1. The provisions of the statute of 1866 of New York, providing
for the assessment and taxation of the stockholders of a bank or
banking association on the value of their shares of stock, are in
conflict with the act of Congress so far as they do not permit a
stockholder of a national bank to deduct the amount of his just
debts from the assessed value of his stock, while by the laws of
the state, the owner of all other personal taxable property can
deduct such debts from its value.
2. The statute is not, however, rendered void by reason of such
conflict, nor is the assessment thereunder of the shares of stock
in national banks of no effect. If the stockholder has no debts to
deduct, the prescribed mode of assessment is valid, and he cannot
recover the tax paid pursuant thereto; if he has debts, the
assessment excluding them from computation is voidable, but the
assessing officers act within their authority until they are duly
notified that he is entitled to deduct such debts.
3. If the assessing officers proceed after such notice and act
in violation of the act of Congress, he may take the requisite
steps to secure that deduction, and, when secured, the residue of
the statute remains valid.
MR. JUSTICE MILLER delivered the opinion of the Court.
Stanley recovered a judgment against the Board of Supervisors of
the County of Albany, for taxes exacted and paid under legal
process on shares of the stock of the National Albany Exchange
Bank. A large number of the shareholders of the bank who had paid
this tax made an assignment of their claims to him, and the
judgment was for the sum of $61,991.20, with interest and
costs.
The ground of this recovery was that the statute of New York,
under which the shares were assessed, was void, because it did not
permit the shareholder to make deduction of the amount of his debts
from the valuation of his shares of stock, in ascertaining the
amount for which they should be taxed.
Page 105 U. S. 306
The pleadings in the case set out the sums paid by the
stockholders and their names, and their assignment to Stanley, the
payment under compulsion of legal process, and a demand for the
repayment on the Albany County authorities.
The case was submitted to the court on a waiver of trial by
jury, and on the finding of facts and conclusions of law thereon by
the court, judgment was rendered for plaintiffs. The facts found by
the court are thus stated:
"
First, that the allegations of the complaint in regard
to the citizenship of the plaintiff, the citizenship and powers and
liabilities of the defendant, the organization and capital of the
National Albany Exchange Bank, the ownership of the shares of
capital stock of the National Albany Exchange Bank, the assessment
of the stockholders in said bank, named in said complaint, by the
board of assessors of the city of Albany, the names and residences
of said stockholders, the collection of taxes from said
stockholders, and the payment of the same to the County Treasurer
of the County of Albany, and the demand made by Chauncey P.
Williams, before the commencement of this action of the Treasurer
of the County of Albany, are true as therein set forth."
"
Second, that the amounts collected from the said
stockholders and paid to the Treasurer of the County of Albany, and
the times when the said amounts were so paid to said treasurer,
were as follows, to wit:"
$907 90 paid . . . . . . . . August 11, 1874
127 84 paid . . . . . . . . August 11, 1874
1,868 06 paid . . . . . . . . May 1, 1875
1,409 33 paid . . . . . . . . May 27, 1876
1,202 32 paid . . . . . . . . May 3, 1877
1,336 60 paid . . . . . . . . April 17, 1878
1,473 02 paid . . . . . . . . April 22, 1879
11,604 75 paid . . . . . . . . May 1, 1875
8,147 26 paid . . . . . . . . May 27, 1876
7,822 34 paid . . . . . . . . May 3, 1877
7,357 94 paid . . . . . . . . April 16, 1878
6,243 20 paid . . . . . . . . April 21, 1879
"
Third, that the sums above named were not paid
voluntarily by said stockholders, but were forcibly collected by
the
Page 105 U. S. 307
marshal of the City of Albany, under a warrant issued to such
marshal by the receiver of taxes of said city, pursuant to a
warrant issued to said receiver of taxes by the board of
supervisors of the county of Albany, by levying upon the property
of the said stockholders respectively, as alleged in said
complaint."
"
Fourth, that the said assessments were made and said
amounts collected and received by the Treasurer of the County of
Albany, as above stated, under color of an act of the Legislature
of the State of New York, entitled 'An Act authorizing the taxation
of stockholders of banks, and surplus funds of savings banks,'
passed April 23, 1866, being chapter 761 of the laws of 1866, and
not otherwise."
