The State ex rel. Compton v. Buder

• Decision Date: 13 April 1925
• Docket Number: 25730
• Parties: THE STATE ex rel. WILLIAM R. COMPTON and ST. LOUIS JOINT STOCK LAND BANK v. WILLIAM BUDER et al., Constituting Board of Equalization of City of St. Louis
• Court: Missouri Supreme Court

271 S.W. 770

308 Mo. 253

THE STATE ex rel. WILLIAM R. COMPTON and ST. LOUIS JOINT STOCK LAND BANK v. WILLIAM BUDER et al., Constituting Board of Equalization of City of St. Louis

No. 25730

Supreme Court of Missouri

April 13, 1925

Record quashed.

Bryan Williams & Cave for relators.

(1) The St. Louis Joint Stock Land Bank, being (as decided by the Supreme Court of Missouri in Smith v. Kansas City Title Company, 255 U.S. 180) a fiscal agent of the United States Government, is not subject to any tax whatever unless by the consent and permission of the United States Government. The Federal Farm Loan Act (U.S. Compiled Statutes 1916, secs. 9835a-9835z), under which the St. Louis Joint Stock Land Bank is organized, does, however, expressly permit the State to pass an act taxing (a) the shares of said company, (b) the dividends paid on the shares of said company as income of the shares, or (c) the income of such company. No act has, however, been adopted in this State levying a tax on the shares of stock in such companies as such. (2) The St Louis Joint Stock Land Bank is not a bank within the meaning of the provisions of Sec. 12775, R. S. 1919, and the attempted assessment against its shareholders under the provisions of said section, on the theory that it is a bank is therefore void. Federal Farm Loan Act (U.S. Compiled Statutes, secs. 9835a-9835z); Senator Walsh on Joint Stock Lands Banks, 83 Cen. Law. Journal, 354; R. S. 1919, secs 12775, 11780a, 11781; 1 Morse on Banks & Banking (5 Ed.) sec. 2; R. S. United States, sec. 3407; Selden v. Equitable Tr. Co., 94 U.S. 419; Kiggins v. Munday, 19 Wash. 233; Ore. & Wash. T. & I. Co. v. Rathbun, 18 Fed. Cas. 10555; State v. Comptoir Natl. Bank, 51 La. Ann. 1272; Dunn v. State, 13 Ga.App. 314; Life Assn. v. Levy, 33 La. Ann. 1203; Wells Fargo Co. v. Northern Pac. Ry. Co., 23 F. 469; Scott v. Burnham, 56 Ill.App. 28; Hamilton Natl. Bank v. Trust Co., 66 Neb. 67. (3) While no act has been passed in this State levying a tax against the shares of such land bank companies, the dividends on such shares are made taxable as income of the owners of such shares under the provisions of Secs. 13106, 13107, R. S. 1919, as amended by Laws 1921, p. 187. And such dividends are in fact taxable under said sections. (4) If land bank companies formed under the Federal Farm Loan Act be held to be banks within the meaning of Section 12775 and their shares taxable as such under the provisions of said section, and the dividends on such shares are taxable under the provisions of said Sections 13106 and 13107, an attempt to tax both the shares and the dividends thereon results, and neither act is effective, because, while the Federal Farm Loan Act permits the taxation of joint stock land banks, such permission is upon the express condition that the imposition by any state of any one of the three permitted forms of taxation shall be in lieu of all other forms. Sec. 5219, R. S. United States.

Oliver Senti and Daniel Bartlett for respondents.

(1) Shares in joint stock land banks may be included in the valuation of the personal property of the owners of such shares for the purpose of taxation, and the assessment and taxation shall be in manner and subject to the limitations and conditions contained in Sec. 5219, Revised Statutes of United States with reference to the shares of national banking associations. Federal Farm Loan Act of July 17, 1916, ch. 245, sec. 26 (U.S. Compiled Statutes, sec. 9835g2). Section 26 of Farm Loan Act, being a reference statute, and the reference to Section 5219 being specific, it does not embrace or include any subsequent modification of Section 5219, and hence the amendment of Section 5219 by Act of March 4, 1923, did not alter or affect in any way the right of the State to tax the shares of joint stock land banks. Lewis' Sutherland on Statutory Const. (2 Ed.) sec. 405; State v. Rogers, 253 Mo. 408; Gaston v. Lamkin, 115 Mo. 33; Postal Tel. & C. Co. v. So. Ry. Co., 89 F. 194; Kendall v. United States, 37 U.S. 524, 9 L.Ed. 1181; In re Heath, 144 U.S. 92, 36 L.Ed. 358. (2) And even if it be held that the State is put to its election as to which method of taxation of the shares in joint stock land banks the State will enforce, there is no showing that the State has enforced or is attempting to enforce any other method, or is attempting to levy any tax on the shares of St. Louis Joint Stock Land Bank other than that tax which relators, by the present proceedings, seek to avoid. (3) St. Louis Joint Stock Land Bank is organized and exists under the provisions of the Federal Farm Loan Act. Act of July 17, 1916, U.S. Compiled Statutes, sec. 9835. The State is authorized and empowered by Congress to assess and tax the shares in such banks. Federal Farm Loan Act, sec. 26. Thus, with sufficient authority from the act under which the bank was organized, shares therein may be assessed and taxed under the revenue laws of the State, and more particularly under Sec. 12775, R. S. 1919, which provides for the assessment of shares in "banks or joint stock associations doing a banking business." St. Louis Joint Stock Land Bank is a bank within the meaning of Section 12775. Century Dictionary and Cyclopaedia; Standard Dictionary; Encyclopaedia Britannica (11 Ed.); Federal Farm Loan Act of July 17, 1916; R. S. United States, sec. 5219; Smith v. Trust Co., 255 U.S. 180, 65 L.Ed. 577.

