State Bank v. Board of Revenue of Montgomery County

• Citation: 8 So. 852,91 Ala. 217
• Parties: STATE BANK v. BOARD OF REVENUE OF MONTGOMERY COUNTY.
• Decision Date: 12 February 1891
• Court: Supreme Court of Alabama

8 So. 852

91 Ala. 217

STATE BANK v. BOARD OF REVENUE OF MONTGOMERY COUNTY.

Supreme Court of Alabama

February 12, 1891

Appeal from circuit court, Montgomery county; JOHN P. HUBBARD Judge.

The State Bank, the appellant on this appeal, is a corporation duly incorporated under the laws of Alabama, and doing business in the city of Montgomery, with a capital stock, on the 1st day of January, 1889, divided into 1,000 shares of the par value of $100 a share. On the 4th day of February 1889, J. F. Leary, cashier of said bank, made and returned under oath to the tax assessor for Montgomery county a list of the number of the shares of the bank, the names and residences of each shareholder, and the fair market value of the shares. The stock was owned as follows: M. B. Houghton 304 35-100 shares; J. F. Leary, 598 70-100 shares; C. S Anderson, 86 95-100 shares; and L. Sessions owned 10 shares. When said Leary made said return to the said tax assessor said Houghton, by sworn statement, claimed that he was entitled to a deduction from the value of his shares of $11,500 for indebtedness owed by him, and that said indebtedness had not been deducted elsewhere from his taxes for the year 1889. Leary made a similar claim of $51,600. The tax assessor, in making his assessment of the value of said shares of stock for taxes, allowed the said deduction. On notice given to the said State Bank by the clerk of the board of revenue to appear before said board and show cause why its assessment should not be increased, its cashier went before the board of December 23, 1889, and objected to any increase in the assessment of taxes on the capital of said bank, and he then filed with the board a full statement, sworn to by said cashier, showing all the above facts, and objected to any further increase. After hearing the reasons, as given by said cashier, the said board of revenue ordered and adjudged that the said bank should be assessed upon its capital stock of $100,000 at the par value of $100,000. Thereupon the said State Bank filed an application in the circuit court, praying for a writ of certiorari to the clerk of the board of revenue to certify all the proceedings up to the circuit court. Upon motion of the board of revenue, the court quashed the application for the writ, and affirmed the action of the board. The State Bank now appeals, and assigns this ruling of the court as error.

Arrington & Graham, for appellant.

STONE C.J.

The appellant is a banking corporation created under the laws of Alabama, and the chief question raised by the record is whether in assessing the shares of the bank for taxation the shareholders are entitled to a credit or discount of the debts they severally owe from the value of their shares as a subject of taxation. But there is a preliminary question. The appellee contends that only the shareholders are competent to raise this question, and that the bank, as a corporation, is without interest in the suit, and cannot be heard to complain. On principle, it would seem this argument ought to be sound. It is the shareholder who is assessed, and the taxes, though paid by the bank, are paid for the shareholder and are properly chargeable, and no doubt are charged, against the shareholder's assets and effects in the bank's control. But the question has been several times before the courts, and in no case which has fallen under our observation was it decided that the bank could not maintain the suit. Bank v. Com., 9 Wall. 353; Cummings v. Bank, 101 U.S. 153; Hills v. Bank, 105 U.S. 319. We will not decide this case on the question of parties. If we were inclined to hold that the shareholders, and not the bank, should be the actors in this litigation, it is questionable if our decision would not have a double-edged effect. When the board of revenue took the initiative, with the purpose of raising the assessment against the shareholders, it caused a citation to show cause to be served, not on the shareholders, but on the bank itself. It proceeded, not against the shareholders, but against the bank. So, if there was any mistake of parties, it would seem the board of revenue committed the first mistake. In declaring the subjects of taxation our legislature had in contemplation the act of congress, section 5219 of the Revised Statutes, and made the attempt to steer clear of any and all obstacles interposed by that enactment, as construed by the supreme court of the United States. That was an enabling act. It conceded to the state legislatures the power to tax the shares owned by stockholders in the national banking associations located in their several jurisdictional limits, subject to two restrictions, one of which was and is "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." This clause of the act of congress has given rise to much litigation and to many decisions by the United States supreme court. Those decisions are binding on us whenever the question is raised on a statute of this state which imposes a tax on the shares in national banking associations. It will be discovered that in the rulings of that court of last resort on the question we have in hand no narrow or strict interpretation has been placed on the words or phrase "other moneyed capital," as found in the act of congress. Van Allen v. Assessors, 3 Wall. 573; People v. Weaver, 100 U.S. 539; Supervisors v. Stanley, 105 U.S. 305; Hills v. Bank, Id. 319; Bank v. Britton, Id. 322; Cummings v. Bank, 101 U.S. 153. We do not consider it necessary to specify in full the particular points ruled in the foregoing citations, because in those cases the rights and liabilities of shareholders in national banks were the subject of contention, whereas, in the present case, the contestants are shareholders in a bank which derived its existence and powers from the state government. The citations, however, are important in two aspects of the case before us: First, that investments in bank shares are embraced in the term "moneyed capital;" and, Second, that when state legislation permits the tax-payer to deduct his debts from his money investments, and treats only the difference as a subject of taxation, it cannot lawfully tax shares in a national bank without allowing a corresponding deduction. The case of Bank v. Britton, 105 U.S. 322, deserves some further consideration. The statute of Indiana permitted the tax-payer to deduct the amount of his debts from the amount of his "credits or money at interest, *** [and] all other demands against persons, or bodies corporate, either within or without the state," and assessed only the difference as a subject of taxation. It made no provision for such deduction from the value of shares in a national banking association, but taxed them at their par value. Now, literally, bank shares are not "credits or money at interest," and they are not "demands against persons or bodies corporate." Yet the court held that the tax-payer could only be taxed for the difference between his indebtedness and the value of his shares in the national bank. In Maguire v. Board, 71 Ala. 401, we considered our revenue law, which for the first time provided expressly for taxation of shares in national banks. That statute, which was a very comprehensive one, in enumerating the subjects of taxation contained this clause: "All money loaned and solvent credits, or credits of value, from which credits the indebtedness of the tax-payer shall be deducted, and the excess only shall be taxed." There was no provision for any deduction from the value of national bank shares. As we said above, it cannot be pretended that bank shares are either "money loaned, or solvent credits;" and hence it was contended the case was not brought within the restriction of the act of congress. Under the authority of the Evansville Bank Case, however, we felt constrained to hold that money invested in bank shares was "moneyed capital" within the act of congre...