23 Iowa 130 | Iowa | 1867
Lead Opinion
The forty-first section of the act of congress, authorizing the taxation by and under State authority, of the shares of the shareholders in the associations in said act contemplated, provided, that the tax so imposed “shall not exceed the fate imposed upon the shares of any banks organized under- the authority of the State where such association is located.
. Now the power of congress to declare that the bonds and securities issue,d and provided by the federal government, in carrying on and managing its fiscal affairs, shall be exempt from State taxation, is not, as we understand, denied. And as congress may prohibit, so it may allow such taxation, or prescribe the manner of its exercise.
For myself, I cannot but remark that the argument in favor of the exercise of that power, based upon a distinction between the capital and the shares, does not strike me with the most conclusive force.
In addition to the cases herein after cited on the general subject, see upon this point: Whitney v. Madison, 23 Ind. 331; Salem Factory v. Danvers, 10 Mass. 514; Weston v. City Council, etc., 2 Peters, 449; Bank of Commerce v. New York City, 2 Black. 620. As already suggested, however, the distinction is clearly recognized and admitted, and the question can hardly now be regarded as. an oj>en one. See the following recent cases in the Supreme Court of the United States: Bradley v. The People, etc., and The People, etc., v. Commissioners of Taxes (two cases); Wright v. Steltz, Supreme Court of Indiana; Frazer v. Siebern, 16 Ohio St., 614 (Am. Law Reg. 6, 466, 483).
The rule, therefore, now is, that shares in national banks may be taxed by State authority, and that too without regard to the amount which the association itself may have invested in federal bonds.
It will be observed that the act itself contains no proviso that this tax shall not “exceed the rate imposed upon the shares of banks” organized under the State laws. And notwithstanding the case of Van Allen v. Nolan (supra) would seem "to imply, that this was necessary, or, that the limitation must be contained in the act which imposes the taxation, we confess our inability to see • the propriety or force of the position. If the prior legislation taxes the shares, or makes them liable, either generally, as all other property, or to a given per cent, there is no necessity, in our opinion, for declaring in terms in the act taxing shares in national banks, that such taxation shall not exceed^ etc. The practical result to be attained, was to prevent any discrimination in favor of the State associations, or against those organized under the
Keeping in view the accepted proposition that the taxation of the capital is not the taxation of the shares, we come to the question whether in this State, “ tlie shares of banks organized under its authority ” are taxable, or whether such taxation is upon the capital. And here is the ppint of difficulty; for if there is no tax upon the shares, though there may be upon the capital of State banks, these levies were illegal. If there is such a tax, then they were legal and the taxes should be paid.
The learned chief justice in the Van Alen case (supra), speaking for the minority of the court, goes so far as to say that the act “ witholds from the State whose policy does not allow the organization of hmihs, and pro•vide for the taxation of shares, the authority to tax the shares of the national banking associations.” It is not necessary for us to adopt this extreme view, for in this State we do authorize banking. And yet, if there would be no power to tax in the case stated by the Chief Justice, there certainly could not be where the law authorizes but the banks have not been organized. Not only so, but this provision is substantive, cannot be disregarded, and
Aside from Certain exemptions not material to be noted, all property within the State, including that belonging' to any bank or company, incorporated or otherwise, whether incorporated by this or any other State, is declared subject to taxation. The property of a body corporate is to be listed by its principal accounting officer'
Our laws provide also for the organization of two classes of banking institutions; a State hank and branches, and those, known as “free hanks ” under a general banking law. In the first (§ 1676), it is declared that the legislature shall never impose any greater tax upon the property employed in banking thereunder, than is imposed upon the property of individuáis. .The second act provides that taxes shall he levied on and paid hy the corporation and not upon the individual stockholders / the value of the property to be ascertained annually by the bank commissioners herein .provided for, and the rule of taxation shall be the same as that required to be levied on other taxable property by the -revenue laws of the State. § 1598.
Upon this legislation, the argument for taxation is briefly this: The capital of these (State) banks is property, and, therefore, it is taxable. The shares in such banks are property, and, therefore, they are taxable. In other words, that the shares, as well as the capital, are taxable, and, therefore, the taxation of shares in national
If this argument is sound, then what is the necessity of the act of 1866 ? Shares in national banks are property. Under the general revenue law, they are as clearly so as shares in any other bank or corporation. Being property, they were taxable without further legislation, and this aet was entirely unnecessary. The fact, however, that a special declaration to this effect was deemed necessary, tends to show that prior thereto there was no law recognizing shares in banking corporations, as such, subject to taxation. But without designing to do more than suggest this thought, we pass to tlie legislation of which we have above given a condensed statement.
We feel entirely clear that by our laws, these corpora-, tions (State and free, banks) are taxable property, and that the shareholders- are not to be taxed upon' their shares of stock.
