Security Sav. Bank v. Board of Review of City of Waterloo

• Decision Date: 06 July 1920
• Docket Number: 33344
• Parties: SECURITY SAVINGS BANK, Appellant, v. BOARD OF REVIEW OF THE CITY OF WATERLOO, Appellee
• Court: Iowa Supreme Court

178 N.W. 562

189 Iowa 463

SECURITY SAVINGS BANK, Appellant, v. BOARD OF REVIEW OF THE CITY OF WATERLOO, Appellee

No. 33344

Supreme Court of Iowa, Des Moines

July 6, 1920

Appeal from Blackhawk District Court.--H. B. BOIES, Judge.

IN the district court, this was an appeal from the board of review of the city of Waterloo. The question involved pertained to the assessment of the shares of stock of the plaintiff bank. Such question is whether, in fixing the value of the shares of stock of plaintiff's bank for the purpose of assessment, the assessor should deduct from the amount of the moneyed capital, including surplus and undivided earnings the amount of such capital actually invested by the bank in real estate, as provided by Section 1322 of the Supplement to the Code, 1913, or whether such deduction for the purpose of valuation of the shares should be confined to the assessed value of such real estate, as provided by Code Section 1324. The trial court held that the measure of reduction should be the assessed value, and affirmed the action of the board of review accordingly. The plaintiff has appealed.

Reversed.

Pike Sias & Zimmerman and Pickett, Swisher & Farwell, for appellant.

Burr A Brown, for appellee.

EVANS, J. WEAVER, C. J., PRESTON and SALINGER, JJ., concur.

OPINION

EVANS, J.

To put the question concretely, the plaintiff bank had a total moneyed capital, including capital stock, surplus, and undivided earnings, of $ 127,720. The amount of this moneyed capital actually invested in real estate (mostly in Waterloo) was $ 67,886. The assessed value of this real estate was $ 40,260. These facts are not in dispute. The plaintiff bank furnished to the assessor the verified statement required by Section 1322, which showed a total actual value of capital, over and above the amount invested in real estate, of approximately $ 60,000. That is to say, the sum of $ 67,886 was deducted from $ 127,720. To the total actual value thus disclosed by such verified statement, the assessor added the sum of $ 27,626, being the difference between the amount actually invested in real estate ($ 67,886) and the amount of value at which such real estate was assessed ($ 40,260). The whole issue is involved in this item of $ 27,626 thus added by the assessor.

The plaintiff claims that, in the valuation of shares for the purpose of taxation, the sum of $ 67,886 should be deducted from the sum total of the capital stock, surplus, and undivided earnings; whereas the defendant contends that such deduction should be $ 40,260, and no more. If, in the valuation of shares for the purpose of taxation, it is requisite, under the statute, to deduct from the total capital the amount "actually invested," then plaintiff should prevail. If, on the other hand, the amount of such deduction should be the "assessed value" of the real estate, then the defendant should prevail, and the order of the trial court should be affirmed. The question thus presented is controlled primarily by Section 1322 of the Supplement to the Code, 1913, which is as follows:

"Shares of stock of national banks and state and savings banks, and loan and trust companies, located in this state, shall be assessed to the individual stockholders at the place where the bank or loan and trust company is located. At the time the assessment is made the officers of national banks and state and savings banks and loan and trust companies shall furnish the assessor with lists of all the stockholders and the number of shares owned by each, and the assessor shall list to each stockholder under the head of corporation stock the total value of such shares. To aid the assessor in fixing the value of such shares, the said corporation shall furnish him a verified statement of all the matter provided in Section 1321 of the Supplement to the Code, 1907, which shall also show separately the amount of the capital stock and the surplus and undivided earnings, and the assessor from such statement shall fix the value of such stock based upon the capital, surplus, and undivided earnings. In arriving at the total value of the shares of stock of such corporations, the amount of their capital actually invested in real estate owned by them and in the shares of stock of corporations owning only the real estate (inclusive of leasehold interests, if any) on or in which the bank or trust company is located, shall be deducted from the real value of such shares, and such real estate shall be assessed as other real estate, and the property of such corporation shall not be otherwise assessed. * * *"