"
Fifth, that the allegations of the complaint with
reference to the assignments by the respective stockholders of said
bank of their claims against the County of Albany, by reason of the
matters alleged in the said complaint, are true as set forth in
said complaint, and that the plaintiff, at the time of the
commencement of this action, was the holder and owner of all claims
against the County of Albany, or against the defendant, arising out
of the matters alleged and set forth in said complaint."
"
Sixth, that the said act of the Legislature of the
State of New York, chapter 761 of the laws of 1866, did not permit
the deduction of debts owing by the owners of stock in banks or
banking associations, in the assessment thereof for taxation,
although such deduction of debts of the owner was, at the time of
the assessments alleged in the said complaint, permitted and
required by the laws of the State of New York to be made from the
value of every kind of personal property and moneyed capital, other
than bank stock, in assessing the same for the purpose of
taxation."
"
Seventh, that the allegations in the fourth count of
said complaint, as to the presentation to the said board of
assessors by said Chauncey P. Williams of the affidavit of his
indebtedness, and the request by him for a reduction of his
assessment on his bank stock, and the refusal of said board of
assessors to make such reduction, and the application by said
Williams to the supreme court of the State of New York for a writ
of
Page 105 U. S. 308
mandamus, and the subsequent legal proceedings thereon,
including the decision of the Supreme Court of the United States,
are true, as set forth in said fourth count."
It does not appear by this finding of the court that any
shareholder, for whose payment of taxes this suit is brought, made
affidavit or other application in regard to his indebtedness, that
it might be deducted from his assessment, or that he owed anything
to be deducted from the assessed value of his shares, except the
seventh finding of facts in regard to C. P. Williams.
Unless, therefore, the other shareholders who paid the tax on
the shares of their stock were entitled to recover back the sum
paid without any evidence that they had made affidavit of the
amount which they would be entitled to deduct from the assessment
of their shares, if the same rule had been applied to assessment of
bank shares as to other personal property, and without any evidence
that they owed anything whatever to be deducted from any assessment
of their personal property, including bank shares, the judgment in
this case cannot be supported.
The judge who decided the case on the circuit found as a
conclusion of law that the assessment of all shares of national
banks was void, because the statute of New York, under which the
assessments were necessarily made, was void, as being in conflict
with the act of Congress on that subject, and he declares, in an
opinion delivered in the case of
The National Albany Exchange
Bank v. Hills, Receiver of Taxes, in a chancery suit, that the
assessments in this class of cases are absolutely void, the
assessors having acted without any jurisdiction.
If this view of the subject be sound -- if the officers who
assessed and collected this tax were utterly without authority to
collect any tax whatever, or, if there was no law by which in any
case they could assess and collect a tax on shares of national
banks -- then it is of no consequence to inquire of anything beyond
the fact that plaintiff's assignors did pay such a tax under legal
compulsion.
On the other hand, if the law is for any purpose a valid law,
and if it can be held to furnish the rule of taxation as to any
class of owners of national bank shares, then the onus is on
plaintiff to show that his assignors are not of that class.
Page 105 U. S. 309
The question here to be decided arises under two statutes of the
State of New York in regard to taxation.
The first of these is the act of 1850, relating to the
assessment and collection of taxes in the City of Albany. The sixth
section of the act requires the board of assessors to prepare an
assessment roll, in which there shall be set opposite the name of
each taxpayer, (1) all his real estate liable to taxation and its
value; (2) the full value of all his personal property after
deducting the just debts owing by him.
Section 9 of the act is as follows:
"If any person shall at any time before the assessors shall have
completed their assessments make affidavit that the value of his
real estate does not exceed a certain sum, to be specified in such
affidavit, or that the value of the personal estate owned by him,
after deducting his just debts, and his property invested in the
stock of any corporation or association liable to be taxed
therefor, does not exceed a certain sum, to be specified in the
affidavit, it shall be the duty of the board of assessors to value
such real or personal estate, or both, as the case may be, at the
sum specified in such affidavit, and no more."
In 1866, the State enacted a law concerning the taxation of bank
shares, which was evidently intended to meet the requirements of
the act of Congress in relation to state taxation of the shares of
national banks, and the provision of this statute related only to
taxing stockholders in banks, and to the capital invested in
individual banks. The first section of this act reads as follows,
and it contains no other provision for deductions as the basis of
taxation, except what is found in this section:
"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
Page 105 U. S. 310
the hands of individuals in this state. And in making such
assessment there shall also be deducted from the value of such
shares such sum as is in the same proportion to such value as is
the assessed value of the real estate of the bank or banking
association, and in which any portion of their capital is invested
in which said shares are held to the whole amount of the capital
stock of said bank or banking association.
