118 Ky. 547 | Ky. Ct. App. | 1904
Opinion op the court by
Affirming.
Through Frank A. Lucas, claiming to represent the Commonwealth, as auditor’s agent, three proceedings were instituted against the appellee to compel it to list for taxation of the date of September 15, 1899, notes secured by mortgage of the fair cash value of f-; other notes of the fair cash value of $-; certain accounts of the fair cash value of $-; cash on hand of $-; cash on deposit with other banks, or due from other banks, of $-; certain sums- due as overdrafts from -sundry persons and corporations of $ — —; certain bonds and stocks of the value of $-; and in the aggregate of the fair cash value of $4,008,125.34. By -each of the proceedings it is sought to compel the appellee to list the same kind of property for taxation for the years 1900, 1901, 1902, and 1903, but the aggregate amount varying with the years. We -shall designate, for convenience, the proceedings by numbers. By proceeding No. 1 the plaintiff seeks to compel the appellee to list the property sought to be taxed upon the theory that the appellee owns it, and that it has been omitted from
The cash and assets sought to be assessed were acquired with money deposited by the bank’s depositors, or in part by the money which was paid by the stockholders, and the accumulations thereon, or by the money derived in both of the ways named. For the bank it is contended that it is an effort to tax the money deposited by its depositors. For the appellant it is claimed that this is a misstatement of the purpose of the proceedings; that plaintiff only seeks to tax certain assets of the bank. The plaintiff does not in terms state how the bank derived the property sought to be taxed, but, when we take the three statements together, it may fairly be concluded that it. is the purpose to tax property derived from sums deposited by appellee’s depositors. This conclusion is supported by the fact that the bank’s capital stock, surplus, and undivided profits were assessed by the board of equalization in fixing its franchise tax. The correctness of that - assessment is not questioned, and it is admitted that it paid its tax due thereon. It is the theory of the appellant that the property sought to be taxed belongs to the appellee, or is held by it for others, and that it should be assessed regardless of -the question as to how it was acquired or is held.
The claim that the property should' be assessed asi omitted property is based upon sections 171, 172-, and 174 of the Constitution, and section 4020, Ky. St., 1903. Section 171, In speaking of taxes, provides: “They shall be uniform
Section 4020, Ky. St., 1903, was enacted pursuant to the provisions of the Constitution. A bank does not keep the funds arising from the contributions of shareholders and depositors separate. Therefore the only way to approximate the amount which each class may have contributed to the cash on hand, and to the purchose of notes, bills of exchange, etc., is by proportion. Evidently the auditor’s agent, in his calculations, segregates the items of value which produce the total credits of the bank, and thus ascertains the value of the alleged omittedi property. The amount thus ascertained is the proportion of the contribution made by the deposits. The law, in the affairs of state and men, regards the substance of things. While the auditor’s agent does not, eo nomine, seek to assess the appellee’s deposits, yet he in effect does so. The Legislature was confronted by a condition. In its wisdom, it knew that banks and similar institutions are necessary to conduct the business affairs of the State. It likewise knew that, to establish and conduct a bank, it was necessary that persons should contribute a banking capital, and that persons should deposit their money therein. It knew that persons would Mot contribute their money to acquire a banking) house, equip it with vaults, safes, and furniture, and put it in
It has never been the policy of the Commonwealth to require bankers and banking institutions to pay taxes on their deposits, or on that part of them preserved in cash, or on the part invested in notes, bills of exchange, etc.. So far as we are advised, no effort to do so has ever been made in a constitutional convention or in any Legislature assembled in the State. Neither has any political party or association of voters, so far as we are aware, ever, advocated the justness or advisability of such a provision in the tax laws of the State- It therefore is fair to conclude that the members of the several constitutional conventions and the many members of the Legislatures which have assembled in
The judgment is affirmed.
Petition for rehearing by appellant overruled.