Iowa Nat. Bank v. Stewart

• Decision Date: 26 September 1930
• Docket Number: 39843,39844
• Citation: 232 N.W. 445,214 Iowa 1229
• Parties: IOWA NATIONAL BANK, Appellant,[*] v. J. M. STEWART et al., Appellees. CENTRAL STATE BANK, Appellant, v. J. M. STEWART et al., Appellees
• Court: Iowa Supreme Court

232 N.W. 445

214 Iowa 1229

IOWA NATIONAL BANK, Appellant,^[*] v. J. M. STEWART et al., Appellees.

CENTRAL STATE BANK, Appellant, v. J. M. STEWART et al., Appellees

Nos. 39843, 39844

Supreme Court of Iowa, Des Moines

September 26, 1930

Appeal from Polk District Court.--O. S. FRANKLIN, Judge.

Seven separate actions, tried together, brought by banks against the board of supervisors, county auditor, and treasurer in mandamus to compel refund of payment of taxes for the years 1919 to 1922, inclusive, alleged to have been illegally exacted. Decree for defendants. Plaintiffs appeal.

Affirmed.

Sargent Gamble & Read, for appellants.

Ben. J Gibson and Sargent, Gamble & Read, for Central Trust Company of Des Moines and L. A. Andrew, State Superintendent of Banking, Receiver, appellants.

Wilson & Shaw, John Fletcher, Attorney-general, Maxwell A O'Brien, Assistant Attorney-general, Eskil C. Carlson, Charles Hutchinson, and Carl Missildine, for appellees.

MORLING, C. J. EVANS, STEVENS, FAVILLE, and DE GRAFF, JJ., concur. WAGNER, J., ALBERT, KINDIG, and GRIMM, JJ., Dissenting.

OPINION

MORLING, C. J.

For the years 1919 to 1922, inclusive, the plaintiffs (two national banks and five state banks and trust companies doing business in Des Moines) made their sworn statements to the assessor for the assessment of the shares of their stock to their individual stockholders (omitting, however, the names of the stockholders and numbers of shares of their several holdings, as to which, and as to deductions on account of amount invested in real estate, no question is raised), all as provided by Section 1322 et seq., Code Supp. 1913.

The assessor classified the plaintiffs' taxable property as corporate stock and made up the assessment rolls accordingly, assessing the stockholders (though not individually) on each share of stock. The returned value of such shares was computed on the basis of the sworn statements. This classification and assessment was passed by the board of review. The assessor's books were made up and returned to the county auditor in conformity with the sworn statements and assessment rolls.

These assessments were made and appeared upon the rolls and upon the assessor's books as assessments upon "corporate stock." The county auditor so entered them upon the tax books, fixing the taxable value at 20 per cent of the actual value, and applied to such taxable value the consolidated levy for the respective years which varied from 137.8 to 164 mills.

During these years a large number of domestic corporations employing, as we shall assume, moneyed capital in competition with plaintiffs in Des Moines in like form made to the assessor their sworn statements. The assessor in these cases used the same classification and assessment, applied to the capital of these corporations the same basis of assessment, and made up and returned to the county auditor the assessment rolls and the assessor's books in identically the same form and on the same basis as in the case of the assessments against the plaintiffs.

The county auditor in some of these assessments against competing corporations fixed the taxable value at 20 per cent of the actual value and applied the consolidated levy as in the case of the plaintiffs. After the tax books had passed into the hands of the treasurer, but before payment, the county auditor changed these assessments as they appeared upon the tax books to assessments of moneys and credits and applied to them the five-mill levy. As to the rest of the assessments of the competing domestic corporations the county auditor, instead of entering on the tax books the assessments as taxes upon "corporate stock" and applying the consolidated levy upon 20 per cent of the valuation, extended them on the tax books as "moneys and credits," and applied the five-mill levy on the dollar of actual valuation, under Sections 1310 and 1311, Code Supplement, 1913.

During these years there were in the city of Des Moines a large number of persons and a few foreign corporations, who, as we shall assume, were employing moneyed capital in competition with plaintiffs. The assessor classified and assessed this competing capital as "moneys and credits." He made up the assessment rolls and assessor's books accordingly and returned them to the county auditor. The county auditor extended these assessments upon the tax books as "moneys and credits," and applied to them the five-mill levy upon the actual net valuation.

