United States Supreme Court Cases & Opinions

U.S. Supreme Court

Bank Tax Case, 69 U.S. 2 Wall. 200 200 (1864)

Bank Tax Case

69 U.S. (2 Wall.) 200

Syllabus

A tax laid by a state on banks, "on a valuation equal to the amount of their capital stock paid in, or secured to be paid in," is a tax on the property of the institution, and when that property consists of stocks of the federal government, the law laying the tax is void.

A statute of the State of New York, passed in 1857, making some modifications of previous acts of 1823, 1825, and 1830, enacted that the capital stock of the banks of the state should be "assessed at its actual value, and taxed in the same manner as other personal and real estate of the country." After the passage of this act, several of the banks became owners of large amounts of the bonds of the United States, in regard to which Congress enacts [Footnote 1] that "whether held by individuals or corporations, they shall be exempt from taxation by or under state authority." On a question between several banks of New York, formed under the general banking law of 1838 in that state, and the tax commissioners of New York, this Court decided, in March, 1863 (Bank of Commerce v. New York City, reported in 67 U. S. 2 Black 620), that the tax referred to was a tax upon the stock, and that being so, it was by the settled law of this Court illegally imposed. In April, 1863, just after this decision, the Legislature of New York passed another statute, [Footnote 2] which enacted that

"all banks, banking associations &c., shall be liable to taxation on a valuation equal to the amount of their capital stock paid in or secured to be paid in, and their surplus earnings &c., in the manner now provided by law,"

&c. On a tax laid, under

Page 69 U. S. 201

this act, by the commissioners, upon the different banks of New York City, some of which had invested their whole capital in the securities of the federal government and others of which had largely done so, the question was whether this second act did or did not also impose a tax upon these stocks. The Court of Appeals of New York decided that it did not, and from this decision the case came here. It is proper to say that by the general banking law of New York, under which all these banks were created, it is enacted that the legislature may at any time alter or repeal the act. Between twenty and thirty banks being now here as plaintiffs in error, and the question being one of magnitude both in amount and in principle, [Footnote 3] as many of the corporations as wished to be heard were heard, though the principle involved was much the same in the case of each.

Page 69 U. S. 206