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BOYER v. BOYER and others

March 2, 1885


The opinion of the court was delivered by: Harlan, J.

Chas. W. Wells, for plaintiff in error.

W. J. Whitehouse, for defendant in error.

The plaintiff in error brought this suit in a state court of Pennsylvania for an injunction restraining the commissioners of Schuylkill county from levying a county tax for the year 1883 upon certain shares in the Pennsylvania National Bank–an association organized under the national banking act. The suit proceeds upon the ground that such levy violates the act of congress prescribing conditions upon state taxation of national bank shares, in this: that 'other moneyed capital in the hands of individual citizens' of that county is exempted, by the laws of Pennsylvania, from such taxation. A demurrer to the bill was sustained, and the suit was dismissed. Upon appeal to the supreme court of Pennsylvania that judgment was affirmed, on the ground that the laws of the state, under which the defendants sought to justify the taxation, were not repugnant to the act of congress.

State taxation of national bank shares was permitted by the forty-first section of the act of congress of June 3, 1864, subject to the restriction that it should not be at a greater rate than that imposed upon other moneyed capital in the hands of individual citizens of the same state. 13 St. c. 106, § 41. But that section contained a proviso to the effect 'that the tax so imposed, under the laws of any state, upon shares of any of the associations authorized by this act, shall not exceed the rate imposed upon the shares in any of the banks organized under the authority of the state where such association is located.' The case of Lionberger v. Rouse, 9 Wall. 469, arose under that act. The question there was whether shares in a national bank were exempt from state taxation merely because two state banks of issue, organized before the national banking act was passed, and which held a very inconsiderable portion of the banking capital of the state, had by their charter the right to pay a certain per cent. on the amount of their capital stock in full of all state bonus and taxes,–an amount less than that imposed upon national bank shares. The shares of other associations in the state, having the privileges of banking, except the power to emit bills, were taxed like the shares in national banks. It was held that congress meant, by reference in the act of 1864 to taxation of state bank shares, to require, as a condition to taxation by the state of shares in national banks, that she should, unless restra ned by valid contract, tax in like manner the shares of banks of issue of her own creation. There was no question in that case of discrimination against capital invested in national bank shares in favor of moneyed capital, which was invested otherwise than in bank stock.

But the act of 1864 was so far modified by that of February 10, 1868, (15 St. c. 7,) that the validity of suth state taxation was thereafter to be determined by the inquiry, whether it was a greater rate than was assessed upon other moneyed capital in the hands of individual citizens, and not necessarily by a comparison with the particular rate imposed upon shares in state banks. The effect, if not the object, of the latter act was to preclude the possibility of any such interpretation of the act of congress as would justify states, while imposing the same taxation upon national bank shares as upon shares in state banks, from discriminating against national bank shares, in favor of moneyed capital not invested in state bank stock. At any rate, the acts of congress do not now permit any such discrimination. Section 5219 of the Revised Statutes is as follows:

'Nothing herein [the national banking act] shall prevent all the shares in any association from being included in the valuation of the personal property of the owner or holder of such shares, in assessing taxes imposed by authority of the state within which such association is located, but the legislature of each state may determine and direct the manner and place of taxing all the shares of national banking associations located within the state, subject only to two 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 banking association, owned by nonresidents of any state, shall be taxed in the city or county where the bank is located, and not elsewhere. Nothing herein shall be construed to exempt the real property of associations from either state, county, or municipal taxes to the same extent, according to its value, as other real property is taxed.' Rev. St. § 5219.

Whether the proposed taxation for county purposes of the plaintiff's shares of national bank stock is at a greater rate than is assessed, for like purposes, on other moneyed capital in the hands of individual citizens, is the single question upon which depends the affirmance or reversal of the judgment.