And provided
further that nothing herein contained shall be held or
construed to exempt from taxation the real estate held or owned by
such bank or banking association; but the same shall be subject to
state, county, municipal, and other taxation to the same extent and
rate and in the same manner as other real estate is taxed."
In the case of
People v. Dolan, 36 N.Y. 59, the
question was whether, taking these two statutes together, an owner
of shares of stock in a national bank was entitled to deduct from
the assessed value of his shares the just debts owing by him. It
was argued that into this act of 1866 for the taxation of bank
shares there should enter, as part of it, the provision of the act
of 1850 which allowed this deduction as to all personal property,
and that nothing in the act of 1866 forbade this or was
inconsistent with it. It was also insisted that unless the act of
1866 was so construed it would violate the act of Congress which
only permitted the shares of national banks to be taxed at the same
rate as other money capital of the citizens of the state.
But the Court of Appeals overruled both propositions, and held
that the true meaning of the act of 1866 was that no such deduction
should be made, and that as thus construed it was not in conflict
with the act of Congress on that subject.
In a subsequent case, Williams, a shareholder in the National
Albany Exchange Bank, made the affidavit required by sec. 9 of the
act of 1850, and presenting it to the board of assessors of the
county, demanded a reduction in accordance with it, from the
valuation of his bank shares. On the refusal of the assessors to
comply with this request, a proceeding was commenced in the courts
of the state, in which the Court of Appeals reaffirmed the
principles of the case of
People v. Dolan. That case
coming into this court by writ of error, it was here held that
while we were bound to accept the decision of the
Page 105 U. S. 311
highest court of the state in construction of its own statute
the act of 1866 as thus construed was in that particular in
conflict with the act of Congress, because it did tax shares of the
national banks at a higher rate than other moneyed capital in the
state. It is reported in 100 U.S.
100 U. S. 539, and
there are no words which declare the act of 1866 to be void, but
the careful language of the decision is, that
"in refusing to plaintiff the same deduction for debts due by
him from his shares of national bank stock that it allows to others
who have moneyed capital otherwise invested, it is in conflict with
the act of Congress."
P.
100 U. S.
546.
Accepting, therefore, as we must, the act of 1866, as construed
by the Court of Appeals of New York, as not authorizing any
deduction for debts by a shareholder of a national bank, is it for
that reason absolutely void? This cannot be true in its full sense,
for there is no reason why it should not remain the law as to banks
or banking associations organized under the laws of the state, or
as to private bankers, of which there no doubt exists a large
number of both classes.
What is there to render it void as to a shareholder in a
national bank, who owes no debts which he can deduct from the
assessed value of his shares? The denial of this right does not
affect him. He pays the same amount of tax that he would if the law
gave him the right of deduction. He would be in no better condition
if the law expressly authorized him to make the deduction. What
legal interest has he in a question which only affects others? Why
should he invoke the protection of the act of Congress in a case
where he has no rights to protect? Is a court to sit and decide
abstract questions of law in which the parties before it show no
interest, and which, if decided either way, affect no right of
theirs?
It would seem that if the act remains a valid rule of assessment
for shares of state banks, and for individual bankers, it should
also remain the rule for shareholders of national banks who have no
debts to deduct, and who could not, therefore, deduct anything if
the statute conformed to the requirements of the act of
Congress.
It is very difficult to conceive why the act of the legislature
should be held void any further than when it affects some
Page 105 U. S. 312
right conferred by the act of Congress. If no such right exists,
the delicate duty of declaring by this court that an act of state
legislation is void, is an assumption of authority uncalled for by
the merits of the case, and unnecessary to the assertion of the
rights of any party to the suit.
The general proposition must be conceded, that in a statute
which contains invalid or unconstitutional provisions, that which
is unaffected by these provisions, or which can stand without them,
must remain. If the valid and invalid are capable of separation,
only the latter are to be disregarded.
In
Railroad Companies v. Schutte, 103 U.
S. 118, decided at the last term, this point was pressed
upon us with much earnestness, and its decision was necessary to
the judgment of the court. "It is contended," said the Court,
"that as the provision of the act in respect to the execution
and exchange of the state bonds is unconstitutional, the one in
relation to the statutory lien on the property of the company is
also void and must fall. We do not so understand the law."
