People of the State of New York Ex Rel Amoskeag Savings Bank of Manchester, New Hampshire v. Lawson Purdy

• Decision Date: 01 December 1913
• Docket Number: No. 6,6
• Parties: PEOPLE OF THE STATE OF NEW YORK EX REL. AMOSKEAG SAVINGS BANK OF MANCHESTER, NEW HAMPSHIRE, Plff. in Err., v. LAWSON PURDY and Others, Commissioners of Taxes and Assessments of the City of New York
• Court: U.S. Supreme Court

231 U.S. 373

34 S.Ct. 114

58 L.Ed. 274

PEOPLE OF THE STATE OF NEW YORK EX REL. AMOSKEAG SAVINGS BANK OF MANCHESTER, NEW HAMPSHIRE, Plff. in Err.,

v LAWSON PURDY and Others, Commissioners of Taxes and Assessments of the City of New York.

No. 6.

Argued December 4 and 5. 1912.

Decided December 1, 1913.

Messrs. Maxwell evarts and George Richards for plaintiff in error.

Messrs.

[Argument of Counsel from page 374 intentionally omitted]

[375]

William Herbert King, Lawson Purdy, and Archibald R. Watson for defendants in error.

Mr. Justice Pitney delivered the opinion of the court:

The question presented is the validity of certain taxes imposed in the year 1908 by the taxing officers of New York city upon some shares of stock in certain national banking associations located in that city, which shares were owned by the relator, a New Hampshire corporation doing business in its home state. The taxable value of the shares was ascertained by the commissioners of taxes and assessments, in accordance with the provisions of the law of the state of New York, by adding together the capital, surplus, and undivided profits of each bank, and dividing the amount by the number of outstanding shares. It is admitted that at the time of the making of this assessment the relator owed just debts exceeding the value of its gross personal estate, including its bank shares, after deducting therefrom the value of its property taxable elsewhere and the value of its property not taxable anywhere; that no portion of such debts had been deducted from the assessment of any of its personal property, other than the bank shares; and that no portion of the indebtedness was contracted in the purchase of nontaxable property or securities, or for the purpose of evading taxation. Relator made application to the commissioners of taxes and assessments for the cancelation of the assessment, upon the ground that it was entitled to have its indebtedness deducted from the assessed valuation of the bank shares. This application was denied, a proceeding by certiorari taken to review the determination of the commissioners was dismissed at the special term of the supreme court of New York; the appellate division affirmed the dismissal (134 App. Div. 966, 119 N. Y. Supp. 1139), upon the authority of People ex rel. Bridgeport Sav. Bank v. Feitner, 191 N. Y. 88, 83 N. E. 592, and the court of appeals affirmed the order of the appellate division, upon the same authority (198 N. Y. 503, 92 N. E. 1096). The case comes here by writ of error under § 709, Rev Stat. (U. S. Comp. Stat. 1901, p. 575) (Judicial Code, § 237 [36 Stat. at L. 1156, chap. 231, U. S. Comp. Stat. Supp. 1911, p. 227]), upon the ground that the taxation imposed is in violation of the rights of the relator under § 5219, Rev. Stat. (U. S. Comp. Stat. 1901, p. 3502).¹

The contention of the plaintiff in error, made in the state tribunals and reiterated here, is that the taxes are invalid because made without allowing any deduction for relator's debts, as alleged to be allowed by the laws of New York in the case of other moneyed capital in the hands of individual citizens of that state; it being insisted that inasmuch as the debts of relator exceeded the valuation of the bank shares, the assessment should be wholly canceled.

