Suffolk Savings Bank

Holmes, J. This is a petition under the Pub. Sts. c. 13, § 64, for an abatement of a tax upon so much of the petitioner’s bank building as is not actually used by it for the transaction of its business. It appears from the report of the justice who tried the case that the building covers, no greater area than is necessary for a suitable building; but in the prudent management of the land it was proper to build it with more stories than were needed for the use of the savings bank, and that has been done. These stories the petitioner lets, and it is with regard to these that the question is raised. By the Pub. Sts. c. 116, § 20, cl. 7 (St. 1876, c. 203, § 9, cl. 6; St. 1870, c. 226), “ Ten per cent of the deposits of any such corporation, but not exceeding two hundred thousand dollars, may be invested in the purchase of a suitable site and the erection or preparation of a suitable building for the convenient transac [4] tion of its business.” This section authorized the petitioner to erect such a building as it has built. It is not argued that the additional stories were beyond the authority conferred, and the original act of 1870 expressly recognized the possible necessity of building so that there would be some space not needed for banking purposes, by requiring all income arising from such real estate to be devoted exclusively to the interests of the corporation. The next clause of the Pub. Sts. c. 116, § 20, (St. 1876, c. 203, § 26,) authorizes savings banks to hold real estate acquired by foreclosure or mortgage sale for five years. These are the only cases in which the statutes have provided for savings banks holding real estate. By the Pub. Sts. e. 13, § 20, savings banks are to pay a State tax, on account of their depositors, assessed on their deposits, “ provided that so much of the deposits as are invested in real estate used for banking purposes, or in loans secured by mortgages of taxable real estate, shall be exempt from taxation under the provisions of this section, and that so much of said deposits as are invested in real estate, the title to which has been acquired by the completion of foreclosure, or by purchase under the provisions of section twenty of chapter one hundred and sixteen, shall be exempt from taxation under the provisions of this section for the period named in said section.” It is manifest that the purpose of this section is to avoid double taxation, and that purpose is expressly declared by the St. of 1881, c. 304, from which this section is taken. The act of 1881 is entitled, “ An Act relieving property from double taxation in certain cases.” The general purpose of the _act being thus apparent, it is carried out by exempting all land which savings banks are authorized to hold, unless a slight variation in phraseology as to the bank building makes an exception in that case; the plain reason being that all the land is subject to local taxation in the city or town where it lies. For a similar reason, funds invested in loans secured by mortgages of taxable real estate are also exempted. For this part of the discussion it does not matter whether the theory on which the Legislature proceeds is true or not, although we see no reason to doubt its substantial correctness. It is enough for purposes of construction that the [5] statute does proceed upon that theory expressly. And this being so, it is manifest that those parts of an authorized bank building which are not used for banking purposes are as much within the supposed evil sought to be remedied as those which are occupied by the bank. A general view of the objects of the act leads to the conclusion that the petitioner’s contention is right. The language of the act leads to the same result. “ So much of the deposits as are invested in real estate used for banking purposes,” on the face of it, refers to all the deposits invested in that land, and to the whole piece of land. The case is unlike Cambridge v. County Commissioners, 114 Mass. 337, both in the language used and in the purpose of the statute to be construed. There the statute under consideration, Gen. Sts. c. 11, § 5, cl. 3, was one absolutely exempting literary institutions, etc. from taxation on real estate belonging to such institutions, occupied by them or their officers, for the purposes for which they were.incorporated, and it rightly was assumed by both parties, and by the court, that the exemption was confined to the portion of a building actually occupied for the purposes mentioned. Pierce v. Cambridge, 2 Cush. 611. Chapel of the Good Shepherd v. Boston, 120 Mass. 212. Lynn Workingmen’s Aid Association v. Lynn, 136 Mass. 283. In Bank v. Tennessee, 104 U. S. 493, it was assumed that the exemption was coextensive with the authority given the bank, although it was held, following the decision of the Supreme Court of Tennessee in the same case, De Soto Bank v. Memphis, 6 Baxter, 415, that the authority was confined to so much of the building as was actually necessary for the use of the bank. The case is too unlike the present to throw much light upon it. It is argued for the Commonwealth, that it does not appear that all the funds invested in this bank building are deposits of the bank, within the words of the Pub. Sts. c. 13, § 20, because, so far as appears, a part of the guaranty fund required by the Pub. Sts. c. 116, § 24, (St. 1876, c. 203, § 13,) to be set aside from the net profits of the last six months at the time of making a semiannual dividend may be represented by the bank building. The building was built in this case before a guaranty fund was required by law. But the true answer to this contention is, that [6] § 20 of the Pub. Sts. c. 13, does not contemplate any such distinction between the guaranty fund and other funds of the bank. The tax imposed by that section is assessed on the average amount of the bank’s deposits during the six months preceding May 1 and November 1, respectively. Deposits here mean the amounts with which the bank stands charged on its books as received from depositors, not any particular part of the investments of the bank. Then the statute goes on to exempt so much of the deposits as are invested in the specified ways. It is very plain that the word “ deposits ” is used in the second half of the section in substantially the same sense as in the first half. It means the total amount received for which the bank is accountable. But it does not mean merely the identical money received, it means the fund now representing the original deposit and assumed to be equal to it. But the guaranty fund is a part of that fund. If it were not contemplated that it might be needed to repay the depositors the amount put in by them, it would not be required. The declared purpose of it is to meet losses in the corporation’s business, from depreciation of its securities, or otherwise. When the act of 1881 proclaimed the purpose to relieve property from double taxation, it plainly assumed, for purposes of practical justice, that a tax on average deposits came to about the same thing as a tax on the bank’s investments at a valuation of them. An exemption of certain property to avoid double taxation would have been absurd, unless the tax on de.posits practically taxed that property. But if so, a tax on all the deposits was treated as equivalent to a tax on all the property, not a tax on some selected part not mentioned. The statute gives no color to the notion that investments less profits and guaranty fund are taken to be equal to the deposits. As we have just said, if so, why require a guaranty fund? Moreover, it is to be remembered that, while the result in the case of a successful bank may be that a small proportion of its total assets may escape taxation, if unsuccessful it has to pay the same tax, although it has no profits, and its total assets, including the guaranty fund, are not enough to pay the deposits in full. We are of opinion that the word “ deposits ” is used in this part of § 20 to signify all the funds which the bank holds for investment. Decree for petitioner.