Gully v. First Nat. Bank In Meridian

• Decision Date: 28 November 1938
• Docket Number: 33220
• Citation: 183 Miss. 385,184 So. 615
• Court: Mississippi Supreme Court
• Parties: GULLY, STATE TAX COLLECTOR, v. FIRST NAT. BANK IN MERIDIAN

184 So. 615

183 Miss. 385

GULLY, STATE TAX COLLECTOR, v. FIRST NAT. BANK IN MERIDIAN

No. 33220

Supreme Court of Mississippi

November 28, 1938

Division A

1 TAXATION.

A provision in contract of insolvent national bank's stockholders with committee, to which they had assigned their stock for benefit of another bank taking over insolvent bank's assets and liabilities, that the stockholders should be held harmless from statutory liability as stockholders, did not justify a direct suit by state tax collector against transferee bank for insolvent bank's back taxes even if they were included in the agreement before the stockholders' liability was established, since the agreement constituted an "indemnity" contract (12 U.S.C. A., sec. 64).

2 INDEMNITY.

A suit may not be brought by creditor of indemnitee against the indemnitor directly until the liability of the indemnitee has been established, an "indemnity" constituting an agreement to save harmless, and not being made for benefit of the creditor.

3 TAXATION.

Where new bank was formed and took over old insolvent bank's assets and liabilities, the new bank could rely on terms of creditor's agreement under which the new bank's liability to pay claims against old bank extended only to those claims which were established against old bank during its receivership, and the new bank was not liable for taxes allegedly owed by the old bank, which were not so established against the old bank during receivership.

4. TAXATION.

A claim of state tax collector against a Mississippi national bank for taxes imposed on shares of stock of national bank, even if enforceable against the bank, would not survive bank's insolvency nor be enforceable against bank's receiver, since assets of the bank could not be taken from its creditor and paid to the tax collector for the benefit of the stockholders.

5. EQUITY.

The refusal to permit state tax collector to amend complaint in suit against transferee bank for taxes assessed against insolvent Mississippi national bank, the liabilities of which the transferee bank had allegedly assumed, to show by amendment that the insolvent bank by course of dealing permitted itself to be assessed upon its shares of stock and paid its assessment therefor for many years, was not error, where the amendment contained cumulative recitals which would not change rules of law governing the case.

HON. M. B. MONTGOMERY, Special Chancellor.

APPEAL from the chancery court of Lauderdale county HON. M. B. MONTGOMERY, Special Chancellor.

Suit by J. B. Gully, State Tax Collector, against the First National Bank in Meridian, to recover certain state, county, and municipal taxes allegedly due by the defendant. From a decree for the defendant, the plaintiff appeals. Affirmed.

Affirmed.

J. C. Floyd, of Meridian, for appellant.

After this cause was remanded to the state court by the federal court the complainant filed a motion for authority to amend its bill in certain particulars in order to more fully and more accurately state certain phases of the cause of action. We submit that these amendments should have been allowed.

Section 391 of the Mississippi Code 1930 provides that "amendments shall be allowed in the pleadings and proceedings, on liberal terms, to prevent delay and injustice."

Tishomingo Ins. Co. v. Allen, 76 Miss. 114, 23 So. 305; Greenwood Grocery Co. v. Bennett, 101 Miss. 563, 58 So. 482.

The main point urged by the defendant in its demurrer, and the theory upon which the bill was dismissed by the District Court and upon which the decree of the District Court dismissing the bill was affirmed by the Circuit Court of Appeals, was that the assessments as made in this case were void and, therefore, no taxes ever accrued. Not that the Mississippi statute providing for the taxation of national banks was void, but that the assessments were void in that the assessing officers placed the name of the bank upon the assessment rolls as the owner of the property instead of the names of the various individual shareholders.

It is not a sufficient challenge of the validity of the law to aver that it is improperly administered by those charged with its administration.

Cummings v. Merchants Nat. Bank, 101 U.S. 153, 25 L.Ed. 903.

There is, therefore, a marked distinction between the question thus presented in this cause and that presented in Owensboro Nat. Bank v. Owensboro, 173 U.S. 664, 43 L.Ed. 850, and similar cases, for the question there was whether or not the law imposing the tax was in contravention of the federal statute.

Section 5219 of the Revised Statutes, Section 548, U.S.C. A., Title 28.

The State of Mississippi has elected to pursue the first of the three forms of taxation allowed and taxed the shares by Section 3138, Mississippi Code of 1930.

The proper measure of taxation upon the national banking association shares in Mississippi determined and directed by the legislature as authorized by Section 5219 Revised Statutes, supra, is "par value of the shares augmented by the undivided profits, surplus, or accumulations of any sort constituting part of the assets of the bank . . . But if the shares of such bank or banking association are of less value than par they shall be valued accordingly . . ." in other words the true value of stock.

