State Bank Comm'r v. Fid. Trust Co.

• Decision Date: 21 April 1944
• Citation: 37 A.2d 273
• Parties: ROBINSON, State Bank Commissioner, v. FIDELITY TRUST CO.
• Court: Maine Supreme Court

37 A.2d 273

ROBINSON, State Bank Commissioner,

v.FIDELITY TRUST CO.

Supreme Judicial Court of Maine.

April 21, 1944.

Report from Supreme Judicial Court, Cumberland County, in Equity.

Suit in equity by Homer E. Robinson, Bank Commissioner, for appointment of a conservator to liquidate the Fidelity Trust Company of Portland, in which the State filed a petition for allowance of a claim for a tax assessed against the company and payment thereof by the conservator out of assets remaining in his hands. On report.

Claim disallowed and cause remanded.

Before STURGIS, C. J., and THAXTER, HUDSON, MANSER, MURCHIE, and CHAPMAN, JJ.

Frank I. Cowan, Atty. Gen., and John O. Rogers, Asst. Atty. Gen., for petitioner.

Cook, Hutchinson, Pierce & Connell, of Portland, for Robert Braun, conservator of Fidelity Trust Co.

STURGIS, Chief Justice.

In this proceeding in equity brought by the Bank Commissioner under Public Laws 1933, Chapter 93, known as the Emergency Banking Act, by decree of the Supreme Judicial Court of March 18, 1933, a conservator pending hearing was appointed for the Fidelity Trust Company of Portland, a state trust and banking company, who, as ordered, forthwith began its liquidation, and, the appointment having on April 13, 1933 been confirmed and made permanent, the liquidation has continued without interruption and is still in progress. The State of Maine, by petition, here presents a claim for a tax assessed against the Fidelity Trust Company on May 15, 1933 and prays that it may be allowed and ordered paid by the conservator out of assets remaining in his hands. The claim being resisted, by agreement the case is reported for decision, on the legally admissible evidence, as law and equity require.

The tax in controversy was assessed against the Fidelity Trust Company by the State Bureau of Taxation on May 15, 1933 and as the semi-annual assessment for the first six months of that year of one-half of the annual tax upon the bank provided by R.S. c. 12, §§ 72-75, as modified by P.L.1931, c. 216. In Section 72, as modified, every domestic incorporated trust and banking company is required semi-annually on or before the first Saturdays of April and October to make returns, signed and sworn to by its treasurer, to the Bank Commissioner of the average amounts of its time and interest-bearing deposits for the six months preceding the last Saturdays of March and September together with statements of its deductible assets and investments with their par value, cost and book value, and it is the duty of the Bank Commissioner within thirty days thereafter to determine the cost and value of the assets and investments and transmit the same with the returns to the Bureau of Taxation. In Section 73, as modified, it is provided that the Bureau of Taxation shall thereupon deduct from the average amount of the deposits returned an amount equal to the cost and value, so determined, of the deductible assets and investments and upon the balance found assess an annual tax of one-half of one per cent; “one-half of said tax shall be assessed on or before the fifteenth day of May on the balance of said deposits so ascertained for the six months ending on and including the last Saturday of March, and one half on or before the fifteenth day of November on the balance of said deposits so ascertained for the six months ending on and including the last Saturday of September.” It is then made the duty of the Bureau of Taxation to certify the assessments to the State Treasurer and he to forthwith notify interested trust and banking companies and the taxes so assessed become payable within ten days after the fifteenth days of May and November. In section 74 the deposits upon which the taxes are based are exempted from municipal taxation. In Section 75, as modified, if a trust and banking company fails to make the required returns, the Bureau of Taxation is directed to assess the tax upon it on such valuation as is thought just and the assessment is final.

The tax is not a property tax but is an excise imposed upon the right of the bank to exercise the privileges of its franchise. The excise is not laid upon the property of the bank, or its deposits, or on the business which the bank transacted during the given periods, but upon the value of its franchise when the tax is assessed, that is, its capacity to then transact its business and enjoy the privileges granted by its charter, measured, if the returns are made, by the standard of its average deposits less allowable deductions for the six months preceding the designated dates, and measured, if the returns are not made, by the valuation placed upon it by the Bureau of Taxation. Jones v. Winthrop Savings Bank, 66 Me. 242; Provident Institution for Savings v. Massachusetts, 6 Wall. 611, 18 L.Ed. 907; Society for Savings v. Coite, 6 Wall. 594, 18 L.Ed. 897; Shippee v. Commercial Trust Co., 115 Conn. 313, 161 A. 781; Greenfield Savings Bank v. Commonwealth, 211 Mass. 207, 97 N.E. 927; Com. v. Lancaster Savings Bank, 123 Mass. 493; Com. v. People's Five Cents Savings Bank, 5 Allen, Mass., 428; State v. Central Savings Bank, 67 Md. 290, 10 A. 290, 11 A. 357; State v. Bradford Savings Bank & Trust Co., 71 Vt. 234, 44 A. 349; 102 A.L. R. 62, note. The imposition of a franchise tax of this kind is lawful in this State. Opinion of Justices, 102 Me. 527, 66 A. 726.

As a reading of the statute discloses the semi-annual taxes on trust and banking companies, by express mandate, shall be assessed on or before the fifteenth days of May and November. A tax cannot be said to be assessed until the amount is made certain. If returns are made by the bank certainty does not lie in the returns as and when made but in the amounts of the balances of its average deposits for the designated periods as and when they are found by the Bureau of Taxation after deducting the cost and value of enumerated assets and investments as determined by the Bank Commissioner. If no returns are made the amount of the tax is determined by the valuation fixed by the Bureau of Taxation and cannot rest on the returns. This statute differs materially from those which impose similar franchise taxes based solely on the returns of the bank and fail to expressly provide when the assessment shall be made. Under such statutes by construction the days when the returns are or should be made are deemed to be the dates of the assessments of the taxes and of their existence as subsisting debts. P.L.Me. 1875, c. 47, § 1, Jones v. Winthrop Savings Bank, supra; St.Mass.1862, c. 224, § 4 et seq.; Com. v. People's Five Cents Savings Bank, supra; General Statutes Conn. §§ 1285, 1287; Shippee v. Commercial Trust Co., supra. As to the time of the assessment, the statute is analogous to that which requires corporations generally to pay annual franchise taxes and fixes the date on or before which the taxes shall be assessed. R.S. c. 12, § 21 et seq. It has been decided that such taxes are assessable only as of the designated date and then only because debts of the corporation. Johnson v. Johnson Bros., 108 Me. 272, 80 A. 741, Ann.Cas.1913A, 1303. We think that a similar rule of construction should prevail here...