92 F. 239 | U.S. Circuit Court for the District of Maryland | 1899
This is a bill in equity praying an injunction to restrain the tax collector of the city of Baltimore from collecting from the complainant, the National Bank of Baltimore, as the city tax on the shares of its stock owned by residents of Baltimore, any sum in excess of 30 cents on the $100 of the market value, as ascertained by the state tax commissioner, which amount the complainant offers to pay. The tax demanded by the city collector is for the year 1897, and is at the rate fixed by the mayor and city council of Baltimore as the rate required for its general municipal purposes, viz. at the rate of $2 in every $100 of the assessed value of the shares belonging to residents of the city. This tax is assessed and demanded, in respect of shares of complainant’s stock, by virtue of a portion of section 2 of chapter 120 of the Laws of Maryland of 1896, by which it is enacted:
“That'all shares or interest in any joint stock company and all shares of stock in any bank incorporated under the laws of Maryland, and all shares of stock* in any national bank located in Maryland, and all shares of any corporation incorporated under the laws of Maryland are to be valued and assessed for the purpose of state, county and municipal taxation to the owner thereof in the county or city in this state in which said owners may respectively reside and the taxable value of such shares is to be ascertained and determined and taxes thereon levied and collected as is now or may be hereafter provided by law.”
It is not complained that there is any discrimination either in the valuation or taxation of the shares of the complainant, or of any of the national banks located in'Maryland, as compared with state banks, or as compared with other corporations of any kind incorporated under the laws of Maryland; but the complainant’s contention is that there is a discriminatiqn between the rate of tax imposed upon national bank shares, as compared with the rate of tax on bonds, certificates of indebtedness, and evidences of debt, in whatsoever form, and upon all shares of stock in foreign companies owned by residents of Maryland, as to which class of property section 201 of chapter 143 of the act of 1896 provides that they shall be assessed and valued to the owners thereof at their actual market value, and that upon that valuation there shall be paid the regular rate of taxation for state purposes, but for county or city taxation there shall be paid only at the rate of 30 cents on each $100, and no more. The contention of the complainant is that the bonds, certificates of indebtedness, and evidences of debt which are thus taxed at 30 cents on the $100 are the securities in which it deals, and in which it invests its capital, and that there are private bankers and other citizens of Maryland who
The act of congress which allows taxation of national bank shares is section 5219 of the Revised Statutes:
“Sec. 5219. 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 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 non-residents 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.”
There is no contention that the Maryland act of 1898 contains any intentional discrimination against national banks, or was enacted in any spirit of hostility towards them; but it is contended that the working of the law is such that, as evidences of debt are taxed at a less rate than the shares of national bank stock, persons who are not incorporated, and therefore have no fixed and declared capital, are taxed only on the evidences of debt which they own at the time of assessment, and therefore escape at a less rate than the capital of national banks. It is not denied by the complainant that the great competitors of the banks in loaning money and dealing in evidences of debt are the trust companies, and similar corporations, which, if incorporated in Maryland, all pay the full rate on the value of their shares; but it is alleged that the capital of private and unincorporated bankers is moneyed capital sufficient in amount, in the city of Baltimore, to result in a material discrimination. The burden of supporting this contention is upon the complainant, and requires it to show, not only that the moneyed capital so competing with the capital represented by the shares of the national banks is a sum sufficient to constitute a discrimination material in its amount, but also that it is a discrimination which it is reasonably certain could be avoided by a different tax law. If the clause of section 2 of chapter 120 of the Maryland act of 1896 imposing the full rate of tax on the shares of all corporations had contained the words, “and all moneyed capital of unincorporated citizens of Maryland used by them in the same genera] business as that carried on by national banks in ^Maryland,” and the tax collectors made a bona fide effort to enforce that clause of the law, there could be no ground for this bill of complaint. If a banker with $200 of his capital buys $10,000 worth of bonds, and carries them with the aid of loans from banks or trust companies, it is the $200 of
There are two ways in which the banks can be injured by discrimination in taxation: ,One is that, if other moneyed capital escapes taxation, the rate imposed upon all the assessed capital is greater; and the other is that if other moneyed capital used in busi
“Corporations and individuals carrying on these operations do come into competition with the national banks, and capital in the hands of individuals*244 thus employed is what is intended to he described by the act of congress.” Mercantile Bank v. City of New York, 121 U. S. 138-156, 7 Sup. Ct. 826.
The capital so employed is shown by the defendant to have been, with respect to some of the bankers in Baltimore city, assessed and taxed at the full rate. That it is not so with all is not through a defect in the law, or intentional discrimination of the assessors or collectors, but from the inherent difficulties of ascertaining it. The final clause of section 2 of chapter 120 of the Laws of 1896, taxing “all other property of every kind, nature and description within this state,” is held by the taxing officers to include the banking capital of private bankers.
In the very instructive arguments of the able counsel many points on both sides of this controversy were elaborately and learnedly presented, which it does not seem necessary should be now reviewed in this opinion. The contention that the shares of foreign state banks and other foreign corporations held by citizens of Maryland is moneyed capital, w'hich comes in competition with national banks in Maryland, cannot be maintained, and it would be no illegal discrimination if the public policy of the state was to levy no tax at all upon them. Without attempting to extend this opinion to embrace all the points raised in argument or by the pleadings, I hold that the defendants’ demurrer to the seventeenth paragraph of the bill must be sustained, and that the complainant is not entitled to the relief asked by its bill.