People v. Comr. of Taxes, 94 U.S. 415, 24 L.Ed. 164; First Nat. Bank of Jackson v. McNeel, 238 F. 559; Section 181, Constitution of the State of Mississippi.

The method for determining the value of the shares as provided for in Section 3138 has been upheld by the Mississippi Supreme Court in several cases.

Magnolia Bank v. Pike County, 111 Miss. 857, 72 So. 697; Bank of Commerce v. Adams County, 130 Miss. 37, 93 So. 442; Miller v. Citizens Nat. Bank, 144 Miss. 533, 110 So. 439.

And it has been specifically held by the Supreme Court of Mississippi that Section 3138 does not violate Section 5219, Revised Statutes of U. S.; Selig v. Price, 167 Miss. 612, 142 So. 504.

The contention here made by the defendant, appellee, as to the invalidity of the assessment because made in the name of the bank has been conclusively settled adversely to its contention by the Supreme Court of the United States in the case of First National Bank v. Chehalis County, 166 U.S. 440, 41 L.Ed. 1069.

We are not at all sure that any assessment whatsoever was necessary to the validity of this tax.

Bank v. U.S. 19 Wall. 227, 22 L.Ed. 80; King v. U. S. 25 L.Ed. 373; 3 Cooley on Taxation, (4 Ed.) page 2118; Clement National Bank v. State of Vermont, 231 U.S. 120, 58 L.Ed. 127.

We submit that Section 3138 of the Mississippi Code of 1930 levies the tax; that the assessment return furnished by the bank to the tax assessor for the City of Meridian and Lauderdale County fixed the basis of the assessment, and the only thing left for the taxing districts to do was to fix their various millage rates to be applied to the value as rated by the bank for the computation of the tax.

Carrier Lbr. & Mfg. Co. v. Quitman County, 125 So. 416; U. S. v. Philadelphia B. R., 123 U.S. 114, 31 L.Ed. 138; U. S. v. Warrick, 25 F. 140; Boody v. Watson, 9 A. 799; I. C. v. Kentucky, 218 U.S. 551, 54 L.Ed. 1147.

The Supreme Court of Mississippi has specifically held that the ownership shown on the assessment roll is immaterial.

Smith v. Cassidy, 75 Miss. 916, 23 So. 427; Powell v. McKee, 81 Miss. 229, 32 So. 919; Carr v. Barton, 162 So. 172.

It does not appear to us that it would require any great degree of perspicacity for anyone to tell that the shares of stock of the First National Bank are the property involved in that entry and that "tax on same" means tax on the shares of stock at the true value computed as provided by Section 3138.

Remembering that the First National Bank individually was not liable primarily by law to taxation on its shares, is it unreasonable to construe the act of making the return to be the act of the persons primarily liable for the tax, the shareholders, acting through their statutory agent?

In fact, there is respectable authority to the effect that the assessment should be made in the bank's name in order to hold it liable for the tax as agent for its shareholders under the statute.

61 C. J. 709, sec. 875; First National Bank of Walla Walla v. Hungate, 62 F. 548; Paul v. McGraw, 28 P. 532; State v. Security National Bank, 173 N.W. 885; First National Bank v. Anderson, 192 N.W. 6, 269 U.S. 341, 70 L.Ed. 295; Western Improvement Banking Co. v. Murry, 56 P. 798; Albuquerque v. Perea, 25 P. 776, 147 U.S. 47, 38 L.Ed. 91; City of Yale v. Michigan Ins. Co., 146 N.W. 88; First National Bank of Aberdeen v. County of Chehalis, 166 U.S. 440, 41 L.Ed. 1069.

Many other authorities might be cited to sustain the proposition we are contending for, i. e., that the fact that the assessment is made in the name of the bank does not invalidate the assessment or establish the fact that the tax is anything else than a tax of the shares as permitted by Congress, but it seems that after First National Bank v. Commonwealth of Kentucky, 9 Wall. 353, 19 L.Ed. 701, and First National Bank v. Chehalis County, 166 U.S. 440, 41 L.Ed. 1069, hereinbefore cited, and the provisions of the Mississippi statutes, that it is wholly unnecessary to take up more of the court's time on this point.

There are many cases in the Mississippi Reports where the Supreme Court of Mississippi has approved assessments made, as the ones here involved were made, of the shares of stock directly against a national bank without the addition of "agent" or any other designation after the name of the bank on the rolls.

Robertson v. First National Bank of Greenwood, 115 Miss. 840, 76 So 687; First National Bank of Biloxi v. Bd. of Suprs., 157 Miss. 197, 127...