Independent School Dist. No. 1, Lemhi County v. Board of County Commissioners of Lemhi County
| Decision Date | 01 December 1926 |
| Parties | INDEPENDENT SCHOOL DISTRICT No. 1, LEMHI COUNTY, IDAHO, Respondent, v. BOARD OF COUNTY COMMISSIONERS OF LEMHI COUNTY, IDAHO, Sitting as a Board of Equalization, Respondent, and PIONEER BANK & TRUST COMPANY, CITIZENS' NATIONAL BANK OF SALMON, LEMHI VALLEY BANK, Appellants |
| Court | Idaho Supreme Court |
TAXATION - ASSESSMENT OF BANK SHARES - INVESTMENT OF CAPITAL STOCK IN PROPERTY.
1. Under C. S., sec. 3297, value of shares of capital stock of banks for purpose of assessment is properly determined by deducting investments in other property from value of capital stock including surplus and undivided profits.
2. Property acquired by bank in satisfaction of prior indebtedness constitutes actual investment of capital stock for purpose of determining value thereof for tax assessment.
APPEAL from the District Court of the Sixth Judicial District, for Lemhi County. Hon. Raymond L. Givens, Judge.
Judgment reversing order of board of equalization. Reversed.
Judgment reversed. Costs to appellant.
E. H Casterlin, for Appellants.
In valuing shares of capital stock of banks for the purpose of taxation, the shares equal the capital stock, and property otherwise taxable should be deducted. (Commercial Nat Bank v. Chambers, 21 Utah 324, 61 P. 560; Continental Nat. Bank, etc., v. Naylor, 54 Utah 49, 179 P. 67; Scandinavian-American Bank, etc., v. Pierce Co., 85 Wash. 348, 148 P. 18; First Nat. Bank, etc., v. Moon, 102 Kan. 334, 170 P. 33, L. R. A. 1918C, 986; Ranchman's Trust Co. v. Duncan, 114 Kan. 308, 219 P. 523; People v. Neff, 29 Misc. 59, 60 N.Y.S. 582; Jenkins v. Neff, 186 U.S. 230, 22 S.Ct. 905, 46 L.Ed. 1140; Nevada Nat. Bank v. Dodge, 119 F. 57, 56 C. C. A. 145.)
Real estate owned by a bank must be a part of its capital stock.
L. E. Glennon, for Respondent Ind. School District.
Even though a bank would not be authorized in the first instance to purchase property of a particular character, it may frequently accept such property as security for a loan or indebtedness, or may take it in payment, or part payment, of a past debt in order to save itself from loss. (State Security Bank v. Hoskins, 130 Iowa 339, 106 N.W. 764, 8 L. R. A., N. S., 376; Battey v. Eureka Bank, 62 Kan. 384, 63 P. 437; Charlotte First Nat. Bank v. National Exchange Bank, 92 U.S. 122, 23 L.Ed. 679; Fleckner v. United States Bank, 22 U.S. 338, 5 L.Ed. 631.)
"The value of stock in the hands of the stockholder is measured by the amount of capital, the surplus, and undivided profits of the bank." (First Nat. Bank of Weiser v. Washington County, 17 Idaho 306, 105 P. 1053.)
The capital and surplus of a bank and the shares into which it is divided are separate and distinct property interests, and it is not double taxation to assess the bank upon the property in which the capital is invested and also assess the shareholders upon the shares held by them. (Belo v. Forsyth, 82 N.C. 415, 33 Am. Rep. 688; Pacific Nat. Bank v. Pierce Co., 20 Wash. 675, 56 P. 936; Bank of Commerce v. Tennessee, 161 U.S. 134, 16 S.Ct. 456, 40 L.Ed. 645; Mercantile Nat. Bank v. New York, 28 F. 776, 121 U.S. 138, 7 S.Ct. 826, 30 L.Ed. 895.)
Francis R. Hall, Jr., for Respondent Board of County Commrs.
The Century Dictionary defines investment as "An investing of money or capital, expenditure for profit, a placing or conversion of capital in a way intended to secure income or profit from its employment." (See, also, Savings Bank of San Diego County v. Barrett, 126 Cal. 413, 58 P. 914; Dean v. Hawes, 29 Cal.App. 689, 157 P. 558; Lumberman's Indemnity Exchange v. State, 113 Wash. 82, 193 P. 217.)
The board of county commissioners of Lemhi county, sitting as a board of equalization, ordered the shares of capital stock of three of the county's banks assessed by deducting from the value of the capital stock the amount thereof invested in other property owned by them, respectively, in Lemhi county. The city of Salmon and Independent School District No. 1 of Lemhi county separately appealed from the order. The district court reversed the order of the board of equalization. The effect of the judgment of the district court was that no deduction be allowed from the value of the capital stock other than for bank buildings, furniture and fixtures.
According to the "annual bank tax statement" filed by the Citizens' National Bank, in pursuance of C. S., sec. 3298, the full cash value of such capital stock, actually invested in or represented by other property separately assessed, was $ 58,011.58. This left $ 46,184.88, on which the board ordered the capital stock assessed. In addition to the banking-house, with its furnishings and fixtures, the item of $ 58,011.58 included real property of the value $ 29,090.81, in Lemhi county, acquired in satisfaction of prior indebtedness to the bank.
The cause was submitted to the trial court on an agreed statement of facts and on the "annual bank tax statement." The agreed statement was adopted as the findings of fact. Among other findings, the court found that the bank had been and then was carrying the real estate on its books as a part of the capital stock investment. In view of the fact that the court had before it the sworn "annual bank tax statement," which represented that ," and the further fact that the court did not find that such "other property" was not a part of the capital stock invested, it is reasonable to conclude that the court in effect found that $ 29,090.81 of the capital stock of the bank was invested in this "other property."
C. S sec. 3297, provides for the assessment of shares of capital stock of banks uniformly with all other property assessed in the county. Seemingly, in order to effect such...
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