Before examining the statutes of Pennsylvania upon the subject of taxation, it will be well to ascertain how far the decisions of this court have fixed the true meaning of the words 'at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such state.' The supreme court of Pennsylvania is of opinion that the commissioners are fully sustained by the decision in Hepburn v. School Directors, 23 Wall. 480. In that case the question was whether the owner of national bank shares residing in Cumberland county, Pennsylvania, was exempt from a local tax by reason of a statutory exemption from all taxation in that county, except for state purposes of 'mortgages, judgments, recognizances, and money owing upon articles of agreement for the sale of real estate,' except mortgages, judgments, and articles of agreement given by corporations. Laws Pa. 1868, p. 61. The value of such securities, (if they could all be properly so described,) as compared with other moneyed capital in the hands of individual citizens in that locality, did not appear in that case. What the court had to decide, and all that it did decide, was whether the exemption from local taxation of mortgages, judgments, recognizances, and money due upon agreements for the sale of real estate, in the hands of individuals, was a partial exemption only; that is, whether it was so substantial in its nature and operation as to affect the integrity of the general assessment for local purposes. The court, after observ ng that money at interest was not the only moneyed capital to which the national banking act had reference, and that the words 'other moneyed capital' included investments in bank shares and other stocks and securities, said: 'This is a partial exemption only. It was evidently intended to prevent a double burden by the taxation both of property and debts secured upon it. Necessarily, there may be other moneyed capital in the locality than such as is not exempt. Some part of it only is. It could not have been the intention of congress to exempt bank shares from taxation because some moneyed capital was exempt.' That case is authority for the proposition that a partial exemption by a state, for local purposes, of moneyed capital in the hands of individual citizens, does not, of itself and without reference to the aggregate amount of moneyed capital not so exempted, establish the right to a similar exemption in favor of national bank shares held by persons within the same jurisdiction. But it is by no means an authority for the broad proposition that national bank shares may be subjected to local taxation where a very material part, relatively, of other moneyed capital in the hands of individual citizens within the same jurisdiction or taxing district is exempted from such taxation. Indeed, such an interpretation of the statutes might entirely defeat the purpose that induced congress to confine state taxation of national bank shares within the limit of equality with other moneyed capital; for it would enable the states to impose upon capital invested in such shares materially greater burdens than those to which other moneyed capital in individual hands is subjected.

The case of Adams v. Nashville, 95 U. S. 19, is also relied upon to support the judgment below. The question there raised was whether an alleged exemption from municipal taxation, under an ordinance of a city, of its interest-bearing bonds, operated to exempt from like taxation the shares in a national bank located in the same city. The court held that as the ordinance had been abrogated by subsequent legislation of the state, no such exemption existed. However, considering the question on its merits, it was said that the act of congress did not intend 'to cut off the power to exempt particular kinds of property, if the legislature chose to do so.' In illustration of this view reference was made to exemptions of homesteads, household furniture, school-houses, academies, and libraries,–regulations sustained, as a general rule, upon grounds of policy and humanity, or because the property exempted is employed for objects more or less connected with the public welfare. And it was observed that the discretionary power of the legislature over such subjects remained as before the act of 1868; the intention of that statute being to protect corporations formed under its authority from unfriendly discrimination by the states in the exercise of their taxing power. 'That particular persons or particular articles are relieved from taxation, is not a matter to which either class can object.' It is scarcely necessary to say that this language leaves untouched the question as to the power of the state to subject the shares of national banks to taxation, when a very material portion of other moneyed capital in the hands of individual citizens and corporations is exempted from like taxation.

The court has had occasion to examine the provisions of the national banking act in several other cases recently determined. People v. Weaver, 100 U. S. 539; Pelton v. National Bank, 101 U. S. 143; Cummings v. Same, Id. 153; Supervisors v. Stanley, 105 U. S. 305; Evansville Bank v. Britton, Id. 323. From these cases may be deduced certain rules for the construction of that act: (1) That the words 'at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens' refer to the entire process of assessment, which, in the case of ational bank shares, includes both their valuation and the rate of percentage on such valuation; consequently, that the act of congress is violated if, in connection with a fixed percentage applicable to the valuation alike of national bank shares and of other moneyed investments or capital, the state law establishes or permits a mode of assessment by which such shares are valued higher in proportion to their real value than is other moneyed capital. (2) That a state law which permits individual citizens to deduct their just debts from the valuation of their personal property of every kind, other than national bank shares, or which permits the tax-payer to deduct from the sum of his credits, money at interest or other demands to the extent of his bona fide indebtedness, leaving the remainder to be taxed, while it denies the same right of deduction from the cash value of bank shares, operates to tax the latter at a greater rate than other moneyed capital.

