Second Nat Bank of Titusville, Pennsylvania v. Caldwell

• Decision Date: 01 January 1882
• Citation: 13 F. 429
• Court: U.S. District Court — Western District of Pennsylvania
• Parties: SECOND NAT. BANK OF TITUSVILLE, PENNSYLVANIA, v. CALDWELL and others.

13 F. 429

SECOND NAT. BANK OF TITUSVILLE, PENNSYLVANIA, v. CALDWELL and others.

United States District Court, W.D. Pennsylvania.

October Term, 1882

Frank B. Guthrie, for plaintiff.

Samuel Grumbine and J. W. Smith, for defendants.

ACHESON D. J.

The plaintiff's claim to exemption from local taxation on its real estate rests upon the assumption that section 17 of the act of assembly of June 7, 1879, (P.L. 112,) entitled 'An act to provide revenue by taxation,' is still in full force. That section enacts that 'in case any bank or savings institution incorporated by this state, or any national bank, elect to collect annually from the shareholders thereof a tax of six-tenths of 1 per centum upon the par value of all the shares of said bank or savings institution, and pay the same into the state treasury on or before the twentieth day of June in every year, the shares capital, and profits of such bank shall be exempt from all other taxation under the laws of this commonwealth. ' And if the plaintiff's hypothesis that this law is in operation were correct, there would be good ground for its complaint that its real estate has been illegally assessed with local taxes; for it was held in County of Lackawanna v. First Nat. Bank of Scranton, 94 Pa.St. 221, that the banking house of a bank is part of the capital represented by its shares of stock, and a tax upon the par value of the shares, is a tax upon it.

But after that decision was made, the legislature on June 12 1881, passed an act entitled 'A supplement to an act entitled 'An act to provide revenue by taxation,' approved the seventh day of June, one thousand eight hundred and seventy-nine,' the third section of which is in these words: 'In case any bank or savings institution incorporated by this state, or the United States, shall elect to collect annually from shareholders thereof a tax of six-tenths of 1 per centum upon the par value of all the shares of said bank or savings institution, and pay the same into the state treasury on or before the first day of March in each year, the shares, and so much of the capital and profits of such bank as shall not be invested in real estate, shall be exempt from all other taxation under the laws of this commonwealth. ' The purpose of this section is not doubtful. Obviously the intention is to restrict the exemption from taxation conferred by the act of June 7, 1879, and to subject the real estate of banks to distinct taxation. Moreover, section 6 of the act of June 10, 1881, expressly repeals the seventeenth section of the act of June 7, 1879.

It is, however, contended on behalf of the plaintiff that the third section of the act of June 10, 1881, is inoperative and void, and for this several reasons are assigned:

1. The title to the act, it is said, is in conflict with section 3 of article 3, of the constitution of Pennsylvania: 'No bill, except general appropriation bills, shall be passed containing more than one subject, which shall be clearly expressed in its title. ' But it is the settled construction of this section that where an act of assembly is entitled a supplement to a former act, and the subject thereof is germane to the subject of the original act, its subject is sufficiently expressed to meet the constitutional requirement. State Line & Juniata R. Co.'s Appeal, 77 Pa.St. 429; Craig v. First Pres. Church, 88 Pa.St. 42. In the present case the supplement, from first to last, relates to revenue by taxation, and there is no provision in it incongruous with the original act.

2. It is insisted that the third section of the act of June 10, 1881, is in conflict with section 6 of article 3, of the constitution of Pennsylvania: 'No law shall be revived, amended, or the provisions thereof extended or conferred, by reference to its title only; but so much thereof as is revived, amended, extended, or conferred, shall be reenacted and published at length. ' It cannot, of course, be pretended that there is here any violation of the first part of this section, for there was no attempt to revive or amend the original act, or to extend or confer its provisions, by reference to the title only. The objection, as stated in the bill of complaint, is this: 'that said third section materially amends the provisions of section 17 of the act of June 7, 1879, (to which it is a supplement,) and fails to re-enact and publish at length so much of said act of June 7, 1879, as is thereby amended. ' But does the constitutional provision in question require that a supplemental and amendatory act must republish the original act or so much thereof as is amended? This I understand is what is insisted on. It seems to me, however, that such is not the natural or true construction of the clause. It is to be read as a whole, and thus considered its purpose is plain. It was intended to prevent covert legislation and the passage of laws whose meaning and object are not fully disclosed. If there is no attempt to legislate by reference to the title of the old law, it is, I think, sufficient if the proposed law in its amended form is 're-enacted and published at length.' Treating of a similar constitutional provision, Mr. Cooley, in his work on Constitutional Limitations, page 185, well says that the requirement 'is fully complied with in letter and spirit, if the act or section revised or amended is set forth and published as revised or amended, and that anything more only tends to render the statute unnecessarily cumbrous.'

