*1 TERM, 1804. 70 Syllabus. U. S. . is for such necessity tax, What the what 261, .upon 275. it shall be as well as amount of the imposed, occupations .the are. within the control of exclusively the state imposition, as there is no discrimination So legislature. long against amount and States, necessity citizens of other the tax criticism are not here. open tax The that the of a impairs argument obligation and Nelson Morris &
contract between petitioner Company consideration. The worthy serious of taxa- hardly power overrides an to sérve for employé tion agreement remains entirely sum. His contract undisturbed. specific There no for an for a definite employment stipulation if there it is inconceivable that were, State period; should lose this of taxation the fact that the party right taxed had entered into an with his for employer engagement The is an incident to a definite tax period. business, under the terms of their contract be charged probably might as one of the necessary employer expenses up against it on. carrying Court of of the Supreme Georgia judgment
Affirmed. FRANCISCO NATIONAL BANK SAN v. DODGE. THE CIRCUIT COURT APPEALS APPEAL FROM OF FOR THE NINTH ' CIRCUIT. Argued November 7, No. 44. February 27, 1905. 1904.Decided 5219, Stat., authorizes the taxation Rev. States of Section of national banks but exacts that the tax when levied shall imposed greater moneyed capital; on other at no rate than no necessarily the Federal statute conflict arises between and a state law provides latter one method for taxation of solely because the state banks and another method for national banks if there is no actual discrimina- resulting tion the shares the national banks from the difference If, however, law, irrespective of system in method. face practical produces the state law execution created an actual v. DODGE. BANK
SAN FRANCISCO NATIONAL Argument Appellant. it does against national banks conflict with and material discrimination' Stat., and is § Rev. void. express specified record contains an that a instance Where the admission *2 corporation showing a property an taxation undervaluation is illustrative of the method which all other similar institutions are valuation, requiring full cannot dis- assessed under statute court regard the undervaluation is an isolated admission and consider that such instance of other institutions is assessed and that all the similar provisions at full value accordance with statute. appears agreed As facts in this case that under statement of. (cid:127) California, State, highest the laws of of that as construed court all the elements of which are value embraced the assessment shares assessing stock in national banks are included the value moneyed corporations, is state banks there a dis- of national banks and the taxing crimination the shares state law violates, under, 5219, construed and is § such shares' so void Rev.' ' - Stat. . facts are the opinion. stated The (cid:127) W. with whom Mr. E. Wood, Pillsbury Mr. S. S. and Mr. for, Sutro were on the brief, appellant. Alfred As to constitutional see taxation, scope McCulloch v. Const, 4 316, 429; Wheat. Art. Maryland, 3, I; Art. 1, XIII, § § under the. Property exempt of California. laws of the United the' is under state exempt laws; States is exemption oblig Co, Pollock Farmers’ L. & T. atory. v. 157. U. S. 429. banks, are not subject National state taxation.. The fran chise to be a national bank is not subject state- taxation. to. Bank v. Owensboro, 671; Bank National v. Louis 173 U. S. S. ville, 174 U. 43 8.
The be- taxed but only under the provisions of Rev. Stat. This the measure of the power óf §5219. tax national Staté banks. First National Bank v. San . Francisco, 129 California; 97
The is to authority not the given tax, .thus banks, but shareholders; authority'to tax shareholders is upon limitations thus express declared by Congress. state
Whenever, therefore, legislation assumes tax share- holders of national banks at a rate than greater other moneyed TERM, 1904. 72 Argument for Appellant. U. 197 of individual citizens such hands capital State, and void. People unconstitutional legislation Weaver, v. 101 U. 539; Bank, 100 U. S. Pelton v. National S. 146; EvansvilleBank v. v. Britton, 322; McHenry 105 116 Downer, California, 25; Heilbron, California, Miller v. 58
As to California taxation of shares authorizing legislation in national see 116 bank, McHenry Downer, 25; v. California, 14, 96; Stat. March and also 1899, p. see exemptions under Political Code. 3608, § of this constitutionality statute as .to the exemption
of shares
was affirmed in
corporations
Bad
Burke v.
in.state
594;
San Francisco
lam,
California,
Sawyer,
v. Mackay, 10
302; County Commissioners
Farmers’ &
Bank,
Mechanics’
Maryland,
Germania Trust
v. San
117;
Francisco,
Co.
California,
the decisions of
Supreme Court of
*3
State,
constitution and
construing
are bind
statutes,
the Federal courts. This creates a
discrimination
ing
shares of national banks.
Under
are
3609
national banks
and
valued
§
assessed as other
for
taxation.
v. Stan
Supervisors
311;
Britton,
105 U. S.
Evansville Bank v.
ley,
tional Chapman, be adhered to. County statute must Merced v. Helm, tion the 165_ California, 159, 102 Bank 142 State, California, 276,
As to v. California refusal but is not bound court reason accept see Burnett, 530, 599; Hart v. 15 Cohens California, ing, As to methods of v. Wheat. 399. fran Virginia, valuing 6 chises state see Water Works v. Schottler, 62 corporations, Gas Co. California, 69, 117; January, San Jose v. 57 California, Francisco v. 103 614; Anderson, California, 70; San Germania San 128 Francisco, 595; Trust Co. v. California, v. People 53, Bank, California, 60; National 123 San Francisco Fry, v. California, 63 470. I, whom Brobeck,
Mr. William with Mr. Percy Long V. was on for brief, appellee: of March 14, 1899,
The act is constitutional and is vio lative of Rev. as to extent of Stat., 'power taxation. § Foreign See Tax on Held Bonds, 334; State 15 Wall. Kirtland Hotchkiss, 491; Mackay v. v. 113 Francisco, San An will California, not be declared 392. void unless a plan valuation inequality preconcerted discrimi nation is Stanley Supervisors, 550; disclosed. v. S.U. Stanley, 305; 105 U. S. Bank v. Kimball, Supervisors U. S. 732; Perea, Bank v. 147 U.
As to construction of “other moneyed capital” see Na Bank v. Mayor, Rep. 29; tional 100 Fed. Mercantile Bank v. *4 121 S. Bank v. York, 154; New U. Evansville 105 Britton, Chehalis, U. Bank v. The 322; S. 166 440. National nthis has bank i case had the benefit of all deduc possible Van Allen v. 3 Wall. Peo Assessors, 573; Bradley tions. v. 4 459; People Commissioners, Wall. v. Wall. 244. ple, 4 There is no national discrimination banks on the against . face Bank statute v. Davenport Davenport, 123 U. S. to what should be allowed to deductions holders As 83. bank and how values stóck should be estimated see cases cited-
74 TERM, 1904. Appellee.
Argument for U. 197 S. by Wayne, Nebraska, 834; and Bressler v. 32 appellant Cha pman 310. Bank, v. Ohio St. 56. a share of stock is a to a
The rule- general right pro in-the dividends and profits corporation portionate part a share of its net assets dissolution. Plumpton and to Field Bigelow, 599; Pierce, Massachusetts, 93 N. Y. v. 102 v. v. 477; St. Tax Collector Insur 261; Davis, Jones v. 35 Ohio U. Farrington 42 v. 95 1172; Tennessee, La. Ann. Co., ance Bank, California, v. 123 687; People under the constitution solvent credits escape No XIII, constitution; of California. Section Art. and laws .of Bank, v. Hibernia 51 Cali Code; Pol. §§3607., 3617, People fornia, 247. banks does not discriminate
The of shares of exemption state Cases, cited and see appellant, national banks. Ottawa Glass California, 34; v. San 131 Francisco, Stanford Bank Nevada National v. McCalet, Illinois, 556; Co. v. 81 . have con of California 119 Fed. 57 courts Dodge, Rep. only shares of once and taxing strued statute there, decisions in two lines' of decisions while are are those of the California .courts-whose volved in this case will be followed of the statute of the State .construction this, court; Rice decisions are supported The-California Commissioner's v. Na Minnesota, 280; 23 Bank, v. National 117; Bank, Lackawanna v. National Bank, Maryland, 48 tional Gordon v. v. Texas, Texas, 578; 67 221; Rosenberg Pa. St. 94 484; Zabr. 3 Johnson Blythe Brannin, 5 Till. v. &c., 231; Mayor 12 &G. Johns. 342; Cases, Tax Commonwealth, Dana, v 7 . ; Weaver, v. H. Williams Burley, 423; Smith v. 11 N. 7 Connecticut, 106. 31; Bank, Y. New N. Haven and decisions evident both statutes of. face works no dis on its the. taxation State, system- crimination, shareholders, bank national against .the taxa it was the and intent thought legislature-that one the shares taxation'of tion of the and the n the same.; *5 n v. 75 NATIONAL BANK FRANCISCO SAN ' Opinion of the Court. U. 197 S. method of taxation was avoid what
The purpose of the State had declared to be double Court Supreme l Bank 119 Fed. Dodge, taxation Nevada Nationa v. Rep. 23 Directors, Wall. 480. 57; ' v. School Hepburn of two fairly susceptible a statute is constructions Where to mischief or absurdity, —one and the inevitably leading with sound sense and wise justice, other consistent policy— the former should be and' the latter In re rejected adopted. California, 384, 386; Jacobs v. Mitchell, 120 Supervisors, on California, Law, Stat. Const. 312. 127; Sedgwick White delivered the opinion Justice court. Mr. sued, bank to restrain the enforcement of appellant city levied for state, county, taxes, year upon the. the bank. were made- Adequate averments stock.of . Cummings Bank, to show National equitable jurisdiction 319; Hills v. U. 157; Exchange Bank, 101 U. S. S. 153, Bank, Mercantile 186 U. S. The taxes were Lander v. be in conflict with the law of United States. alleged Rev. Stat. §5219. The case was submitted and an pleadings agreed- n A
statement of facts. decree of dismissal affirmed by the Circuit Court of for the Appeals Ninth Circuit. That the -cause was court deemed that controlled the reasoning of an delivered opinion deciding previous case, Nevada Assessor, Bank v. in which Dodge, opinion National case . in 119 Fed. reported Rep. 57 Before relied we considering quote contentions text of the of California directly constitution to the relating hand, briefly advert subject of that legislation State which the act under.which the assailed preceded tax was levied. 1. of Article XIII of the
Section constitution of California provides:
“All in State, under -the laws exempt States, United shall taxed in value, to its proportion TERM, Í904.
