61 So. 47 | Ala. Ct. App. | 1912
The complaint follows substantially that in Elmwood Gem. Co. v. Tarrant, 170 Ala. 459, 54 South. 186. It states the facts, and the reporter will set it out, together with the demurrers thereto'. The overruling of the latter is the only, ground of error assigned. They raise, as conceded by both sides in brief, substantially but two questions, only one of which, in the view we take of the case, is necessary to be decided. This involves a construction of our revenue laws.
It will be observed that the appellee, plaintiff below, is a banking corporation organized under and chartered by the laws of the United States. The question here considered is whether or not that portion of its capital stock, which is invested in exempt bonds-of the state of Alabama, should, in the assessment for taxation of its shares of stock against the respective shareholders under section 2082, subd.' 8, of the Code, be deducted from the-total value of-those shares first, before assessing such shares for taxation, so that the assessment would be- on the value of those shares, as reduced by. such deduction. The .tax assessor and. collector, .declined t.o permit the-reduction,- but assessed - and collected,, under protest from, the bank, who,, under, the .statute cited above, is. •required to.pay it for, .the -shareholders) .the tax upon the, value of. the shares,, unreduced,.as that value was,,
Said subdivision 8 of said section 2082 of the Code of Alabama, under which the assessment was made and by which it is to be justified, if at all, thus provides: “Every share of any incorporated bank. of this state, etc., or of the United States, shall be assessed and collected in the city, town or village where such bank is located, and such share shall be assessed at its actual market value to the person in whose name such share stands on the books of the bank, and not to the bank or corporation. The president or cashier * * shall make out and return under oath to the assessor * * * a list showing the total number of shares of the capital stock of such bank, the full name and residence of every shareholder as far as known, the actual market value of such shares, the par value, thereof, etc., * " and the value of the shares as shown by the books of the corporation, etc.; and such president or cashier shall, at the same, time,-return to the assessor * * * a sworn statement of all real estate owned by the bank situated in this state and the.value thereof as assessed for taxation the same year, and thereupon the assessor shall, after passing .on such assessment, deduct from the amount or sum, at which the whole of the shares are assessed, the -amount or-sum at which.the real estate of ,the-bank situated:in this state-is assessed for taxation; and;the residue-of values remaining.-after such deduc-tion shall be the assessed, value, of . the. whole-of such shares* and' such residue, divided by -the -whole number of shares, shall constitute the value of each share for
National banks are instruments or agents of the general government, designed to aid in the administration of an important branch of the public service; and they are appropriate means to that end, constitutionally authorized, as a proper exercise of the incidental or implied powers of Congress. — Farmers’ Nat. Bank v. Dearing, 91 U. S. 29, 23 L. Ed. 196.
The power of the state to tax their property or their' shares is derived from the legislative permission of
Said section 5219 of the Revised Statutes of the United States, just cited as the authority of the state to tax, thus reads: “Nothing herein [referring to preceding sections] shall prevent all the shares of national banks from being included in the valuation of the personal property of the owner or holder of such shares, in assessing taxes imposed by the authority of the state within which the bank is located; but the Legislature in each state may determine and direct the manner and place of taxing all the shares of national banking asso-sications located within the state, subject only to two restrictions, that the taxation shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such state, and that the shares of any such bank owned by non-residents of any state shall be taxed in the city or town where the bank is located, and not elsewhere. Nothing herein shall be-'construed to exempt the real estate of such banks from either state, county, or municipal taxes, to the
Code of Alabama, § 2082, subd. 8, hereinbefore set out, as will appear from only a casual reading of it, taxes only the real estate of the bank, and does not tax at all its personal property. If it does not tax any of its personal property, then it certainly does not tax any of the exempt bonds held by it; and appellee’s contention is without merit. It is true that the section taxes the shares of stock in the bank; but it does so upon.an assessment against the shareholder, and on the theory that these shares are not the property of the bank, hut the property of the shareholders, respectively, as individuals.- In the assessment of these shares against the shareholders, they are by the state statute allowed a deduction for the real estate assessed against the hank; but this is a matter of legislative grace, and not a right that they could demand under the federal statute hereinbefore quoted. This federal statute has received very careful consideration by the Supreme Court of the United States, wherein they have -clearly pointed out that a tax against a shareholder on his shares in a bank is not a tax on the personal prop
