126 Ky. 573 | Ky. Ct. App. | 1907
Opinion op the Court by
Reversing.
This is a proceeding, commenced by the auditor’s agent, to assess as omitted property certain amounts of money belonging to appellee and alleged to have been on deposit to his credit in the Farmers’ National Bank of Marion on assessment day in the years 1901, 1902,1903,1904, and 1905, respectively. The evidence shows, without contradiction, that appellee had on deposit to his credit on the 1st day of September, 1904, the sum of $2,169, and on the 1st day of Sep
The Constitution requires all property in this State not specifically exempted from taxation to be assessed at its fair cash value. It is conceded that the property in question is not exempt from taxation by the terms of section 170 of the Constitution. Therefore it must be assessed, by the terms of section 172, against either the appellee or the bank. It is admitted that it has not, for the years involved here, been assessed as the property of either. In the case of Deposit Bank of Owensboro v. Daviess County, etc., 102 Ky. 214, 19 Ky. Law Rep. 248, 39 S. W. 1041, 44 L. R. A. 825, on the subject of taxation of deposits as the property of the bank, it was said: “The banks are not required to pay tax on the money deposited with them by their customers, or on assets which represent it. Owing to the particular character of the business which they conduct, they are quasi trustees of their depositors, and under the law the depositors are required to pay the tax on the money so deposited.” This language was cited with ap
But it is insisted that, because the bank held the depositors’ notes for more than the amount of the deposit, and could, if that course had seemed desirable, have credited the notes with the amount of the deposit, and thus absorbed it, therefore the deposit should not be considered the property of the depositor. Admitting, as we do, the proposition that banks may credit any money on deposit belonging to their debtors on any overdue paper of the debtors held by them, the corollary sought to be drawn from this principle by appellee is not fairly deducible from the premises. In the first place, the notes held by the bank were not due. The evidence shows they were due on demand, and no demand seems to have been made. The deposit could not have been credited on paper not then due. But we do not rest this ease upon so narrow a principle as the difference between a note already due and one which is due on demand, although there is a plain distinction between them. Therefore, passing this proposition, we are of opinion that, while a bank has a right to credit the deposit of its customer on any overdue paper of the customer which it holds, the money belongs to the customer, and is subject to his cheeks until the bank exercises this right; and until this is actually done the money belongs to the depositor for fiscal purposes, and is taxable in his hands just as if he owed nothing to the bank. If this be not sound, then it must follow that the deposit, although not exempted from taxation,
For the reasons indicated, the judgment is reversed, for further proceedings consistent herewith.