Roberts v. American Nat. Bank of Pensacola

Decision Date01 April 1929
PartiesROBERTS, County Tax Collector v. AMERICAN NAT. BANK OF PENSACOLA.
CourtFlorida Supreme Court

Suit by the American National Bank of Pensacola against J. S Roberts, as Tax Collector of the County of Escambia. Decree for complainant, and defendant appeals.

Affirmed.

(Syllabus by the Court.)

Appeal from Circuit Court, Escambia County; A. G Campbell, judge.

COUNSEL

Fred H Davis, Atty. Gen., and H. E. Carter, Asst. Atty. Gen., for appellant.

Watson & Pasco & Brown, of Pensacola, for appellee.

OPINION

WHITFIELD P.J.

This appeal is from a final decree adjudging 'to be invalid and void' an assessment of state and county taxes for the year 1925 on the shares in a national bank, and perpetually enjoining the collection of the tax as assessed; an order overruling a demurrer to the bill of complaint and granting a temporary injunction having been affirmed on appeal. Roberts, as Tax Collector, v. American National Bank of Pensacola, 94 Fla. 427, 115 So. 261.

The shares in a national banking association cannot be taxed under state authority except as Congress consents, and then only in conformity with the restrictions attached to such consent given. Des Moines National Bank v. Fairweather, 263 U.S. 103, 106, 44 S.Ct. 23, 68 L.Ed. 191; First National Bank of Guthrie Center v. Anderson, 269 U.S. 341, 347, 46 S.Ct. 135, 70 L.Ed. 295.

The United States Code Annotated contains the following:

'Sec. 548. State taxation.--The legislature of each State may determine and direct, subject to the provisions of this section, the manner and place of taxing all the shares of national banking associations located within its limits. The several States may tax said shares, or include dividends derived therefrom in the taxable income of an owner or holder thereof, or tax the income of such associations, provided the following conditions are complied with:
'1. (a) The imposition by said State of any one of the above three forms of taxation shall be in lieu of the others.
'(b) In the case of a tax on said shares the tax imposed shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such State coming into competition with the business of national banks: Provided, That bonds, notes, or other evidences of indebtedness in the hands of individual citizens not employed or engaged in the banking or investment business and representing merely personal investments not made in competition with such business, shall not be deemed moneyed capital within the meaning of this section.
'(c) In case of a tax on the net income of an association, the rate shall not be higher than the rate assessed upon other financial corporations nor higher than the highest of the rates assessed by the taxing State upon the net income of mercantile, manufacturing, and business corporations doing business within its limits.
'(d) In case the dividends derived from the said shares are taxed, the tax shall not be a greater rate than is assessed upon the net income from other moneyed capital.

'2. The shares or the net income as above provided of any national banking association owned by nonresidents of any State, or the dividends on such shares owned by such nonresidents, shall be taxed in the taxing district where the association is located and not elsewhere; and such association shall make return of such income and pay the tax thereon as agent of such nonresident shareholders.

'3. Nothing herein shall be construed to exempt the real property of associations from taxation in any State or in any subdivision thereof, to the same extent, according to its value, as other real property is taxed.

'4. The provisions of section 5219 of the Revised Statutes of the United States as in force prior to March 4, 1923, shall not prevent the legalizing, ratifying, or confirming by the States of any tax heretofore paid, levied, or assessed upon the shares of national banks, or the collecting thereof, to the extent that such tax would be valid under said section. (R. S. § 5219; Mar. 4, 1923, c. 267, 42 Stat. 1499.)' 12 USCA § 548.

This section was not intended to control the power of the state on the subject of taxation, or to prohibit the exemption of particular kinds of property, but to protect the capital invested in national bank shares from unfriendly discrimination by the states in the exercise of the taxing power. Adams v. Nashville (Tenn. 1877) 95 U.S. 19, 20, 24 L.Ed. 369; Mercantile Nat. Bank v. City of New York (C. C. N.Y. 1886) 28 F. 776, affirmed (1887) 121 U.S. 138, 7 S.Ct. 826, 30 L.Ed. 895.

It was intended by this section to comprehensively control the subject with which it dealt, and thus to furnish the exclusive rule governing state taxation as to the federal agencies created as provided in the section. Bank of California, National Ass'n, v. Richardson (1919) 248 U.S. 476, 39 S.Ct. 165, 63 L.Ed. 372, reversing (1917) 175 Cal. 813, 165 P. 152.

