Rockingham v. . Hood, Comr.

OlaeksoN, J. The questions involved: (1) Is the bank stock tax of North Carolina a tax on the shares of stock to be paid by the stockholders or by the bank itself? We think by the bank. (2) Can the taxing units require the liquidator of an insolvent bank to pay such tax duly levied before the bank was closed? "We think so. Public Laws of 1929, chap. 344, Art. YI, sec. 600, subsec. 6, is as follows: “The taxes assessed upon the shares of stock of any such banking association, institution or trust companies shall be paid by the cashier, secretary, treasurer, or other officer or officers thereof, and in the same manner and at the same time as other taxes are required to be paid in such counties, and in default thereof such cashier, secretary, treasurer, or other accounting officer as well as such banking association, institution or trust company shall be liable for such taxes and in addition thereto for a sum equal to ten per cent thereof. Any taxes so paid upon any such shares may, with the interest thereon, be recovered from the owners thereof by the banking association, institution, or trust company, or officers thereof paying them, or may be deducted from the dividends accruing on such shares. The taxation of such shares of capital stock shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of this State, coming in competition with the business of such banking associations, institutions or trust companies.” Section 603, subsec. 4, gives a right to appeal from the assessment. Section 603, subsee. 6, is as follows: “The State. Board of Assessment shall, on or before the first day of August of each year, certify to the register of deeds of the county in which such corporation, limited partnership or association has its principal office or place of business, the total value of the capital stock of such corporation, limited partnership or association as determined in this section; and such corporation, limited partnership or association shall pay the county, township, city or town tax upon the valuation so certified.” *622 Tbe above and other relevant statutes were duly complied with as set forth in the findings of facts- by the court below. There was no appeal from the State Board of Assessment and defendant is now precluded from raising the question. Mfg. Co. v. Comrs., 196 N. C., 744. In Comrs. v. Tobacco Co., 116 N. C., 441, 448, we find: “The tax on the shares is a separate matter, and is a tax on the shareholders on their property whether they reside in or out of the State collected through the medium of a gwasi-statutory garnishment on the corporation. ‘It has long been the common, if not the only mode in many states, and indeed is the only mode to collect taxes on the shares of nonresident shareholders.’ Bank v. Commonwealth, 9 Wall., 353, 361, approved in Delaware R. R. Tax, 18 Wall., 206, 230; 2 Thomp. Corp., 2849.” Trust Co. v. Lumberton, 179 N. C., 409; C. S., 7971(59). In Vol. 8, Banks & Banking (Michie), at p. 194-5, is the following: “It is clearly within the power of the State Legislature to provide, as is done in a number of jurisdictions, that the taxes assessed on shares of bank stock shall be paid by the bank. ... In at least one jurisdiction, it has been held that under an act taxing a bank on the shares of its stock, such tax was payable out of the common funds of the bank.” Attorney-General v. Bank, 21 N. C., 216; Attorney-General v. Bank, 40 N. C., 71. This question was raised in the first case, supra, nearly 100 years ago, and seems not to have been questioned since the above decisions. The tax is a lien on the land. N. C. Code, 1931 (Michie), sec. 7987. We think the case of Chowan County v. Comr. of Banks, 202 N. C., 672, similar to the present one. At p. 675 this Court said: “It is mandatory on the bank to pay the taxes on the shares of stock.” Conceding that the bank was insolvent when the tax was assessed by the State Board of Assessment, yet it did not follow the procedure mapped out by law and it cannot now be heard to complain. It would be a like hardship on a municipality relying on this tax regularly assessed to now be deprived of it. The municipality is not in fault, it is the fault of the bank in not appealing if the assessment was incorrect. The rule as to insolvent National Banks is different, as there is a statute on the subject: U. S. Code, Anno., Title 12, Banks & Banking, sec. 570: “Whenever and after any bank has ceased to do business by reason of insolvency or bankruptcy, no tax shall be assessed or collected, or paid into the Treasury of the United States, on account of such bank, which shall diminish the assets thereof necessary for the full payment of all its depositors; and such tax shall be abated from such national banks as are found by the Comptroller of the Currency to be insolvent; and the Commissioner of Internal Revenue, when the facts *623 stall so appear to bim, is authorized to remit so much of said tax against insolvent State and savings banks as shall be found to affect the claims of their depositors. (1 March, 1879, chap. 125, sec. 20, 20 Stat., 351; 3 March, 1883, chap. 121, sec. 1, 22 Stat., 488.)” The statute “was passed for the undoubted purpose of relieving depositors in national banks from the payment of certain taxes, not assessed upon them, but upon the banks of which they are only customers; taxes which under the preexisting law, they would indirectly be obliged to pay when a bank is so insolvent that all its capital is gone and it has nothing-left with which to pay taxes, except the money of its depositors. . . . When, therefore, it was found that in case of insolvency of the bank, and the loss of its entire capital, and its inability to pay its depositors in full from all its assets, an enforcement of the taxes would result in the taxation of the depositors, the customers and creditors of the bank, this act to relieve them was passed.” Johnston v. U. S. (1881), 18 Ct. Cl., 157. The Commissioner of Eevenue had no power to direct the tax accountant of Eockingham, N. C., to strike from the records the valuation in excess of assessed value real and personal property of the Bank of Pee Dee for the year 1930. Chowan County case, supra, p. 696. The judgment below is Affirmed.