The consolidated levy applied to the 20 per cent of the valuation of the stock in plaintiff corporations resulted in a much larger tax than would have the five-mill levy applied to the full valuation.

Plaintiffs knew just what was occurring with respect to their assessments. The sworn statements of the plaintiffs to the assessor show that they are "to aid the assessor in fixing the value of shares of stock in national, state or saving banks or loan and trust companies, to be assessed to the individual stockholders, each such bank or trust company is required to furnish him a verified statement of all the matters set forth below * * * Statement of Assets, Liabilities, etc. On the first day of January * * * of the (e.g., Iowa National Bank) exclusive of real estate which is to be listed and assessed in each odd numbered year only, as other real estate, as follows * * *" Following are assets and liabilities tabulated, the total of capital, surplus and undivided earnings set out, the value of the real estate deducted, with the result "value of stock, less real estate," (e.g., Iowa National Bank $ 1,814,347.49.) The printed instructions on the sworn statement forms direct the assessor to send the president or cashier one of the blanks, and state: "This data is to aid you in fixing the value of the stock of said corporation which is to be assessed to the stockholders * * * and the corporation is made liable for the payment of the tax thereon." The assessment rolls of the individual taxpayers in question show on their face that they were assessments "of moneys and credits taxed at 5 mills or $ 5.00 for each one thousand dollars thereof." The dates of all of the assessment rolls of competing capital do not appear, but at least part of them were made during January and February. The assessments against the plaintiffs were made during the month of January. The board of review met on the first Monday in April. The dates of final adjournment varied from April twentieth to May sixth.

Plaintiffs severally in each of the years in controversy made complaint to the board of review in which they objected to their respective assessments on the ground that the assessments included the value of tax-exempt government securities, the amount of which should, as plaintiffs there claimed, have been deducted from their assessments. In presenting this claim the plaintiffs in their respective objections, among other things, appealed to Section 5219, U.S. Revised Statutes, to Sections 1321, 1322, Code Supp., 1913, to Chapter 257, Laws 38th G. A., and Section 2, Article 8, of the State Constitution, all of which were, in the objections, alleged to have been violated. The board of review overruled the objections. Plaintiffs severally appealed to the district court. Similar appeals and similar objections were made and overruled and appeals taken in each of the years in controversy.

That plaintiffs, at the time of making their objections before the board of review, were chargeable with notice of the facts on which they now base their complaint of discrimination (except, of course, that at the time of making the objections for any one year they did not know of the fact of the change by the auditor on the books for that year, because that change would be made after the filing of the objections), is not denied, but is the necessary conclusion from the record before us, some of which will be referred to.

The record shows the existence of considerable intimacy between plaintiffs and the taxpayers whose assessments are brought to our attention. The vice president and trust officer of plaintiff Central Trust Company made the returns of some of the individual taxpayers here alleged to be in competition with plaintiffs. The president of the plaintiff Central State Bank testifies that that bank waited until 1923 to pay their taxes because they thought they would be exempted.

"Q. When did you think you would be exempted? A. I think it was brought to our attention in 1919 that we would not have to pay these taxes. * * * Q. In 1919 you knew or were conscious of the fact that you had objections to these taxes which were eventually paid by the Central State Bank; is that correct? * * * A. Yes, we thought we should be excused from paying the taxes. Q. And those were the same objections that you now make to these taxes; is that right? * * * A. Yes. Q. And you had those same objections in 1920, 1921, and 1922? * * * Yes." (The objection, "immaterial and irrelevant", is not well taken.)

The vice president of plaintiff Valley National Bank and cashier of plaintiff Valley Savings Bank testifies:

"I have discussed the matter with Mr. Crawford [president of the Valley National Bank and vice president of the Valley Savings Bank] as to whether the stock of the bank ought not to be taxed as moneys and credits at five mills on the dollar. I could not state when that discussion was first had--it has been a matter of several years. I would say that Mr. Crawford had it in mind some years back; at least the question of whether the bank stock ought not to be taxed as moneys and credits. * * * I had in mind on March 17, 1920, that we might wish to contest this assessment. I have no positive recollection as to the grounds of such contest, but I presume on the same grounds we...