Clement National Bank v. Vermont - 231 U.S. 120 (1913)
U.S. Supreme Court
Clement National Bank v. Vermont, 231 U.S. 120 (1913)
Clement National Bank v. Vermont
Argued April 28, 29, 1913
Decided November 10, 1913
231 U.S. 120
A tax upon deposits in a national bank to be paid by the depositors held in this case not to be a tax upon the franchise of the bank.
An interpretation by the state court of a state statute is controlling on this Court, and this Court determines whether the statute as so delimited conflicts with federal law.
The National Bank Act does not withdraw credits of depositors in national banks from the taxing power of the state.
Under its broad powers of classification for taxation, a state may classify depositors in national banks so long as the tax is not essentially inimical to such banks in frustrating the purpose of the legislation or impairing their efficiency as federal agencies.
The object of § 5219, Rev.Stat., is to prevent hostile discrimination against national banks, and a state tax, to be in conflict therewith, must constitute such a discrimination.
A provision in a statute permitting a bank to stipulate with the state to pay the taxes on deposits and thereby relieve its depositors from making returns does not place the bank under duress.
This Court finds no basis for the charge of injurious discrimination against national banks in § 815 of Chapter 37 of the Public Statutes of Vermont.
While a national bank can only transact such business as the federal statutes permit, it may, under its incidental powers, make reasonable business agreements in regard to its deposits, including the payment
of state taxes thereon pursuant to the laws of the state in which it is located. Such an agreement is not ultra vires.
A state may provide for garnishment or trustee process to collect a valid tax, and may constitute a bank it agent to collect the tax from its depositors.
A state tax on interest-bearing deposits in national banks does not deny equal protection of the law on account of exemptions which it is within the power of the state to allow or on account of the exemption of noninterest-bearing accounts. The classification is reasonable.
A state tax of a specified percent on deposits in national banks paid by the bank under agreement with the state pursuant to statute and which is otherwise valid does not amount to denial of due process of law because the depositor had no notice in advance of the assessment where, as in this case, the tax was recoverable by suit in which the depositor would have full opportunity to resist any illegal demand.
A lawful state tax on deposits in bank is imposed in the exercise of a power subject to which deposits are made, and does not impair the contract obligation of the bank to the depositors by requiring the bank to act as agent in collecting it. North Missouri R. Co. v. Maguire, 20 Wall. 46.
84 Vt. 167 affirmed.
The facts, which involve the legality of a statute of Vermont imposing a tax on deposits in national banks, are stated in the opinion.