Jesse W. Barrett, Attorney-General, and J. Henry Caruthers, Assistant Attorney-General, amicus curiae.

(1) Shares of stock in banks, joint stock institutions or associations doing a banking business, are subject to taxation at their true value in money, less the value of real estate, if any, represented by such shares of stock. Sec. 12775, R. S. 1919; State ex rel. v. Shryack, 179 Mo. 424; State v. Citizens Bank, 274 Mo. 60. (2) The State may tax all the shares of national banking associations located within its limits, or the dividends therefrom in the taxable income of the owner or holder thereof, or the income of the associations. The imposition of any one of the above three forms of taxation shall be in lieu of the others. Sec. 5219, U.S. Statutes, as amended, March 4, 1923, (42 U.S. Statutes at Large, p. 1499); Owensboro Natl. Bank v. Owensboro, 173 U.S. 669; First Natl. Bank v. Meredith, 44 Mo. 500; State ex rel. v. Citizens Bank, 274 Mo. 67. (3) Section 26 of the Federal Farm Loan Act specifically exempts from federal, state, municipal and local taxation, Federal land banks and every national farm loan association, but as to joint stock land banks, declares that: "Nothing herein shall prevent the shares in any joint stock land bank 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 bank is located; but such assessment and taxation shall be in manner and subject to the conditions and limitations contained in Section fifty-two hundred and nineteen of the Revised Statutes with reference to the shares of national banking associations." 39 U.S. Statutes at Large, 360. (4) Joint stock land banks have been held by the Supreme Court of the United States to be banks with limited power. Smith v. Kansas City Title Co., 255 U.S. 210.

David E. Blair, J. All concur, except Atwood, J., not sitting.

OPINION

BLAIR

The St. Louis Joint Stock Land Bank, a corporation organized under the Federal Farm Loan Act and herein referred to as "land bank," and William R. Compton, owner of shares of stock of said land bank, seek our order quashing the record of the Board of Equalization of the City of St Louis, herein referred to as "board."

In response to our writ theretofore issued, a return was filed incorporating a stipulated record of the proceedings before the board. Relators filed their motion for judgment upon the pleadings, thereby admitting all facts well pleaded in said return. The Attorney-General has filed a brief as amicus curiae.

As appears in the stipulated record, the board made an order on April 12, 1924, directing "that an assessment be made against the shares of stock of said St. Louis Joint Stock Land Bank for taxes for the year 1924 on the basis of a total assessment in the sum of $ 603,292.87." The board was dissolved on April 12, 1924, and prior to the issuance of our writ. The records and minutes of the board are in the custody and control of respondent William Buder, herein referred to as "assessor."

The sole question in the case is the power and authority of the board to assess against said land bank, for taxation for state, city and school purposes, the value of the shares of stock owned by the shareholders of said land bank. It is conceded that the land bank is a Federal agency and that its shares of stock are not subject to taxation by the State or its agencies, except to the extent and in the manner authorized by Congress.

In the view we take of the case, it is unnecessary to enter into an extended consideration of the various provisions of the Federal Farm Loan Act which give rise to the authority of the State to take advantage of the Federal Government's permission to tax the shares of said land bank. We will assume that such authority exists. Relators concede this, but contend that the State of Missouri has not enacted any law to take advantage of such permission. Respondent assessor contends that Section 12775, Revised Statutes 1919, which was enacted long before the Federal Farm Loan Act was passed, is broad enough in its scope and meaning to serve as such authority.

Much space is taken in the briefs and numerous decided cases and text-writers are cited upon the question of whether or not the land bank is doing a banking business. It will be unnecessary to consider such...