Opinion of the Court. U. *6 law. The word ‘property/ as provided to be-ascertained in- section,.is and declared to hereby in this article used and all stocks, dues, franchises credits, bonds, clude moneys, real, mixed, and and personal capable othér matters things, -provide, The. except ownership. legislature of. private trust a for deed, of credits secured mortgage the case of-debts due to bofia residents of from credits reduction fide this State.” for the ascertain- out the command
Carrying provide enacted, to be it was taxed, of the value of property ment shall all taxable be §3627, property Code, Political and, Code, §3617, cash Political value,” “at its full assessed mean the amount and ‘full cash value’ terms ‘value’ that “.the a just be taken payment at- which the would property from a solvent debtor.” 'due debt v of all were corporations taxed, of stock Prior to 1881 shares of the Political 3640 Code'commanded and. section taken as should be corporation the stock market value assessment; of"the shares Where the-value shares corporate prop no tax was levied taxed stock .were of California had Court Supreme This because erty. was property the stock the corporate tax both that to decided and Badlam, taxation. Burke California, 57 double (cid:127)would be 594 . taxing system
In the year general in force the corpo- a rule was abandoned, put taxing and was em- Code, which of the Political Section property. rate follows: changé, '.bodied no value intrinsic corporations possess -of stock “Shares the property corpo- the actual value of. and-above over the assess- and for and they stand represent; ration which also, of the shares, corporate of such and taxation meiit all Therefore, be double taxation. would property, but .taxed, be assessed and shall to corporations belonging nor shall stock; made of-shares shall be no assessment therefor.” taxed thereof be holder BANK v. DODGE. NATIONAL SAN FRANCISCO Cpurt; Opinion oí 197 U. S. under which the tax this case was 1899, levied, act of section that all just quoted, by prop-
amended the providing shall be assessed and taxed erty corporations belonging national “save and associa- except banking not assessable Federal tions, statute;” by adding that no assessment shall made provision commanding of shares of stock any corporation the words: following associations, “Save national whose except banking real other than from assessment property, estate, exempt carry Federal To out the made by the change statute.” just referred two sections were added to provision to, Code, Political viz., 3609 3610. Section as amended *7 1899, of and the two new sections by from act. resulting that are in the act, margin.1 1 corporations possess in Sec. 3608. Shares of stock no intrinsic value over corporation property and of they above the actual value of the represent; shares, for and and the stand assessment and taxation of such corporate property, Therefore, and also all the would be double taxation. property belonging corporations, except all property and save associations, statute, banking by national not assessable Federal shall be assessed and taxed. But no assessment shall be made shares of stock any corporation, except associations, banking in save and in national whose estate, property, exempt other than real is from assessment Federal
statute. every, banking in doing stockholders national association Sec. State, having principal place business in this its of business located State, shall be assessed and taxed on the value of their shares of stock therein; and said shares shall property be valued and assessed as other taxation, personal and shall be included'in the valuation of-the of such place, town, stockholders in the city, assessment of the at the taxes county banking located, where such national association and not elsewhere, place, whether town, the said reside in said city, stockholders not; county, or or but in the assessment of such shares each stockholder shall be allowed permitted by the deductions law moneyed to the holders of .all capital credits, in the form of solvent manner same as such deduc- provision tions are allowed paragraph six of thirty-six section hundred and twenty-nine of the Political of the Code State of California. making In such assessment to each there shall stockholder from deducted the value of his shares proportion is in stock sum as the same to such value as the total exempt value real estate and from law bears to taxation the whole value of all the capital shares of stock said TERM, 1904. .
Opinion Court. the law is on is that' of 1899 its face The first contention of the Revised section 5219 -Statutes, with because conflict banks in national of stock does not tax it taxes shares other moneyed banks and state in state corpo- such shares the state banks it is patent corpora- As rations. their property, proposition are taxed on. reduces tions may-not pursue That States the method to this: .itself the act of shares of stock taxing permitted, Congress method is employed the same to the banks-unless national state and-other corporations. of state banks stock moneyed n 123 U. S. Bank v. was de Davenport, In Davenport of section Revised Stat that- the provision cided of shares stock national the taxation utes, authorizing be at the-tax when levied should no but banks, exacting moneyed capital, did imposed rate than greater “ their own States, corporations, require- taxing national, banks of- system taxing conform to their owners.”' in the hands of their stock it was decided that it is in the case True Davenport also rate in the act of of taxation higher Congress prohibition moneyed banks than on other in national of shares avoid method assessment taxa- capital operated exempt nothing herein shall be construed to the real And national bank. And and taxa- bank taxation. estate of such national *8 banking shall not stock in said national associations of such tion shares capital moneyed is made or assessed other greater .rate than be at a citizens of this State. the hands of individual in charged by with the assessment of said shares The assessor law Sec. assessment, give shall, days he has made such written notice after within-ten of its banking of such assessment shares association to each national shareholders; personal or notice to such shareholder respective and no other necessary purpose of this act. And for the shall of such assessment by aiíy-éifeh owned real estate stock is unsecured case the tax stock, become bank in which is held shall such theh- the said- stock holder of bank, therefor; which same from and the assessor shall collect the said liable so charge amount of the tax collected to the-account then liens,. stock, lien, prior owning and have a to shall all stockholder stock, thereof,' earnings dividends and for the reimburse- on his said paid. so such taxes ment to it of FRANCISCO NATIONAL BANK v. SAN T9 o{ Opinion the Court. tion, the usual or effect of probable which would be to dis- banks criminate in favor of state national against banks. True.also is it that in the same case it was held that, even where no such discrimination arose on the seemingly face of if from the record statute, nevertheless, it that appeared created the State in its system execution practical an' material produced actual and discrimination na- tional banks, duty it would be offthe court to hold the be in state conflict with the act of Congress, statute therefore void.
As, then, no conflict arises necessarily between the act of solely and the. state because the Congress law, latter provides one method taxation of state banks and other moneyed and another method for national corporations banks, follows that the contention the state law for that that re- reason.is to the act of without Congress merit. And pugnant this us consider the contention of which brings appellant, we think was embraced which was pleadings, expressly covered stipulated facts, which was overruling as error the Circuit and in assigned Court Appeals court, and was discussed both elaborately parties bar, viz., at that of the face of the argument irrespective law, state law is void because discrimination.against. of. banks, principles national within the settled Davenport case..
To determine this latter contention an analysis requires systems two which the law of California order enforces, that the be accurately two may compared.
n Underthe law shares national banks must be valued at their “full cash value,” the statute defines to mean at the amount which “would be taken for a due they just debt a solvent debtor.” These words are but synonymous with the requirement assessing stock their market value must be the This the case, criterion. for, extraordinary conditions, eliminating exceptional giving an abnormal value for it is stock, apparent moment *9 TEEM, 1904..
Opinion . Court. 197.TJ. value stock is its true cash and market general selling That such is the of the words in the meaning legisla value. tion, of the indisputable, of California is view provision which Code, section of the Political made market value 3640 rule, for shares of stock when assessing during period of stock and that prevailed, the taxatioñ shares generally was iñ held mandatory was effect such requirement Heilbron, Court California. Miller v. Cali Supreme fornia, 133, 138. in the assessment of the shares
What, then, was embraced It cash or or market value? em- of stock at their full selling of all the assets of thé not the book value only corpo- braced will, dividend-earning but ration, good power, which the affairs were managed, with ability corporate, of tenure permanency confidence reposed capacity other indirect and' officers, and all those intangible the estimate of the worth of value which enter into increments fix the market value or selling price of stock and help in Adams subject Express Company this Considering shares. court said: 221, U. S. Ohio, 185, .the and the shares of a stock of a corporation “The capital property, tangible company joint-stock represent also, fran- all corporate therein including the intangible, but will of the con- and good contracts, and all privileges chises cern.”
