53 Kan. 440 | Kan. | 1894
The opinion of the court was delivered by
The principal question in this case is as to the right of the holder of stock in a national bank to deduct his indebtedness from the value of the stock, where he has no other credits from which such deduction can be made. In support of this contention two claims are made: (1) That the term “credit,” as defined in ¶ 6847, includes stock in a national bank; (2) that §5219 of the Revised Statutes of the United States prohibits taxation of national-bank shares at a greater rate than other moneyed capital in the hands of the individual citizens of the state, and that, as individual citizens are allowed to deduct their debts from their credits of a certain class, like deductions must be allowed holders of national-bank stock. We will consider these questions in the: order stated.
I. The statutory definition of the word “credit,” as given
'“Debts owing in good faith by any person, company or -corporation may be deducted from the gross amount of credits belonging to such person, company, or corporation, provided such debts are not owing to any person, company or corporation, as depositors in any bank, or banking association, or with any person or firm engaged in the business of banking in this state or elsewhere, and the person, company or corporation making out the statement of personal property to be ..given to the assessor, claiming deductions herein provided for, shall set forth both the amount and nature of his debts sought to be deducted, but no persoD, company or corporation shall be entitled to any deduction on account of any bond, note or obligation given to any mutual insurance company, or ■deferred payment or loan for a policy of life insurance, nor «on account of any unpaid subscription to any religious, literary, scientific or benevolent institution or society: Provided, That in deducting debts from credits, no debt shall be ■deducted where said debt was created by a loan on government bonds or other nontaxable securities.”
Paragraph 6846 provides “That all property in this state, ffeal and personal, not expressly exempt therefrom, shall be subject to taxation in the manner prescribed by this act.” By the various articles in chapter 107, on “ Taxation,” provision is made for the assessment and taxation of the vari-<ons classes of property. Article 6, as amended by chapter 84 of the Laws of 1891, provides for the assessment of stock in banks and other corporations. No hint is contained in any part of this article that such stock is to be treated as a ■credit in the hands of the stockholder. Only the net value «of the shares is required to be returned. Banking and other ■corporations are allowed, in determining'the value of their -shares, to deduct all indebtedness, all liabilities of every kind atnd character, not only from their credits, but from their
The statutory definition of the word “credit” must be construed in the light of all of the provisions of the statute on the subject of taxation. It is by no means clear that stock in a corporation is a demand for money, labor, or other valuable thing, either present or future. The stockholder has no right to demand from the corporation any sum whatever, or any valuable thing whatever. ‘ If the concern is prosperous, and the board of directors so determine, he may be entitled
“The legislature shall provide for taxing the notes and bills discounted or purchased, moneys loaned, and other property, effects, or dues of every description, (without deductiou) of all banks now existing, or hereafter to be created, and of all bankers; so that all property employed in banking shall always bear a burden of taxation equal to that imposed upon the property of individuals.”
II. Section 5219 of the Revised Statutes of the United States provides:
“Nothing herein shall prevent all the shares in any association from being included in the valuation of the personal property of the owner or holder of such shares in assessing taxes imposed by authority of the state within which the association is located, but 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 nonresidents of any state shall be taxed in the city or town where the bank is located and not elsewhere. Nothing herein shall be construed to exempt the real property of associations from either state, county or municipal taxes to the same extent, according to its value, as other real property is taxed.”
The claim made in this case, and the others argued and submitted at the same time with it, of a right to deduct individual indebtedness from the value of national-bank stock, by the owner, is a novel one. So far as our knowledge extends, such right has never before been claimed, but the shares of stock
In the case of People v. Weaver, 100 U. S. 539, it was held that this operated as a discrimination against the banks, and imposed taxation on banking capital at a greater rate than on other moneyed capital. It is easy to perceive that the laws
“A distinction is attempted to be drawn between the Indiana statute and the New York statute, because the former permitted the deduction of the taxpayer’s indebtedness to be made from the valuation of his personal property, while in Indiana he can only deduct it from his credits, and undoubtedly there is such a difference in the laws of the two states; but if one of them is more directly in conflict with the act of congress than the other, it is the Indiana statute. In its schedule, the subject of taxation from which the taxpayer may deduct his bona fide indebtedness is placed under two heads, as follows: ‘1. Credits or money at interest, either within or without the state, at par value. 2. All other demands against persons, or bodies corporate, either within or without this state. Total amount of all credits.’ The act of congress does not make the tax on personal property the measure of the tax on bank shares in the state, but the tax on moneyed capital in the hands of the individual citizens. Credits, money loaned at interest and demands against persons or corporations are more purely representative of moneyed capital than personal property, so far as they can be said to differ. Undoubtedly there may be much personal property exempt from taxation without giving bank shares a right to similar exemption, because personal property is not necessarily mon*458 eyed capital; but the rights, credits, demands and money at interest mentioned in the Indiana statute, from which bona fide debts may be deducted, all mean moneyed capital invested in that way.”
