Lionberger v. Rowse

• Decision Date: 31 October 1868
• Citation: 43 Mo. 67
• Parties: JOHN R. LIONBERGER, Plaintiff in Error, v. EDWARD S. ROWSE, Defendant in Error.
• Court: Missouri Supreme Court

43 Mo. 67

JOHN R. LIONBERGER, Plaintiff in Error,

v.EDWARD S. ROWSE, Defendant in Error.

Supreme Court of Missouri.

October Term, 1868.

Error to St. Louis Circuit Court.

The facts appear in the opinion of the court.

Sharp & Broadhead, for plaintiff in error.

I. The assessment and levy of the tax made by the assessors of St. Louis county was erroneous and void as to the form and manner of the assessment. It is manifest, from the provisions of the statute on this subject (Gen. Stat. 1865, ch. 12, §§ 9, 10, 27, 28, 66; ch. 13, §§ 26, 28), that the assessment of the shares of stock owned by an individual is to be made against the corporation, and not against the stockholders; that the tax is to be paid by the corporation to the collector, and not by the stockholder; and that the levy and proceedings under it are against the corporation, and not against the stockholder--the corporation being the person by whom the tax is payable, in the express language of the law. The stockholder is not required to give in this stock with his other property; he is not required to pay the tax to the collector; and although his property is liable to taxation and to be sold for the non-payment of the tax assessed against it, he is not liable personally for the tax, nor can he be estopped or precluded from denying the validity of the assessment or any proceedings under it. The assessment, levy, and proceeding against him as an individual, are utterly void and without any authority of law.

II. But even if the form and manner of the assessment were in compliance with the statute law of Missouri, the tax imposed is not authorized under the provisions of the acts of Congress in relation thereto. The Third National Bank of St. Louis was created under the provisions of the act of Congress of February 25, 1863. (U. S. Laws 1862-3, p. 665.) This act was amended by the act of June 3, 1864. (U. S. Laws 1863-4, p. 99.) By the sixty-second section of the last-named act it is provided that associations organized under the act of February 25, 1863, shall enjoy all the rights and privileges of, and be subject to all the duties, liabilities, and restrictions imposed by, the act of 1864. Under the proviso to the forty-first section of the act of 1864, the shares of stock in any of the national banks may be taxed as any other property, with the proviso that the rate of taxation on such shares shall not exceed the rate imposed upon the shares in any of the banks organized under the authority of the State. The question therefore arises, what rate of taxation was or is imposed by the State of Missouri upon the shares of banks organized under State authority? Congress assumed, as it had a right to do, legislative control over the whole subject; and whatever rights were acquired by the stockholders under the act of Congress became, from the moment of the organization of the banks, vested rights, which the States had no authority to impair or interfere with.

The only State banks in existence in Missouri and organized under State authority were those established under the general banking law of 1857. The first section of the general banking law declares that “every bank which now is or shall hereafter be incorporated under the authority of this State shall be subject to the liabilities and governed by the rules contained in this act.” The thirty-second section of the same act declares that “in consideration of the privileges granted by this act to the banks incorporated in this State, each banking company agrees to pay to the State annually one per cent. on the amount of capital stock paid in by the stockholders other than the State, which shall be in full of all bonus and taxes to be paid to the State by the respective banks.” (Sess. Acts 1857, p. 22.) By section 12 of the act of March 18, 1861 (Sess. Acts 1861, p. 13), it is provided “that the one per cent. required to be paid by the thirty-second section of article I of said act shall be received as full compensation for all taxes of every kind whatever; and it shall not be lawful for any county, city, or town corporation, to levy or collect any tax of any kind upon or from any banks organized under said law.” At the time of the passage of the act of Congress of June, 1864, there was no other mode or amount of taxation on State banks than is provided by the general banking law above recited and the amendments thereto. The State had expressly stipulated that there should be no other. The stockholders were not taxed, nor could they be taxed. There was no tax upon shares, but a tax upon the capital of the bank; and there was no provision for an ad valorem tax. If the State has bound itself not to tax the bank, it cannot tax the shares. (Gordon v. The Appeal Tax Court, 3 How. 147; State v. Branin, 3 Zabr. 484.) The contract made by the State of Missouri with the State banks is just as strong as in the case cited from 3 Howard. The legislature of Maryland had provided, by the eleventh section of the act of 1812, that, upon the banks complying with the conditions of the act, the faith of the State was pledged not to impose any further tax or bonus on said banks during the continuance of their charters; and the Supreme Court held that the legislature of Maryland could not, by a subsequent act, tax the stockholders upon their shares of stock.

