. Gen., W. Dan Greer, Atlanta, for plaintiff in error.

Fulcher, Fulcher & Hagler, Augusta, Alston, Sibley, Miller, Spann & Schackelford, Atlanta, for defendant in error. DUCKWORTH, Chief Justice.

1. Whether the assessment here is against the bank or against its shareholders, the bank is entitled to maintain a suit in equity in its own name to prevent an unlawful assessment. Pelton v. National Bank, 101 U.S. 143, 25 L.Ed. 901; Hills v. National Albany Exchange Bank, 105 U.S. 319, 26 L.Ed. 1052. Since a national bank is an instrumentality of the Federal government, the States are without power to tax such banks in the absence of consent of the Congress. Owensboro National Bank v. Owensboro, 173 U.S. 664, 19 S.Ct. 537, 43 L.Ed. 850. Such congressional consent is given in 12 U.S.C.A. § 548, and is sharply constricted as follows: 'The legislature of each State may determine and direct, subject to the provisions of this section, the manner and place of taxing all the shares of national banking associations located within its limits. The several States may (1) tax said shares, or (2) include dividends derived therefrom in the taxable income of an owner or holder thereof, or (3) tax such associations on their net income, or (4) according to or measured by their net income, provided the following conditions are complied with'; and it is further provided by the Federal statute that when the State has adopted one of the four plans, it will not be allowed to impose any of the other methods of taxation. The provision of our Code, § 13-203, defining rules applicable to branch banks and investing the superintendent of banks with authority to make the ultimate decision as to compliance with such rules, was obviously intended to apply only to State banks, because (1) it vests in the superintendent of banks powers which he cannot exercise with reference to national banks; and (2) Code, § 13-201 plainly states that the provisions of chapter 13 shall not apply to national banks unless expressly so provided.

Therefore we must look solely to the 1927 general tax act, Code, § 92-2406; Ga.L.1927, p. 99, § 11, for the State law relating to taxing national branch banks. That section begins with the positive statement that 'No tax shall be assessed upon the capital of banks or banking associations organized under the authority of this State or the United States located within this State, but the shares of the stockholders of the banks or banking associations, whether resident or nonresident owners, shall be taxed in the county where the banks or banking associations are located, and not elsewhere'. It is important to observe that shares alone are taxable, and banks are not, and this can be done only in the county where the bank is located. This much of the State tax act is in complete accord with the Federal law which gives consent and upon which the State is wholly dependent for authority to tax at all.

But when the State in...