1. The shares of stock of a national bank in New York should be
assessed for taxation at their actual value.
2. The ruling in
Van Allen v.
Assessors, 3 Wall. 573, as to the invalidity of the
Act of the Legislature of New York of March 9, 1865, known as the
Enabling Act, so far as it provided for the taxation of shares in a
national bank, reaffirmed.
The relator, the Gallatin National Bank of the City of New York,
was, prior to 1864, a state bank, incorporated under the general
banking laws of New York. It surrendered that charter and was
reorganized as a national bank, under the Act of Congress of June
3, 1864, 13 Stat. 99, known as the National Banking Act, and c. 97
of the laws of 1865 of New York, known as the "Enabling Act," with
a capital of $1,500,000 divided into thirty thousand shares of $50
each.
The bank has reserved from profits $300,000. It also holds, on
deposit with the Treasurer, bonds of the United States of the par
value of $591,000, on which the premium, estimated at twenty
percent, would be $118,200, so that the bank has, in addition to
its capital, a surplus of $418,200.
The commissioners of taxes and assessments of the City of New
York having signified their intention to tax this surplus, the
president of the bank made a statement of its condition. Its
capital and surplus were shown to be $1,918,200, which, on a
division, would make each share $63.60. As those bonds were liable
to daily and almost hourly fluctuation, and so might slightly
exceed the estimate, he made affidavit that the value of each share
did not exceed $64.
Thereupon the commissioners, deducting $5 per share as the
proportion of the assessed value of the bank's real estate, took
$59 as the valuation of each share, and imposed the tax
accordingly. The relator, to test the validity of such assessment,
sued out of the supreme court of the state a writ of certiorari,
which, upon a hearing, was quashed, and it thereupon appealed to
the Court of Appeals, where the judgment below was affirmed. It
then brought the case here.
Page 94 U. S. 416
The statutes bearing upon the question at issue are set forth in
the opinion of the Court.
MR. JUSTICE HUNT delivered the opinion of the Court.
The relators complain that their shares of stock in the Gallatin
National Bank are assessed at too large a sum. They appeal from the
judgment of the Court of Appeals sustaining the determination of
the commissioners of taxes, which fixed the taxable value of such
shares at $59 each, whereas the par or nominal value of such shares
is $50 each.
Many grave questions were discussed by the council upon the
argument, to which we do not think it necessary to refer. We place
our judgment upon a single ground.
The laws of the State of New York provide that shares of stock
like those we refer to shall be assessed "on the value" of the
shares, and at "their full and true value, as they [the assessors]
would appraise the same in payment of a just debt due from a
solvent debtor," deducting the proportional value of the real
estate owned by the bank. 2 Stat.N.Y. 1866, p. 1647, c. 71; 1
R.S.N.Y. 393, sec. 17.
The assessors were justified under this authority in fixing the
value as we have stated. The appraisement included the reserve
fund, which is as much a part of the property of the bank, and goes
to fix the value of shares, equally as if it were not called by
that name but remained as a part of the
Page 94 U. S. 417
specie, bills discounted, or other funds of the bank,
undistinguished from the general mass.
The forty-first section of the Act of Congress of June, 1864,
provides that the states may tax the shares of national banks,
subject to two restrictions: 1st, that this 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 2d,
"that the tax so imposed . . . shall not exceed the rate imposed
upon the shares of any of the banks organized under the authority
of the State where such association is located."
13 Stat. 112. In
Hepburn v. School
Directors, this Court decided that in making
assessment of bank shares by this authority, it was competent to
assess them at an amount above their par value. 23 Wall. 480.
But the relators insist that by the Act of the Legislature of
the State of New York passed March 9, 1865, it was enacted that the
shares of a bank could not be assessed at an amount greater than
the par value thereof, and that such statute created a contract
with the banks organized under the same, which could not be altered
by a subsequent legislature. Hence it is argued that the act of
1866, authorizing such shares to be assessed at a rate which may
exceed their par value, is a law impairing the obligation of a
contract, and is void.
The section of the statute of 1865 referred to is as follows,
viz.:
"SEC. 10. All the shares in any of the said banking associations
organized under this act or the act of Congress . . . held by any
person or body corporate shall be included in the valuation of the
personal property of such person or body corporate or corporation
in the assessment of taxes in the town or ward where such banking
association is located, and not elsewhere, whether the holder
thereof reside in such town or ward or not, but not at a greater
rate than is assessed upon other moneyed capital in the hands of
individuals of this state,
provided that the tax so
imposed upon such shares shall not exceed the par value thereof,
and provided further that the real estate of such
associations shall be subject to state, county, or municipal taxes,
to the same extent, according to its value, as other real estate is
taxed. "
Page 94 U. S. 418
Had this been a valid statute, we might have been called upon to
discuss the point raised. But it was held in
Van Allen
v. Assessors, 3 Wall. 573, that this statute was
fatally defective, in that it did not contain a proviso that the
tax thereby authorized to be imposed should not exceed the rate
imposed upon banks organized under the authority of the state. The
system of taxation devised by the statute of 1865 was adjudged to
be illegal and void. The clause now laid hold of by the relators
was simply a proviso or qualification of that system. It
necessarily fell with it. When the main idea was thrown out of
existence, the subordinate parts, which were adjuncts of and
dependent upon the main theory, ceased to exist. There never was,
legally speaking, any such proviso or enactment as the relators
claim the benefit of. Of course, there could be no such thing as a
violation of contract contained in a proviso which never existed.
Warren v. The Mayor, 2 Gray, 98, 99; Sedgwick on Statutes
413, 414 (ed. of 1874).
Judgment affirmed.