‘ n And Pullman’s Company, Co. v. Transportation Car observing after court, reiterated. The into the entering was one of things the franchise while 154): stock, said (p. of shares of market value computation enters also earnings capacity prospective “The probable earnings and future value, possible market into the largely with which the the skill extent upon great depend again These considera- managed. of the company affairs the value may enhance they while tions, value of actual increase the in fact do not market, yet are matters of They opinion itself. *10 BANK v. FRANCISCO NATIONAL SAN Opinion of the Court. 197 U. S. have may the stock selling buying different
persons views.” is the is clearly
That this doctrine rule California shown Francisco, California, 276, v. San by Bank of California in that case of such elements value court, speaking or said power good-will,” as “dividend profit-earning (p.289):
“In it will be observed that these elements, connection they may stock, far as enter into value so in an shares to the would be included such stockholders.”
' n Thestate banks and other (cid:127) áre assessed corporations every their that oí is species property. Conceding property which is as specifically assessed enumerated taxable constitution,, assessment.,o£ it does not follow state as such includes dividend good will, property earning power, ability all confidence those management, n necessarily other elements which enter intangible into the cash or value of shares of stock. said As selling passage, such already quoted case, supra, Pullman elements enhance the value of the shares of stock in “may the market, yet they do not in fact increase the value of the actual prop- erty itself. are They matters opinion upon which persons and buying stock'may have selling different views.” In the. no at bar law of the State was referred argument to re- officers in quiring valuing assessing should assess corporation good will, its power, dividend the confidence earning reposed officers, its. analysis etc. From this it results that in the one case, that banks, of national value of all the tangible prop- erty, but also the value of all the elements intangible ábove to is referred assessed and taxed, whilst case, of state banks and. other moneyed corporations, their prop- erty taxed, but the intangible elements of value which' we have indicated are taxed, not assessed and the consequence rise to the discrimination being give against national banks CXOV1I —6
VOL. TERM, 1904.
Opinion of the Court. 197 U. S. and other moneyed state banks corporations favor of the act Congress. forbidden bar this it conclusion, at In the insisted, is argument whilst under the text of the state because, avoided statutes of value ali the elements which are be that included in are not shares of stock eo the assessment of nomine assessed moneyed banks and other corporations state against prop- nevertheless, assessed erty, they are, corpora- “franchise,” duty of the tions under the denomination *11 as the imperative, do so result of the officer to being assessing the- law the taxing Supreme to Court given interpretation n is thus stated in The the proposition argument -of the State. of counsel: all the of system, the California California
“Under their assessed, including franchises. It fre- corporations value of the market the stock of 'the case that the quently in excess of the value of its property, is greatly corporation fact was This called to the attention than its franchise. the of this court, which force recognized of sugges- the state the and laws of the constitution State require held tion, and of the franchise of the corporation, and taxation the assessment of such tax- for the assessment and purpose its value ascertained the market deducting was properly ation of its value corporate property the and assess- value of its stock as franchises.” the remainder ing if the inter- statutes have been conceded It be asserted, Court State thus Supreme the preted they have been the applied by interpreted so and that as to be an end the discrimination there would officers, assessing of the result from the consideration arises which we have seen when so interpreted. of the statutes of the Supreme the decisions Court is, then do The question duty the the contended, place positive California, the franchises of in an assessment of state of including assessor of value which form part all elements corporations value of stock? selling market or v. BANK NATIONAL FRANCISCO. SAN Opinion of the Court. to sustain the proposition, viz., cases are cited San Three January, California, 614; v. Spring Gas Company José Schottler, California, 69, v. and Bank Waterworks Valley Francisco, 142 California, San v. California case cited, Before to consider the last Which is coming relied we the two others principally upon, dispose one do not The first they support proposition. saying where a tax be decided that a was .asserted to simply part a to valid, duty admitted be existed part 'illegal to relief confessedly justify pay legal part concerning The second de claimed to case but portion illegal. the franchises were taxable as corporations prop cided that enjoyed and where other franchises than erty, corporation as a corporation, exist board of right equaliza franchises had them as tion treated assessing equiva lent in value to the value selling capital stock, courts interfere, no with the discretion had power lodged In last cited case, officers. and latest decided assessing San Francisco, Bank was this: controversy of California The was assessed on Bank California property. between the value of such difference and the cash or market value of the shares selling corpora *12 franchise, was as $2,943,096.92. tion instead of being was valued amount, $750,000. sessed for at This valuation was resisted the the it bank, upon that ground so it must have was included large-that dividend good'will, etc,, it was capacity, which,, could not under earning asserted, law be embraced in an assessment of franchises'. The court, reasoned elaborately (there two being dissenting judges) of the power .that view the assessors to value property say” it ^csuld not that officers' had tran assessing authority scended their the valuation making complained of the duty of. it was Speaking officers, said assessing- 288): (p\ n duty “‘Th<? the valuation making was cast at +he assessor. The arriving valuation, method process TERM, Opinion of the Court. 197 U. S. (in where, which his mind reached the conclusion case n here, he or fraudulently it’ is that acted dis- pretended matter committed to his honestly) is determination.’ . . . This to be of the determinative contention here appears. 289): . Whether . or not the whole differ- (p. made. ence between the' market value of the shares of stock aggregate viz., $2,943,096.92— and the value of the tangible property, the assessor had the certainly was the value' of franchise, the value of the in de- to take shares into consideration right liberty of the and were we at franchise; the value termining of the assessor and of the board of to review the judgment we could not that an matters, say those equalization upoñ $750,000 thereon is or unjust, assessment includes that.it elements dividend or profit-earning power, good .as into claimed, it is should not taken considera- will, which, the value determining corpora- tion tion.” elements out that these entered into
After pointing at their market value,' 'of of stock shares was 289): (p. observed if the laws the State properly express
“It is clear value to the everything gives the intention shall be assessed as “of the corpora- a corporation important value of those shares a most ele- tion, the true value of such property.” in determining ment declared that words, simply the court the law In other if tax to expressed purpose properly the State everything, had discretion to- consider what the assessor was value, value, of shares of stock the value of the fixing selling the contention that the law' Instead of supporting franchise. franchise the value of assessor attribute obliged which it was conceded were em- elements intangible those stock, shares of reasoning in- the assessment braced cash, As the or market contrary. selling the opinion *13 case before the court conceded of the value three million dollars than the nearly greater been have BANK FRANCISCO NATIONAL SAN of Opinion the Court. U. assessed to and the corporation, assessor tangible franchise not at that but at sum, only $750,000, had valued if the law California had been what it is now patent it to that the claim be, court held that there was asserted the would, franchise have of the been so frivolous an overvaluation of the law to decide a statement only as to require overvaluation; claim of no the court made such statement. On the
But contrary, judicially declare that an inability it stated its which was more than unjust was extravagant grossly thaii it should have been if the two millions lower law imposed on the assessor franchise obligation valuing difference between value the tangible property assessed and the cash or value shares stock. This 'selling inability to relief the discretion give placed solely upon was. ' which., But the law this interpretation lodged assessor. of the. serves to further statute demonstrate discrimina- tion ‘which -has been The out. result previously pointed made clear the discretion the assessor comparing lodged or other valuing moneyed franchisé banks cor- state him porations with the on to the duty resting valuation of national banks. wide difference between the discretion on one hand and the .the the other will be duty additionally demonstrated aby consideration the discrimina- tion against banks which has arisen the practical national execution of the statutes.