The taxing laws in force at the time the assessment was made were, in the following year, consolidated and re-enacted as the 'tax law.' (Laws 1909, chap. 62; in effect February 17, 1909, Consol. Laws, chap. 60.) Those sections that are deemed in anywise pertinent to the matter in issue are set forth in full in the margin.¹ Sec. 21 provides for the preparation of the assessment roll, and requires that it shall contain separate columns, in which the assessing officers shall set down the pertinent items, and, among others, '4. In the fourth column the full value of all the taxable personal property owned by each person respectively, after deducting the just debts owing by him.' This provision is held to apply equally to corporations and individuals (People ex rel. Cornell S. B. Co. v. Dederick, 161 N. Y. 195, 55 N. E. 927), and has the effect of allowing a deduction of the amount of the debts of the taxpayer from the valuation of his general personal estate, not, however, including bank shares, which are dealt with in other sections. Sec. 23 requires the chief fiscal officer of every bank or banking association organized under the laws of the state or of the United States to furnish an- nually, on or before July 1st, to the assessors of the tax district in which its principal office is located, a sworn statement of the condition of the bank on the 1st day of June next preceding, stating the amount of its capital stock, surplus, and undivided profits, the number of shares and the names and residences of the stockholders, with the number of shares held by each. Sections 13 and 24 relate to the taxation of these shares, stockholders in state and in national banks being treated alike. Section 13 takes the place of § 13 of the tax law of 1896 (Laws, 1896, chap. 908, p. 802). Section 24 of the latcapital ter act was amended by Laws 1901, chap. 550; Laws 1902, chap. 126; Laws 1903, chap. 267; Laws 1907 chap. 739; and in its final form became § 24 of the tax law of 1909. In this form § 24 is evidently a more recent enactment than § 13, and, so far as inconsistent, impliedly repeals it. The provision of § 13 for taxing bank shares in the district where the bank is located remains in force. It will be observed that § 24 declares (in obedience to § 5219, Rev. Stat. [U. S. Comp. Stat. 1901, p. 3502] ) that 'the assessment and taxation shall not be at a greater rate than is made or assessed upon other moneyed capital in the hands of individual citizens of this state;' that the valuation of the shares of going concerns is to be ascertained by dividing the amount of capital stock, surplus, and undivided profits by the number of shares; the valuation, in the case of banks in liquidation, to be fixed by dividing the actual assets by the number of shares; that a fixed rate of tax equal to 1 per centum upon the value thus ascertained is imposed without deduction because of the personal indebtedness of the owners, or for any other reason; that the tax is in lieu of all other state taxation upon the choses in action and personal property held by the bank whose value enters into the valuation of its shares of stock; that this section is not to be construed as an exemption of the real estate of the banks from taxation; and that no share of stock of such banks, by whomsoeven ever held, is to be exempt from the tax imposed. In construing § 24, the court of appeals of New York had held (People ex rel. Bridgeport Sav. Bank v. Feitner, 191 N. Y. 88, 96, 83 N. E. 592) that the effect of introducing into the section the limitation prescribed by § 5219, Rev. Stat. (U. S. Comp. Stat. 1901, p. 3502), is such that if any bank is located in a tax district where the rate is less than 1 per centum, its stockholders are entitled to a reduction to conform to the local rate.

Respecting other moneyed capital, trust companies, by § 188, are subjected to an annual franchise tax 'equal to 1 per centum, on the amount of its capital stock, surplus, and undivided profits.' The practical burden of such a tax (which of course falls eventually upon the stockholder) is presumably not materially different from the burden of a tax at the same rate, imposed upon the individual stockholder on a valuation of his shares, arrived at by taking into consideration the same elements of capital stock, surplus, and undivided profits. And of course the stock- holder has no relief from such a franchise tax because of his individual debts. By § 189 savings banks are subjected to a franchise tax of 1 per centum on the par value of the surplus and undivided earnings. These institutions are thus apparently taxed upon the basis of what they possess over and above what they owe to their depositors. The individual banker, by §§ 14 and 25, is taxed at the place where his business is located upon he 'amount of capital invested in his banking business.'

It is not insisted that this tax law discriminates against national banks or the stockholders thereof as compared particularly with individual bankers, trust companies, or savings banks. The ground of complaint is that § 24, in providing that owners of bank stock (state or national) shall not be entitled to deduction from the taxable value of their shares because of their personal indebtedness, is contrary to the restriction contained in§ 5219, Rev. Stat (U. S. Comp. Stat. 1901, p. 3502), that the shares of national banks shall not be taxed 'at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such state,' because, under § 21 of the tax law, all persons are permitted to deduct their debts from their other taxable personal property in general, including, as is claimed, other moneyed capital.

Plaintiff in error relies chiefly upon the decision of this court in New York v. Weaver, 100 U. S. 539, 25 L. ed. 705. That case was in effect a review of the decision of the court of appeals of New York in People ex rel. Cagger v. Dolan, 36 N. Y. 59. The question was as to the validity of an assessment and taxation of national bank shares in the city of Albany under the state law of April 23, 1866 (N. Y. Laws 1866, p. 1647), without deduction because of the indebtedness of the taxpayer, in view of the fact that under other laws the owners of other kinds of personal property were entitled to have the amount of their debts deducted from the valuation for the purposes of taxation. The state court in the Dolan Case had justified the method adopted in taxing the bank shares, upon reasoning that assumed 'that while Congress limited the state authorities in reference to the ratio or percentage levied on the value of these shares, which could not be greater than on...