The federal statute forbids states to tax national bank shares 'at a greater rate than is assessed upon other moneyed capital * * * of individual citizens,' and 'was intended to prevent discrimination against moneyed capital of citizens invested in shares of national banks; and it is immaterial that state bank shares are taxed equally with shares of national banks.' Minnehaha Nat. Bank v. Anderson (D. C.) 2 F. (2d) 898; Eddy v. First National Bank of Fargo (C. C. A.) 275 F. 550.

The foregoing act of Congress prescribes the full measure of the power of the state to impose taxes upon national banking associations or their shareholders. Any assessment not in conformity therewith is unauthorized and invalid. First Nat. Bank of Gulfport v. Adams, 258 U.S. 362, 42 S.Ct. 323, 66 L.Ed. 661; People ex rel. Hanover Nat. Bank of City of New York v. Goldfogle et al., 234 N.Y. 345, 137 N.E. 612; First Nat. Bank of Guthrie Center v. Anderson, 269 U.S. 341, 46 S.Ct. 135, 70 L.Ed. 295; Minnehaha Nat. Bank v. Anderson (D. C.) 2 F. (2d) 897.

The purpose of the restriction contained in the act of Congress consenting to state taxation of the shares in national banking associations, is to render it impossible for any state, in taxing the shares, 'to create and foster an unequal and unfriendly competition with national banks, by favoring shareholders in state banks or individuals interested in private banking or engaged in operations and investments normally common to the business of banking. Mercantile National Bank v. New York, 121 U.S. 138, 155, 7 S.Ct. 826, 30 L.Ed. 895; Des Moines National Bank v. Fairweather, supra [263 U. S.] 116 (44 S.Ct. 23 ).

'The term 'other moneyed capital' in the restriction is not intended to include all moneyed capital not invested in national bank shares, but only that which is employed in such ways as to bring it into substantial competition with the business of national banks. Mercantile National Bank v. New York, supra [121 U. S.] 157 (7 S.Ct. 826 ); Aberdeen Bank v. Chehalis County, 166 U.S. 440, 461 (17 S.Ct. 629, 41 L.Ed. 1069).

'Moneyed capital is brought into such competition where it is invested in shares of state banks or in private banking; and also where it is employed, substantially as in the loan and investment features of banking, in making investments, by way of loan, discount or otherwise, in notes, bonds or other securities with a view to sale or repayment and reinvestment. Mercantile National Bank v. New York, supra, 155-157 (7 S.Ct. 826 ); Palmer v. McMahon, 133 U.S. 660, 667, 668 (10 S.Ct. 324, 33 L.Ed. 772); Talbott v. Silver Bow County, 139 U.S. 438-447 (11 S.Ct. 594, 35 L.Ed. 210).

'The restriction is not intended to exact mathematical equality in the taxing of national bank shares and such other moneyed capital, nor to do more than require such practical equality as is reasonably attainable in view of the differing situations of such properties. But every clear discrimination against national bank shares and in favor of a relatively material part of other moneyed capital employed in substantial competition with national banks is a violation of both the letter and spirit of the restriction. People v. Weaver, 100 U.S. 539 (25 L.Ed. 705); Boyer v. Boyer, 113 U.S. 689, 701 (5 S.Ct. 706, 28 L.Ed. 1089); National Bank of Wellington v. Chapman, 173 U.S. 205, 216 (19 S.Ct. 407, 43 L.Ed. 669). First National Bank of Guthrie Center v. Anderson, County Auditor, 269 U.S. 341, text 347, 348, 46 S.Ct. 135, 138 (70 L.Ed. 295).' Roberts v. American Nat. Bank, supra, 94 Fla. 427, 115 So. 261.

The state Constitution requires the Legislature to provide for a uniform and equal rate of taxation, and permits the Legislature to provide for special rates on intangible property, which special rates have not as yet been provided for. The Constitution also requires the Legislature to prescribe regulations to secure a just valuation of all property, both real and personal, with exceptions not material here. Section 1, art. 9, as amended at the general election 1924, vol. 5, p. 4401, Compiled General Laws 1927.

The taxation statutes of the state define 'real property,' and also define 'personal property,' or 'personal estate,' as including 'all public stocks or shares in all incorporated or unincorporated companies,' and provide that the shares of national banks shall be assessed as personal property, 'but not at a greater rate than is assessed on other moneyed capital in the hands of individuals.' Sections 895, 896, 907, Comp. Gen. Laws 1927. The rate of taxation in 1925 and subsequent years was the same on all property that is assessed. Chapter 11333, Acts 1925; chapter 12415, Acts 1927.

A national bank may, on behalf of its stockholders, maintain a suit to enjoin the collection of a...

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