(cid:127) In the statement agreed of faóts it was admitted that there are The State'of California one hundred and seventy-eight (or commercial state) banks, -a vast amount of possessing capital, eighteen were located in San Francisco-. And, to quote the statement, “that manner which franchises commercial banks and trust companies were assessed for said year ending June-30, 1901, by the as- fis.cal sessor of the city county San Francisco, is illustrated by the case Bank of California, corporation banking under organized the laws State of' California.'” .The *14 TERM,
Opinion of Court. the 197 U. S. thus assessment which it is declared in the state question, of facts is illustrative of the other assessments ment state was the one which was involved the banks, controversy decided in the Bank It is then case, supra. California the total re recited statement agreed property' Bank of California, sources of the a the correcting misprint were and that the market or value record, $5,156,903.08; selling a $8,100,000, stock was difference of capital $2,943,096.92; that, from the resources the bank certain deducting $2,311,774. the assessed for at bank was exemptions, tax, mentioned sum was added for franchise not To this last value of the and the sell the difference between the which, stated, three nearly value the "'was ing stock, It insisted in dollars, .only $750,000. millions of but argu but a case of single this statement show's under ment assessors, of a state bank the therefore does valuation exercise of their the conclusion that the- dis not justify as to state banks and cretion the assessors had not generally, than the the franchises at less difference valued corporations, taxed and market or value of the property between the But this contention disregards of the stock. value selling it was admitted statement, expressly that, by fact agreed was illustrative of the assess assessment question that the and moneyed corporations. the' state banks upon ments to which the cause, were the issues in In view of facts only illustrated say question that the assessment agreed, us' to dis would require the Bank California the case of statement.' regard agreed even if the state banks and that, it is contended
Finally, assessed as illustrated were moneyed corporations other state California, the com- Bank on the the valuation placed because the to complain no reason national bank plainant has relatively no of stock was its shares put upon and there- California, Bank than that put upon higher (cid:127) This is predicated occasioned. was. fore no discrimination affixed the stock share per fact that value upon v., NATIONAL BANK FRANCISCO SAN Opinion of the Court. national bank was higher, sole complainant having of the stock as shown value book.value reference'to allowable assets, and, considering deductions, than the Bank California, assessment put considering But there is no proof-whatever the same elements. .alone bank had market or complainant selling the value affixed to it the assessor; value than higher *15 made the basis the the items which were against assessment be agreed the stock are declared statement the entire the at bank, assets bar behalf of argument shares the the value the of stock assessor the bank in of their book value is assumed to have only excess been nomi- therefore, The comes to this, nal. proposition, although national bank was assessed at the full -value of complainant no its there was discrimination in of- stock, favor the state' a bank, albeit there was difference in excess of two millions of
dollars between value put upon and fran- property chise bank and sum which state should have been if levied all the elements had been it, assessed enter into value shares And, stock. thus analyzed, of. reducible to this contention is again proposition, one worth a where property person amount is given assessed full -value no discrimination favor of another results when the latter is assessed for a sum greatly below value assessed. property just has been said disposes
What also of the contention that if the national bank had been assessed under the state law by the rule to state banks it would applied have had affixed to its property higher valuation than slightly was as the given value of the shares of its capital stock. Without stopping out the error point calculation by which this result is to be tljat supposed demonstrated, suffices to say con-' would have only tention the event that The merit property and franchise of all state banks had no higher value than the book value of the shares fallacy. underlying stock. better, the whole contention cannot máde- clear' -than- by TERM, Opinion of Court. that, mere reiteration of the statement under
the. the facts of stock it is obvious thát the shares of the na- agreed, bank for all were worth they tional were assessed under the rule of or whilst the state bank value, market selling $750,000 assessed for above book value of the or market value cash, selling would stock, although millions of nearly have an assessment of three dol- required lars. bar were at asser-
Many argued involving contentions because of tion law was invalid deductions of the state which, asserted, it was the law debts exempt moneyed on an corporations allows to state banks and not allow holders of of their does of these in national Most contentions stock- banks!. the' consideration which we have are in effect disposed law was void simply to the the.state given proposition of taxation to the because it established different methods far as In so the contentions two classes corporations., our conclusions on not in referred to are effect disposed *16 that we think content ourselves with subject, saying we by the court were decided below rightly all such propositions expressed opinion reasons to be without merit, case, Bank to-which the delivered that court the Nevada by its We de- placed rulings. which court referred and upon the record before us. conclu- solely cide this case upon Our of the State of Cali- sion, therefore, deny does not the power banks, in national provided shares of stock fornia assess discrimination method does adopted produce course, it this, From the act prohibited Congress. from their California, if either the statutes would follow com- State, court of that text or as construed the highest the property in the valuation officers pelled assessing in- moneyed corporations of state banks and state other are embraced in the clude all those elements 'of value so that there banks of stock in national assessment of shares national banks, of taxation as respects be an equality would BANK FRANCISCO NATIONAL SAN S9 J., Brown, Peckham, JJ., dissenting. S.' The Chief Justice, 197 U. Brewer, we the discrimination which find to exist under the present law of California would state of the disappear. reversed; is
The decree
the Circuit Court
Appeals
the Circuit
reversed,
decree
Court
also
and the cause is
to the Circuit Court
remanded
in.
proceedings
for further
conformity n
with this
opinion.
with whom the Mr.
Justice
Brewer,
Justice,
Mr.
concur, dissenting.
Justice
Justice Peckham
Brown
Mr.
I
am unable to concur
be-
foregoing opinion, and,
that a
is done
the State of
lieving
grevious wrong
California,
will state the reasons for
Section
my
dissent.
Rev.
the conditions and limitations
state taxa-
Stat., prescribes
national
In reference to it we said in
tion of
banks.
Owens-
Owensboro,
boro National Bank v.
By the section and two are only, placed two. restrictions,^ on the of the State to tax the shares of power stock: “That the taxation be at a shall not rate than is assessed greater moneyed the hands of capital individual citizens of the shares State, and that national any asso- banking ciation owned non-residents of State shall be taxed city or town where the bank located, and not elsewhere.”
No uniform rule is prescribed to the mode Congress of assessment or the manner which the State shall impose burden of taxation on the shares of stock in national banks. *17 left to that to its State own according judg- Each is determine ment. All is is in demanded that fact neither the rate of tax nor the assessment shall discriminate national and that the banks, subject to taxation shall property not be TERM, 1904. J., JJ., dissenting. The 197 U. S. Justice, Brown, Brewer, Peckham, in excess of the burdens cast moneyed burdened . Bank v. U. capital. Davenport Davenport, 83 of section 1 of The mandate the constitution of California is: “All in State, not under property exempt the. the laws of be States, United shall taxed in to its proportion value, as to be ascertained law. The word provided by 'property/ as in this article and section, hereby used to include declared credits, stocks, moneys, bonds, dues, and all other franchises, real, things, personal matters and and mixed, capable ownership.” private
Thus the constitution the taxation of requires all property in to value, and a taxation proportion defines property and everything capable private Cer- including ownership. if mandate of the constitution is tainly, expressed statute the national banks will be subjected same rate of taxation all other property State, therein It moneyed must, capital. therefore, be including the taxation heid of national legislation respecting is in defiance the state bank shares constitution before.it be conflict with the provision can adjudged equality in other Or, words, section Rev. Stat. 5219, legis- of California of their disregarded requirements lature own - order to subject pro- constitution property taxation tected Federal laws. in this California found sec- legislation regard of the.Political as amended in Code,
tion 3608' and two in that enacted year, additional sections numbered 3609 and 3610: “ of stock in corporations Shares no in- possess Sec. and the actual value of the valúo over trinsic above for and corporation they stand represent; of such shares, taxation also all the corpo- double would be taxation. all Therefore, prop- rate property, save erty corporations belonging except associations not assessable by of national Federal banking and taxed. But no shall assessed assessment shall statute *18 NATIONAL BANK SAN FRANCISCO 91 Peckham, Brown, JJ., J., Justice, dissenting. Brewer, The Chief stock in save and be made of shares of any corporation, except whose other than- associations, property, national banking from assessment Federal estate, real statute. exempt “ national every The stockholders asso- banking Sec. 3609. in this its ciation business State, having principal doing shall be of business this assessed and place State, located of their taxed the value shares of and said therein; stock is other shares shall be valued assessed as for and shall be included the valuation taxation, personal of the taxes such stockholders assessment town, at the such national bank- city, county where place, whether association is and not the said ing located, elsewhere, said or or town, county, not; stockholders reside in place, city, but in stockholder be the assessment such shares shall .each allowed all the law to the deductions holders permitted by moneyed in the form of in the same capital credits, solvent manner as such deductions are provisions allowed six of section hundred and paragraph thirty-six twenty-nine of. the Political In Code State of making California. each such assessment shall be there deducted stockholder, his from value of shares of stock sum as is in the to such value total value proportion same as the of its real estate and by law from taxation bears property exempt whole, value all the shares of stock in said na- capital tional bank. And herein construed exempt shall be nothing the real estate of such national bank from taxation. And the assessment and taxation of of stock na- such shares inlaid tional at a associations shall not be rate than banking greater is made or assessed capital the hands moneyed of individual citizens this State. “ Sec. The assessor 3610. law with the assessment charged of said within ten he shall, days after made such has written notice -national assessment, to each give asso- banking ciation of such assessment of -of the shares share- respective and no to such holders; other notice shareholders personal of such shall necessary purpose of TERM, Brown, Peckham, JJ., J., Justice, dissenting. U. Brewer, The Chief And in the tax on such stock unsecured by act: case stock, holder-of such then-the bank by-the real estate owned therefor; said is held shall become liable which shall collect the-same said bank, the assessor *19 of the tax so collected then the amount to the account charge and a lien, stockholder shall have owning, stock, of.the on his said and liens, stock, to all other the prior dividends for reimbursement of such thereof, and the to it earnings taxes so paid,” fifth, rule of is