In Van Allen v. Assessors, 3 Wall. 581, 18 L. Ed. 229, that court says: “The main and important question involved, and the one Avhich has been argued at great length and with eminent ability, is whether the state possesses the power to authorize the taxation of the shares of these national banks in the hands of stockholders, when the whole capital of the banks is invested in exempt stock and bonds of the United States. The court are of opinion that this power is possessed by the state, and that it is due * * *' to the public interest involved that the question should be finally disposed of. We shall proceed, therefore, to state, as briefly as practicable, the grounds and reasons which have led to this judgment. * * * The tax on the shares is not a tax on the capital of the bank. The corporation is the legal owner of all the property of the bank, real and personal, and within the powers'conferred upon it by the charter, and for the purposes for which it ’was created, can deal with tire corporate property as absolutely as a private individual can deal with his own. This is familiar law, and can he found in every work that may be opened on the subject of corporations. * * * The individual members of the corporation are no doubt interested in one sense in the property of the corporation, as they may derive individual benefits from its increase, or loss from its decrease; but in no legal sense are the individual members the owners of the corporate property. The interest of the shareholder entitles him to participate in the net profits earned by the bank in the employment of its capital, during the existence of
The Supreme Court of this state, in an able opinion by Judge Stone; have also recognized and approved of the property difference here pointed out between the capital stock of the bank and the shares therein owned by the stockholders.' — Maguire v. Board of Rev., 71 Ala. 401, and cases there cited. It was in the light of the federal statute quoted, the construction thereof as given it by the Supreme Court of the United States, herein-before noted, and the decision of our own court above cited, that the Legislature of this state set about the task of taxing national banks and the shares therein. From them all they reasoned, and correctly so: “We can tax the real estate of national banks, but not their personal property, because the congressional act forbids. We can tax both the real and personal property of state banks, for they are our own creations, though, if we tax their personal property, it will increase the tax burdens
These evident conclusions of the Legislature were expressed in section 2082, subd. 8, of the Code, which we have hereinbefore set out; and for fear, it seems, that the tax officers and courts might possibly misunderstand and undertake to allow shareholders deduction on account of other property owned by the bank other than its real estate, as here insisted on, they put this express prohibition in said subdivision 8 of said section 2082:
A further result would be that the shareholder in a national bank would have an advantage, in point of taxation, over a shareholder in state banks, for the reason that United States bonds are profitable to, and largely held by, national banks mainly in that they can issue on them bank notes to the amount of their face value, Avhereas they are not profitable or inviting as an investment for state banks, who are deprived of this privilege; and hence very few are held by the latter. The owner of shares in a national bank would, therefore, neces
The section (2082, subd. 8, of the State Code), in that it makes the bank liable for the tax so assessed against the shareholders on such shares, and requires the bank to pay it for the shareholders, is construed not to be a tax on the bank, and therefore not violative of the said act of Congress. — U. S. Rev. Stat. § 5219; Aberdeen First Nat. Bank v. Chehalis County, 166 U. S. 440, 17 Sup. St. 629, 41 L. Ed. 1069.
All other classes of domestic corporations in this state are assessed differently from banks. See subdivision 9 of said section 2082 of the Code. This does not offend the laAV of Congress (U. S. Rev. Stat. § 5219) inhibiting discriminations in the taxation of national banks, because the business of such co.rporations does not come in competition Avith that of banks. — Talbott v. Silver Bow County, 139 U. S. 438, 11 Sup. Ct. 594, 35 L. Ed. 210, and numerous authorities cited on page 157 et seq. of volume 5 of Edward Thompson Company’s Annotated Federal Statutes.
Under said subdivision 9, § 2082, the corporations therein assessed, which are all other domestic corporations than banks, are not required to pay taxes on any of their exempt property, whether real or personal, but only on their taxable property; hence they therein also clearly get the benefit of all state laws exempting state bonds or other property from taxation; and to allow the shareholder, in assessing his shares for taxation, deduction for the value of such property exempted to the corporation Avould be to allow its exemption twice,
The Elmwood Cemetery Co. Case, 170 Ala. 459, 54 South. 186, upon -which appellee bank relies,-was a decision upon a different .subdivision of the Code, §, 2082, ■subd. 9, than that Ave have here under .consideration, which- is subdivision 8,-of section 2082$, and- Avhich differs from the other, in- niaterial.¡respects;,.hence Ave do .not regard that case as. an authority here. .-The con clu
Counsel for appellee bank argues that, unless the state statute (Code, § 2082, subd: 8) be so construed as to allow the contention of appellee bank, then the whole statute must fall (as contravening the congressional act cited), in that it amounts to a discrimination against shareholders in national banks in favor of private individuals, not incorporated, who own exempt bonds and compete with national banks in carrying on a banking business. It is a complete answer to this, we think, to repeat, what we have hereinbefore endeavored to point out, that the bank itself, Avho OAvns the bonds gets the benefit of the exemption in that its personal property is not taxed at all; and incidentally, of course, the shareholders get the benefit in proportion to the shares they OAvn in the bank — the same benefit that the same number of priváte individuals Avould get if they OAvned the bonds jointly. The only difference is that in the one case the bank is relieved of the tax resulting in benefit to the shareholders avIio OAvn its stock, whereas in the other case the individuals are directly relieved, but not as a credit on their shares, for they have none.
The judgment of'the loAver court is reversed, and the cause is remanded for entry of the proper judgment in the loAver court sustáining the demurrers.
Reversed and remanded.