Hibernia Nat. Bank in New Orleans v. Louisiana Tax Com'n

• Decision Date: 04 March 1940
• Docket Number: 35577.
• Citation: 195 La. 43,196 So. 15
• Court: Louisiana Supreme Court
• Parties: HIBERNIA NAT. BANK IN NEW ORLEANS v. LOUISIANA TAX COMMISSION et al. NATIONAL BANK OF COMMERCE IN NEW ORLEANS v. SAME. WHITNEY NAT. BANK OF NEW ORLEANS v. SAME.

196 So. 15

195 La. 43

HIBERNIA NAT. BANK IN NEW ORLEANS v. LOUISIANA TAX COMMISSION et al.

NATIONAL BANK OF COMMERCE IN NEW ORLEANS v. SAME.

WHITNEY NAT. BANK OF NEW ORLEANS v. SAME.

No. 35577.

Supreme Court of Louisiana.

March 4, 1940

Rehearing Denied April 29, 1940.

Appeal from Nineteenth Judicial District Court, Parish of East Baton Rouge; Charles A. Holcombe, Judge.

Actions by the Hibernia National Bank in New Orleans, the National Bank of Commerce in New Orleans, and the Whitney National Bank of New Orleans against the Louisiana Tax Commission and others for a reduction of assessments on the shares of capital stock of the plaintiff. The cases were consolidated. Judgment for plaintiffs, and defendants appeal.

Judgment set aside, and actions dismissed.

The statute providing that the value of bank shares shall be fixed annually for assessment purposes and shall not exceed the par value of the shares plus any amount in which the combined declared surplus, undivided profits, and contingent reserve may exceed the par value of the common capital thereof purports in effect to grant an exemption and is unconstitutional to that extent. Act No. 14 of 1917 Ex.Sess., § 4, as amended by Act No. 172 of 1938, § 2 LSA-R.S. 47:1967. Const.1921, art. 10, § 4, as amended in 1938.

Rosen Kammer, Wolff & Farrar, Schwarz, Guste, Barnett & Redmann, and Milling, Godchaux, Saal & Milling, all of New Orleans, for plaintiffs and appellees.

Lessley P. Gardiner, Edward M. Heath, Frank J. Stich Joseph M. Bowab, Francis P. Burns, and Henry B. Curtis, all of New Orleans, for defendants and appellees.

Dubuisson & Dubuisson, of Opelousas, for St. Landry Bank & Trust Co., amici curiae.

Jno. E. Fleury, of Gretna, for First Nat. Bank of Jefferson Parish, and Luling-Hahnville Bank, amicus curiae.

Clement M. Moss, of Lake Charles, Hudson, Potts, Bernstein & Snellings and McHenry, Lamkin & Titche, all of Monroe, and Cline, Thompson, Lawes & Cavanaugh, of Lake Charles, for appellee.

Harvey Peltier, of Thibodaux, Ellender & Wright and Wallis & Butler, all of Houma, and Breazeale & Sachse, of Baton Rouge, for Louisian a Bankers Ass'n and certain banks, amici curiae.

Blanchard, Goldstein, Walker & O'Quin, of Shreveport, amicus curiae.

HIGGINS, Justice.

The plaintiff banks each instituted suit against the Louisiana Tax Commission, the City of New Orleans, the Board of Assessors of the Parish of Orleans, the Board of Equalization of the Parish of Orleans, and the State Tax Collector for the Parish of Orleans to reduce the respective assessments on the shares of their capital stock for the year 1939, and to require the assessing authorities to value the shares of stock in accordance with the provisions of Act 14 of the Extra Session of 1917, as amended by Act 172 of 1938.

The reduction in the assessment claimed by each bank is as follows:

From:

To: Whitney National Bank of New Orleans $3,348,000.00

$ 540,184.00 The Hibernia National Bank in New Orleans $2,122,707.90

$1,500,000.00 The National Bank of Commerce in New Orleans $2,280,280.00

$1,500,000.00 making a total claimed reduction of $4,210,803.90

The defendants filed exceptions of no right and no cause of action putting at issue the construction and constitutionality of Act 172 of 1938. The district judge overruled these exceptions and the defendants then filed answers, again taking issue with the interpretation and effect which the banks asserted should be given to the provisions of Act 172 of 1938, and, in the alternative, the defendants specially pleaded that, if the construction contended for by the banks were adopted by the court, the statute would be unconstitutional and in violation of Section 1 (the Uniformity Clause) and Section 4 (the Exemption Clause) of Article X of the Constitution of 1921, as amended. By special pleas, the defendants also urged that the banks were estopped from contesting in court the correctness of the assessments, by virtue of the provisions of Section 4 of Act 14 of 1917, as amended, and Section 25 of Act 170 of 1898, in that the returns provided for by Act 14 of 1917, Ex.Sess., as amended, were not filed until after January 20, 1938.

