143 Minn. 408 | Minn. | 1919
The Security Bank failed to return to the assessor its list of stockholders as banks are required by law to do. G-. S. 1913, § 2018. The assessor assessed the $5,000,000 on deposit as money and credits. On October 16, 1915, the Minnesota Tax Commission, after notice to the bank and a hearing, directed the county auditor of Hennepin county to assess the stock of the Security National Bank “in the manner provided by section 2018, G. S. 1913, for the current year as omitted property.” The county auditor thereupon assessed the stock in the name of the bank. No list of stockholders was called for or returned. The assessment was not paid. The bank was held not liable for the payment of this tax, for reasons which will be hereafter more fully stated. State v. Security Nat. Bank of Minneapolis, 139 Minn. 162, 165 N. W. 1067.
On the second trial of the ease the state called for a list of the stockholders of the bank, with the amount of stock held by each on May 1, 1915, and this was produced in court by the attorneys for the bank, with the stipulation that, by its production, no rights were waived. The court then, without citation or notice to any of the persons named on the list, ordered personal judgment against each of them for a proportion of the tax. Thereafter certain of the persons named as stockholders appeared specially, and moved to vacate the decision, on the ground that the court had no jurisdiction to give personal judgment against them. The motion was denied and they appealed.
The pertinent statutes are as follows:
Section 2018 provides that: “The stock of every bank * * * organized under the laws of this state or of the United States, shall be assessed and taxed in the town, city or village where such bank * * * is located, whether the stockholders of such bank reside in such place or not, and shall be assessed in the name of the bank.”
Section 2019 provides that: “In every bank * * * there shall be kept at all times a full and correct list of the names and residences of
Section 2021 provides that: “To secure the payment of taxes on * * * bank stock * * * every bank * * * shall, before declaring any dividend, deduct from the annual earnings of the bank such amount as may be necessary to pay any taxes levied upon the shares of the stock, and such bank * * * shall pay the taxes, and shall be authorized to charge the amount of such taxes paid to the expense account of such bank.”
This court held on the former appeal that the stock was a taxable asset on May 1, 1915. We have no misgivings as to the correctness of this ruling. The stock was a very valuable asset and continued to be such, until, by contemporaneous transactions, it was surrendered and canceled, and the stock in the First National Bank was issued. There was no point of time at which it could be said that neither one nor the other was in existence. On May 1 the stock in the First National Bank was not taxable because it had not come into existence. The stock in the Security Bank was still in existence and it was taxable.
On the former appeal it was held that the bank was not liable for the tax on the ground that a bank is liable to pay taxes levied on its stock only out of earnings, at least out of assets of some sort, belonging to the stockholders and in the hands of the bank, and that the Security Bank had no such earnings or assets in its possession at any time after this tax levy was made.
It is clearly not a tax against the bank. A state legislature has no power to tax the capital of a national bank. National Bank v. Commonwealth, 9 Wall. 353, 19 L. ed. 701; Owensboro Nat. Bank v. Owensboro,
The tax is not in rem against the stock. In this state real estate taxes are in rem against the land. Personal property taxes are not in rem, but are in personam against the taxpayer. Laird Norton Co. v. County of Pine, 72 Minn. 409, 412, 75 N. W. 723; State v. Eberhard, 90 Minn. 120, 95 N. W. 1115. This tax is of the same character as other taxes upon personal property. This court has so held. State v. Barnesville Nat. Bank, 134 Minn. 315, 159 N. W. 754; State v. Security Nat. Bank of Minneapolis, 139 Minn. 162, 165 N. W. 1067.
This method of taxation of stock in banks is in vogue in many states. In some states, the tax is levied, in form, in the name of the stockholder, Nevada Nat. Bank v. Dodge, 119 Fed. 57, 56 C. C. A. 145; Tappan v. Merchants’ Nat. Bank, 19 Wall. 490, 22 L. ed. 189; Corry v. Baltimore, 196 U. S. 466, 25 Sup. Ct. 297, 49 L. ed. 556; see Merchants & Mnfrs. Bank v. Pennsylvania, 167 U. S. 461, 17 Sup. Ct. 829, 42 L. ed. 236, as it formerly was in this state. G. S. 1878, c. 11, § 24. In some, the tax is levied in form, in the name of the bank. Aberdeen Bank v. Chehalis County, 166 U. S. 440, 17 Sup. Ct. 629, 41 L. ed. 1069; National Bank v. Commonwealth, 9 Wall. 353, 19 L. ed. 701; Bell’s Gap R. Co. v. Pennsylvania, 134 U. S. 232, 10 Sup. Ct. 533, 33 L. ed. 892. In some, the provision is simply for taxation of the shares of stock. National Bank v. Commonwealth, 9 Wall. 353, 19 L. ed. 701; Citizens Nat. Bank v. Kentucky, 217 U. S. 443, 30 Sup. Ct. 532, 54 L. ed. 832.
In all of these cases the result is the same. It is in substance a tax against the stockholders on account of the ownership of the stock, and the bank is constituted a tax collector to collect the tax from the stockholders.
The contention is made that the statute provides no means of enforcing the tax against the stockholder. If this were true it might lend color to the argument that no such liability is intended, but we are not prepared to hold that our tax laws are inadequate for the collection of this tax from the stockholder.
But we cannot sustain the judgment against these appellants- because it was given without notice to them. Counsel for the state contends, and the trial court held, that judgment may be entered against the persons whose names are returned by the bank as stockholders, without service of notice upon them, on the theory that the bank represents them, and that service upon the bank is service upon them.
We cannot sustain this position. We are of the opinion that the court acquired no jurisdiction to render a personal judgment against the stock
In Tappan v. Merchants’ Nat. Bank, 19 Wall. 490, 22 L. ed. 189, cited by the state, the court used language to the effect that all owners of stock in banks “have,” by becoming owners, “submitted themselves to the jurisdiction of the state.” But we think the court referred to jurisdiction “for purposes of taxation” and not to jurisdiction for the purpose of obtaining judgment against the person. The court made this clear when it said: “If the state has actual jurisdiction of the person of the owner, it operates directly upon him. If he is absent, and it has jurisdiction of his property, it operates upon him through his property.”
In Corry v. Baltimore, supra, the court sustained the power o£ the state to impose a personal liability upon the owner. But there is a difference between imposing a personal liability upon the owner and the enforcement of that liability by giving personal judgment against one alleged to be the owner without notice to him. The application for a judgment against the stockholders involves something more than the validity of the tax. For example, it involves the question whether the person named is in fact a stockholder, and this question cannot be determined against him, without an opportunity to be heard, in a proceeding to enforce payment of the tax, any more than it could be in an action to enforce the liability of stockholders for the debts of the corporation. See Wilson v. Seligman, 144 U. S. 41, 12 Sup. Ct. 541, 36 L. ed. 338. Nor
Judgments reversed.