McAden v. Board of Commissioners

Smith, C. J., (after stating the facts). The revenue act of 1885, ch. 175, §12, in its enumeration of taxable property, contains this clause, numbered 5 : “ The amount of solvent credits, including accrued interest uncollected, owing to the party, whether in or out of the State, whether owing by mortgage, bond, note, bill of exchange, certificate, check, open account due and payaable, or whether owing by any State, or government, county, city, town or township, individual, company or corporation. Any certificate of deposit in any bank, whether in or out of the State, and the value of cotton, tobacco, or other property., in the hands of commission merchants or agents, in or out of the State, shall be deemed solvent credits within the meaning of this act. If any credit be not regarded as entirely solvent, it shall be given in at its true current or market value. The party may deduct from the amount of solvent credits owing to him the amount of collectable debts owing by him as principal debtor.” Not only are stocks not included in the credits, as defined in the clause, but some forms of visible property, crops in the hands of agents, are included in the term. The act of Congress, without the authority of which no taxation upon the shares of these national banking associations could be imposed, confers this power upon the States within whose limits they are located, with the restrictions ■“ that the taxation shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such State, and that the shares of any national *358 banking association owned by non-residents of any State, shall be taxed in the city or town where the bank is located, and not elsewhere.” Rev. Stat. of U. S., §5219. The term “moneyed capital” has been construed to embrace investments in banking associations as well as credits in a more strict sense, and hence an act denying deductions for indebtedness of the share owner from the value of his stock, when it is allowed to creditors who owe, is in violation of the permitting act of Congress, and is void as to share-holders who are indebted and have not such property as the deductions are allowed to be made from. The discrimination against such shares is wholly unauthorized. In Hepburn v. School Directors, 23 Wall. 480, Chief Justice Waite says : “We cannot concede that money at interest is the only moneyed capital included in that term as here used by Congress. The words are “ other moneyed capital; ” that certainly makes stock in these banks moneyed capital, and would seem to indicate that other investments in stocks and securities might be included in that descriptive term. In Adams v. Nashville, 95 U. S., 19, Mr. Justice Hunt, after remarking that the act did not mean to interfere with exemptions from taxation of homesteads and other property for meritorious considerations by a State, adds: “ The plain intention of that statute was to protect the corporations formed under its authority from unfriendly discrimination of the States in the exercise of their taxing power.” In People v. Weaver, 100 U. S., 539, an act of New York was declared null, in that it refused “to the plaintiff the same deduction for debts due by him from the valuation of his shares of national bank stock, that it allows to those who have moneyed capital otherwise invested,” &c. So it has been held, that while the statute of the State requires all moneyed capital, including national bank shares, to be assessed at its true cash value, the systematic and intentional under-valuation of all other moneyed capital and *359 of shares in national banks at their full .value, is a violation of the act of Congress. Pelton v. National Bank, 101 U. S., 143; Cummings v. National Bank, Ib., 153. The subject was more elaborately examined in Hill v. Exchange Bank, 105 U. S., 319, on appeal from the Circuit Court of the United States for the Northern District of New York. The suit was brought by the bank, suing in right of and as representing the stockholders, to prevent the enforcement of the tax imposed by the State upon national bank shares, on the ground that no provision was made “ for deduction from the assessed value of these shares of the debts honestly owing by the share-holders.” The Circuit Court declared the enactment void; and while this ruling was reversed, it was declared that the share-holder had a right to have his own indebtedness taken from the valuation of his shares. It was again considered, in Evansville Bank v. Bretton, Ibid., 322, in which the opinion of the majority of the Courtis delivered by Justice Miller. He reiterates the proposition, “ that the taxation of bank shares by the Indiana statute, without permitting the share-holder to deduct from their assessed value tire amount of his bona fide indebtedness, as in the case of other investments of moneyed capital, is a discrimination forbidden by the act of Congress.” The statute referred to, somewhat like our own and less obnoxious to the objection, allowed the tax-payer’s debts to reduce his: I. Credits or money at interest either within or without the State at par value, and II. All other demands against persons or bodies corporate either within or without this State. Three of the Court dissented, the Chief Justice and Justice Gray being of opinion, that the deduction allowed of one indebtedness from another indebtedness, was not within the purview of the enactment; and was not a prohibited discrimination, while Justice Bradley held the whole provision for taxing national bank shares *360 inoperative, whether the owner owed debts to be deducted or not. The State statute was held by the Court to be void ■only as it interfered with the right of one in debt to have his valuation of stock diminished thereby when subjected to taxation. These cases settle the question of construction and we abide by the rulings in them. There is no error, and this will be certified to the Court .below. No error. . Affirmed.