TOY NAT. BANK OF SIOUX CITY v. Smith

• Decision Date: 22 October 1934
• Docket Number: 696,938.,No. 695,695
• Citation: 8 F. Supp. 638
• Parties: TOY NAT. BANK OF SIOUX CITY, IOWA, v. SMITH, County Treasurer, et al. IOWA JOINT STOCK LAND BANK OF SIOUX CITY, IOWA, v. SAME. LIVE STOCK NAT. BANK OF SIOUX CITY, IOWA, v. SAME.
• Court: U.S. District Court — Northern District of Iowa

8 F. Supp. 638

TOY NAT. BANK OF SIOUX CITY, IOWA, v. SMITH, County Treasurer, et al.

IOWA JOINT STOCK LAND BANK OF SIOUX CITY, IOWA, v. SAME.

LIVE STOCK NAT. BANK OF SIOUX CITY, IOWA, v. SAME.

Nos. 695, 696, 938.

District Court, N. D. Iowa, W. D.

October 22, 1934.

Edwin J. Stason, of Sioux City, Iowa, for plaintiffs Toy Nat. Bank and Iowa Joint Stock Land Bank.

Peter S. Rask, of Minneapolis, Minn., and Edwin J. Stason, of Sioux City, Iowa, for plaintiff Live Stock Nat. Bank.

C. M. Stilwill, M. E. Duckworth, and A. R. Strong, all of Sioux City, Iowa, for defendants.

WOODROUGH, Circuit Judge.

These are three actions at law, consolidated, brought to recover taxes paid on the shares of stock of each of the plaintiff banks alleged to have been assessed and levied in violation of section 5219 of R. Stat. U. S., 12 USCA § 548, and the equal protection clause of the Federal Constitution. The Toy National Bank seeks to recover taxes so paid for the years 1923 to 1928, inclusive, in the amount of $40,292.83, with interest. The Iowa Joint Stock Land Bank seeks to recover taxes thus paid for the years 1923 to 1925, inclusive, in the amount of $27,733.97 with interest. The Live Stock National Bank seeks to recover taxes so paid in the amount of $15,593.25 for the years 1927 to 1931, inclusive.

Demurrers were filed to the original petitions of the Toy National Bank, the Iowa Joint Stock Land Bank, and the Security National Bank, and upon hearing the demurrers were overruled by Judge Scott on February 5, 1930, with an elaborate opinion responding to the legal questions involved. Toy Nat. Bank v. Nelson (D. C.) 38 F.(2d) 261. The cases came on for hearing on the amended petition of the Live Stock National Bank and the amended and substituted petitions of the Toy National Bank and the Iowa Joint Stock Land Bank and the answers and replies. The amended and substituted petitions of the Toy National Bank and the Iowa Joint Stock Land Bank alleged more in detail the difficulties of procedure involved to prosecute their claims before the statutory board of review, but did not set forth new causes of action. A jury was waived by stipulation of the parties, and the trial of the three cases consolidated was had to the court.

The question first presented is whether the order overruling the demurrers became the law of the case in its further progress in the trial court. The general rule is that, when a court has considered and determined a point in a case its conclusion becomes the law of the case, unless or until reversed by an appellate court, subject, of course, to the general authority of courts to vacate or set aside their judgments. 15 C. J. 961; Plattner Implement Co. v. International Harvester Co. (C. C. A. 8) 133 F. 376, 378; Hardy v. North Butte Min. Co. (C. C. A. 9) 22 F.(2d) 62; Commercial Union v. Anglo-South American Bank (C. C. A. 2) 10 F.(2d) 937; Cherry v. Howell (C. C. A. 2) 66 F.(2d) 713, 715; Messinger v. Anderson, 225 U. S. 436, 32 S. Ct. 739, 56 L. Ed. 1152; Universal Oil Products Co. v. Standard Oil Co. (D. C.) 6 F. Supp. 37; Friederichsen v. Renard (C. C. A. 8) 231 F. 882. The rule is one of comity and convenience in the interests of orderly judicial procedure; otherwise great confusion might arise if each judge called to sit in a case should set up his own independent opinion upon a question which had been already ruled upon. Judge Walter H. Sanborn, in the case of Plattner Imp. Co. v. International Harvester Co., supra, stated the rule as follows: "That rule is `that the various judges who sit in the same court should not attempt to overrule the decisions of each other * * * except for the most cogent reasons.' * * * The rule * * * is a rule of comity and of necessity. * * * By its terms it permits the `most cogent reasons,' such as a certainty that a previous ruling was erroneous * * * to present exceptions to it. But the rule itself, and a careful observance of it, are essential to the prevention of unseemly conflicts, to the speedy conclusion of litigation, and to the respectable administration of the law, especially in the national courts, where many judges are qualified to sit at the trials, and are frequently called upon to act in the same cases."

