109 F. 21 | U.S. Circuit Court for the District of Northern Ohio | 1901
The bill and supplemental bill in this case ask that the defendant, Marcellus A. Bander, treasurer of Cuyahoga county, be perpetually enjoined from collecting certain taxes on the stock of the Mercantile National Bank, complainant, for the years 1894, 1895, and 1896. It is shown by the bill that these taxes are on the duplicate, and threatened to be collected, because the auditor, on the 14th day of October, 1899, unlawfully-added to the respective duplicates of the years 1894, 1895, and 1896 the names of the stockholders of said bank, the holdings of shares, and the value thereof, and, against each of said stockholders, taxes on said valuation in the amounts shown after their respective names, and certified said taxes to the defendant treasurer for collection, and that such certification, entry, and addition were made without any color or right or power. The complainant rests its right to the relief prayed for upon two grounds: First, that under the statutes of Ohio governing the powers and duties of the auditor in this regard, and their interpretation by the supreme court of the state, the.auditor had no right to make such addition with respect to the years mentioned; and, second, that the defendant is estopped to tax the shares of stock in the complainant corporation against its stockholders without allowing them to offset their respective indebtednesses, by former adjudication.
As to the first ground urged by the complainant the court has no difficulty. In the , case of State v. Akins (Ohio Sup.) 57 N. E. 1094, which was an application to the supreme court of the state for a writ of mandamus to compel the auditor of Cuyahoga county to do what is complained of in this bill, to wit, to add to the duplicate taxes against the holders of the stock of the complainant for the years 1894, 1895, and 1896, it was held that the auditor had no power or right to so increase the duplicates of previous years. The court say:
“A stockholder in a national or incorporated bank has not the right to have his indebtedness deducted from the value of his shares by the county auditor; but, when this has been done in former years, there is no law by which the deduction can thereafter be placed on the duplicate, as an omission, and the taxes collected thereon. Sections 2781, 2782, Rev. St., apply only to persons required to make returns of their property for taxation; and the. stock of a shareholder in a bank is returned, not by himself, but by the cashier, and is assessed by the auditor. The remedy for a false return by the cashier is provided for in section 2769, Rev. St. There was, however, no false return by the cashier in this case.” a
In order to make myself clear with respect to the second ground upon which complainant rests its prayer for relief, it is necessary to state chronologically the action of the courts with respect to this much-mooted question of the right to tax the shares of stock in a National Bank in Ohio without allowing the holder of such stock to offset his indebtedness. In the case of Whitbeck v. Bank, 127 U. S. 193, 8 Sup. Ct. 1121, 32 L. Ed. 118, decided in April, 1888, ii: was held that the owners of stock in a National Bank in Ohio were entitled to have a deduction of their indebtedness made from its assessed value, as in the case of ordinary moneyed capital. Notwithstanding this decision, the supreme court of Ohio held, in April, 3.897, in the case of Chapman v. Bank, 56 Ohio St. 310, 47 N. E. 54, that the holder of national bank shares had no right, under the statutes, state and national, to deduct his legal bona lide debts from the value of such shares, but that he was legally bound to pay tax upon the assessed value of such shares, without deduction on account of such debts. That decision followed the previous decision in Niles v. Shaw, 50 Ohio St. 370, 34 N. E. 162. The Chapman Case wag taken to the supreme court of the United States on error, and was there affirmed in January, 1899. 173 U. S. 205, 19 Sup. Ct. 407, 43 L. Ed. 669. In the years 1886, 1888, and 1893 suits were brought by this same complainant to restrain the treasurer of Cuyahoga county from collecting- a tax on account of the shares of stock of the complainant bank, without allowing an offset of indebtedness by stockholders. In each of these suits decree was rendered in favor of the complainant, and the treasurer was enjoined. The decrees in these cases are pleaded by the complainant as res judicata, and the records in such cases have been offered in evidence, and admitted, notwithstanding the objection of the defendant. In this ruling I have followed the decision of the circuit court of appeals. Bank v. Hubbard, 105 Fed. 809.
