Griffin v. Heard, Allen & Floore

GALOIS, Associate Justice. —The appellees, a partnership engaged in the business of banking at Cleburne, in Johnson County, brought this suit against appellant, as the tax collector of that county, to enjoin the collection of certain taxes. The action was instituted in Johnson County but the venue was changed to Somervell. The cause was submitted to a jury upon special issues, and the court rendered a judgment in favor of the plaintiffs upon the verdict. ° The. plaintiffs rendered statements of the assets of their banking business for taxation for the years 1887 and 1888 in the form required by the Act of April 14,1883, but neither statement showed either money or credits subject to taxation. The assessor, being dissatisfied therewith, assessed them upon the sum of 846,976, consisting of money and credits for each year. The taxes so assessed they sought to enjoin by this action. It was agreed between the counsel for the respective parties that the only questions to be determined were: “ 1. Did plaintiffs, composing the firm of Heard, Allen & Floore, and operating a private bank in Cleburne, Texas, known as the ‘ Bank of Cleburne/ own, hold, and have the 846,976 assessed against said firm on the 1st day of January, 1887, and on the 1st day of January, 1888, as money and credits subject to assessment and taxation in Johnson County, Texas, for said years under the law passed by the Legislature of this State April 14,1883, for the assessment of private banks, etc. ? “2. If plaintiffs did not have said amount of money and credits on said — 612 — dates, then how much did they so have on said dates subject to asessment and taxation as aforesaid ? “ 3. If plaintiffs can not be held liable for such tax as may be due upon such moneys and credits under the law under which said firm was assessed, then can they be held under any other law for said taxes? “4. Neither party shall be required to introduce any testimony except such evidence as may tend to prove or disprove the questions of fact involved in the above stated questions.” The testimony of the members of the banking firm was introduced upon the trial, and was substantially as follows: That the firm had on January 1, 1887, money on hand, in transit, and in the hands of other bankers, except United States treasury notes, $8673; that they had credits, $89,815; that the amount of money on deposit with them was $112,030. They also testified that on the date above mentioned they had in their bank vaults $36,322.71, and $40,492 in other banks, making together $76,814.71, but that $68,141 of this amount was in treasury notes which had been accumulated by them during a course of business extending over four years. They also testified, in effect, that they had on January 1, 1888, cash in vaults $42,431, and $7322 in other banks, making the sum of $49,753, and that of this sum $42,003 were treasury notes; that at this date their credits amounted to $55,971, and that the amount of money on deposit with them was $69,671. There are two prominent questions in the .cause, and they involve the construction of the provisions of the act of the Legislature above mentioned. That statute was enacted as amended article 4684 of the Bevised Statutes, and the fourth subdivision reads as follows: “ 4. All other banks, bankers, brokers, or dealers in exchange, or stock jobbers shall render their lists in the following manner: (1) The amount of money on hand or in transit, or in the hands of other banks, bankers, brokers, or others subject to draft, whether the same be in or out of the State (except United States treasury notes); (2) the amount of bills received, discounted, or purchased, and other credits due or to become due, including aocouuts receivable, interest accrued but not due, and interest due and unpaid; (3) from the aggregate amount of the items named in the first and second of the last two subdivisions shall be deducted the amount of money on deposit; (4). the amount of bonds and stocks of every kind (except United States bonds), and all shares of capital stocks or joint stocks of other companies or corporations held as an investment or in any way representing assets; (5) all other property belonging or appertaining to said bank or business, including both personal property and real estate, shall be listed as other personal property and real estate.” We understand the main contention of appellant to be that since the — 613 — appellees are entitled to deduct from the money on hand all nontaxable United States treasury notes, all treasury notes placed in bank by their depositors should be subtracted from the amount of their deposits before subtracting the latter from the sum of their cash aud credits, aud that having the burden of proof and having failed to show the amount of treasury notes that had contributed to swell the deposits, nothing should have been deducted for money on deposit. In this construction of the statute we do not concur. Wo are of opinion that by “the amount of money on deposit,” as those words are used in the third subdivision of the act we have quoted, is meant the amount due depositors—that is to say, the debts of the