People ex rel. Bridgeport Sav. Bank v. Feitner

• Decision Date: 31 January 1908
• Citation: 83 N.E. 592,191 N.Y. 88
• Parties: PEOPLE ex rel. BRIDGEPORT SAVINGS BANK v. FEITNER et al., Tax Com'rs.
• Court: New York Court of Appeals Court of Appeals

191 N.Y. 88

83 N.E. 592

PEOPLE ex rel. BRIDGEPORT SAVINGS BANK

v.FEITNER et al., Tax Com'rs.

Court of Appeals of New York.

Jan. 31, 1908.

Appeal from Supreme Court, Appellate Division, First Department.

Certiorari by the people, on the relation of the Bridgeport Savings Bank, to review the determination of Thomas L. Feitner and others, as commissioners of taxes and assessments of the city of New York, in assessing for taxation relator's shares of stock in ten national banks and one state bank. From an order of the Appellate Division (105 N. Y. Supp. 993), affirming an order dismissing the writ and confirming the assessment, relator appeals. Reversed.

Appeal from an order of the Appellate Division of the Supreme Court in the First Judicial Department, affirming an order made at Special Term, which dismissed a writ of certiorari and confirmed an assessment of taxes. The writ of certiorari was procured to review the determination of the respondents in assessing for the purpose of taxation certain shares of stock owned by the relator in one state bank and in ten national banks in the state of New York. The facts as both parties unite in stating them are as follows: ‘The relator is a Connecticut savings bank, and owned on June 1, 1901, the bank shares enumerated in the petition. It had on that day assets and liabilities of such character and amount that it would have been exempt from any taxation under the laws of New York had it been permitted to deduct its debts in arriving at its taxable surplus, as in the case of an individual taxpayer other than a bank stockholder. The assessment of relator's bank shares was made pursuant to the amendments of sections 23 and 24 of the tax law effected by chapter 550, pp. 1349, 1350, Laws 1901. The procedure was as follows: The chief fiscal officers of these banks reported to the defendants by July 1, 1901, the condition of their banks, as required by section 23 of the tax law. In June, 1901, the relator gave notice to the defendants that it claimed to be exempt from assessment on account of its deductible debts and tendered proofs of the fact, but was refused a hearing. At some time prior to October 30, 1901, the defendants assessed these stocks against the relator at the amounts named in the petition, and served written notice thereof upon the respective banks on October 31, 1901. On November 13, 1901, the writ herein was issued and served. The general tax rate for 1901 in the Borough of Manhattan where the banks were located was 2,31733 per cent.’ The tax on bank shares is fixed by section 24 of the tax law at 1 per centum. The assessment was confirmed by the court at Special Term and the Appellate Division affirmed the order; two of the justices dissenting. The relator appealed to this court.Charles F. Brown, for appellant.

Francis K. Pendleton, Corp. Counsel (George S. Coleman, of counsel), for respondents.

VANN, J. (after stating the facts as above).

No state has power to tax national banks without the consent of Congress, because they are agencies of the federal government, and the power to tax involves the power to destroy. Owensboro National Bank v. Owensboro, 173 U. S. 664, 19 Sup. Ct. 537, 43 L. Ed. 850. Congress gave its consent many years ago through a statute which commits the subject, including by express mention ‘the manner and place’ of taxing all shares of national banks located within a state to the Legislature thereof, ‘subject only to the two restrictions, that the taxation shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such state, and that the shares of any national banking association owned by nonresidents of any state shall be taxed in the city or town where the bank is located, and not elsewhere.’ The statute also provides that ‘nothing herein shall be construed to exempt the real property of associations from either state, county of municipal taxes, to the same extent, according to its value, as other real property is taxed.’ U. S. Rev. St. § 5219 [U. S. Comp. St. 1901, p. 3502]. The state of New York exercised this power by enacting sections 23 and 24 of the tax law, by which a new and special system of assessment and taxation was created and applied solely to banks, both national and state. The method or ‘manner’ of assessment rests primarily on a report which the chief fiscal officer of every bank is required to make to the assessors of the tax district where the bank is located, on or before the 1st day of July in each year, stating the amount of its authorized capital stock, the number of shares and the par value thereof, the amount of stock paid in, the amount of the surplus and undivided profits, a complete list of the shareholders, and the number of shares held by each. Tax Law, Laws 1901, p. 1349, c. 550, § 23.