Looking to this section of the statute alone, there could be little room for argument. It unequivocally requires a deduction of the amount of "capital actually invested in real estate." We need not enter here into an analysis of the provisions of this particular section, because the contention of the defendant, appellee, is made to rest, not upon the terms of this section, but upon the provisions of Section 1324, which reads as follows:

"If the assessor is not satisfied with the appraisement and valuation furnished as provided in the preceding sections, he may make a valuation of the shares of stock based upon the facts contained in the statements above required, or upon any information within his possession, or that shall come to him, and shall, in either case, assess to the owners the stock at the valuation made by him. If the officers of any corporation refuse or neglect to make the statement required, the assessor shall make a valuation of the capital stock of the defaulting corporation from the best information obtainable. In deducting, under the provisions of this chapter, the value of real estate from the actual value of the properties, shares or capital stock of any person, firm, association or corporation, the actual value at which said real estate is valued by the assessor or other taxing officer or body where the same is assessed shall be the value thereof."

It will be noted that the foregoing section presents a different yardstick for the measure of the amount of deduction than is presented in Section 1322. The contention for appellee is that this section has the effect to qualify or to interpret Section 1322. It is further contended that we so construed the effect of Section 1324 in In re Appeal of Valley Investment Co., 152 Iowa 84, 131 N.W. 669. A perusal of the two sections above quoted will clearly disclose that, if the two sections are to be deemed operative upon the same subject-matter, they present conflicting standards of measure. The first question, then, which arises, is: Does Section 1324 control or qualify the provisions of Section 1322 at the point of conflict? In the Valley Investment Co. case, 152 Iowa 84, a somewhat similar conflict was presented, as between Code Section 1323 and 1324. We held that Section 1324, was controlling, in that it was more definite and mandatory than was Section 1323. The argument for appellee at this point is that the same reasoning adopted in the cited case would be likewise applicable to the point of conflict between Sections 1324 and 1322. The argument is legitimate, so far as it goes, and would be very cogent, were it not for the legislative history of Section 1322. To this history we turn.

Sections 1321, 1322, 1323, and 1324, as originally enacted, and as they appeared in the Code of 1897, were parts of the same act, and carried the same legislative history. Section 1321 provided a method of assessment for private banks, or individuals doing a banking business. Section 1322 dealt with corporate banks, including national, state, and savings. Section 1323 and 1324 dealt with the assessments of corporations generally, excepting, however, such as were "otherwise provided for in this act." Under Section 1322, a different method was provided for assessing the shares of a national bank from that provided for assessing the shares of a state bank. In the first, they were assessed to the shareholder, and in the second, assessed to the bank. The only right which the state had to tax national banks at all was by the legislative permission of Congress, as expressed in the Federal statute, Rev. Stat., Section 5219 (U. S. Comp. St., Sec. 9784), as follows:

"Section 5219. Nothing herein shall prevent all the shares in any association from being included in the valuation of the personal property of the owner or holder of such shares, in assessing taxes imposed by authority of the state within which the association is located; but the legislature of each state may determine and direct the manner and place of taxing all the shares of national banking associations located within the state, 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. Nothing herein shall be construed to exempt the real property of associations from either state, county, or municipal taxes, to the same extent, according to its value, as other real property is taxed."

In Home Savings Bank v. City of Des Moines, 205 U.S. 503, 51 L.Ed. 901, 27 S.Ct. 571, the Supreme Court of the United States held that our Section 1322 was discriminatory as to national banks, and violative of Federal statute, Section 5219, and therefore inoperative as to national banks. The assessment involved in that case was set aside. The consequential result of that holding was that it left the state without any adequate statute for the assessment of the shares of national bank stock, even within the permission of the Federal statute, ...