Hamilton Nat. Bank v. City of Chattanooga

• Decision Date: 26 November 1932
• Citation: 54 S.W.2d 943
• Parties: HAMILTON NAT. BANK v. CITY OF CHATTANOOGA.
• Court: Tennessee Supreme Court

54 S.W.2d 943

HAMILTON NAT. BANK v. CITY OF CHATTANOOGA.

Supreme Court of Tennessee.

November 26, 1932.

Appeal from Chancery Court, Hamilton County; W. B. Garvin, Chancellor.

Suit by the Hamilton National Bank against the City of Chattanooga. From an adverse decree, complainant appeals.

Affirmed.

J. L. Foust, of Chattanooga, for complainant.

J. W. Anderson, of Chattanooga, for defendant.

GREEN, C. J.

This is a controversy between the complainant bank and the defendant city as to whether a savings deposit on hand for more than six months is subject to an ad valorem tax. The chancellor held that it was, and the complainant has appealed. The bank is acting as executor of one of its former customers, and on January 10, 1930, and on January 10, 1931, as such executor, had on hand in bank as a savings deposit several thousand dollars upon each date.

On each date the money in the savings account had been on hand for more than six months.

The bank maintains that this savings deposit is not subject to ad valorem taxation by reason of the provisions of the income tax law, chapter 86 of the Pub. Acts of 1929. That act exempts certain bonds from ad valorem taxation, and then defines the word "bond" as follows:

"The word `Bond' shall be held and construed to include all obligations issued by any person, firm, joint stock company, business trust or corporation organized and doing business under the laws of the State of Tennessee, or any other State, evidenced by an instrument whereby the obligor is bound to pay interest to the obligee regardless of whether the obligor is doing business in the State of Tennessee, or whether the obligation under the terms of which the interest accrues is a mortgage or lien on property located in the State of Tennessee, or beyond the jurisdiction thereof; provided, that the word `bond' shall not include ordinary commercial paper, trade acceptances, * * * etc., maturing in six months or less from the date of issuance." Section 4.

The argument is that the savings passbook issued to the complainant is an obligation whereby "the obligor is bound to pay interest to the obligee," and that only the interest from said savings account is taxable.

The passbook, however, contains this provision: "Savings deposits will ordinarily be paid upon demand, but the bank reserves the right to require sixty days' notice of withdrawal of funds in this department. The bank also reserves the right to repay any deposit at any time."

The...