The three cases were consolidated and tried on the above issues on stipulations of fact.

The trial judge, in two written opinions, sustained the plaintiffs' contentions, overruled all of the defendants' exceptions and pleas, and rendered judgment in favor of the plaintiffs, as prayed for. The defendants appealed.

It appears that the shares of stock of the Whitney Bank were assessed at $3,348,000. This figure was arrived at by adding to its common capital of $2,800,000, the amount of its declared surplus and undivided profits of $6,237,580 (this amount was treated in round figures as $6,237,000), and by deducting from the total thus obtained, the sum of $5,689,000, representing the book value of its real estate, banking houses, furniture and fixtures. By applying the provisions of Act 172 of 1938 to this assessment, the Whitney Bank contends that, as its common capital is $2,800,000, and its declared surplus and undivided profits are $6,237,580, and as it has no contingent reserves, its combined declared surplus and undivided profits exceed the parvalue of its common capital only to the extent of $3,437,580. Adding this excess of surplus and undivided profits to the par value of the common capital ($2,800,000) a gross figure of $6,237,580 is obtained. However, the Whitney Bank (the only one of the three banks which owns real estate) pays the usual ad valorem taxes on $5,697,396, the assessed value of its real estate in the State of Louisiana. It is not disputed that Act 172 of 1938 expressly authorizes the deduction of this item in computing the assessment on its shares of stock. Therefore, it is said that the assessment of the Whitney Bank's shares of stock should be reduced from $3,348,000 to $540,184, which figure represents the total amount of its surplus and undivided profits of $6,237,580, less $5,697,396, the assessed value of its real estate.

The shares of stock of the Hibernia Bank were assessed for $2,122,708. This figure was reached after adding to the common capital of $1,500,000, the full amount of the declared surplus and undivided profits of $622,708. Applying the provisions of Act 172 of 1938 to this assessment, the Hibernia Bank contends that, as its common capital is $1,500,000, and its combined declared surplus and undivided profits are only $622,708, and as it has no contingent reserves, its surplus and undivided profits should not enter into the calculation of the assessment, because they do not exceed the par value of the common capital, and therefore, the assessment should be $1,500,000 and not $2,122,708.

In reference to the National Bank of Commerce, its shares were assessed at $2,280,280. This amount was arrived at by adding to its common capital of $1,500,000, the full amount of its declared surplus and undivided profits of $780,280. Applying the provisions of Act 172 of 1938 to this assessment, the National Bank of Commerce urges that, as its common capital is $1,500,000, and its combined declared surplus, undivided profits and contingent reserves do not exceed the par value of the common capital, the assessment should be $1,500,000 and not $2,280,280.

The first point raised by the exceptions of no right and no cause of action is whether Act 172 of 1938 authorizes the taxing authorities to assess the shares of capital stock of the banks by adding to the common capital, the whole of the surplus, undivided profits and the contingent reserves, as defendants claim, or whether, as maintained by the banks, the surplus, undivided profits and contingent reserves enter into the computation only in the amount that they exceed the par value of the common capital.

The second issue is whether, if given the construction contended for by the banks, Act 172 of 1938 would be unconstitutional.

We shall discuss these points in their respective order:

The law providing for the assessment of the shares of capital stock in banking corporations is Act 14 of 1917, Ex.Sess., as amended by various subsequent statutes, including Act 172 of 1938, which amended Sections 2 and 4, the pertinent parts of which sections read, as follows:

‘ Section 2. That no assessment shall hereafter be made against the capital stock, surplus, or undivided profits of any bank, banking company, firm, association, or corporation engaged in the banking business, chartered under the laws of this State, or the United States, doing business in this State, whose capital stock is represented by shares, but the shares shall be assessed to the shareholders at the domicile or location of the bank, banking company, firm, association, or corporation, who appear as such upon the books, * * *.’

‘ Section 4. That the value of the said shares of stock in any bank, banking company, firm, association, or corporation engaged in the banking business shall be fixed annually by the Louisiana Tax Commission for both State and local assessment purposes, and shall not exceed the par value of said shares of stock, plus any amount in which the combined declared surplus, undivided profits and contingent reserves of any such banking institution may exceed the par value of the common capital thereof; * * *.’

The original statute, Act 14 of 1917, Ex.Sess., was enacted to provide a system for the taxing of the shares of stock and other property of banks, etc., both state and national. It consists of a title and nine sections and has been amended four times, towit, by Act 116 of 1922, Act 221 of 1928, Act 6 of 1934 and Act 172 of 1938. From 1917 to 1938, Section 4 of the statute provided ...