1. Under the Act of Congress of February 10, 1868, enacting that
the legislature of each state may direct the manner of taxing all
the shares of national banks located within said state, subject to
the restriction 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 the Act of the
Legislature of Pennsylvania of March 31st, 1810, enacting
Page 90 U. S. 481
that the shares of national banks within that state
"shall be taxable 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 the state"
-- shares in national banks may be valued for taxation for
county, school, municipal, and local purposes, at an amount above
their par value.
2. This is true of shares in a national bank in Cumberland
County, Pennsylvania, although by statute of Pennsylvania, "all
mortgages, judgments, recognizances, and moneys owing upon articles
of agreement for the sale of real estate," are made exempt from
taxation in that county, except fur state purposes.
An Act of Congress of February 10th, 1868, relating to the
taxation by states of shares in the national banks, thus enacts:
[
Footnote 1]
"The legislature of each state may determine and direct the
manner and place of taxing all the shares of national banks located
within said state,
subject to the restriction 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."
An Act of Assembly of Pennsylvania, of March 31st, 1870, with a
view of giving effect to this act of Congress, further enacts:
[
Footnote 2]
"All the shares of national banks, located within this state,
shall be taxable for state purposes at the rate of three mills 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."
This act gives an appeal to the Auditor General, who is
authorized by the act to correct any errors in the assessment.
Another act of Assembly of Pennsylvania, one of April 4th, 1868,
[
Footnote 3] enacts that
Cumberland County, in which county the town of Carlisle is
situated, enacts additionally:
Page 90 U. S. 482
"All mortgages, judgments, recognizances, and moneys owing upon
articles of agreement for the sale of real estate shall be exempt
from taxation except for state purposes,"
&c.
In this state of legislation, federal and state, Hepburn, a
citizen of Pennsylvania, residing at the Borough of Carlisle, in
Cumberland County, in the said state, owned four hundred and sixty
shares of stock in the First National Bank of Carlisle, the par
value of which was $100 a share.
This stock was assessed for county, school, and borough tax by
the bank assessor, appointed under an Act of Assembly of
Pennsylvania approved April 12th, 1840, at the value of $150 per
share.
On amicable suit brought by the school directors to test their
right to collect the school tax, the Supreme Court of Pennsylvania
adjudged that they had such a right, and to reverse that judgment
Hepburn brought this writ of error.
Page 90 U. S. 483
THE CHIEF JUSTICE delivered the opinion of the Court.
The most important question presented by the assignment of
errors is whether shares of stock in a national bank can be valued
for taxation by the state in which the bank is located at an amount
exceeding their par value. In is certain that they cannot be taxed
at a greater rate than is assessed upon other moneyed capital in
the hands of individual citizens of the state. Such is the express
provision of the act of Congress.
It is contended that the term "moneyed capital," as here
Page 90 U. S. 484
used, signifies money put out at interest, and that as such
capital is not taxed upon more than its par or nominal value, the
par value of these shares is their maximum taxable value.
We cannot concede that money at interest is the only moneyed
capital included in that term as here used by Congress. The words
are "other moneyed capital." That certainly makes stock in these
banks moneyed capital, and would seem to indicate that other
investments in stocks and securities might be included in that
descriptive term.
But even if it were true that these shares can only be taxed as
money at interest is, the result contended for would not
necessarily follow. The money invested in a bank is not money put
out at interest. The money of the bank is so put out and the share
of the shareholder represents his proportion of that money. What
the amount of this share is must in some form be ascertained in
order to determine its taxable value. If the nominal or par value
of the stock necessarily indicated this amount, there might be some
propriety in making that the taxable value; but as all know, such
is not the case. The available moneyed capital belonging to a bank
may be diminished by losses or increased by accumulated profits.
Therefore some plan must be devised to ascertain what amount of
money at interest is actually represented by a share of stock. The
State of Pennsylvania has provided that this may be done by an
official appraisement, taking care to prevent abuses by declaring
that such appraisement shall not be higher than the current market
value of the stock at the place where the bank is located, and by
giving an appeal to the Auditor General, who is authorized to
inquire into the value and correct any errors that may appear.
There certainly is no apparent injustice in this. It is not the
amount of money invested which is wanted for taxation, but the
amount of moneyed capital which the investment represents for the
time being.
If the value set upon the share does not exceed this amount, it
will not be assessed at a greater rate than other money at
interest. Other plans may be devised to accomplish
Page 90 U. S. 485
the same end, but it is sufficient for the purposes of this case
that this plan is not unreasonable. If a shareholder is not
satisfied with the original appraisement, all he has to do is to
appeal to the Auditor General, make known to him the actual
condition of the affairs of the bank, and have the error if any
exists corrected. Hepburn did not see fit to avail himself of this
right which he had. He preferred to rest upon his supposed right
under the Act of Congress to limit the power of assessment to the
par value. This right, we think, he did not have.
It is next insisted that no municipal or school taxes could be
assessed upon the shares of the First National Bank of Carlisle, a
national bank located within the borough of Carlisle, because by
the laws of Pennsylvania, as is claimed, other moneyed capital in
the hands of individual citizens at that place is exempt from such
taxation.
In support of this claim, it is shown that all mortgages,
judgments, recognizances, and moneys owing upon articles of
agreement for the sale of real estate are exempt from taxation in
that borough except for state purposes. 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
exempt. If there is, moneyed capital as such 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. Certainly there is no presumption in favor of
such an intention. To have effect, it must be manifest. The
affirmative of the proposition rests upon him who asserts it. In
this case, it has not been made to appear.
Judgment affirmed.
[
Footnote 1]
15 Stat. at Large 34.
[
Footnote 2]
Pamphlet Laws. 1870, p. 42.
[
Footnote 3]
Ib. 1868, p. 61.
