Whitbeck v. Mercantile Nat Bank of Cleveland

• Decision Date: 23 April 1888
• Citation: 127 U.S. 193,8 S.Ct. 1121,32 L.Ed. 118
• Parties: WHITBECK, County Treasurer, v. MERCANTILE NAT. BANK OF CLEVELAND
• Court: U.S. Supreme Court

8 S.Ct. 1121

127 U.S. 193

32 L.Ed. 118

WHITBECK, County Treasurer, v. MERCANTILE NAT. BANK OF CLEVELAND.

April 23, 1888.

James Lawrence, Clarence Brown, and D. K. Watson, for appellant.

W. W. Boynton and John C. Hale, for appellee.

MILLER, J.

This is an appeal from the circuit court of the United States for the Northern district of Ohio. The Mercantile National Bank of Cleveland, Ohio, brought this suit against Horatio N. Whitbeck, the appellant here, as treasurer of Cuyahoga county, in that state, in which the city of Cleveland is located, to restrain him from the collection of certain taxes levied upon the shares of the capital stock of that bank. The substantial allegations of the bill are that, upon the assessment of the value of the shares of its capital stock for purposes of taxation, they were estimated at 65 cents on the dollar of their real value in money, while all other personal property in the city of Cleveland and county of Cuyahoga, including the moneyed capital in the hands of individual citizens of said city and county, was estimated at only 60 cents upon the same basis. This occurred in the following manner: The auditor of Cuyahoga county, in accordance with the rules and practice adopted for the valuation of other moneyed capital of individuals, fixed the taxable value of these bank shares at 60 per centum of their true value in money, and certified and transmitted the same to the annual state board of equalization for incorporated banks. This board made an order increasing the valuation to 65 per centum, which latter value was certified back to the auditor, and by him placed upon the tax duplicate for the year 1885. This was delivered to the defendant, the treasurer of said county, for the collection of the taxes thereon. Another point made by the bill was, that while the statutes of Ohio permit the tax-payer owning moneyed capital subject to taxation to make a deduction, from the amount assessed against him on account of credits, of the amount of his bona fide indebtedness, no such provision is made in regard to the indebtedness of any holder of bank stock. The bill sets up as affected by this proposition the names of certain shareholders of the plaintiff bank, who claim that they should be allowed this deduction for their indebtedness upon the taxable value of their bank shares. The case was tried before the circuit and district judges, sitting together, and a certificate of a division of opinion was made, accompanied by a statement of the facts on which the difference arose. A decree was entered in accordance with the opinion of the circuit judge, enjoining the collection of the amount represented by the difference between 60 and 65 per centum of the actual value of the stock, and granting the relief asked for by the shareholders who claimed a deduction on account of their indebtedness, except as to three of them.

As regards the allegation of a discrimination against the stockholders on account of the shares held by them, caused by the increase in the assessment of 5 per centum made by the state board of equalization, the matter is not altogether free from difficulty; but we are of opinion that there is such a discrimination as is forbidden by section 5219, Rev. St. U. S. It is certainly true that the tax upon personal property, including the moneyed capital of private citizens, in Cuyahoga county is made upon an estimate of 60 per centum of its cash value in all cases except with regard to bank stocks, and that in regard to these the valuation is fixed upon the same basis at 65 per centum. It is probably the fact, as alleged by the counsel for the treasurer, that the state board having these stocks under consideration may have made a truer estimate, and may have equalized their assessed value over the entire state; but this equalization, from the very nature of the functions and powers of that body, merely has reference to bank shares as among themselves; that is to say, its purpose is to make the capital stock of all incorporated banks in the state equal in valuation for the purposes of taxation so far as relates to their actual cash value. This board has no other power than this; it has no capacity to equalize the valuation of bank shares for taxation as compared with other moneyed capital in the state. Such capital may, therefore, have a valuation very much below its real value, and even very much below the conventional rate fixed upon bank stocks by the action of this body; and that result almost necessarily follows in this case from the nature of the powers which have been conferred upon it. While it has the power, and it is made its duty, to take the valuation of bank shares as reported to it by the auditor of Cuyahoga county, and make a comparison between it and the reports of the same character made to it by the 80 other counties in the state, it receives no such report in regard to any other moneyed capital. There is no means furnished it for the purpose of making a comparison of the proportion which the assessment sustains to the true value, as between the banks and the other moneyed capital of the state, in the different counties thereof. While it is not an absolute necessity that this method should result in a discrimination against the national banks, it is one of the probabilities, as has happened in this case, that...