But admitting that the legislature may, in spite of their previous legislation in regard to State banks, tax the shares of stock in State banks; the question still remains, has it been done? The act of Congress provides that the ?hares of stock only in national banks may be taxed; that is, they may be taxed on an ad valorem assessment, as other property owned by individuals may be taxed; provided that the tax so imposed upon shares shall not exceed the rate imposed upon shares in any of the banks organized under authority of the State where such association is located. There was no rate of taxation imposed upon the shares in any of the banks created by or organized under the authority of the State of Missouri at the time of the creation of this national bank, nor is there any now. The tax on shares is not a tax on capital. (Van Allen v. Nolan, 3 Wall. 583; Bradley v. The People, 4 Wall. 459.) Nor is a tax on the capital equivalent to a tax on shares. (See opinion of Judge Nelson in Van Allen v. Nolan, 3 Wall. 581.) The case of Bradley v. The People, 4 Wall. 459, is directly in point. The act of the legislature of Illinois provides for taxing the capital stock of the banks just as the act of Missouri does.

But admitting that the assessment and levy of the tax in this case had been conformable to the present State law on the subject of the assessment of shares of stock in corporations, and that the legislature had the authority to pass such a law in violation of the stipulation made with the banks; still, such assessment, if made under the present State law, would not be conformable to the provisions of the act of Congress. The act of Congress provides that the shares of an individual or the shares of a corporation may be included in the valuation of the personal property of such individual or corporation in the assessment of State taxes. The present law of Missouri does not provide for including shares of stock held by individuals in the valuation of personal property of such individual; the assessment must be against the corporation, and the tax is to be paid by the corporation. By the act of Congress, the mode of assessment, as well as the amount, is pointed out, and the State law must conform to it. The tax can not be paid over the counter of the bank. This would subject the bank to a foreign and hostile jurisdiction; it would give to the States the power to control the banks which are created under the authority of the Federal Government to provide a national currency. (See, on this point, Markoe v. Hartranfft, 6 Am. Jur., N. S., 487, approved in the case of The City of Pittsburgh v. First National Bank, 55 Penn. St. 52.) The law of Pennsylvania under which this decision was made is in substance precisely the same with ours. The tax was to be paid over the counter of the bank, by requiring the cashier to collect it from every stockholder and pay it. (See, also, Frazier v. Siebern et al., 6 Am. Jur., N. S., 475, a case decided by the Supreme Court of Ohio.) The national banks are stated, by the Supreme Court of Pennsylvania, in the decision above referred to, to be as entirely independent of State legislation and State interference as the army and navy, the mint, and the judicial tribunals of the United States. (55 Penn. St. 48.)

III. But it is said that the provisions of our own State law taxing shares, being older than the act of Congress, must control. The Third National Bank was incorporated on the 25th day of December, 1863, as stated in the petition, under the provisions of the act of Congress of February 25, 1863. Under that act there was no provision authorizing the States to tax the shares of national banks at all. On the contrary, the nineteenth section of that act provides for a payment of one per cent. upon the amount of circulation, in lieu of all taxation upon circulation or upon bonds, leaving the question open as to whether the States might tax the shares or not. The act of the legislature of Missouri containing the provisions of the present revenue law was first passed on the 4th of February, 1864. (Adj. Sess. Acts 1863, p. 69, §§ 19, 20.) Then the act of Congress of June, 1864, declares that banking associations organized under the act of February 25, 1863, shall enjoy all the rights and privileges, and be subject to all the duties, liabilities and restrictions, provided by the act of 1864. And this is the act that contains the proviso declaring that the tax on shares of national banks shall not exceed the rate of taxation on shares of banks created by State authority. This proviso, then, applies as fully to the Third National Bank, organized under the...