The valuation subdivision prescribed Code, (cid:127)of the Political which that provides, section 3617 “the ’ ’ ‘ ‘ terms value full cash value mean the and amount at which be in payment would taken of a property just debt due from It is true that prior a solvent debtor.” 1881 market rule of-valuation,-but value was made the the section pre- it was, so far as applied that rule to-national scribing bank void Court Supreme shares, adjudged State, California, 58 and Heilbron, wholly Miller repealed by v. in lieu 59), and of that (Stat. 1881, p. the' legislature rule But the of valuation established. rule of present valua- tion not so an material, is and doubtless established market would amount at which would be value be .the taken property of á debt a solvent debtor. just payment' due is the same rule of main valuation shall thing applied be assessment and taxation of national bank other, And the moneyed declaration sec- express capital. tion is that the shares banks “shall be valued innational for is other property and assessed as taxation.” it appears 'From the sections quoted method of of state 'corporations reaching property purposes taxation is owner all treating corporation and the burden of taxation directly upon it, while on casting the. hand, other obedience to the requirements the Federal taxation in to national banks is statute, respect limited to an and of the shares of stock. But taxation there is if the same is property no reached by discrimination -each.' BANK NATIONAL SAN FRANCISCO Justice, Brown, Peckham, JJ., dissenting. J., The Brewer, U.S. same rule of to the by.each subjected and valuation. method of state corporations .all ifiust section 3608 By' property taxed, word'“property” and is defined be assessed and not merely, to include assets but tangible the constitution and all matters real, other and “franchises, things, per also 'mixed, Every sonal, private ownership.”- capable a part is state therefore, thing, subject is to assessment and taxation. No other corporation burden, is shares of banks, cast national larger can no discrimination when entire surely there as a whole in the one instance taxed to the corporation and instance subdivided and to the stockholder. .taxed less nor more than all The whole neither But parts. is said is ho command to include in specific there the property will, of a state dividend corporation good .power earning like, they-are necessarily included true, value of the stock of It is corporation. these selling *20 items are not in terms are mentioned, but neither desks and furniture. The is so general, that it. language general includes will', dividend everything, good excepting earning power “ and the are like, they of. capable ownership.” private There is ho They to the in belong corporation. -a good, will share stock and above the of over will good to belongs if corporation the and the sells and corporation, conveys all of ownership,” it it possesses “capable private sells and and there is of conveys will, left will good nothing good else the to stockholders. This so belonging is anything plain that he who read. It is hardly runs .in necessary a matter so clear to refer to the of the Supreme Court- decisions California, and yet they are direct the proposition. Thus Badlam, in California, 594, the Burke court (pp. said 602): the of a
“Now, what is corporation but its property— consisting its franchise such other as the -property, own? corporation may what else does its Of stock consist? all this is taken what If remains? away, Obviously nothing. TERM, J., JJ., dissenting. Brewer, Peckham, Justice, Brown, 197TJ. the the is assessed When, corporation oil therefore, property every all its other property —its character— franchise is assessed, the stock the and the man corporation then all of with. This is complied the constitutionis held property date of in trust for the by stockholders, the who are the corporation itof in certain called proportions shares, beneficial owners usually and which are evidenced certificates stock. The is undoubtedly share of each stockholder but it is property, held It very corporation. an interest property of the dividends, is his to a share and other proportionate right more. When the prop- of the corporation nothing property — it, assessed to and the is tax thereon erty corporation it? It is true it is who the stockholders pay paid but paid, before the treasury corporation money from the therein it the same if divided, substantially thing paid but is stockholders; Tp of the individual assess all of the pockets and also to corporation, assess the corporate property number of shares held by to him, each the stockholders twice, the same manifest, assessing property it is would, the trustee of all the corporation, once in the aggregate ta the individual stock stockholders, separately and again the number of shares held each. holders, proportion of a partner As well be contended that property might that the firm, addition, be assessed to should ship firm be assessed of each should partner property interest If I an in partnership to him have interest individually. I therein is It my property. right interest property, firm, profits property pro have to share are my property I own. But rights to the interest portion firm, just held confined *21 of, confined the are to corporation the stockholder the rights In case of the partner the by corporation. held the property I have no firm, the and away take all of property ship, corpo In the case the any partner. a property longer it must be re which,. all its away take ration, property, no its and shareholder membered, franchise, longer the includes BANK NATIONAL FRANCISCO SAN Brown, Peckham, JJ., dissenting. Bíiewer, J., Justice, The Chief If in the one case The cases are parallel. has property. all of the property to to the assess corporation is competent it the respective individual stockholders to the by held and it, to so must it be by therein, competent each interest owned and by firm, held every property to partnership assess It is clear to his interest therein. each individual partner to in: the in the one case the partner our minds that to on the same pay would be twice compelled the stockholder by is nor the con permitted neither required property, to we have re stitution. In case corporation which by has declared that all held the legislature property ferred assessed to them. It not shall be has attempted corporations taxation not the con to exempt any property exempted do it course could not had. It has itself, stitution if shall be only said that assessed property corporation, again shall not be assessed the same tax. This it had (Italics this and right say.” succeeding quotations mine.) are will seen from this be the court quotation places
.It on the same basis If corporations. partnerships part- its will nership property,' sells and its including good out are of its power, which under part profit earning definition of there constitutional left to property, nothing whole has to the separate partners. thing passed pur- way in the same when chaser, corporation makes a sale. And to that the will and profit hold good power must earning is to specifically mentioned hold that the constitutional insufficient; definition will and good profit are not earnirg power “capable private or do ownership,” corporation. Burke v. belong Badlam was reaffirmed in Bank v. San Francisco, California, 276, of California since the decided decision case of Appeals. Court very This case is It was an instructive. action brought a state plaintiff, bank,'to an have assessment of its fran- chise declared and void, and to recover illegal the amount paid it under as taxes protest thereon. The contention *22 TERM, 1904. 96 J., JJ., dissenting. The Chief 197 ÍJ. S. Peckham, Brewer, Justice, Brown, it not or was that did own plaintiff possess franchise whatever, that the franchise in any way connected with franchise, it was the the franchise corporate a being corpo- ration, which was of the the-property and not stockholders assessable or taxable to the It corporation. appears the that the assessor found opinion that the value the aggregate of the bank tangible property was that the mar- $5,156,903.08, ket value of all the shares of the stock was capital $8,100,000, and the difference between him .by the two was ascertained to- be the value of the franchise of the bank. determined was assessment, State not the and of course challenging no made as the to an increase the inquiry propriety was valuation.
In the uses reply plaintiff contention the court the. language:
. States, “It said the Court United Supreme Society Savings Coite, ‘Corporate v. 6 Wall. 606: are legal corporation franchises entities vested itself in. They as it is are mere powers as soon in esse. not naked an in- but with corporation, powers couple'd granted which vest in the possession terest corporation, upon franchises, thought corpo- and whatever a it cannot be denied that itself has. rators, corporation interest in such franchises.’ legal then, “If this franchise is assessable as corporate property, instead of the it be assessed to corporation must settled this State clearly members stockholders decision, in where was Badlam, California, 594, v. 57 Burke his held that stockholder could be assessed upon certificate his an interest stock, inasmuch as shares were simply held the assessment all very corporation, everything represented covered .corporation 3608.)” Code, also (See Pol. § certificate. v. the court Badlam, supra, to Burke referring Again, said 285): (p. con- case question “This involved necessarily SAN FEANCISCO NATIONAL BANK Brewer, J., Justice, Brown, Peckham,'JJ., dissenting. The of section stitutionality Code, the Political prohibiting assessment of shares of stock to the holders thereof. Such *23 undoubtedly they shares unless were other- property, being the unconstitutional, wise section in view assessed, clearly the of of the constitution to provision property requiring all be taxed. According to the decision the court were under they of e., to be otherwise assessed—i. law by the everything represented the was to be assessed to the corporation.” certificates And on p. 289: again,
"Whether or not the whole difference the between aggregate market value of the shares of stock the value of the tangible $2,943,096.92 franchise, the value of the property viz., —was — assessor had the to take the the certainly right the value shares of value determining franchise; into consideration the the of we to the the the liberty judgment were review assessor and at of those we could not that matters, say board equalization upon of $750,000 assessment thereon or that it includes unjust, an of as or earning good will, such elements dividend profit power, it not into consideration in which, claimed, should be taken value determining the In this property corporation. of be it will observed that these so connection, elements, they far stock, enter the value shares would included in into n an assessment stockholders, such shares to the a method liberty is at to bound State adopt, fact—in are otherwise covered the assess- shares adopt, —unless the corporation. ment property of that if the laws of this State properly is clear express “It to' that' value everything gives the intention assessed as property shall'be corporation corpora- is a true value of those shares most tion, important ele- of such ment determining property.” the. value these I have made extensive quotations opinions1 for in like California, cases we Supreme Court court placed by follow the highest construction that court construes Obviously, State its statutes. them within the including corporate aggregate value von. oxovii —7 . TERM, 190-1. Pecicham, JJ., dissenting. Justice, Brown, U.
Brewer,-J., while they and that forbid the assess- all of stock the shares in a of stock state of shares corporation, and taxation ment all- value those shares represented they require and taxed so that corporation; be assessed value of a share of stock ascertain the you single when number of shares corporation you multiply property subject value of the taxation. corporate have the of the assessment that the prohibition After declaring unconstitutional, unless clearly they of shares was taxation to the case of assessed, added, referring were otherwise the decision of the they court Badlam, Burke v. “according e., i. assessed, were under the law to be otherwise everything was to be to the the certificates assessed corpo represented the shares if as Now, claimed, represent merely ration.”. -the franchise, but the dividend the tangible earning *24 “ as then, stated, represented by the certifi everything power, was to be assessed to the And this lan corporation.” cates declaration, dividends, is followed referring guage “ In will, etc.: it connection, this profits, earning power, good so far as elements, they may be observed that these enter will would stock, of shares of be included in an the value into such shares to the stockholders, method of assessment is at liberty which the State fact adopt, —in such shares are otherwise covered adopt, bound to —unless of the of the Refer property corporation.” the assessment word “if” in made to the use the last ence is paragraph as that a doubt as to the implied of the though quotation, that, But surely of the state statutes. cannot be, meaning same that opinion, “every view-of the declaration prior was to be to the the certificates assessed represented thing as is to be read it though said corporation.” paragraph in-, propierly express, the laws of the that State provided then do, the true already they we have held tention, as element determining, value of the shares is an important word “if” used The same corporate property. value of the ef quota- the second paragraph at the-commencement of SAN FRANCISCO NATIONAL BANK v. Brewer, J., Justice, Brown, Peckham, JJ., The Chiev dissenting. tion “if this franchise is corporate assessable as property,” for the word manner, like “franchises” is found'in the constitutional definition property, paragraph preceding “the “if” declares that itself has a corporation interest legal and the franchises,” very paragraph says “the assessment of all the of the corporation covered by the certificate.” everything represented Certainly seems to me there is no justification word “if” torturing all the clear declarations of overthrowing court, as well a destruction of the letter implying plain of the stat- utes.