3. Again, it is contended that the third section of the act of June 10, 1881, in so far as it would subject the real estate of national banks to taxation for local purposes, is inoperative and void for repugnancy.

The argument runs thus: Under the act of congress, (Rev. St. Sec. 5219,) only the shares and real estate of national banks are taxable under state laws, and the shares are not taxable at any higher rate than other moneyed capital of individuals. In Pennsylvania the moneyed capital of individuals is exempt from all local taxation, and was so exempt prior to the passage of the acts of June 7, 1879, and June 10, 1881. At the time of the passage of the latter act the only property of national banks taxable for local purposes was their real estate, and therefore the restricting words in the third section of the act of June 10, 1881, excepted from the operation of the act the only property of national banks to which the exemption could extend, and they thus constitute a saving clause repugnant to the purview of the act, and void. But the argument is not satisfactory, and, even if the premises were conceded, the conclusion sought to be deduced could not be accepted; for it was held in Hepburn v. The School Directors, 23 Wall. 480, that shares in national banks, in Pennsylvania, may be valued for taxation at an amount above their par value. The act of June 10, 1881, therefore, does unquestionably leave something for its exemption clause to act on, and the argument based upon a supposed repugnancy plainly fails.

It will be perceived that neither the act of June 7, 1879, nor that of June 10, 1881, peremptorily imposes a tax of six-tenths of 1 per centum upon the par value of the shares of stock. Under each of these acts the payment of that tax is optional with the banks. The former act gave the banks the election to pay the specified tax in commutation for all other taxes under the laws of the commonwealth; the latter act gives the banks the like option in commutation for all taxes, except that on real estate. The only difference is in the extent of the exemption. It is not pretended that the method of taxation contemplated by this legislation is open to constitutional objections, or contravenes the provisions of the national bank act. Indeed, the plaintiff is satisfied with and seeks the benefit of the act of 1879. But why could not the legislature modify that act by the amendments incorporated in the act of June 10, 1881? Clearly it was competent for the legislature to do so.

I am of opinion that none of the objections which the plaintiff has raised against the validity of the local taxation of its real estate for the year 1882, are tenable.

At the hearing of this case the validity of the ordinance of the city of Titusville, in so far as it attempts to impose a tax license upon national banks doing business in that city, was not much discussed; and at present I shall simply indicate what my impressions are on that subject. It seems to me the ordinance undertakes to tax the operations of national banks, and is a direct obstruction to the exercise of their corporate powers. I do not see that this license tax is distinguishable from the business tax involved in the case of the city of Pittsburgh v. First Nat. Bank of Pittsburgh, 55 Pa.St. 45, which the supreme court of Pennsylvania, following the authoritative cases of McCulloch v. State, 4 Wheat. 316, and Osborn v. U.S. Bank, 9 Wheat. 738, adjudged to be unconstitutional.

But it does not follow that because the tax is illegal, the plaintiff is entitled to an injunction to restrain the collection thereof; Dows v. Chicago, 11 Wall. 108; Hannewinkle v. Georgetown, 15 Wall. 547; State Railroad Tax Case, 92 U.S. 575; and I am of opinion that the bill does not bring the plaintiff's case within any of the recognized foundations of equitable jurisdiction. Id. The ordinance imposing the tax does not undertake to make it a lien, and it is not enforceable by any summary process. The ordinance gives an action of debt for its collection, and it is not otherwise collectible. To such action the bank can set up its defense, and therefore needs not equitable relief.

What has been said covers all the questions thus far raised, and it is only necessary to add that the motion for a preliminary...