259 Mass. 1 | Mass. | 1927
These are proceedings to recover a tax for the year 1921 paid under protest by the plaintiff to the defendant. One is a complaint under G. L. c. 59, § 65, for refusal by the
The complainant and plaintiff is a national banking association established under the statutes of the United States, having its usual place of business at Lynn. Its contention is that, although the provisions of our statutes respecting the taxation of shares in national banks as they existed prior to 1917 had been held to be valid and in conformity to the provisions of the controlling act of Congress, in Bank of Redemption v. Boston, 125 U. S. 60, yet since the passage of the income tax law, now G. L. c. 62, which became effective as to taxation for the year 1917, the previously established method of taxation of shares of stock in national banks has become illegal, because other moneyed capital in the hands of individual citizens of the Commonwealth employed in competition with national banks now is taxed at a much lower rate.
1. The complainant is not entitled to relief upon the complaint for abatement. The reason is that there has been no compliance with all the statutory mandates which must be met before there can be an abatement. It is provided by G. L. c. 63, § 4, that the cashier of every national “bank shall make and deliver to the assessors ... a statement on oath showing the name of each shareholder” in such detail as is there specified. The cashier of the complainant bank in fact did file with the assessors a list satisfying the statute in every particular except that it was not sworn to. The oath is imperative under our statutes. The requirement for the oath was not enacted for the benefit of the assessors, but for the protection of the public and in the general interest. It cannot be waived by any act of the assessors. Winnisimmet Co. v. Chelsea, 6 Cush. 477, 483. Amherst College v. Amherst, 193 Mass. 168. Boston Rubber Shoe Co. v. Malden, 216 Mass. 508, 511. Parsons v. Lenox, 228 Mass. 231. Dexter v. Beverly, 249 Mass. 167, 169. The filing of the “statement on oath” is a condition precedent to the maintenance by the taxpayer of a petition for an abatement. The right to
This is the reasonable construction of the statutes. There is nothing to indicate that the Legislature intended to except national banks from a general requirement as to filing sworn lists resting upon other members of the community. While a complaint for abatement may be maintained where the tax is wholly illegal, the filing of the list is nevertheless a condition precedent to the existence of the right to abatement.
It follows, from the terms of the governing statutes and the decisions rendered touching them already cited, that the circumstance, that the chairman of the board of assessors of the defendant accepted, within the time specified in the statute and without objection and in accordance with a practice of many years, the unsworn statement of the cashier of the complainant containing the requisite information, is of no consequence in this connection. Plainly the sovereign power may create reasonable conditions as prerequisites to the enforcement of rights in the courts. No further discussion is needed to demonstrate that a statement under oath is a reasonable condition precedent to judicial inquiry into the legality of taxes. The rulings that the list filed by the complainant did not comply with the law, and that the complaint for refusal of the assessors to abate the tax be dismissed, were right.
2. The pertinent facts respecting the action of contract to recover the taxes here in question as displayed in the record are in effect that the capital stock of the plaintiff is $200,000, divided into two thousand shares; that the assessors of the defendant determined as of April 1, 1921, that the value of each share of the capital stock of the plaintiff was $245, and levied a tax on all the stockholders of $28.48 on each $1,000 of fair cash value of shares owned by them, that being the rate fixed for the year 1921 on real estate and tangible personal property in Lynn. The tax thus levied, amounting to $13,916, was seasonably paid by the plaintiff, G. L. c. 63, § 2, under sufficient written protest. G. L. c. 60, § 98. Carleton v. Ashburnham, 102 Mass. 348, 350. It is stated in the exceptions: “During the years 1920 and 1921 said bank paid dividends to its shareholders at the rate of $10 per share for each year, said dividends aggregating $20,000 per year. Taxes on all taxable bonds, notes, taxable securities and other moneyed capital in the hands of individual
An action of contract, such as is the one at bar, to recover a tax under G. L. c. 60, § 98, cannot be maintained unless the tax is wholly void. That has been frequently determined. Harrington v. Glidden, 179 Mass. 486, where earlier decisions are collected and reviewed, affirmed in Glidden v. Harrington, 189 U. S. 255. Sullivan v. Ashfield, 227 Mass. 24. Collector of Taxes of West Bridgewater v. Dunster, 231 Mass. 291, 293.