But reliance is great placed upon admission in the statement of “that facts, the manner in which agreed fran- chises of commercial banks and trust were companies assessed for said fiscal June year 30, 1901, by the ending assessor of the city and of San county Francisco, illustrated by the case of the Bank of California, a„banking corporation organized under the laws of the State of In California.” the assessment assessor, of that bank the did not add to the value of the the difference between tangible property that value and the market value stock, but a sum capital much very less. A tabulated is also statement annexed, the financial showing condition year 178 state banks of during California. It be sufficient to say that might stipulation is satisfied by a conclusion that the assessor in state banks assessing gen- added to the value of the erally tangible property something on account of the franchise —we are not compelled to infer to the valuation tangible of each bank *25 he that he $750,000, added or even failed to add the full differ- ence the value between of that property and that of the stock. Indeed,- it does not from the tabular appear statement the market value the shares in a state bank in Cali- single fornia exceeded the value of its tangible property., So that, far so as that evidence the case in goes, only which there was franchise value to be added was that of the' Bank more tips: California. But It significant from the appears TERM, 1904. Brewer, J., Justice, Brown, Peckham, JJ., dissenting. 197IJ. statement that the assessment agreed complained case was way: made following
“The his defendant assessment fixed the value making $104.35 of the at at each, shares taxation arrived manner: He added to valuation in following capital bank, stock of the undivided $500,000, profits its amounting to face value of $77,260, deducted the United States bonds of its by it, $50,000, furniture, held and the- value $5,500, value, the total assessable $521j760 leaving dividing the number of shares made the assessable value of each share the sum above stated.” words,
In other plaintiff’s against value of the based tangible property. a dollar -wasadded to the valuation on account of fran- Not or dividend or chise, will, earning power, good anything form, that kind. it another Or, put assessment of the state bank added to value the tangible property for the of -the the assessment franchise, something value with the it property, yet plaintiff stopped tangible that there was an actual discrimination unjust held And is this conclusion reached? By how as- plaintiff. bank shares in.the had no value plaintiff above suming that But a tangible assump- the value this is mere property. A more rational would be that the shares of stock tion. guess were over whose undivided fifteen cent profits a bank per a much had value above value of capital par iijs value of its can be that the And tangible property. of a State system legislation respect whole can an un- of national banks be stricken down upon taxation a that the shares national bank assumption given founded If the com- more than its property? were worth tangible a discrimination it was an actual plaint part .was of that its shares had no and show plaintiff’s duty prove.it, and would not “be of the tangible property, value above that from, a solvent debtor” of a debt due payment just taken rule of judicial pro- elementary most at sum. The larger *26 BANK NATIONAL SAN FEANCISCO JJ., Brewer, J., Justice, Brown, Peckham, dissenting. Chibe U. to his party is that a make out cause of must céedings action the existence of all essential assume, not prove, facts. of upon But I need not rest the omission proof. There is no of discrimination-based such differ- upon allegation ence of valuation. The eleventh and twelfth of paragraphs of the state the on account which relief is complaint wrongs In there no may be sought. misunderstanding order of full the of I the causes action these scope alleged quote entire: paragraphs
"Eleventh. —That the said and assessment so as taxation, to aforesaid threatened be made and levied the respondent stock your the shares of upon capital orator, will be of, violation and repugnant to, sections 5219 provisions and 1977 of Revised Statutes the United in that States, and taxation will be at said assessment rate than greater is will moneyed or be assessed in the hands upon capital of individual citizens of the said State of California. And in behalf under your orator shows that virtue of of the said shares of in cor- California, laws State all stock under laws the said State and porations organized to sum of more than the two hundred million amounting dollars ($200,000,000), especially corporations organized under the laws of the said State for purpose banking, to all of stock than more sum amounting thereof million dollars are ($35,000,000), expressly thirty-five exempt from assessment and and the same are not taxation, subject not thereto, and that has assessed and will respondent fiscal June assess, 30th, 1901, the said and does year ending to shares in assess, not intend holders of corporations under of the said State the laws organized California, collect same, value of the shareholders any or the taxes said shares value thereof.
“And further your orator shows said pretended that'the so taxation as aforesaid threatened be made and levied the shares of the respondent capital yiolation orator will be in your of, to, repugnant TERM, 190á. Brewer, J., Justice, Brown, Pe.ckham, JJ., dissenting. The Chief 197 U. S. of said section 5219 Revised Statutes provisions *27 in that thé said taxation United will be States, at. will be assessed other upon any rate than moneyed greater individual capital the hands of citizens of State your And in that behalf orator California. further.shows said shares of the capital and stock of taxing assessing or orator, no can made from will, legally, deduction your them, of or of of debts shares, any the valuation said unsecured real of or other lien on or deed by trust, mortgage personal of by your orator, or stockholders or owing due of of bona residents State them, California; by fide moneyed capital that in and taxing and assessing deed of by trust, of credits .unsecured form mortgage solvent due or to, lien on real or or personal property, owing or other individual citizens said State of of, the hand's California, m a deduction does and will make from said the respondent laws of under and the constitution and by State credits, trust by deed, of the debts unsecured California, mortgage of or bemay lien on real personal property owing by or other or of to bona by any them, resi- citizens, individual such fide and that California, said threatened dents of State the shares of your and taxation orator and is, unlawful and and will illegal, discriminate be unjust, will such and and against and upon per- upon same, and will and them to holding compel owning sons than their share and just and bear more burden sustain And in the said California. this behalf your taxes of State believes, that it is informed and further avers and orator and states the fact be, information belief in' the and city of San moneyed capital county amount on the first Monday State of California in said Francisco 1900, day, on March at noon said 5, March, wit, their bankers, place and having principal banks by invested therein, and and residents city county, in said of business the con- which, and from under credits, solvent unsecured said unsecured debts can be de- State, laws of and stitution NATIONAL BANK FRANCISCO SAN dissenting. Justice, Brown, Peckham, JJ., Brewer, J., The Chief U. and day year and on-the .$14,074,501; was-the sum of ducted, in the State capital the amount moneyed aforesaid last in the said and city county other than San California, in unsecured solvent invested banks and bankers Francisco, (cid:127) laws of under constitution and which, and credits, sum of can be was the deducted, unsecured debts State, said banks aforesaid said day year that on the last $7,589,302; had of San Francisco city at said county and bankers or other lien real deed, debts unsecured trust mortgage such banks and bankers said property owing personal to the sum $36,710,062; city county, amounting the amount of debts unsecured that on last aforesaid day said or other lien on or personal trust deed, .real mortgage *28 banks in the State of said and bankers by property owing in the and of city other than said San California, county of the amount of Francisco, was the sum $32,400,304; by such solvent credits such capital invested moneyed and last day aforesaid, and on the said year banks bankers of Francisco said State Cali- county and of San and city of in- capital with the amount moneyed as fornia, compared of your orator, the the is so capital vested in shares of stock , and the assessment taxation of and substantial that the large of- orator without your shares of stock capital deducting able therefrom, and without to deduct therefrom, being debts other lien by deed, unsecured trust or on real mortgage have by been owing respective personal property, of capital your holders of shares stock orator on the year will day aforesaid, and last be an and illegal unjust dis- against the owners and holders of the shares of crimination stock of will and make capital your.orator, the taxation of said shares of stock at rate than is greater imposed upon moneyed in the capital other hand's of individual citizens in .in California, and-particularly city State and county of San in said State. And in this behalf your orator Francisco/ solvent avers that the said credits so held as aforesaid further and in the banks by. city -bankers said and of San county TERM, 1904. JJ., dissenting. Brown, Peckham, Brewer, J., TJ. Justice, The moneyed the said State of California are and in Francisco individual citizens hands of of the State of capital enter into competition business with California, your orator. of the said assessment of
"Twelfth. —That making orator the your respond- stock capital said of' manner directed the said act will proceed ent in this: That the said as here- respondent, of March 14, 1899, determine the value of will ascertain and each inbefore set out, orator to your be the sum stock capital the shares $11.10 the sum of therefrom per and will deduct $115,452, share of the value amount per as the proportionate share your held orator to secure its the United States bonds of its and hereinbefore circúlation, furniture, will,, set $104.36 the' per assess to stockholders sum share out, of each share of said capital as the value said to assessment subject claimed to be and taxation respondent March-14, under the said act'of provisions fail and refuse to make wholly will the respondent or' deductions ascertained value of said further thereof, to determine the assessable value in order shares, said section 3609 of the Political provisions whereas, under California, pursuance, whereof of the State Code and intends has threatened to make the said the.respondent proceed attempt and will demand will he was and is aforesaid, deduct required the taxes collect *29 capital each share of the stock of your orator, value of from such is in the same to' value as the proportion as sum real estate and of property your of the orator total value taxation bears to whole of all law from value by exempt your stock of orator. That on the the capital shares of on March, 5, 1900, March- wit, of Monday first at had your not, of said orator and thence day, o’clock M. twelve has real and- as had, now, any estate, nor hitherto-has all of hereof of the averred, 'Eighth’ paragraph at said has. day on said and and time, orator consisted your BANK NATIONAL FRANCISCO SAN Brown, Justice, Peckham, dissenting. Brewer, J., JJ., The Chief now of and does consist consisted, bonds, thence hitherto furniture and crédits, personal property, on money hand, at said time the same constituted and and day and said have now the assets been, are, thence hitherto were, and and. are used and it in employed by and were and your orator, of on its business a national bank- the conduct and carrying as of the of the and virtue provisions association under ing the United States known act National Congress are exempt by and were and law from assess- Act, Banking ment and That deduction all the property taxation. .if orator from assessment and- taxation as last your exempt aforesaid to each made stockholder said assessing were remain of value subject there would assess- nothing ment and that assessment and pretended taxation, and $104.36 taxation at value of share of said shares said per would be based and fictitious wholly upon supposed and Constitution laws of upon property exempt United States from assessment taxation.” a alleges first- these violation paragraphs Federal statute in the taxation shares of plaintiff’s stock, shares, because under virtue of the laws California all of stock are in state corporations exempt and the assessor does not intend to taxation, assess to the holders the value of those But, shares. as repeatedly held, mere a difference in the methods of state and national bank taxation to the is not act of Congress. The balance repugnant a paragraph substantially of a discrimination charge . by reason of a failure to deduct debts. But it is that, con- ceded in opinion court, may be put one side—a concession undoubtedly compelled facts agreed upon, for an to each opportunity was given stockholder the plain- tiff bank have any deducted, debts and no one óf -them to avail of this sought privilege.
