The Iowa State Savings Bank v. The City Council of the City of Burlington

• Decision Date: 16 January 1895
• Citation: 61 N.W. 851,98 Iowa 737
• Parties: THE IOWA STATE SAVINGS BANK v. THE CITY COUNCIL OF THE CITY OF BURLINGTON, et al., Appellants
• Court: Iowa Supreme Court

61 N.W. 851

98 Iowa 737

THE IOWA STATE SAVINGS BANK v. THE CITY COUNCIL OF THE CITY OF BURLINGTON, et al., Appellants

Supreme Court of Iowa, Des Moines

January 16, 1895

Appeal from Des Moines District Court.--HON. JAMES D. SMYTHE, Judge.

THIS was a proceeding instituted before the city council of the city of Burlington, acting as a board of equalization, for the correction of an assessment. The board of equalization refused the relief asked, and the plaintiff appealed to the district court. That court, after a hearing upon the merits set aside and canceled the assessment, and from that action the defendants, the city of Burlington, the city council, and the members thereof, the county auditor, and the county treasurer, appeal.

Reversed.

Seerley & Clark and Geo. S. Tracy for appellants.

Power Huston & Power for appellee.

OPINION

ROBINSON, J.

The plaintiff is a corporation, organized as a savings bank under the laws of this state, with a paid up capital of one hundred thousand dollars. In January, 1892, plaintiff had in its possession, set apart as and for the capital stock of the bank, the sum of one hundred thousand dollars, in legal tender notes of the United States. In addition, it had a surplus of one hundred and twelve thousand, three hundred and thirty-one dollars and thirty-nine cents, which represented the undistributed profits of the business. Of that amount forty-eight thousand, three hundred and thirteen dollars and ninety-three cents were invested in real estate. The plaintiff was assessed for moneys and credits in the sum of sixty thousand dollars. It is not claimed that the portion of the surplus invested in real estate was properly assessable in the manner attempted, but it is insisted that the remainder, amounting to sixty-four thousand, seventeen dollars and forty-six cents, was subject to assessment as the property of the plaintiff; and the question we are required to determine is, how should the surplus moneys and credits of a savings bank be taxed? The appellant contends that such a surplus is the property of the stockholders, and the thought seems to be that although the bank has possession of and the legal title to, the surplus, yet its value is balanced by the obligation to distribute it, and hence that, under section 1291 of McClain's Code, nothing remains to assess on account of it. That section provides that, "in making up the amount of money or credit, which any person is required to list or have listed or assessed, he will be entitled to deduct from the gross amount, all debts in good faith owing by him." It was held in Equitable Life Insurance Co. v. Board of Equalization of Des Moines, 74 Iowa 178 (37 N.W. 141), that each stockholder of a corporation has an interest in the property to which it holds title, which represents an obligation or debt of the corporation to the stockholder, and that the rule applies not only to money paid as a part of the capital stock, but to profits also; and it was said that the surplus goes to increase the value of the stock, and is reached, through the stock, for taxation. It was therefore held that the amount which the stockholders would be entitled to receive upon a present distribution of the money and credits of the corporation, should be deducted from its moneys and credits in listing them for taxation. The corporation under consideration in that case was a life insurance company, the capital of which was taxable to the shareholders. But savings banks are governed by a different rule, contained in section 28, of chapter 60, of the acts of the Fifteenth General...