Ruffin v. Bd. of Commissioners of Orange Co.

• Decision Date: 30 June 1873
• Court: North Carolina Supreme Court
• Parties: ANNE M. RUFFIN v. THE BOARD OF COMMISSIONERS OF ORANGE CO.

69 N.C. 498

ANNE M. RUFFIN

v.THE BOARD OF COMMISSIONERS OF ORANGE CO.

Supreme Court of North Carolina.

June Term, 1873.

Where money is placed in a bank on deposit, in the usual course of business, it is a general deposit, and the depositor has no right to the particular money deposited, as he has in the case of a special deposit: Therefore held to be error in the Judge below, to charge that money so deposited, remained the money of the depositor.

United States Treasury notes, being one of the means used for the support and administration of the general government, cannot be taxed by a State. Nor can Congress for the same reason, tax any of the necessary means used to administer the government of any of the States.

The power of a State to tax the circulation of the National Banks, depends upon whether such circulation is for the use of the United States Government or for private profit. Congress can protect the circulation of those banks, by forbidding the States to tax it; until this is done, the States have the right to tax it.

( Lilly v. The Comm'rs of Cumberland, 69 N.C. 300, cited and approved.)

PETITION by the plaintiff to the Board of Commissioners of ORANGE county, praying a revision and correction of the list of taxables given in by her, heard by his Honor, Tourgee, J., at the Spring Term, 1873, of the Superior Court of said county.

His Honor being of opinion with the petitioner, directed the tax list to be corrected. From this order the Commissioners appealed.

The facts necessary to an understanding of the points decided, are fully set out in the opinion of the Court.

Attorney General Hargrove, for appellants , submitted:

1. Assuming that the United States Treasury notes are not taxable by State governments. There is no authority that I have seen deciding that National Bank notes are not taxable by State governments. It is true, the Veazie Bank v. Fenno, 8 Wallace, 549, may bear that construction, but it does not seem to be clear. Dissenting opinion of Judge NELSON, charges that view on the majority of the Court.

2. But if neither United States Treasury notes nor National Bank notes are taxable, still if the owner parts with them, either to an individual or a bank corporation, and takes in lieu of them a note or certificate of indebtedness, then he, the former owner, must pay on his solvent credit.

The individual or bank which may have thus acquired them, if the notes are kept on hand, would be entitled to have them exempt from taxation, but if the notes are changed into other property or evidence of indebtedness, such property would not be entitled to exemption. Walker v. Whitehead, from Georgia, only decides that a heavy tax on old debts was illegal, &c., it does not decide that a tax on solvent credits is unconstitutional.

Then arises the question. Was this deposit of the plaintiff a solvent credit? And to ascertain the true answer, we must determine whether it was a special deposit or a general deposit? It was a deposit on which the plaintiff could, if she chose so to do, draw interest. Interest was to be paid if she permitted it to remain six months.

The Bank in which it was deposited had no option as to paying interest; that depended solely upon the action of the plaintiff.

Nothing to the contrary appearing, when a deposit is made it will be taken to be a general deposit; here it was on deposit and the plaintiff had a right to receive interest, and so the bank was the debtor of the plaintiff. The bank was not bound, and it is not to be supposed that the bank would keep the money on hand in its vaults until the expiration of six months to see whether or not the plaintiff would call for it or not, and then at the end of six months pay interest on it.

The condition that “interest was to be paid if the deposit remained six months,” meant that interest was to be paid every six months, and if called for, or checked out before the expiration of any six months, counting from the date of deposit, then no interest was to be paid for that fraction of six months which had passed at the time the money must be called for. No bank would take money on special deposit and pay interest on it. It would be more likely to charge for keeping the “ notes.”

As to nature of deposit in bank, see Planters' Bank of Tennessee v. Union Bank of Louisiana, cited by His Honor Judge BUXTON, in Lilly v. Commissioners of Cumberland County, now before the Court.

Then this was not a special, but a general deposit--a loan--a solvent credit. The plaintiff calling it “money on hand” or on deposit in her complaint, or it being so listed improperly, on the tax list, cannot alter the true character of the subject matter, for that character is shown by “the case” as sent up by his Honor.