The proposition is not denied, that the State, in granting a franchise, might affix its own terms-as conditions of the grant. And, therefore, in such a case, it might be entirely competent to declare that shares and capital should both be subject to taxation. But that equality, which should never be lost sight of in any and every scheme of taxation, most manifestly dictates that this practical, if not theoretic double taxation, should not be allowed, except this appears to be the clearly expressed intention of the statute making the grant. And when the whole property is reached, as it may be, either through the shares or capital, and made to bear its due proportion of the public burden, the State ought not to ask more; nor should it in good faith be given more, unless the right thereto is cleax-ly deducible from the terms of the law, be it either general or special.
• Not only so, but the law itself quite clearly negatives such intention. How otherwise are we. to understand the provision that temes shall be levied on andjpaid by the corr ■poration, and not upon the individual stockholders, entirely harmonizing as it does with the declaration that •the individual shall pay taxes on his shares in a corporation not required bg law to be otherwise taxed? There can be no question that the tax is not only to be paid by the bank-, but levied on it, and not upon the stockholders. Any other construction would be, that t'he taxes against the corporation, against the property, shall be paid by the bank, and not by the stockholders, but the stockholders shall, nevertheless, pay on their shares. This is not warr .ranted by the language of the law, and is against its spirit and policy. So too, these provisions áre in accord with those which make liable to taxation property belonging to a bank, and that such property shall be listed by fhe principal accounting officer of the bank. §§ 712-714. And, indeed, it would be difficult to find so many provisions, in statutes passed at different times, upon any other subject, with so little conflict. They all point to the conclusion that it is the capital and not the shares which are to be taxed. And this has been substantially held in The Town of McGregor v. The McGregor Bank (12 Iowa, 79). All the cases, too, decided in the Supreme -Court of the United States, and in other States (most of which we have herein before cited), fortify this position. •The length of this opinion forbids that we should do more than thus refer to them. See further, Morkoc v. Hart
It is true that the owner is required to assist the assessor in listing his property. But it would be a most violent ■presumption to say that, because of this duty, without any averment that in the particular case it was discharged, the owner was estopped from complaining of an illegal or ■unauthorized levy.
We, therefore,-conclude, that as our legislation now stands, the shares in national banks in this State cannot
The first and third cases are affirmed — the second one reversed.
Dissenting Opinion
dissenting.— I concur in the foregoing opinion
and in its reasoning, except upon one point, but that is the decisive one.
In my opinion our statute, aside from the act of 1866, authorized the taxation of shares in both our State and national banks. The error, as I think, of the reasoning in the majority opinion upon-this point, is fundamental. It, to a greater or less extent, assumes, that the taxation of the capital stock of our State banks, and the taxation of the shares therein also, would.be double taxation, 'and it is directly stated, that before the shares could properly be taxed the legislative intent to tax them should be clear and certain.
However much I might, upon original principles, agree with the writer of the majority opinion, in the view that the distinction between capital and shares, as held by the Supreme Court of the. United States, is arbitrary and without foundation in principle, yet that question was properly bfefore that court, and the distinction was clearly held and made the basis of its judgment. It was a question upon which the decision of that court becomes leg
Óur bank laws provide for the taxation of the capital of our State banks. Our revenue law (Rev. § 732), also provides for the taxation “ of stock or shares in any corporation.” * * * The general principle is that all property shall be equally taxed, and our statute has expressly provided that “ all property, real and personal, within the State, is subject to taxation” (Rev. § 712), excepting certain exempt articles, and also property held for religious, charitable and educational purposes, etc. By the decision of the Supreme Court of the United States, shares of bank stock are property other and different from the capital, and, hence, are liable to taxation. I should therefore invert the rule of the majority opinion, and instead of holding that the legislative intent to tax them, must be made clear and certain, I would hold that, being property, they are legitimately liable to taxation, and should be taxed unless the legislative intent to exempt them from taxation is made clear and certain.
It is so obviously just and right that these shares, being property, should pay their equal proportion of the taxes, that I should hesitate to exempt them from taxation, under the statute making all property, real and personal, within the State taxable, even if shares were not, in terms, mentioned in our statute. But when we remember that by our statute “ shares in any corporation ” are expressly required' to be listed for taxation, and the assessors are to be provided with books in which to list them, it appears to me to be sufficiently clear and certain that the legislature intended to tax shares.
If this be so, then our statute does conform to the act of congress, and the-shares of national banks, like the shares of our State banks, are properly taxable in this State.
• The majority opinion was prepared late in the term and only read to me on the day for - adjournment, and, hence, no adequate time is afforded me to state more at length my reasons and views. I feel constrained to dissent from the conclusion reached by the majority, and in compliance with the statute, have stated the grounds of' my dissent “ in writing.” I regret that I have not 'the opportunity of stating them more satisfactorily to myself.
In fny opinion the first case should be reversed; the second affirmed; the third is properly affiimed upon other grounds.