bank due depositors, and not money belonging to others and held by the bank as bailees. Money on special deposit is not the property of the bank, but belongs to the depositors and is subject to be assessed to them for taxation. On the other hand, an ordinary deposit in bank creates the relation of debtor and creditor, and the effect of the transaction is to transfer the property in,the funds deposited to the bank and to render it liable to taxation as the money of the banker. How it must be borne in mind that articles 4669, 4670, 4671, 4672, and 4673 of the Revised Statutes define the property in the State which is made subject to taxation. Article 4669 declares that “ All property, real, personal, and mixed, except such as may be hereinafter expressly exempted, is subject to taxation, and the same shall be" rendered and listed as herein prescribed.” Article 4673 declares what property shall be exempt. Article 4671, among other things, provides that “Personal property shall for the purposes of taxation be construed to include all goods, chattels, and effects, and all moneys, credits, bonds, and other evidences of debt owned by citizens of the State, whether the same be in or out of the State; * * * all moneys at interest, either within or without the State, due the person to be taxed over and above what he pays interest for, and all other debts due such persons over and above their indebtedness,” etc. Article 4672 declares that “ The term money or moneys wherever used in this title shall besides money or moneys include every deposit which any person owning the same or holding in trust aud residing in this State is entitled to withdraw in money on demand,” and that “the term credits wherever used in this title shall be held to mean and include every claim and demand for money or other valuable thing, and every annuity or sum of money receivable at stated periods due or to become due, and all claims aud demands secured by deed or mortgage due or to become due.” The effect of these provisions is simply to subject to taxation, in addition to tangible property, all moneys actually belonging to the tax payer and any excess that may exist of his credits over his indebtedness. The object of article 4684 is not to define the property of banks and bankers subject to taxation, but merely to secure a faithful rendition of their assets, to the end that they may not escape the equal and uniform — 614 — taxation required by the Constitution. The statement therein provided for is in fact not the sole statement required of bankers, brokers, and stock jobbers, for it is evidently contemplated that they shall in the first instance list all their assets for taxation under article 4681 in the same manner that all other persons are required to render their property. This is shown, we think, by the following extracts from the enumeration of the classes of property to be rendered. That enumeration includes the following: “36. Amount of money of banker, broker, or stock jobber. “ 37. Amount of credits of banker, broker, or stock jobber. “38. Amount of money other than of banker, broker, or stock jobber. “39. Amount of credits other than of banker, broker, or stockjobber.” This shows that all bankers in rendering their general list of real and personal property were required to render their money as others were required to render such assets, except that they were to be listed as the money and credits of a banker and credits subject to taxation. Article 4684 required a more specific statement, so that the law would not be evaded. It is apparent, therefore, that the object of the statement required by that article (now amended by the Act of April 14, 1883) was simply to ascertain their taxable money and credits, to the end that they should be taxed just as other persons are taxed. It does not declare the personal property subject to taxation. That is done by article 4671, previously quoted, from which it follows that the act under consideration is to be construed in the light of that article. Amended article 4684 expressly provides that from the aggregate amount of money, etc., and of credits “shall be deducted the amount of money on deposit.” We think this means no more nor loss than that all the money due depositors shall be deducted. In a banking business proper the sum due depositors represents the bank’s indebtedness, and in order to make the tax upon the credits of a banker equal to and uniform with the tax upon the credits of other persons it is necessary that all these debts should be deducted. The case of New Orleans v. Canal and Banking Company, 29 Louisiana Annual, 85 (same case, 99 United States, 97), relied upon by appellant, evidently involved the construction of a statute which provided a different method of ascertaining the capital of a bank for taxation, and the rule there announced is not applicable to the case before us. We conclude that in estimating the appellees’ credits for taxation it was proper to deduct the whole amount of their deposits. But appellant also insists that the court should have granted a new trial because the evidence was not sufficient to support the finding of the jury as to the amount of