Bank of Oxford v. Town of Oxford

Campbell, C. J., delivered the opinion of the court. In Vicksburg. Bank v. Worrell, 67 Miss., 47, we held that the act approved March 8, 1888, amending § 585 of the-code of 1880, as to banks, was constitutional, and that its purpose was to impose a tax, measured by the entire assets of the bank, in lieu of all other taxes, and that a bank which paid according to the requirements of that act thereby secured the immunity from other taxation which it declares, ¥e added: “Any bank which did not estimate all of its assets, beyond the amount of its capital stock, and pay the privilege tax on the larger basis, is in default,' and did not secure the exemption from taxation declared by the law in favor of those which conformed to its terms.” This is the expression of the plain implication of the declaration immediately preceding, viz.: That- such as complied with the law secured its benefits. The obvious suggestion, the irresistible inference, from this is that such as did not pay according to the law did not secure its benefits, and, instead of leaving it to inference, this was plainly declared; and now we are met by the assertion that this utterance is obiter. This we deny, and adhere to it as a pertinent and correct declaration of the court in dealing with the matter before it. We hold now, as we said then, that any bank not having paid as provided by the law did not secure its benefits. That was as far as it was proper for us to go then. The question before us now is, what taxation was a bank [512] subject to, if it did not pay in accordance with the act of 1888? We answer that §498 of the code of 1880 governs in such case. It was never repealed. By the act, entitled “An act to amend §§ 557 and 585, code of 1880,” etc., approved March 18, 1886 (Laws, p. 12 et seq.), the privilege tax imposed by the code of 1880 was materially changed; but § 498 of the code, which provides for taxing the capital stock paid in at its market value, was not affected by it. That remained in full force, unaffected by the requirement of a privilege tax The act of March 8, 1888, already spoken of, took the place of the act of March 18, 1886. It greatly increased the privilege taxes on banks, and declared their payment to be in lieu of all other taxes upon banks; but it did not abrogate § 498 of the code. That remained in full force — inoperative if the act of 1888 was complied with, but operative if it was not. The proposition that the assets of banks we're taxáble as those of individuals, is not maintainable. Section 498 of the code of 1880, copied from the code of 1871, § 1683, which was transferred from the code of 1857, p. 77, art. 24, which was taken from the act of March 5, 1846, Hutch, code, p. 196, furnishes the rule for the taxation of bank stock. Section 468 of the code of 1880 declares what property shall be exempt from taxation, and succeeding sections provide for obtaining lists of taxable property and placing them on the assessment rolls, but the capital stock of banks and other joint-stock companies is excepted from the operation of the provisions applicable to property, generally, by the special provision contained in § 498, which looks to the company as the medium through which to impose a tax according to value on the capital stock paid in. In this way it is sought to tax, at its value,-the personal property, consisting of shares of capital stock. Nominally,'the tax is on the company, but, really, it is upon the share-holders who own the capital stock, who bear whatever burden is imposed on the company, which is the aggregation of all who own its capital. [513] The foregoing proceeds on the assumption that the bank of Oxford did not comply with the act of March 8,1888, and secure immunity from other taxation; and this is true, for, while the assets of the bank considerably exceeded $75,000, it paid the tax prescribed for banks whose assets did not exceed that sum. Its claim is that it had $10,000 of its assets invested in non-taxable bonds, and, deducting this sum, its assets were reduced to $75,000. This position is not tenable. If every dollar of its capital stock and assets was invested in United States bonds, or other non-taxable securities, the liability to taxation would not be lessened, or in any way affected. The securities are not taxable, and are not taxed. The value of the shares of capital stock paid in is taxed. They are property, and taxable as such, no matter in what the assets of the company may be invested. An individual is taxable on what is due him. Tie is required to report to the assessor the amount of indebtedness to him in various forms of indebtedness, as well as money on hand or on deposit, that he may be taxed on these things. A bank is not required to do this. It may have many times its capital employed in discounts and loans, and receive interest on this enlarged basis, and it is not required, as an individual is, to pay taxes on this basis, but on the value of the shares of its capital. Why this is so, is not for judicial inquiry, but so the law is written, and has been in this state for about half a century, and it has been embodied in the constitution of 1890, permissively but suggestively to the legislature. § 181. The notion that a bank may deduct the amount of non-taxable securities it may own, because an individual may, arises from misconception, and is completely dispelled by considering that the bank is not taxed as an individual, but in its representative character — that the owners ofthe bank, share-holders, are the burden-bearers of these taxes, and the bank is named and used as an instrumentality for reaching the property of share-holders in this form. Individuals are entitled to deduct from the sum of their claims such as are not taxable, [514] because the basis on which they are taxable is amount clue them; but, as the bank (or its share-holders) is not taxable on the basis of what is due to it, but the capital is to be taxed at its value to the share-holders, no deduction is allowable for any thing hold by it. Its capital stock (and the shares into which it may be divided) is one thing, and the form in which it may have invested it is quite a different thing. Its entire capital may be'put in non-taxable indebtedness, and the shares of its capital stock may thereby be enhanced or diminished in value, but their character as property,-and liability to taxation as such, is not in any manner affected by the investment of the capital of the bank. If a bank has added to its capital stock any sum, by whatever name, which augments the value of its stock, and puts that in non-taxable securities, that does not entitle it to any deduction in taxation, but the capital stock, at its increased value by reason of such accumulations, is the basis of taxation, the purpose of the law being to impose on holders of bank stock taxes according to value, as on other forms of property. The owner of bank stock is not' required to give it in to the assessor. Another mode of reaching it is provided, and that is through the bank, whose officers are required to report it, and the bank is to pay it. In other words, the share-holder is to be taxed, and pay through the bank. This is the simple scheme provided by our daw for the taxation of corporate property, which has long been in force, and prevails elsewhere, and has been approved by the supremo court of the United States, as applied to national banks. National Bank v. Commonwealth, 9 Wall., 353. Section 3764 of the code of 1892, taken from “An act to amend the revenue laws,” approved February 24, 1890, expresses the true view of the law as it has existed in this state for many years on this subject. It differs from former laws in its enumeration of the factors in the value of stock, which, though included, were not expressly mentioned in former [515] enactments. This was to prevent evasion, and secure a just admeasurement of value. The refusal to permit the filing of the amended bill, offered to set up the act granting relief from penalties under § 589 of the code of 1880, approved March 7, 1892 (Laws, p. 81), was right, for that act has no sort of application to the subject of this controversy. Its sole purpose was to give delinquents an opportunity to escape the consequence of delinquency as to the enforceability of their contracts. The decree is correct as to its finding that the bank did not pay as required by the law of 1888, and did not secure exemption from other taxation; but it is erroneous in fixing the basis for the taxation of the bank. If it was taxable as an individual, the deduction from its dioses in action of its liabilities in the shape of deposits was inadmissible, and,, on this ground, the decree is wrong in detail on the basis on which it was rendered; but, as shown, it is fundamentally wrong. "We reverse the interlocutory decree of November 27,1891, and the final decree in the cause, and remand- it for such further proceedings as may be proper in conformity to this opinion. As this will'require a settlement of the controversy on a view not before suggested in the cause, new pleadings and evidence may be necessary, the consideration of which matter we merely suggest without expressing any opinion. Reversed and remanded.