86 N.J.L. 424 | N.J. | 1914
The opinion of the court was delivered by
Tlic only question raised is the- validity off chapter 90 of the laws of 1914, for the taxation of banking/ capital. The act is assailed as violating the provision of our '1 s.tate constitution requiring property to be assessed under general laws by uniform rules according to its true value, and as violating the act of congress which forbids the taxation of shares of stock of national banks at a greater rate than is assessed on other moneyed capital.-
The constitutionality of the act is assailed upon the grounds:
(2) That the legislature has not included all the members of the class, since it has excluded private bankers and savings banks.
(3) That properly of banks not used for banking purposes is included in the valuation.
(4) That the method of valuation prescribed involves double taxation, when one bank holds stock of another.
(5) That real estate.of a bank is taxed b3r a different 'method from its other property.
(6) That instead of being taxed at their true-value, bank shares are required arbitrarily to be taxed at their book or liquidation value.
For many years prior to 1905 the stock of national banks was taxed in a way peculiar to itself, and although litigation arose, no question seems to have been raised that such stock constituted a proper class. State, North Ward National Bank, v. City of Newark, 39 N. J. L. 380; 40 Id. 558; Mechanics National Bank v. Baker, 65 Id. 549; Newark v. Tunis, 81 Id. 45; affirmed, 82 Id. 461. The fact that the act of 1914 includes other moneyed capital in the same scheme of taxation, instead of taxing it by a diffrent scheme under a separate act, as was the case at the time Newark v. Tunis was decided, does not alter the legal situation. The inclusion in the act of 1914 of property which the Rational Banking act requires should be taxed at no lower rate, surely could not make bad the classification that was in effect held to be good in Rewark v. Trmis. The inclusion of banking capital of state institutions with that of national banks tends to produce uniformity and not diversity. It is important to bear in mind that the classification is not, as counsel contended, based upon the use to which the property is put, as in the railroad tax cases, but is a classification forced upon the state by the provisions of the Rational Banking act, which, by virtue of its being a federal statute, is of superior force as to federal corporations to our state constitution. Under this act, national banks must necessarily be treated as a distinct class whose corporate property
Savings banks arc quite different from ordinary banks of discount and deposit and trust companies. They are engaged in a different business, not primarily for the making of money, but rather for the purpose of enabliug people of small means to combine their small wages and by careful investments in restricted securities earn a moderate rate of interest. So far as they are without capital stock, the same reasons that justify the omission of private bankers from the act justify the omission of savings banks. There is no proof in this case that there is any savings bank with capital stock, and the court is not required to take judicial notice without proof of the provisions of charters of private corporations. Nevertheless, in accordance with the spirit of the new Practice act, as to additional evidence upon appeal, and in order to avoid resting a decision in a case of great public importance upon a mere omission of proof, I have looked into the facts and find but one savings bank with capital stock — tire Paterson Savings Institution. Pamph. L. 1869, p. 1265. The existence of this one institution is enough to prevent the applicability of the argument drawn from the distinction between corporations with and those without shares of stock, and unless savings banks can be otherwise distinguished from banks and trust companies, the classification of 'the act is bad. I think they
The objection that the effect of the act is to tax property of the bank not used for banking purposes is based upon the theory that banking capital is classified according to its use. This is an error. The classification is based, not upon the peculiar use of the property, but upon the fact that the act of congress requires the interest of the shareholder to be taxed and to be assimilated in rate of taxation to other banking capital. I do not understand that the railroad tax cases decided that use was the only permissible basis of classification. They held use a permissible basis, but it was unnecessary for the court in those cases to hold that it was the only permissible basis.
The objection that the rule is not uniform because double taxation results where .one bank holds shares in another, seems untenable, in view of the provision of section 4 that the tax imposed shall be in lieu of all other state, county or local taxation upon such shares, “or upon any personal property held or owned by banks, banking associations or trust companies, the value of which enters into the taxing value of such shares of stock.” The evident intent is to tax but once.
The objection that real estate is taxed by a different method ls sufficiently answered by the fact that the same was true of national banks, under the law in force rvhen Newark v. Tunis
The stress of the attack upon the act rests on the prosecutors’ contention that it prescribes an arbitrary method of ascertaining true value, and one that had already been disapproved by the Court of Errors and Appeals. The act provides, in section 1, that the shares shall be assessed and taxed according to their trae value, to be determined in the manner thereinafter prescribed. The prosecutors contend that this is the manner prescribed in section 2, by adding together the amount of the capital, surplus and undivided profits, and deducting the assessed value of the real property, and dividing the result by the number of shares. I agree that this method would not always result in the ascertainment of true value as settled by the Tunis case, and if true value, in section 1, means the value ascertained by the method of'section 2, the language is self-contradictory. The contradiction, if it exists, however, does not make the act unconstitutional; it only requires the court to ascertain which of the conflicting provisions expresses the intent of the legislature. There are cases holding that the later of two inconsistent provisions in a statute must prevail, likening the construction of statutes to the construction of wills rather than of deeds. The rule of these cases is, at best, artificial, and is based upon the false premise that the provision standing in the later position in the statute represents the later intent of the legislature. The whole statute, however, as has been well said, is approved and becomes law at the same instant, and not section by section or clause by clause; in fact, the last amendment is quite as likely to appear in the first section as in any other. The rule, if, indeed, it be a rule, is by no means inflexible, and, as the Court of Appeals of New York lias said, is to be resorted to only in extremis. People, ex rel. Mason, v. McClave, 99 N. Y.
The prosecutors wrongly assume that the words “to be determined in the manner hereinafter prescribed” refer to the incomplete and imperfect method set forth in section 2. In fact, they refer to the proceedings of the body which is to determine, in the first instance, the true value; that is to say, the county board of taxation, and the prescribed manner is not the incomplete one of section 2, nor that of section 3, but the complete scheme of section 6, which involves a consideration of all the elements of the problem. I conclude that the act is constitutional.
The next question is whether it conforms to the requirement of the National Banking act that shares of national banks shall not be assessed at a higher rate than other
The same reasoning is applicable to the objection that private bankers are not taxed upon exempt securities and may pay less than three-fourths of one per cent. It is not shown that in fact any such discrimination actually results. We know of nothing to induce the belief that it does. It is quite possible that the value of shares of a national bank may be in part the reflection of the value of exempt securities held by the bank, but it is also possible that such exempt securities may be set oil against its deposits and regarded as investments thereof, while the capital of the bank itself may "be regarded as invested in securities that would be taxable but for
As to the limitation of the assessment to three-fourths of one per cent., it is enough to say that the Supreme Court of the United States has recently sustained an assessment under a similar statute of New York where the rate was limited to one per cent. Amoskeag Savings Bank v. Purdy, 231 U. S. 373. It is not shown that there is any case in New Jersey where moneyed capital is taxed at a lower rate than three-fourths of one per cent. If we may judge from onr own knowledge a higher rate prevails universally.
I find, therefore, that the taxes in the present case are valid. There should be judgment for the defendants.