Banks v. Mayor
74 U.S. 16

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U.S. Supreme Court

Banks v. Mayor, 74 U.S. 7 Wall. 16 16 (1868)

Banks v. Mayor

74 U.S. (7 Wall.) 16

Syllabus

1. Where an act of a state legislature authorized the issue of bonds, by way of refunding to banks such portions of a tax as had been assessed on federal securities made by the Constitution and statutes of the United States exempt from taxation, and the officers who were empowered to issue the obligations refused to sign them because, as they alleged, a portion of the securities for the tax on which the bank claimed reimbursement, was, in law, not exempt, and the highest court of the state sanctioned this refusal,

Held that this was a decision by a state court against a right, privilege, or immunity claimed under the Constitution or a statute of the United States, and so that this Court had jurisdiction under the 25th section of the Judiciary Act, and the Amendatory Act of February 5, 1867.

2. Certificates of indebtedness issued by the United States to creditors of the

Page 74 U. S. 17

government for supplies furnished to it in carrying on the recent war for the integrity of the Union, and by which the government promised to pay the sums of money specified in them, with interest, at a time named, are beyond the taxing power of the states.

These were three cases in error to the Court of Appeals of New York in which the people of that state, at the relation of different banks there, were plaintiffs in error and the Mayor and Controller of the City of New York were defendants. Each presented, under somewhat different forms, the same question, namely: "Are the obligations of the United States, known as certificates of indebtedness, liable to be taxed by state legislation?"

The certificates referred to were issued under authority of Congress, empowering the Secretary of the Treasury to issue them to any public creditor who might be desirous of receiving them. They were payable in one year or earlier, at the option of the government, and bore six percent interest. In the present cases, they had been issued to creditors for supplies necessary to carrying on the war for the suppression of the late rebellion.

The three cases were argued and considered together. The more immediate case in each was thus:

In 1863 and in 1864, the proper officers of the state, acting under the laws of New York, assessed certain taxes upon the capital stock of the several banking associations in that state. Some of these banking associations resisted the collection of the tax on the ground that, though nominally imposed upon their respective capitals, it was in fact imposed upon the bonds and obligations of the United States in which a large proportion of these capitals was invested, and which, under the Constitution and laws of the United States, were exempt from state taxation.

This question was brought before the Court of Appeals, which sustained the assessments and disallowed the claim of the banking associations.

From this decision an appeal was taken to this Court, upon the hearing of which, at the December Term 1864, it was adjudged that the taxes imposed upon the capitals of the associations

Page 74 U. S. 18

were a tax upon the national bonds and obligations in which they were invested, and therefore so far contrary to the Constitution of the United States. [Footnote 1]

A mandate in conformity with this decision was sent to the Court of Appeals of New York, which court thereupon reversed its judgment and entered a judgment agreeably to the mandate.

Afterwards, on the 30th of April, 1866, the Legislature of New York provided by law for refunding to the banking associations and other corporations in like condition the taxes of 1863 and 1864 collected upon that part of their capitals invested in securities of the United States exempt by law from taxation. The Board of Supervisors of the County of New York was charged with the duty of auditing and allowing, with the approval of the mayor of the city and the corporation counsel, the amount collected from each corporation for taxes on the exempt portion of its capital, together with costs, damages, and interest. Upon such auditing and allowance, the sums awarded were to be paid to the corporations severally entitled, by the issue to each of New York County seven percent bonds of equal amounts. These bonds were to be signed by the Controller of the City of New York, countersigned by the mayor, and sealed with the seal of the board of supervisors, and attested by the clerk of the board.

Under this act, the board of supervisors audited, and allowed to the several institutions represented in the three cases under consideration, their several claims for taxes collected upon the national securities held by them, including in this allowance the taxes paid on certificates of indebtedness, which the corporations asserted to be securities of the United States exempt from taxation. But the controller, mayor, and clerk refused to sign, countersign, seal, and attest the requisite amount of bonds for payment, insisting that certificates of indebtedness were not exempt from taxation. A writ of mandamus was thereupon sued out of the

Page 74 U. S. 19

supreme court of New York for the purpose of compelling these officers to perform their alleged duties in this respect. An answer was filed, and the court by its judgment sustained the refusal. An appeal was taken to the Court of Appeals of New York, by which the judgment of the supreme court was affirmed. Writs of error under the 25th section of the Judiciary Act brought these judgments here for revision; the section [Footnote 2] which gives such writ where is drawn in question the validity of a statute of, or authority exercised under any state on the ground of their being repugnant to the Constitution or laws of the United States and the decision is in favor of such validity, or where is drawn in question the construction of any clause of the Constitution or statute of the United States and the decision is against the title, right, privilege, or exemption specially set up &c. -- a paragraph, this last, reenacted by Act of February 5, 1867, [Footnote 3] with additional words, as

"where any title, right, privilege, or immunity is claimed under the Constitution, or any statute of or authority exercised under the United States, and the decision is against the title, right, privilege, or immunity specially set up"

&c.

Page 74 U. S. 22

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