In the early and oft-cited case of Wakelee v. Davis (C. C.) 44 F. 532, 533, the court states that the ruling upon the proposition of law presented upon demurrer "is the law of this court, to be followed, upon similar facts, until a different rule is laid down by the supreme court." A subsequent decision by an appellate court upon an identical proposition ruled upon demurrer would present a cogent reason for disturbing the former order. But a mere difference in the interpretation of the import and weight to be given a subsequent decision by an appellate court should not require an annulment of the previous order. Commercial Union v. Anglo-South American Bank (C. C. A. 2) 10 F.(2d) 937. The purpose of the rule is to leave the litigants in the identical position in which they would have been had the same judge continued throughout the progress of the trial. Cherry v. Howell (C. C. A. 2) 66 F.(2d) 713; Plattner Imp. Co. v. International Harv. Co., 133 F. 376 (C. C. A. 8).

In the application of this rule to the instant case, I have noted carefully what Judge Scott decided in overruling the demurrers to the petitions. His rulings were in effect as follows:

(1) That the facts stated in the petitions were sufficient to show a violation of the federal statute (12 USCA § 548); (2) that a tax levied on shares of national banks in violation of section 5219, Rev. Stat. U. S. (12 USCA § 548), is void; (3) that the plaintiff banks did not waive their remedy to recover a void tax by failing to exhaust some administrative remedy; (4) that the plaintiffs did not waive their remedy to recover a void tax by failing to make formal protest; (5) that, under the Iowa statutes and decisions, an action at law is the proper remedy to recover void taxes illegally collected; (6) that the taxing statute of Iowa does not in its provisions contravene the equal protection clause of the Constitution of the United States nor the federal statute prohibiting the state from taxing national bank shares at a greater rate than other competing moneyed capital; (7) that the assessment and taxation of the shares of the Iowa Joint Stock Land Bank shall be in the manner and subject to the conditions and limitations contained in 12 USCA § 548, with reference to the shares of national banks (12 USCA § 932).

My first care is whether any of these propositions of law have been overruled by either the Circuit Court of Appeals or the Supreme Court of the United States since the ruling on the demurrer was made. In Nelson v. First Nat. Bank of Sioux City (C. C. A. 8) 42 F.(2d) 30, this court held that all adequate administrative remedies in matters of taxation had to be exhausted before resort to the courts could be had. The court held that the record failed to reveal facts showing the inadequacy of the administrative remedy in the particular case, but recognized as in Munn v. Des Moines Nat. Bank (C. C. A. 8) 18 F.(2d) 269, that peculiar facts might render the administrative remedy inadequate. The same rule is announced in First National Bank v. Harrison County (C. C. A. 8) 57 F.(2d) 56. Undoubtedly, in deference to these opinions, these plaintiffs amended their petitions to set forth the facts more completely, which they contended rendered resort to the statutory remedy entirely inadequate. In Security Nat. Bank v. Young (C. C. A. 8) 55 F.(2d) 616, 84 A. L. R. 100, which also involved an action at law to recover taxes illegally assessed and levied against the plaintiff national bank in South Dakota, this court, speaking through Judge Gardner, held that taxes levied in violation of section 5219 were illegal and void; that the administrative remedy accorded by the South Dakota statute was inadequate; but that the taxes had been paid voluntarily, and therefore could not be recovered. That case, governed by the well-recognized rule as to voluntary payment, is not decisive of this one, inasmuch as section 7235 of the Code of Iowa and the decisions of the Supreme Court of Iowa, as interpreted by Judge Scott, present an exception to the general rule and permit void or illegal tax payments to be recovered, even though voluntarily made and without protest. Slimmer v. Chickasaw County, 140 Iowa, 448, 118 N. W. 779, 17 Ann. Cas. 1028; Richards v. Wapello County, 48 Iowa, 507; Dickey v. County of Polk, 58 Iowa, 287, 12 N. W. 290; Commercial Nat. Bank v. Board, 168 Iowa, 501, 150 N. W. 704, Ann. Cas. 1916C, 227. The decision of the Court of Appeals, therefore, does not conflict with that of Judge Scott. In Knowles v. First Nat. Bank (C. C. A. 8) 58 F.(2d) 232, the court affirmed a decree permanently enjoining the collection of taxes against the shares of the plaintiff bank in excess of that collected from other competing moneyed capital. In Iowa-Des Moines Bank v. Bennett, 284 U. S. 239, 52 S. Ct. 133, 76 L. Ed. 265, the Supreme Court declined to consider the adequacy of the administrative remedy, and held that the more favorable taxation of competing domestic corporations entitled the plaintiffs to the relief sought (mandamus to compel refunds). The most recent case of First Nat. Bank v. Louisiana Tax Commission, 289 U. S. 60, 53 S. Ct. 511, 77 L. Ed. 1030, 87 A. L. R. 840, an action to annul taxes levied against the shares of plaintiff, was decided on the particular facts disclosed, and no discrimination was found to have existed. An examination of these cases convinces that the rulings of Judge Scott upon the legal propositions involved should be taken as the law of this case to be strictly followed by me.

The question then is whether the plaintiffs have by their proof sustained the burden of showing that the tax imposed upon the shares of stock of the plaintiffs is at a greater rate than that imposed...