In Boyer v. Boyer, 113 U. S. 689, in a case arising under the laws of Pennsylvania, it appeared that
“The laws of Pennsylvania exempted from local taxation for county purposes railroad securities, shares of stock held by stockholders in corporations which were liable to pay certain taxes to the state, mortgages, judgments, recognizances, moneys due on contracts for sale of real estate, and loans by corporations which were taxable for state purposes when the state tax should be paid. The pleadings in this case admitted in detail large amounts of exempted property under these heads in the state. Held that, under these circumstances, this constituted a discrimination in favor of other moneyed capital against capital invested in shares in national banks, which was inconsistent with the provision in §5219, Revised Statutes, that the taxation by state authority of national-bank shares shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such state.”
In the opinion in that case, it is again said that a partial exemption would not take away the power to tax bank shares, but much stress is laid on the fact that the exemption covered a very large part of the moneyed capital of the state.
In the case of Mercantile National Bank v. City of New York, 121 U. S. 138, it was held that the facts that, under the laws of the state of New York, trust companies and savings banks were taxed in a different manner from national banks, and that deposits in savings banks were exempted from state taxation, and that bonds of the city of New York were also exempt, were not sufficient to show a substantial discrimination against national banks. The court in this case reviewed the previous decisions at some length, and adhered to the general proposition enunciated in the former cases, that, in order to invalidate the tax, there must be a substantial discrimination against national-banking capital.
The case of Whitbeck v. Mercantile Bank, 127 U. S. 193,
It appears to us that the principle declared and maintained in all of the cases decided by the United States supreme court is, that there must not be a substantial discrimination against capital invested in national banks; that the question of minor exemptions is a matter of state policy, with which that •court will not interfere, and that, when only some minor and inconsiderable portions of capital are relieved from the burden of taxation, the validity of taxes levied on national banks will not be thereby affected.
The supreme court of the state of Indiana, in the very elaborate and well-considered opinion in the case of Wasson v. National Bank, 8 N. E. Rep. 97, review the decisions on the question, and take judicial notice of the fact that the other forms of moneyed capital, from which debts may be deducted, constitute a large and material portion of the moneyed capital of the state, and conclude that national banks are therefore entitled to a similar reduction. Following the decisions of the supreme court with reference to the same statute, it was said that, in that state, indebtedness could be deducted from the amount of notes, judgments and credits of every description due from any person, company, or corporation, whether drawing interest or not. In this state, the deduction cannot be made from the amount of judgments, or any moneys secured by lien on real estate. Money on deposit subject to demand is also taxable, as well as all corporate stocks.
We have also examined the cases of McAden v. Commissioners, 97 N. C. 355; National Bank v. City Council, 52 N. W. Rep. (Iowa) 334; Miller v. Heilbron, 58 Cal. 133; Rug
The credits referred to in our statute are but one of many kinds of moneyed capital, if, indeed, they can be regarded as capital at all. It would seem to have been the view of the legislature that only those unsecured credits which were not in general investments for profit, but would in the ordinary •course of honest dealing be applied, as soon as received, to the extinguishment of current debts and obligations, should be subject to the deduction, and that in fact such credits represented no capital whatever where there was a corresponding debt, to the payment of which they of right should be devoted. We cannot, in this case, take judicial notice of the fact that such credits constitute a large or even material part of the moneyed capital of the state. On the contrary, we do take judicial notice of the fact that debts secured by liens on real estate, money invested in corporate stocks of all kinds
The judgment is reversed, and the cause remanded for further proceedings in accordance with the views above expressed.