People ex Rel. Bank of Commerce v. Commissioner of Taxes
67 U.S. 620

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U.S. Supreme Court

People ex Rel. Bank of Commerce v. Commissioner of Taxes, 67 U.S. 2 Black 620 620 (1862)

People ex Rel. Bank of Commerce v. Commissioner of Taxes

67 U.S. (2 Black) 620

Syllabus

1. Stock of the United States is not subject to taxation under the laws of a state.

2. A state law for that purpose is unconstitutional, whether it imposes the tax on United States, stock eo nomine, or includes it in the aggregate of the tax payer's property, to be valued, like the rest, at its worth.

3. A tax on the nominal capital of a bank, without regard to the nature or value of the property composing it, is annexed to the franchise as a royalty for the grant, and not a burden imposed on the property itself.

4. But the law of New York taxes the capital of banks according to its valuation, and the property which constitutes it is subject to taxation or entitled to exemption therefrom like similar property held by individuals.

5. That portion of its capital which a New York bank has invested in the stocks, bonds, or other securities of the United States is not liable to taxation by the state.

6. The taxing power, so far as it is reserved to the states and used within constitutional limits, cannot be controlled or restrained by this Court, the prudence of its exercise not being a judicial question.

7. But a state tax on the loans of the federal government is a restriction upon the constitutional power of the United States to borrow money, and if the states had such a right, being in its nature unlimited, it might be so used as to defeat the federal power altogether.

The Bank of Commerce, a corporation in the City of New York, rendered its statement, according to law, to the tax commissioners, on which the latter were to fix the sum or valuation of property on which the taxation of the Bank was to be made. By this it appeared that their whole capital was nine millions one hundred and forty-eight thousand four hundred

Page 67 U. S. 621

and eighty dollars, $9,148,480.00. Of this sum, three hundred and ninety-two thousand two hundred and fourteen dollars and eighty-three cents (392,214.83) was invested in real estate and the balance, eight millions seven hundred and fifty-six thousand two hundred and sixty-five dollars and seventeen cents, was all invested in stocks, bonds and securities of the United States which the bank claimed to be exempt from taxation. The tax commissioners reported the bank as subject to assessment and taxation for the value of its stock, deducting the value of its real estate and $20,000 undisputed exemption, at $8,736,265.00, without regard to its being invested in the public debt of the United States, but adding that this was not an assessment upon such public debt, but upon the bank capital.

Thereupon a certiorari was issued to them according to a statute of New York, and these facts appeared in the Supreme court, and the questions being debated, the court was of opinion:

1. As to the public debt held by the bank, issued to them prior to the Act of Congress of February 25, 1862, or contracted for by the bank with the government prior to that date, although issued afterwards, the bank was liable to taxation, and ordered the report of the tax commissioners to be confirmed to that extent.

2. As to the public debt issued after that date, not contracted for before, the bank was not liable, and the court ordered the report in this respect to be annulled and corrected.

The taxable amount of the capital was fixed at $7,341,265.00 according to these principles.

From the judgment the bank appealed to the Court of Appeals, who, on hearing, affirmed the judgment of the supreme court, and a writ of error was thereupon brought to this Court.

Page 67 U. S. 628

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