The contention of the plaintiff is that the taxes here in question, thus assessed and collected, are violative of the provisions of the national banking act, U. S. Rev. Sts. § 5219. “National banks are not merely private moneyed
The permission extended by Congress to the several States to tax the shares of stock in national banks is in said § 5219 in these words: “the legislature of each State may determine and direct the manner and place of taxing all the shares of national banking associations located within the State, subject only to the two restrictions, that the taxation shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such State, and that the shares of any national banking association owned by non-residents of any State shall be taxed in the city or town where the bank is located, and not elsewhere.” Pursuant to the authority thus conferred there has been enacted G. L. c. 63, § 1, the relevant words of which are: “All shares of stock in banks . . . existing by authority of the United States . . . and located in the Commonwealth, shall be assessed to the owner thereof in the town where such bank is located, and not elsewhere, in the assessment of State, county, city and town taxes, whether such owner is a resident of said town or not. They shall be assessed at their fair cash value on April first, after deducting therefrom the proportionate part of the real estate belonging to the bank, at the same rate as other moneyed capital in the hands of citizens is by law assessed ... ”; and § 2 of the same chapter: ' ‘ Every such bank shall pay the tax so assessed . . . at the time when other taxes in the town become due . . . .” By G. L. c. 63, § 7, shareholders in national banks are liable to taxation only under that chapter. Other pertinent provisions of the tax law are G. L. c. 59, § 4: ... “Except as provided in the following section and in chapters sixty-two and sixty-three, personal estate for the purpose of taxation shall include: . . . Second, Money at interest, and other
The method of taxation thus framed has been in its essential features in operation since St. 1871, c. 390, § 1; see also St. 1868, c. 349, § 1, and St. 1865, c. 242, §§ 1, 3. It was valid because “other moneyed capital in the hands of individual citizens” of the Commonwealth employed in competition with national banks also was assessed at its fair cash value and taxed at the same rate. After the de
The argument urged in behalf of the plaintiff is that there has been to its harm a violation of U. S. Rev. Sts. § 5219, because shares of the bank were taxed at the rate of $28.40 per thousand of their fair cash value, while private individuals lending money in competition with banks were required to pay only $6 per hundred on the income received from such loans (provided they made full returns of their taxable income) and were exempt from all taxation based directly on the fair cash valuation of such loans. This argument is not founded on any change in the law, by which shares of stock in national banks are taxed, since it was upheld in 125 U. S. 60, but on the changes in the law respecting the taxation of other moneyed capital in the hands of individual citizens wrought by the income tax law, now G. L; c. 62. It does not seem to us necessary to consider the soundness of this argument, nor to determine whether the method of taxation and calculation of the tax adopted by the assessors of the defendant can be supported, nor to pass upon the effect of G. L. c. 62, § 49, imposing the former method of taxation (being the same in substance levied upon the plaintiff) upon the individual taxpayer who fails to make return of his income, nor to determine the weight in this connection of the excise tax on the corporate franchises of trust companies, competitors of national banks in many respects, under G. L. c. 63, § 55. Compare A. J. Tower Co.
It is manifest from the carefully worded provisions of the statutes of this Commonwealth that there was no intention on the part of the General Court to exempt shares of stock in national banks from taxation. The contrary purpose is plain. The words of G. L. c. 63, § 1, are definite and unmistakable that such shares “shall be assessed” and pay taxes. Because of this positive legislative direction, the income received from such shares by inhabitants of the Commonwealth was explicitly exempted from taxation under G. L. c. 62, § 1, (b). The shareholders are exempted from all other liability to taxation on such shares. G. L. c. 63, § 7. The underlying principle of the statutes is that all property employed in profit ought to and must bear its fair share of the financial burdens arising from the expenses of government. It is a general principle that every rational presumption is made in favor of the validity of statutes, and that enforcement will not be refused unless conflict with a superior law is established beyond reasonable doubt. Perkins v. Westwood, 226 Mass. 268, 270.
Examining the tax here assailed in the light of these principles, it cannot be declared wholly illegal and void. A definite standard for the assessment of the shares of stock in national banks for purposes of taxation is fixed by G. L. c. 63, § 1. That standard is their “fair cash value.” The rate of taxation must be “at the same rate as other moneyed capital in the hands of citizens is by law assessed.” Such rate is plainly intended to be the same permitted by the Federal law in U. S. Rev. Sts. § 5219. This rate is not rigidly established. It is a plain inference from these words of the statute that the General Court intended to provide a rate of taxation in conformity to and not in excess of that permitted by the controlling Federal statute. There is recognition in G. L. c. 63, § 1, of the supremacy of the Federal statute and adaptation to its terms by using almost the same essential words. The word “rate” which is in
It is plain that some tax was assessable on these shares under G. L. c. 63, § 1. It was not the purpose of the Legislature that they should be free from taxation. The only question of doubt was the precise amount of tax which lawfully could be assessed. It was within the jurisdiction, and was the duty, of the assessors to determine what rate must be adopted for the tax on bank shares in order to produce a resultant tax burden in substance the same as that resting on other competing moneyed capital. If a mistake was made in this determination, it was a mistake committed in the exercise of jurisdiction. It did not go outside their jurisdiction as to subject matter. The tax laid, therefore, was not wholly void. The most that can be said is that it was excessive to a greater or less degree. The question of excessiveness could have been fully tried on a petition for abatement brought in conformity to our statutes, and the correct amount ascertained. Sears v. Nahant, 221 Mass. 435, 436. Sullivan v. Ashfield, supra, page 26. People v. Weaver, 100 U. S. 539. Pelton v. National Bank, 101 U. S. 143. Supervisors v. Stanley, 105 U. S. 305; Stanley v. Supervisors of Albany, supra. Hills v. Exchange Bank, 105 U. S. 319, 322. People’s National Bank v. Marye, 191 U. S. 272, 279, 280. It cannot be tried in an action to recover the tax. As already pointed out, that remedy lies only in instances where the whole tax is invalid.
The right of the Commonwealth to tax shares of stock in national banks arises solely because of the consent of the United States in said § 5219. But for that consent, they could not be taxed by the States. If, therefore, that consent permits a taxation less than the “proportional” taxes prescribed by c. 1, § 1, art. 4, of the Constitution, there is no violation of that requirement because it must yield to the
The case of Hanover National Bank v. Goldfogle, 234 N. Y. 345, is distinguishable, because there a rigid rate on the book value of shares of national banks was prescribed by the statute and not left as here to be established by the assessors as events may require in order to equalize the tax on shares in national banks with the tax on other moneyed capital in competition with national banks.
Every argument urged by the plaintiff has been considered and discussed. While some difficulties might be found in the practical administration of the tax law, G. L. c. 63, as to shares of stock in national banks in connection with U. S. Rev. Sts. § 5219, and G. L. c. 62, in instances where that may become necessary, those difficulties do not appear to us to be insuperable, nor any more troublesome than other tax problems. Since the shares of stock were subject to some tax, this action at law cannot be maintained. The authorities which settle this point have already been cited. It follows that the requests of the plaintiff for rulings in the action at law ought not to have been granted, and that the defendant’s request that the plaintiff could not maintain the action ought to have been granted.
Plaintiffs exceptions overruled.
Defendant’s exceptions sustained.