I wish, however, to express my reasons for giving effect to the decrees shown by the records pleaded and put in evidence. As we have seen by reference to the decisions reported and pleaded, from the year 1888 until April, 1897, when the case of Chapman v. Bank was decided by the supreme court of Ohio, the law was, as an
In Keokuk & W. Ry. Co. v. Missouri, 152 U. S. 301, 14 Sup. Ct. 592, 38 L. Ed. 450, it is said, in the opinion of the court (on page 314, 152 U. S., page 597, 14 Sup. Ct., and page 456, 38 L. Ed.):
*25 “A suit for taxes for one year is no bar to a suit for taxes for another year. The two suits are for distinct and separate causes of action. If there were any distinct question litigated and settled in the prior suit, tins decision of the court upon that question might raise an estoppel in another suit, upon the principle stated in Cromwell v. Sac Co., 94 U. S. 351, 24 L. Ed. .195. * * * In the case of City of Davenport v. Chicago, R. I. & P. Ry. Co., 38 Iowa, 633, the supreme court of Iowa held that a decree in favor of a railway company in a suit for taxes for a prior year would not estop the state from collecting the taxes for a subsequent year, each year’s taxes constituting a distinct and separate cause of action. * * * It could never be tolerated that the state should he forever barred in its collection of taxes by an erroneous decision.”
In City of New Orleans v. Citizens’ Bank of Louisiana, 167 U. S. 371, 17 Sup. Ct. 905, 42 L. Ed. 202, the judgment which was held to work estoppel, as matter adjudicated, was founded upon a provision of the charter of the defendant hank which was held to be a contract operating in favor of the hank to exempt it from taxation. It having been determined, by a court of competent jurisdiction, that such contract existed, and that it had the effect, by its terms, of exempting the bank from taxation, it is clear that that question never again could be litigated between the same parties.
It does not seem to me sound doctrine that a party to the litigation which evokes an interpretation of a general statute should, from the simple fact that he was such party, thereby acquire a vested and permanent right to have such statute, so far as it might apply to him, interpreted In the same way, although capable of enforcement as to all others in a different way. Sufficient force, I think, cam be given to the decisions pleaded by the complainant by adopting another rule of law, to wit, that decisions of courts should not have a retroactive effect. We have seen that the law, as announced by the court of last resort from the year 1888 to 1897, was to the effect that stock in national banks could not be taxed in Ohio without permitting the stockholder to offset his bona fide debts. Any and all citizens of Ohio* had a right, in the arrangement of their affairs, to assume that this was the law. The decrees of injunction entered in the eases pleaded by the complainant were made upon the assumption that such was the law, and served to give further evidence to the citizens of that fact.
In Douglass v. Pike Co., 101 U. S. 677, 25 L. Ed. 968, it is said in the syllabus:
“The settled judicial construction of a statute, so far as contract rights were thereunder acquired, is as much a part of the statute as the text itself, and a change of decision is the same in its effect on pre-existing contracts as a repeal or an amendment by legislative enactment.”
In the opinion (on. page 687, 101 U. S., and page 971, 25 L. Ed.) Chief Justice Waite speaks as follows:
“The true rule is to give a change of judicial construction in respect to a statute the same effect in its operation on contracts and existing contract rights that would he given to a legislative amendment; that is to say, make it prospective, but not retroactive. After a statute has been settled by judicial construction, the construction becomes, so far as contract rights acquired under it are concerned, as much a part of the statute as the text itself, and a change of decision is to all intents and purposes the same in its effect on contracts as an amendment of the law by means of a legislative enactment.”
I hold that in the years 1894, 1895, and 1896, by reason of the decision in Whitbeck v. Bank, no right existed to levy a tax upon shares in national bank stock against any holder thereof, who was a citizen of Ohio, without permitting him to offset bis bona fide debts. This law was changed by the decisions referred to in Chapman v. Bank. To permit the auditor of Cuyahoga county, in the year 1899, because of the decision rendered in 1897, to place upon the duplicate of the years 1894, 1895', and 1896 something that he could not lawfully have put upon those duplicates in those years, is to give retroactive effect to the decision of 1897. This should not he done.
I do not think that it was necessary for the complainant to plead the records which it has alleged in the bill. Citation would have been enough. Whatever estoppel was operative in favor of the complainant was operative in favor of every citizen of Ohio. For the reasons given, the injunction is granted as prayed for.