l. Shares in banks, whether state banks or those organized under
the Act of June 3, 1864, "to provide a national currency," &c.,
are liable to taxation by the state under certain limitations (set
forth in section forty-first of the act), without regard to the
fact that the capital of such banks is invested in bonds of the
United States, declared, by statutes creating them, to be exempted
from taxation by or under state authority. Van Allen v. The
2. If the rate of taxation by the state on such shares is the
same as, or not greater, than upon the moneyed capital of the
individual citizen which is subject or liable to taxation -- that
is to say if no greater proportion or percentage of tax on the
valuation of the shares is levied than upon other moneyed taxable
capital in the hands of its citizens, the shares are taxed in
conformity with that proviso of the forty-first section, which says
that they may be assessed, "but not at a greater rate than is
assessed upon other moneyed capital in the hands of individual
citizens of such state."
These were two cases which arose upon a certiorari, prosecuted,
the one by Denning Duer as relator, the other by Ralph Mead, in the
same way, out of the supreme court of the State of New York, and
directed to the Commissioners of Taxes and Assessments for the City
and County of New York, the defendants in error. The relator in the
first case was a holder of certain shares of stock in the National
Bank of Commerce in New York, a banking association organized under
the National Bank Law. The relator in the second case held certain
shares in the Corn Exchange Bank, in the City of New York,
incorporated under the laws of the state. These shares, in both
banks, had been assessed in the year 1866, for the purposes of
taxation under the
Page 71 U. S. 245
state laws, by the commissioners, as personal property of the
relator, in the place in which the banks were located.
In justification of their proceedings the commissioners relied
The enactments, in the form of provisos, in the
forty-first section of the National Bank Law, passed June 3, 1864,
] in these
that nothing in this act shall be construed
to prevent all the shares in any of the said associations, held by
any person or body corporate, from being included in the valuation
of the personal property of such person or corporation in the
assessment of taxes imposed, by or under state authority, at the
place where such bank is located, and not elsewhere, but not at
a greater rate than is assessed upon other moneyed capital in the
hands of individual citizens of such state.
that the tax so imposed under the
laws of any state upon the shares of any of the associations
authorized by this act shall not exceed the rate imposed upon the
shares in any of the banks organized under authority of the state
where such association is located."
An act of the State of New York, passed April
23, 1866, [Footnote 3
] in these
"SECTION 1. No tax shall hereafter be assessed upon the capital
of any bank or banking association organized under the authority of
this state or of the United States, but the stockholders in such
banks and banking associations shall be assessed and taxed on the
value of their shares of stock therein; said shares shall be
included in the valuation of the personal property of such
stockholder in the assessment of taxes at the place, town, or ward
where such bank or banking association is located, and not
elsewhere, whether the said stockholder reside in said place, town,
or ward, or not, but not at a greater rate than is assessed
upon other moneyed capital in the hands of individuals in this
The case was heard by the supreme court of New York,
Page 71 U. S. 246
on the return of the commissioners, as upon a demurrer thereto.
The return stated that the commissioners did assess the relator
upon the value of said shares, and included the same in the
valuation of his personal estate.
That they made no allowance or deduction on account of
investments by the bank in any securities of the United
That such a deduction or allowance was made in assessments upon
insurance companies and individuals.
The Supreme Court gave judgment for the commissioners, which
judgment the Court of Appeals affirmed.
The cases were now here for review, under the twenty-fifth
section of the Judiciary Act; two questions, among others brought
up but not considered by this Court, being:
1. Whether the New York statute of 23 April, 1866, was valid so
far as it attempts to authorize the taxation of bank shares where
the capital of such bank is invested in United States securities,
exempt from taxation under the acts of Congress? a question argued
separately in respect to state banks, and to those organized under
2. Whether the taxation of the shares of the several relators
was not invalid, for the reason that an illegal discrimination was
made in favor of other state corporations and individuals, citizens
of said state?
Besides the two cases reported by name here, there were eight or
ten cases in substance very similar to them, the cases being
represented by different counsel.
Page 71 U. S. 255
MR. JUSTICE NELSON delivered the opinion of the Court.
These cases are writs of error to the Court of Appeals of the
State of New York. The relator in the first is an owner of one
hundred and fifty-two shares of stock in the National Bank of
Commerce in New York.
The capital of the bank consists of one hundred thousand shares
of one hundred dollars each, and which is invested in United States
securities and exempt from state taxation. The commissioners of
taxes, in making their assessments, valued the shares at par and
imposed upon them the same rate of tax as was imposed upon other
personal property in this city.
The commissioners, in their return to the certiorari, state that
in estimating the value of the shares they made no deduction on
account of the investment of the capital of the bank in United
States securities. That in the valuation of the personal estate of
individuals, these securities held and owned by them were deducted
and the tax assessed on the balance, and the like deductions were
made from the capital of insurance companies.
The assessment of this tax on the shares of the relator in the
Bank of Commerce was carried to the supreme court of the state,
and, after argument, was affirmed, and thence to the Court of
Appeals, where the judgment of the supreme court was affirmed. The
case is now here on error under the twenty-fifth section of the
The first objection taken to the legality of the tax is on the
ground that the commissioners in the valuation of the shares
refused to deduct the amount of capital of the bank invested in
United States securities, and hence refused to regard this
deduction in the valuation of the shares.
This question has heretofore been considered by this Court, and,
after full deliberation, determined, in the case of Van Allen
and need not again be examined.
Page 71 U. S. 256
That case was one of a large class of cases which were very
thoroughly argued and received at the time the most careful
examination of the Court.
The next and perhaps the only material question in the case
arises upon a construction of a clause in the first proviso of the
forty-first section of the national Bank Act. After referring to
the taxation of these shares by state authority, it provides: "But
not at a greater rate than is assessed upon other moneyed capital
in the hands of individual citizens of such states."
