Ward v. First Nat. Bank

• Decision Date: 12 May 1932
• Docket Number: 4 Div. 636.
• Citation: 225 Ala. 10,142 So. 93
• Parties: WARD, TAX COLLECTOR, v. FIRST NAT. BANK OF HARTFORD.
• Court: Alabama Supreme Court

142 So. 93

225 Ala. 10

WARD, TAX COLLECTOR, v. FIRST NAT. BANK OF HARTFORD.

4 Div. 636.

Supreme Court of Alabama

May 12, 1932

Appeal from Circuit Court, Geneva County; H. A. Pearce, Judge.

Action in assumpsit by the First National Bank of Hartford against F. J. Ward, as Tax Collector of Geneva County. From a judgment for plaintiff, defendant appeals.

Affirmed.

Mulkey & Mulkey, of Geneva, for appellant.

T. M Espy, of Dothan, and A. A. Smith, of Hartford, for appellee.

Cabaniss & Johnston, of Birmingham, amici curiæ.

GARDNER J.

Appellee (plaintiff in the court below) is engaged in the banking business at Hartford, Geneva county, Ala., having been organized under the laws of the United States.

The assessment for taxes on the shares of stock in the bank for the year 1930 amounted to $1,096.18, and the tax collector demanded payment, threatening a levy if not paid. On May 4 1931, the attorney for the bank tendered the amount due protesting at the time that it was illegal, and serving on the collector a protest in writing which also gave notice that suit would at once be instituted for its recovery. The collector receipted for the money, which receipt expressly recognized the payment under protest both verbal and written and made because of a threatened levy. A payment under protest was sufficiently shown, under the authority of Raisler v. Mayor, etc., of Athens, 66 Ala. 194.

While the assessment may be against the shareholders, all details as to report to the taxing authorities is made by the bank officials, and the bank is directed to make the payment of such tax, with the express provision that "it shall be no ground of objection to such assessment of shares that it is entered upon the assessment book in the corporate name of the bank." Gen. Acts 1923, pp. 161, 162. Having thus paid the money to the tax collector for and on behalf of the shareholders, the bank may legally discharge the tax collector upon a refund, and may therefore properly maintain this suit for its recovery. Bibb v. Hall & Farley, 101 Ala. 79, 14 So. 98; Rice v. Rice, 106 Ala. 636, 17 So. 628. The cases of McFarland, Treas. v. Cent. Nat. Bank (C. C. A.) 26 F. (2d) 890, and Boise City Nat. Bank v. Ada County (D. C.) 37 F. (2d) 947, are much in point, dealing with like situations as here presented, and fully supporting the conclusion reached.

It is well settled that where nothing remains to be done, but the payment of the money, recovery may be had on the common counts. Joseph & Bros. Co. v. Hoffman & McNeill, 173 Ala. 568, 56 So. 216; Catts v. Phillips, 217 Ala. 488, 117 So. 34.

The first count of the complaint is for money had and received. If plaintiff is entitled to recover at all, such recovery may be rested upon such a count. Under these circumstances, it becomes unnecessary to consider the question as to the accuracy of averments of the special counts 3 and 4, for even though their insufficiency should be conceded (a question not decided nor even intended as indicated), the error in overruling the demurrer thereto would have been harmless. Gillis v. White, 214 Ala. 22, 106 So. 166; Hamilton v. O'Rear (Ala. Sup.) 141 So. 565.

We pass, therefore, to the merits of the case. Plaintiff rested its right of recovery upon the theory the tax assessed was illegal and void as violative of section 5219, U.S. Revised Statutes (12 USCA § 548), which as here pertinent reads as follows: "In the case of a tax on said shares, the tax imposed shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such State coming into competition with the business of national banks: Provided, That bonds, notes, or other evidences of indebtedness in the hands of individual citizens not employed or engaged in the banking or investment business *** shall not be deemed moneyed capital within the meaning of this section." (Italics supplied.)

And the unlawful discrimination relied upon relates to proof of numerous loans of money, aggregating $234,000, by various individuals within a radius of its banking activities in and around Hartford, Ala., which loans were secured by mortgages on real estate, on personalty, and some by personal indorsements, with the added proof that this money was not taxed. Section 3022, Code 1923.