Our State Constitution, art. 5, sec. 3, requires that laws shall be passed taxing, by a uniform rule, all moneys, credits, investments in bonds, stocks, joint stock companies, or otherwise, and also all real and personal property according to its true value in money.”

This seems to be mandatory, and compels the Legislature to tax all ““moneys, credits,” &c., by a uniform rule. United States Treasury notes and National Bank notes are money--a circulating medium--therefore a legal tender for all debts, with one or two exceptions.

There is no express constitutional provision prohibiting State governments from taxing the “instrumentalities” and “means” of the United States government; that doctrine is established by the decisions of the Courts on account of the relations between the Federal government and the States. If States could tax they could destroy the instrumentalities of Federal government, &c. But Congress may permit the States to tax the ““““instrumentalities” of the Federal government. It has permitted the States to tax shares in the National Banks. See Act of Congress, 3d June, 1864, 9 Wallace 469. It seems Congress has permitted North Carolina to tax “all moneys, credits, investments in bonds, stocks,” &c., (see art. 5, sec. 3, State Constitution,) where Congress approved our new Constitution with that provision in it; “and it is not to be supposed that it would have been done if it had been thought to be in violation of the Constitution of the United States.” See Jacobs v. Smallwood, 63 N. C. Rep. 116.

“Every presumption is to be made in its favor as having the approbation of the Convention of the State, and of the Congress of the United States.” See Bank v. Supervisors, 7 Wallace 468; Lionberger v. Rouse, 9 Wallace 468.

“State supreme within its sphere, as United States government in its, and Courts reluctant to interfere with power of taxation.” See Cooley on Constitutional Lim.; Sedgewick on Construction of Statutory and Constitutional Law, 1 C.

John W. Graham, for petitioner :

The plaintiff contends that the State and county have no right to tax money on deposit, when the money so deposited consists of United States Treasury notes, and notes of National Banks of the United States on these principles, decided by the Supreme Court of the United States in McCullock v. The State of Maryland, 4 Wharton, 316.

1. “The State governments have no right to tax any of the constitutional means employed by the government of the United States to execute its constitutional powers.”

2. “The States have no power by taxation or otherwise to retard, impede, burden, or in any manner control the operations of the constitutional laws enacted by Congress to carry into effect the powers vested in the National Government.”

3. The power of establishing a corporation is not a distinct sovereign power or end of government, but only the means of carrying into effect other powers which are sovereign.” Mr. Webster in his argument for Mr. Cullock says: “The only question is, whether a bank in its known and ordinary operations is capable of being so connected with the finances and revenues of the government, as to be fairly within the discretion of Congress, when selecting means and instruments to execute its powers and perform its duties.” Corporations are but means. The only inquiry therefore, is whether the law imposing this tax be consistent with the free operation of the law establishing the bank, and the full enjoyment of the privileges conferred by it. If it be not, then it is void; if it be, then it may be valid. “If the State may tax the bank, when shall they stop?” It is further argued that the power to tax involves the power to destroy, and the bank must depend on the State government for existence. “The government of the United States has a great pecuniary interest in this corporation.” It is true, that in our case, the United States own no stock in the National Banks; but they are organized under the Act of June 3d, 1864, “to provide a national currency,” and each note bears the endorsement, “this note is receivable at par in all parts of the United States, and in payment of all taxes and excises, and all other dues to the United States except duties on imports;” and also for all salaries and all other debts, and demands owing by the United States to individuals, corporations and associations within the United States, except the interest on the public debt; and the United States provide severe penalties for counterfeiting these notes. If they are not securities of the United States, how can Congress punish the counterfeiting thereof? What is the difference between a State's requiring each of these notes to be stamped, as in the case of McCullock, and imposing, as in our case, a tax of one per cent. on the 1st day of April, 1872, on each note, either on hand or on deposit? Why not 10 per cent. as well; and would not this tax prevent the object of Congress, in providing a uniform currency for the whole country? Congress has destroyed the State banks as banks of issue, by imposing a tax of 10 per cent. for the very purpose of making an opening for the national bank currency, and this law has been sustained by the Supreme Court of the...