The rule of assessment and taxation prescribed is that the rate shall be no greater than that imposed upon other moneyed capital in the state; and the rule of valuation is to add together the amount of the capital stock, surplus and undivided profits, and divide the result by the number of shares outstanding. The value of each share is thus ascertained, and the rate of tax prescribed is 1 per centum on such value, with no right to any deduction from the taxable value of the shares on account of the personal indebtedness of the owner thereof. This tax is in lieu of all other taxes for state, county, or local purposes, either on shares or on the personal property of the bank. The tax is levied by the board of supervisors of the several counties, except the county of New York, on or before the 15th day of December in each year by ascertaining through an inspection of the assessment rolls the assessed value of the shares, and mailing to the president or cashier of each bank a statement of the amount of its capital stock, surplus, and undivided profits, the number of outstanding shares, the value of each share, valued by the assessors according to the rule above prescribed, and the aggregate amount of tax to be paid by such bank. It is made the duty of each bank to collect the tax due upon its shares from the several owners thereof and to pay the same to the county treasurer, or in the city of New York to the receiver of taxes, within 15 days after the receipt of such statement. Id. § 24. The same section provides that ‘complaints in relation to the assessments of the shares of stock of banks and banking associations, made under the provisions of this act shall be heard and determined as provided in article two, section thirty-six of the tax law.’ The section closes with the proviso ‘that in the city of New York the statement of bank assessment and tax herein provided for shall be made by the board of tax commissioners of said city, on or before the 15th day of December in each year, and by them forth-with mailed to the respective banks and banking associations located in said city, and a certified copy thereof sent to the receiver of taxes of said city. The tax shall be paid by the respective banks in said city to the said receiver of taxes within fifteen days after the receipt of said statement, and said tax shall be collected by the said receiver of taxes and shall be by him paid into the treasury of said city to the credit of the general fund thereof. This act is not to be construed as an exemption of the real estate of banks or banking associations from taxation.’ These are the only sections of the tax law that apply especially to the assessment of shares of bank stock. Among other sections that are general in their application is section 35, which provides that the assessors shall complete the assessment roll on or before the 1st day of August and at once give notice where it may be seen and examined by any person until the third Tuesday of August next following, and that on that day they will meet at a time and place specified in the notice to review their assessments. It further provides that ‘in any city the notice shall conform to the requirements of the law regulating the time, place and manner of revising assessments in such city.’

Section 36 provides that ‘the assessors shall meet at the time and place specified in such notice, and hear and determine all complaints in relation to such assessments brought before them, and for that purpose they may adjourn from time to time.’ Provision is made for taking testimony and hearing proofs relating to any complaint and the assessment to which it relates, and, finally, that ‘the assessors shall, after said examination, fix the value of the property of the complainant and for that purpose may increase or diminish the assessment thereof.’ According to the charter of the city of New York (Laws 1901, p. 1, c. 466), the assessment rolls, containing the ‘assessed valuations of real and personal property,’ are to be completed ‘on or before the second Monday of January in each year.’ Section 899. The books are open to inspection until the 1st of April, and during said interval complaints may be made and errors corrected. Sections 892, 895, 898. During the months of April and May the commissioners act upon applications, previously made, to diminish the valuation, but their power to make corrections of any kind ceases by the 1st of June. The clerical work of preparing the revised rolls is finished by the first Monday of July, when the rolls are delivered to the board of aldermen and the commissioners no longer have even the custody thereof. Section 907. The tax rolls are completed and delivered to the receiver of taxes on or before the 15th of September, with the proper warrant annexed for the collection of the taxes, which are due and payable on the first Monday of October, with a reward for paying before the 1st of November and a penalty for not paying until after the 1st of December. Sections 914-916.

We have little trouble over the claim of the relator that the assessment upon its shares of stock in...