These decisions show that, in whatever form the question has arisen, this court has steadily kept in view the intention of congress not to permit any substantial discrimination in favor of moneyed capital, in the hands of individual citizens, as against capital invested in the shares of national banks. In People v. Weaver the court said: 'As congress was conferring a power on the states which they would not otherwise have had, to tax these shares, it undertook to impose a restriction on the exercise of that power, manifestly designed to prevent taxation which should discriminate against that class of property as compared with other moneyed capital. In permitting the states to tax these shares it was foreseen that the states might be disposed to tax the capital invested in these banks oppressively. This might have been prevented by fixing limit on the amount. But congress, with due regard to the dignity of the states, and with a desire to interfere only so far as was necessary to protect the banks from anything beyond their equal share of the public burdens, said: You may tax the real estate of the banks as other real estate is bank as the personal property of the taxed, and you may tax the shares of the bank as the personal property of the owner, to the same extent you tax other moneyed capital invested in your state. It was conceived that by this qualification of the power of taxation equality would be secured and injustice prevented.'

We come now to consider whether the laws of Pennsylvania, under which defendants propose to levy a tax, for county purposes, upon the plaintiff's shares of stock, are open to the objection that they violate the principle of equality, which the act of congress intended to establish between capital invested in such shares, and other moneyed capital. By a law of that state, passed March 31, 1870,–upon which the defense mainly rests,–it is provided 'that all the shares of national banks, located within this state, and of banks and savings institutions incorporated by this state, shall be taxable for state purposes at the rate of three mills [subsequently four] per annum upon the assessed value thereof; and for county, school, municipal, and local purposes at the same rate as now is or may hereafter be assessed and imposed upon other moneyed capital in the hands of individual citizens of this state.' Laws Pa. 1870, p. 42. This act suggests, upon its face, the inquiry as to what moneyed capital, in the hands of individual citizens, is subject to taxation for county and other local purposes; for such capital, if exempted from local taxation at the date of the passage of that act, remains exempt, unless the legislature of the state has since subjected it to taxation. Evidently, in respect of taxation for local purposes, the legislature did not intend, by the act of 1870, to remove the then existing exemptions, and subject all moneyed capital, of whatever description, to such taxation; but only to establish a uniform rate of local taxation as between capital invested in national bank shares, and such, and only such, moneyed capital as was then, or might thereafter be, subjected to taxation.

To ascertain what moneyed capital was, at the passage of the act of 1870, or has since become, exempted in Pennsylvania from taxation for county purposes, requires an examination of several statutes, commencing with the one passed in 1844. The latter subjected to taxation, 'for all state and county purposes whatsoever,' the following personal property: Mortgages; money owing by solvent debtors, whether by promissory note, penal or single bill, bond, or judgment; articles of agreement and accounts bearing interest, except notes or bills for work and labor done, and bank notes; shares or stock in any bank, institution, or company then or thereafter incorporated by or in pursuance of any law of the state, or of any other state or government; shares of stock or weekly deposits in unincorporated saving fund institutions; public loans or stocks, except those issued by the state; money loaned or invested on interest in any other state. 2 Brightly's Purd. Dig. 1380; Laws Pa. 1844, p. 497.

In 1850 shares of stock in state banks, created after the state banking act of 1850, were relieved from taxation for county purposes. Laws Pa. 1852, p. 442; Allegheny Co. v. Shoenberger, 1 Grant, 35. And in 1854 all bonds or certificates of loan of any railroad company incorporated in the state were declared ...

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