Plaintiff bank was shown to have made loans of like character and that during the period here in question made such loans in and within a radius of ten miles of Hartford, averaging about $100,000, with a capital stock of $30,000. That portion of section 5219, supra, which is italicized, was added by amendment by the Act of March 4, 1923, 42 Stat. 1499 (12 USCA § 548), but it has been held that such amendment does not change the meaning of the act as previously interpreted. First Nat. Bank v. Anderson, 269 U.S. 341, 46 S.Ct. 135, 138, 70 L.Ed. 295.

It is well settled that national banks are not merely private moneyed institutions but agencies of the United States created under its laws to promote its fiscal policies, and therefore such banks, their property, and their shares cannot be taxed under state authority, except as Congress consents and then only in conformity with the restrictions attached to its consent. Des Moines Nat. Bank v. Fairweather, 263 U.S. 103, 44 S.Ct. 23, 68 L.Ed. 191; First Nat. Bank v. Anderson, supra; Roberts v. American Nat. Bank, 97 Fla. 411, 121 So. 554.

Upon the question here presented, the decisions of the Federal Supreme Court are, of course, controlling, and the case therefore turns upon a proper interpretation thereof. The following excerpts from the decided cases will prove helpful in an understanding of the conclusion reached:

"The purpose of the restriction is to render it impossible for any state, in taxing the shares, to create and foster an unequal and unfriendly competition with national banks, by favoring shareholders in state banks or individuals interested in private banking or engaged in operations and investments normally common to the business of banking. Mercantile National Bank v. New York, 121 U.S. 138, 155, 7 S.Ct. 826, 30 L.Ed. 895; Des Moines National Bank v. Fairweather, supra, 116 [of 263 U.S., 44 S.Ct. 23].

"The term 'other moneyed capital,' in the restriction, is not intended to include all moneyed capital not invested in national bank shares, but only that which is employed in such way as to bring it into substantial competition with the business of national banks. Mercantile National Bank v. New York, supra, 157 [of 121 U.S., 7 S.Ct. 826]; Aberdeen [First Nat.] Bank v. Chehalis County, 166 U.S. 440, 461, 17 S.Ct. 629, 41 L.Ed. 1069.

"Moneyed capital is brought into such competition where it is invested in shares of state banks or in private banking, and also where it is employed, substantially as in the loan and investment features of banking, in making investments, by way of loan, discount or otherwise, in notes, bonds or other securities with a view to sale or repayment and reinvestment. Mercantile National Bank v. New York, supra, 155, 157 [of 121 U.S., 7 S.Ct. 826]; Palmer v. McMahon, 133 U.S. 660, 667, 668, 10 S.Ct. 324, 33 L.Ed. 772; Talbott v. Silver Bow County, 139 U.S. 438, 447, 11 S.Ct. 594, 35 L.Ed. 210.

"The restriction is not intended to exact mathematical equality in the taxing of national bank shares and such other moneyed capital, nor to do more than require such practical equality as is reasonably attainable in view of the differing situations of such properties. But every clear discrimination against national bank shares and in favor of a relatively material part of other moneyed capital employed in substantial competition with national banks is a violation of both the letter and spirit of the restriction." First National Bank v. Anderson, supra.

"From the section cited, it appears that the tax statutes of Wisconsin discriminate in favor of moneyed capital and capital investments within the state, represented by credits or intangibles, and against that invested in shares in banking corporations.

"But it is not sufficient to show this discrimination alone. The validity of the tax complained of depends upon whether or not the moneyed capital in the state thus favored is employed in such a manner as to bring it into substantial competition with the business of national banks.

"The question thus raised involves considerations both of fact and of law. To answer it, it is necessary to ascertain the nature and extent of the moneyed capital in the hands of individual citizens within the state and the relation of its employment, in point of competition, to the business of plaintiff and other national banks. It is necessary also to ascertain the precise meaning to be given the statute as applied to the facts in hand in order to determine whether the particular moneyed capital and the particular competition with which we are here concerned are moneyed capital and competition within the spirit and purpose of the statute. The question is thus a mixed one of law and fact, and in dealing with it we may review the facts in order correctly to apply the law. ***

"Competition may exist between other moneyed capital and capital invested in national banks, serious in character and therefore well within the purpose of section 5219, even though the competition be with some but not all phases of the business of national banks. Section 5219 is not directed merely at discriminatory taxation which favors a competing banking business. Competition in the sense intended arises not from the character of the business of those who compete but from the manner of the employment of the capital at their command. No decision of this court appears to have so qualified section 5219 as to permit discrimination in taxation in favor of

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