The other paragraph charges discrimination and that the the' assessor ascertained value the shares of the capital stock sum $115.452 at the plaintiff and deducted therefrom *30 TERM, Brewer, Brown, Peckham, J.T.,dissenting. J., Justice, 197 U. oí the sum of the share the proportionate $11.10 share per he by held the that refused bank; value United States bonds the to make further various items of any deductions, although of bonds, held the bank, .moneys, property by consisting “ are etc., were and used it credits, employed business as a national conduct and carrying banking of the act under virtue provisions association, the National Bank the United known as States, Congress law from taxation.” The were and are exempt Act, here is that national complaint tangible property is from 'taxation because used for the wholly bank exempt and as business, only on the banking purpose carrying shares was based the value of assessment of plaintiff’s was void. Now entire assessment tangible in the nor can it be court, is not pretended .opinion-of it claimed in view of decisions of this successfully prior court, stock in a national bank are taxation subject that shares of of their the extent the excess value above that of yet is the corporation tangible I have made this extensive complaint. of plaintiff’s burden therefrom the matter because apparent quotation of the court sufficient to overthrow which, judgment in- to the taxation of national respect the law California If complained plaintiff. not charged banks, nor any neither discrimination proves alleges the plaintiff I this court why cannot understand of valuation the matter and, thereupon one, upset there was assume (cid:127)should tax. Court opinion reference is no there
Further, discrimination fact. any Appeals evidently fail to in error counsel further, plaintiff Still by this quota- discrimination, actual appears perceive tion their brief: in are: appeal
“The “ involved questions for the assessment the act of 1899, That (1) providing banks, of national capital of shares and taxation NATIONAL BANK v. DODGE. SAN FRANCISCO *31 Brewer, Justice, J., Brown, Peckham, JJ., dissenting. The Chief 197 U. S. of to the of séction the Revised provisions is repugnant United the States: Statutes of of stock of shares in'the commercial banks
“(a) Because ,. and are the are not taxed exempt; State “ to, reason of the failure Because tax shares the (b) n the commercial banks of the shares of national banks State, aré to an adverse a subjected and taxed at discrimination, ’such shares; rate than commercial bank higher “ the (c) provisions, void, Because section are 3609; wholly it undertaken thereby that is that a stockholder provide from the value of his shares of his may deduct the amount due bona residents of debts the State. to. fide under the “(2) express That of the Political provision and section 3608 section the whole of Code, property in the included assessment appellant exempt taxation.” The reference to discrimination is the alleged legal one,
“ reason of failure to tax shares in the banks commercial If failure tax of the State.” shares in the commercial banks of the State does not itself work a as discrimination, in the conceded then practically opinion court, whole fails. plaintiff’s complaint basis matter state constitution declares up, that
Summing “all . shall .' . be taxed to its property proportion ” “ and value,” property including “franchises, defines and all other matters and things, real, personal, mixed,’capable ownership.” Franchises, dividend earning, profit private are Indeed, power, capable private earning ownership. the court is based the contention that opinion they are the holder of assessed to shares banks national assessed state Section upon provides banks. “all save and property belonging corporations except associations, not assessable property banking national Federal shall be assessed and Section 3609, statute taxed.” shares national associations “shall banking and assessed taxation.” The property valued TERM, 1904. Brewer, J., Peckham, JJ., dissenting. 197 S. Brown, Justice, U. a in a holds that stockholder state Supreme Court the State his stock, bank not be assessed certificate “could an the very inasmuch as shares were interest simply his of all by. corporation, held everything represented covered corporation, is neither nor evidence allegation certificate.” There by the the.plaintiff’s there was overvaluation is that there was discrimination The complaint stock. from the value of the shares the deduct reason of the failure to. value, because “used tangible property, entire of the bank’s conduct and on its business carrying employed by *32 the And in face yet association.” a banking national the clear statutes, of the constitution and plain'words absence and the California, Court of the Supreme language this court, by discrimination, of actual proof allegation of California for the system strikes down the whole its opinion, national banks. shares of taxation of have from the matters which-1 con- But and asidé beyond purposes following sidered, conceding, for. for the taxa- providing the law of California that suggestion, is I invalid, national banks still in tion of shares Court of be Appeals ought decree insist- .that suit United This is brought affirmed. equitable an law and distinction equity where the between court, States opinion, Upon theory enforced. constantly bank was plaintiff illegal. the shares of stockun the tax upon Now, tax was void. statute of California The that imposing the juris- have propositions two entered into; are which there bemay that they regarded court so thoroughly of this prudence where not interfere there- will First, law: equity settled and, second, law; remedy.at and complete adequate a plain, a, tax the collection not to restrain issue injunction-will The first is not of its-illegality. on the ground simply it is the in but' Chancery England, the Court Command rule-of ¡Section reads: Stat., 723, Rev. statute. “Suits Federal in'either of the. courts.of the shall be'sustained equity v. NATIONAL BANK SAN FRANCISCO DODGE. 109 J., Peckham, JJ., Beown, Brewer, Justice, dissenting. The case where- a plain, United States and com- adequate, be had at law.” remedy may plete n This defense pleaded defendant his answer, the sixteenth which reads as follows: paragraph “And further submits to this respondent honorable court has a complainant full, complete, speedy adequate remedy at law for all respondent causes of action or actions, causes of stated or stated in attempted com- bill on file in plainant’s complaint action; this and he here claims the same benefit as if he objection had not de- murred to the relief so sought.”
Even if it had not been the matter pleaded, is one formally which this court of its own motion would consider and deter As said Wright Ellison, mine. Wall. 22: “But this is a suit in The rules.of equity. equity are as can no fixed those of and this court more law, depart from than the Unless former latter. has complainant shown to relief however clear his equity, rights law, at he right In can have no redress proceeding. cases, adverse has a constitutional to a trial party right by jury. one, not raised objection though plead- nor this court is bound by counsel, ings suggested recognize and enforce.”