treasury notes appellees had on the 1st day of January, 1887, and the amount on hand on the 1st day of January, 1888. We concur in the proposition that for the reason stated a new trial should have been granted. Let us recur to their testimony as to their money on — 615 — hand and in bank on the 1st day of January, 1887. It was to the effect that on that date they had in cash in their vaults $36,322.71 and $40,492 in other banks, and that of this amount $68,141 was in treasury notes. One of the plaintiffs deposed, “ the said firm had on hand and in other banks January 1, 1887, thesumof $68,141 in United States treasury notes, which had been acquired by said firm in the usual and regular course of business during a period of about four years.” How a firm doing a banking business on a capital of $60,000 could afford during a period of four years to accumulate $40,492 as a special deposit in any particular kind of currency, we confess we do not understand; or for what purpose it could be so accumulated, except it be to evade taxation, we are unable to perceive. Therefore we do not think the witness meant that his firm had on hand this amount on special deposit. If the $40,492 in other banks on the 1st of January, 1887, was placed there to the credit of appellees subject to draft, as we know is the usual course of dealing between bankers, then they had no treasury notes in the hands of other banks, but merely credits to that amount, subject to taxation as other credits. This sum represented the amount of their deposits in other banks, for which they were chargeable for the purpose of taxation, just as they were entitled to be credited with the sums that others had deposited with them. The words “ except United States treasury notes” found in amended article 4684 (hereinbefore quoted) evidently refer to “money on hand or in transit” and not to “money in the hands of other banks, bankers, or brokers, or others subject to draft.” Money placed by one banker with another subject to draft creates the relation of debtor and creditor, and can no longer be treasury notes belonging to the depositor, even though the deposit had been made in that currency. It is absurd to presume that the Legislature intended that the credit should follow the nature of the fund deposited. The legislation we have had under consideration was not intended to favor banks, but to prevent their evading the payment of their just proportion of the taxes imposed upon the property of the people. The appellees sought the aid of the equitable powers of the court to enjoin the payment of their taxes, and the burden was upon them to make out their case. They should not succeed without making a full and fair disclosure as to their assets. They were the only witnesses examined in the case, and should have testified whether their “money in the hands of other banks” was on general or special deposit, and if on special deposit how they know the fact that it was in United States treasury notes. Having failed to do this, the presumption is that the $40,492 testified to was on general deposit, and subject to taxation without reduction except for indebtedness owed by them. The testimony heretofore detailed in the statement of the case shows a similar state of assets on January 1,1888, and it need not be here repeated or discussed. — 616 — Appellant also claims that the accumulation of United States treasury notes in the vault of the bank-was for the purpose of evading taxation, and therefore they should not be exempted. But we do not think the testimony shows a case of evasion. The witnesses testified that the exigencies of their business required them to keep on hand a large reserve fund, which they had accumulated during a series of years by retaining treasury notes paid over the counter in the usual course of business and by paying out other money. This we do not think an evasion of the tax laws as recognized in the cases in which it has been held that treasury notes under the circumstances were not exempt. If the treasury notes had been procured for the special purpose by the exchange of taxable money or property the case would have been different. But having been received in due course of business and having been held legitimately as a reserve fund, they remained nontaxable, although one purpose of selecting and retaining them was to escape taxation upon that amount of money. We suggest, in view of a new trial, that the special issues submitted to the jury in reference to the money on hand and iu transit and in the hands of other bankers should have been more specific. The first issue submitted is as follows: “1. State the amount of money on hand or in transit, or in the hands of other banks, bankers, or brokers or others subject to draft, except United States treasury notes, which belonged to plaintiffs on the 1st days of January, 1887, and also 1888.” This involves a mixed question, and no instructions having been given upon it the jury were left to their own construction of the law. Because the court failed to set aside the verdict and grant a new trial, the judgment is reversed and the cause remanded. Reversed and remanded. Delivered November 28, 1890.