It is argued that the assessment upon the shares of the relator
is at a greater rate than that of the personal property of
individual citizens, upon the ground that allowance was made on
account of United States securities held and owned by them, when at
the same time the deduction was disallowed to him.
The answer is that upon a true construction of this clause of
the act, the meaning and intent of the lawmakers were that the rate
of taxation of the shares should be the same, or not greater, than
upon the moneyed capital of the individual citizen which is subject
or liable to taxation. That is, no greater proportion or percentage
of tax in the valuation of the shares should be levied than upon
other moneyed taxable capital in the hands of the citizens.
This rule seems to be as effectual a test to prevent unjust
discrimination against the shareholders as could well be devised.
It embraces a class which constitutes the body politic of the
state, who make its laws and provide for its taxes. They cannot be
greater than the citizens impose upon themselves. It is known as
sound policy that, in every well regulated and enlightened state or
government, certain descriptions of property, and also certain
institutions -- such as churches, hospitals, academies, cemeteries,
and the like -- are exempt from taxation; but these exemptions have
never been regarded as disturbing the rates of taxation, even where
the fundamental law had ordained that it should be uniform.
The objection is a singular one. At the time Congress
Page 71 U. S. 257
enacted this rule as a limitation against discrimination, it was
well known to that body that these securities in the hands of the
citizen were exempt from taxation. It had been so held by this
Court, and, for abundant caution, had passed into a law.
The argument founded on the objection, if it proves anything,
proves that these securities should have been taxed in the hands of
individuals to equalize the taxation, and hence that Congress by
this clause in the proviso intended to subject them, as thus
situated, to taxation, and therefore there was error in the
deduction. This we do not suppose is claimed. But if this is not
the result of the argument, then the other conclusion from it is
that Congress required that the commissioners should deduct the
securities, and at the same time intended the deduction, if made,
should operate as a violation of the rate of the tax prescribed. We
dissent from both conclusions, and think a sound construction of
the clause and one consistent with its words and intent is also
consistent with all the acts of Congress on the subject.
The commissioners, in their return, state that insurance
companies created under the laws of the state, and doing business
in the City of New York, were respectively assessed upon the
balance of their capital and surplus profits, liable to taxation,
after deducting therefrom such part as is invested in United States
Another objection taken is that the taxation of the shares of
the relator is illegal on account of this deduction, it being a
departure from the rate of assessment prescribed in the clause
The answer is that this clause does not refer to the rate of
assessments upon insurance companies as a test by which to prevent
discrimination against the shares -- that is, confined to the rate
of assessments upon moneyed capital in the hands of individual
citizens. These institutions are not within the words or the
contemplation of Congress, but even if they were, the answer we
have already given to the
Page 71 U. S. 258
deduction of these securities in the assessment of the property
of individual citizens is equally applicable to them. These
companies are taxed on their capital, and not on the shareholder,
at the same rate as other personal property in the state. There is
not much danger to be apprehended of a discriminating tax in their
favor, prejudicial to the rights or property of the citizen, and of
course to the rights of the shareholders in these national banks,
who stand on the same footing.
The relator in the second case, Ralph Mead, is the holder and
owner of twenty-five shares of stock in the Corn Exchange Bank in
the City of New York, incorporated under the laws of the state.
The Act of April 23, 1866, imposed a tax on the shares of these
It is insisted that the tax is illegal on account of the refusal
of the commissioners to deduct the United States securities in
which a portion of the capital stock of the bank was invested.
The general question was distinctly presented in the bank cases
of the last term, of which Van Allen v. Assessors
of the class, [Footnote 5
disposed of. It was there said:
"But in addition to this view, the tax on the shares is not a
tax on the capital of the bank. The corporation is the legal owner
of all the property of the bank, real and personal, and within the
powers conferred upon it by the charter and for the purposes for
which it was created, can deal with the corporate property as
absolutely as a private individual can deal with his own. . . . The
interest of the shareholder entitles him to participate in the net
profits earned by the bank, in the employment of its capital,
during the existence of its charter, in proportion to the number of
his shares, and upon its dissolution or termination to his
proportion of the property that may remain, of the corporation
after the payment of its debts. This is a distinct, independent
interest or property, held by the shareholder like any
Page 71 U. S. 259
other property that may belong to him,"
and, we add, of course is subject to like taxation.
It was supposed on the argument that this principle was in
conflict with that which governed the decision of this Court in the
case of Gardner v. Appeal Tax Court,
] but this is a mistake. That case
turned upon the construction of an act of Maryland exempting the
bank from taxation on account of a large bonus to the state for the
extension of the charter. This Court held that upon a true
construction of the act, the stockholders were within the scope of
the exemption. The Court said:
"In whatever way we examine the acts of 1813 and 1821, we are of
opinion that it appears from the eleventh section in those acts to
have been the intention of the legislatures which passed them to
exempt the stockholders from taxation as persons on account of the
stock which they owned in the banks."
Some other questions were discussed on the argument besides
those we have noticed, but they are questions of which this Court
cannot take cognizance. We have examined all of them that are here
under the twenty-fifth section of the Judiciary Act.
Judgment of the court below affirmed.
70 U. S. 3
13 Stat. at Large 99.
Laws of New York, for 1866, vol. 2, p. 1647.
70 U. S. 3
3 Wall. 70 U. S. 573
70 U. S.
3 How. 133.
THE CHIEF JUSTICE:
In concurrence with my brothers WAYNE and SWAYNE, I dissent from
the opinion just read. The reasons of dissent sufficiently appear
in our dissenting opinion in the case of Van Allen v.
read at the last term, and we do not think it
necessary to repeat them.