Greenfield Sav. Bank v. Com.
| Decision Date | 01 March 1912 |
| Citation | 211 Mass. 207,97 N.E. 927 |
| Parties | GREENFIELD SAVINGS BANK v. COMMONWEALTH. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Dana
Malone and Geo. S. Fuller, for petitioner.
Jas. M Swift, Atty. Gen., and Fred T. Field, Asst. Atty. Gen., for the Commonwealth.
This is a petition under St. 1909, c. 490, pt. 3, §§ 70, 71, for the abatement of a tax assessed upon the petitioner under section 21 of said act, upon the average amount of its deposits for the six months prior to November 1, 1910.
The petitioner, a savings bank incorporated under the laws of this commonwealth, was restrained in 1909 from receiving deposits and from exercising certain powers. In June, 1910 the bank commissioner, acting under authority of St. 1910, c 399, took, and has since retained, possession of the property and business of the petitioner because he had reason to conclude that it was in an unsound and unsafe condition and could not expediently continue its business. He has not sent out notices in accordance with section 8 of said chapter 399 requiring proof of claims against the petitioner. The question is whether a savings bank corporation is liable to the tax under these circumstances.
The tax provided by the statute is an excise tax and, speaking generally, such taxes are valid. Com. v. People's Five Cents Sav. Bk., 5 Allen, 428; Provident Inst. for Sav. v. Mass., 6 Wall. 611, 18 L.Ed. 907. In Com. v. Lancaster Sav. Bank, 123 Mass. 493, it appeared that the bank was in the hands of receivers, perpetually prohibited from doing the business for which it was chartered and deprived of the right to exercise its franchise, and thus had practically ceased to exist, and it was held that no tax could be assessed.
In Com. v. Barnstable Sav. Bank, 126 Mass. 526, the bank had been enjoined from receiving deposits or paying depositors, from conveying real estate, except on terms approved by the bank commissioners, was limited in making investments to certain securities, but otherwise its officers were permitted to exercise their judgment in preserving and caring for the property of the bank, and it was held liable for the tax. The case at bar is not covered precisely by either of these decisions.
It is necessary to examine critically what it is which is made subject to the excise tax. The language of the statute namely, that 'every savings bank * * * shall pay * * * an annual tax on one-half of one per cent. on its deposits,' is not decisive. In Atty. Gen. v. Mass. Pipe Line Gas Co., 179 Mass. 15, at page 19, 60 N.E. 389, at page 390, it was said by Knowlton, J., in denying the claim that no tax could be assessed so long as the corporation had not done business, nor done all that the law required before it could legally commence business: If the test there stated is applied to the facts at bar, there is no liability for the tax because the corporation cannot resume business at will. It can only do so when it is deemed safe to do so by the bank commissioner or the court. The bank commissioner, under the terms of the statute, took possession of all the 'property and business' of the bank. This description includes the franchise, for a franchise is a legal estate and not a mere naked power vested in the corporation. Society for Savs. v. Coite, 6 Wall. 594-606, 18 L.Ed. 897. The bank had nothing left in its possession except the fragmentary privileges described in sections 13 and 14 of the act to apply to the court and to call a meeting of the incorporators and appoint agents for liquidation. There is left to it none of the franchise rights which were decisive in Com. v. Barnstable Sav. Bank, 126 Mass. 526. The bank commissioner took possession of the property and business of the petitioner, not as receiver appointed by a court, but as a public officer, with many of the powers of a receiver and in most respects subject to the direction of the court to carry out a legislative policy for liquidation established as to savings banks whose depositors' interests are not being properly conserved. This policy does not necessarily contemplate a winding up of the corporate existence of every institution of which the bank commissioner may take possession. Under section 2 of said chapter 399, he is to retain possession 'until the bank shall resume business or until its affairs shall be finally liquidated.' St. 1910, c. 622, § 11, points one way in which resumption of business might be accomplished by a scaling down of deposits. But in general the policy established by the act is that of final liquidation. In carrying out this legislative policy the bank commissioner does not avail himself of the powers conferred by the act of incorporation, as does the receiver of a public service corporation or a private corporation authorized to continue the business, but acts entirely in pursuance of the powers created by the statute. The bald existence of the corporation remains, but all its other substantial rights and...
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