It unnecessary cite the cases in many this court in which this rule has been the latest Scottish recognized, being Union Insurance Bowland, Co. v. which opinion just 611, has been U. filed, may 196 S. reférence though be discussion Mr. by made to the Justice Field Whitehead U. and in Scott Shattuck, 146, 138 S. v. U. Neely, 106, Mr. Brown in by Justice Wehrman v. Conklin, 155 U. S. Now, in California there is a 314. perfectly adequate legal nature. remedy cases Section 3819 Political “ the of any Code owner . . provides . who claim that the assessment is void in whole or in part, tax collector the same to the under may pay protest, which and shall specify shall be whether protest writing, the whole 'TERM, Brown, Pecicham, JJ., J., Justice, dissenting. 197 U. S. Brewer, The or if a what only, be void, part por- claimed to assessment is which such claim is upon either ease grounds and in tion, when ho under shall paid protest payment founded;’and and such voluntary owner payment, in no case regarded payment six months after such time within bring may-at Court, -to recover Superior an against action county a.nemedy has, in under Such paid protest.” back the so tax shares, bank been held by taxation of national a case to exclude and sufficient complete, this court adequate In Dows v. City of a court of the interposition equity. filed by which was a bill owner of 11 Wall. Chicago, Bank Union National -of stock of the capital shares of the levied a tax city restrain the collection of .Chicago, 112): we said shares, (p. his be invoked of the court can “The powers equitable There of a case of cognizance. presentation equitable where there courts, at least in the Federal .case, can be no such And (cid:127)'where except at law’. remedy is a plain adequate have mentioned exist, circumstances which we the special ordinarily ample is collected has of whom an tax party illegal offiéer the collec- action making either remedy; against 'Here such paid. remedy to whom the'tax body tion or plaintiff against tax was the' protesting existed. If the illegal, it was action, paid, have had his its enforcement after might- he money, to recover back the city officer or his No irrepara- have either for damages. prosecuted might its collection. to him" from have followed would injury ble to a multiplicity, resort compelled he have Nor would been have His entire claim his rights. might determine of suits to (cid:127) action.” single been embraced the unanimous opinion this case was And reaffirmed this, &c. v. Board jate Railway case of Pittsburg court I have 32, in. quotation Works, Public also made is quoted. just '(cid:127) second, referred also I have has to which proposition *34 many decisions I refer only to of the decided'. Out often been v. NATIONAL BANK SAN FRANCISCO Ill Brewer, J., Peckham, JJ., Brown, The Justice, dissenting. TLS. Chicago, Dows v. City two or three. which is supra, of 109): (p. this language void, tax be we to do not illegal think
“Assuming bill presented justifying interposition any ground enjoin of of to its collection. The a court equity illegality tax and the threatened sale of the shares for its payment constitute themselves alone no for such ground interposi- tion. There must be some special circumstances attending a threatened of this it injury kind, from a distinguishing common the case under some trespass, bringing recognized head of before the equity jurisdiction preventive remedy of can be invoked.” injunction Tax U. Cases,
State Railroad is this 614): (p. in these cases lay
“We do not to down absolute propose limitation of the of a court of powers equity restraining we taxes; may say, that, but in addition illegal collection or case be to must illegality, hardship, irregularity, brought within some of the foundations recognized equitable juris errors or excess in or diction, valuation, and that mere hard or which can be injustice law, any grievance ship law, remedied at either before or after suit payment in taxes, will not a5court justify equity interpose by ' collection a tax.” junction stay Railway And in Board Public Pittsburg &c. v. Works, 37): in which the is thus stated (p. rule supra, under authority taxes assessed of a “.The collection writ of from a injunction State is not to be restrained court unless States, clearly appears, United it the tax is but that the owner taxed has illegal, remedy ordinary law, no adequate processes there are circumstances the case under special bringing some head of jurisdiction.” recognized equity
But
said that
cases this court
following
has laid down an
different rule
apparently
respect
Weaver,
People
taxation of national bank shares:
*35
TERM, 1904.
112
Peckham, JJ.,
S.
J.,
197 U.
Justice, Brown,
dissenting.
The Brewer
101 U. S.
v.
Bank,
143; Cummings
539;
v. National
Pelton
Exchange Bank,
v.
105 U.
U. S. 153; Hills
Bank, 101
National
322; Lander v.
Britton,
Bank v.
105 U. S.
319, and Evansville
writ of error
The first was a
“But the State expressly the statute of of taxes and assessments enjoin levy the illegal brought be of the Revised Statutes of them. Section 5848 the collection or And Ohio, 178, 1, Laws of secs. 1880; vol. Ohio, 2.. decided this court we have repeatedly though mode of procedure cannot statute of a State control of their nor them courts, deprive in Federal cases equity that, we have also held where a jurisdiction, separate equity or remedy, a new right provided a a new statute State created on the common right either courts will the Federal enforce or the nature the new docket, right or side law equity Morton, v. U. S. 378. Van Norden new remedy requires. by injunction the remedy doubt Here there can be ..no is to statute, granted by an tax, expressly illegal against enforced on the can be enforced, appropriately .and the court. side of equity to the another made objection
“The statute also answers will not suit, namely, that equity enjoin sought relief known heads under some well collection tax except which is not a mere overvaluation, among jurisdiction, equity an where there is tax, case or the illegality statute of expressly' pro- at law. Ohio remedy adequate illegally an the collection injunction vides for cf^rtax BANK FRANCISCO NATIONAL SAN Brewer, J., Peckham, JJ., dissenting. Justice,.Brown, The Chief back such as for an action to recover tax as well assessed, to authorize an intention both clearly showing when paid, cases. in such remedies we statute, however, of this are oi opinion
“Independently of valuation is rule or those system adopted that when a assessment, which is designed it is to make the whose duty violate a fundamental principle and to unequally operate solely this rule is applied and when Constitution, *36 of individuals or corpora- to a class individual, one but large interfere to restrain the opera- may tions, equity properly exercise of power.” tion of this unconstitutional to to the justify exception are here stated Two reasons a state First, rule in to respect injunctive relief. ordinary of the state au- a on the and, second, part statute, design no of California There is statute to discriminate. thorities to and injunctions, in reference such special provision making rule put a from the general that reason for departure on .the of the an intent part The other implies one side. to discriminate. It does not officials or assessing legislature has a discrimination but that that there resulted mean simply early days known 'that It is well one was intended. was a prejudice against law there strong national banking and legislation of the Union in different portions it adverse uncommon, was not taxation of burdensome way fact that the court tted permi of that was because exercise I am in this and That right powers equity. of the strong rule an intent to a different apply has never been there has been force in respect bank that which a national to Jus- made clear of Mr. language is to' other property Kimball, Bank v. case, Miller in a National subsequent tice he 732, Delivering opinion court, U. S. 103 says: rule to the is universality
“An exception apparent 539, U. S. Pelton v. National Weaver, 100 v. People admitted National Cummings Bank, v. 101 Bank, when cases that the inequality in these is held It U. S. 153. VOL. cxovii — 8 TERM, 1904. JJ., dissenting. Brown, Peckham, J., The Justice, 197 U. S.
Brewer, statute the State designed is the result a to of valuation class of any persons or injuriously against discriminate will a court of equity give property, appropriate species is the -law itself and also relief; where, though unobjectionable, make are assessments appointed the officers who combine rule or together valuation, and establish a nec- principle of tax one species of which essary higher result the court will rate, than the others, higher average than no the bill before us alleges agree- relief. But also give assessors, and no rule common action of general ment or a but relies assessor, on adopted by single rate discriminating unequal numerous instances valuations partial .of rule the subject.” no establish like the action of the court in This was somewhat ruling a U. S. 255. That was case Schwalby, Stanley coming when the judgment a court. Ordinarily from state reversed further to remand the case for the order is proceedings in view of opinion, with our but action inconsistent thereto- in the case we felt taken the state court fore constrained which should be entered. very judgment direct Bank, decree supra, v. Mercantile In Lander dismissing *37 is was affirmed. It true in by the bank the opinion bill filed and discussed, the bill were said nothing merits of about (cid:127) Evidently maintain a suit in equity. to matter right consideration, unnaturally so, and not without as passed dismissed. its merits was bill on the effect of the us, may whatever
In' the case before discrimination, the door to no statute in or creating opening an the- there was intent on say part can read and one to injuriously of California discriminate of the legislature positive national The statute language banks. assessed as is shares shall be taxed and that national bank doubt an beyond attempt and there property, to cast an equal of the California part legislature there course, ought of taxation on such shares. Of burden favor this court an intention to imputed to national not to be v. CO. TEXAS. OIL NATIONAL COTTON lll> n Syllabus. . of taxation to down lay in the matter bank all’,other which is denied to property. its benefit So rule for construction the state' my statute, beyond Iwere wrong the decree of the Circuit Court of Appeals any peradventure the bank remitted to to be affirmed and its legal remedy. ought to the say I am authorized Mr. Justice, Jus- concur in this and Mr. dissent. Justice tice Brown Peckh'am COTTON OIL COMPANY NATIONAL TEXAS. THE ERROR TO COURT OF CIVIL APPEALS IN AND FOR THE THIRD OF THE STATE SUPREME JUDICIAL DISTRICT OF TEXAS. 1905. Decided February November 1, 2, 1901. 27, No. Argued 1889,1895 Acts of The Anti-Trust Texas are all directed to the prohibitions trade, any way of combinations to restrict to limit com- articles, petition production or sale or to or reduce increase preclude prices competition; and, in order to free and unrestricted as the, competition legislature of a State ordain that and not combination1 trade, may prohibit shall be the law combinations to control they prices, the statutes now stand are not conflict with the Four- against corporations dealing teenth Amendment and do ript, cotton combining regulate price cotton.seed, deprivation oil and work a process law, impair due without or liberty their of contract. monopoly The idea of is not now grant confined to a privileges but o£ produced by understood to include a condition the acts of individuals suppression competition by and the unification of manage- interest or through agreement ment and concert of action. power It is the prices control which makes' both the inducement to inake such com- prohibit binations and the concern of the law them. Supreme having Court of Texas construed the act of invalid, 1895 as discriminatory by so far as it was excepting operation from its combina agriculturists organized tions laborers and fell within the terms *38 Conolly Co., Pipe v. Union Sewer 184 U. S. and sustained the respects, having act in other also held that the act of although cumulative did not continue the invalid provisions discriminatory