And yet this was a case in which the scheme of exchanging the
bonds of the state for the bonds of the company, in order that the
company might get the benefit of the better credit of the state,
was accompanied by a mortgage created alone by the statute in favor
of the state as her security; and the court, while holding that the
exchange of bonds was void, as being in conflict with the
Constitution of the state of Florida, held that the mortgage which
secured the bonds of the company, and which was only a mortgage by
operation of the same statute, was valid.
This Court, in the two cases cited in the brief,
United
States v. Reese, 92 U. S. 214, and
Trade-Mark Cases, 100 U. S. 82,
concedes the general principle that the whole of a statute is not
necessarily void because a part of it may be so. Said the Court in
the latter case:
"While it may be true that when one part of the statute is valid
and constitutional, and another part is unconstitutional and void,
the court may enforce the valid part where they are distinctly
separable, so that each may stand alone, it is not within the
judicial province to give to the words used by Congress a narrower
meaning than they are manifestly intended to bear."
The first case also implies that
Page 105 U. S. 313
there may be unconstitutional provisions which do not vitiate
the whole statute or even a single section, because the argument is
to show that in that case there could be no separation of the good
from the bad. It is also to be observed that in both these cases it
was a statute creating and punishing offences criminally which was
to be construed in regard to the limited constitutional power of
Congress in criminal matters.
Case of the State Freight
Tax, 15 Wall. 232, arose out of a statute of
Pennsylvania which attempted to impose a tax on commerce forbidden
by the Constitution of the United States. The act imposed a tax
upon every ton of freight carried by every railroad company,
steamboat company, and canal company doing business within the
state. The railroad companies, who contested the tax, presented a
statement which separated the freight transported by them between
points solely within the state and limited to such destination, and
that which was received from or carried beyond those limits. This
Court held the latter to be void as a tax on interstate commerce,
and did not declare the whole tax or the whole statute void. It
said:
"It is not the purpose of the law, but its effect, which we are
now considering. Nor is it at all material that the tax is levied
upon all freight, as well that which is wholly internal as that
embarked in interstate commerce. . . . The conclusion of the whole
is that, in our opinion, the act of the Legislature of Pennsylvania
of Aug. 25, 1864, so far as it applies to articles carried through
the state, or articles taken up in the state and carried out of it,
or articles taken up without the state and brought into it, is
unconstitutional and void."
The same language is repeated in
Erie
Railway Co. v. Pennsylvania, 15 Wall. 282, decided
at the same time. Both cases were remanded to the state court for
further proceedings in conformity with the opinion, which could
only mean to enforce the tax on transportation limited to the state
and not on interstate commerce.
This is a clear case of distinguishing between the articles
protected by the Constitution of the United States and those which
were not, though nothing in the language of the statute authorized
any such distinction.
But in a review of the cases in this court on this subject,
Austin v. The
Aldermen, 7 Wall. 694, will be found most
Page 105 U. S. 314
nearly to resemble the one before us. It related to the same
matter of the invalidity of a statute of a state taxing shares of
the national banks as being in conflict with the act of Congress.
That act said that such taxes might be assessed at the place where
said bank was located, and not elsewhere.
The statute directed the assessment and taxation of the shares
at the place where the owner resided. Austin, having contested the
tax on his shares in the courts of the state unsuccessfully,
brought the case here by writ of error. This Court declined to
enter upon the question of the validity of the statute because the
case did not show that he was taxed on his shares in any other
place than that where he bank was located.
The argument of counsel in the case before us is that any tax,
or a tax on any person on account of his bank shares, is void
because the whole of the New York statute is void. If the argument
is sound, it was equally applicable to Austin's case, in which the
statute, which made no limitation of taxation to the place where he
bank was located, must have been held void under any principle
which would wholly invalidate the statute of New York, because the
latter did not allow the deduction of the owner's indebtedness from
his shares. And if in that case the Massachusetts statute was
utterly void as to national bank shares, then the tax on Austin's
shares in Boston was void, and he had a right to be protected
against the unconstitutional statute. The court evidently went upon
the principle that the statute was only void as against the act of
Congress, in cases where some one was injured by the particular
matter in which there was such conflict. The case seems to us
directly in point.
To the same effect are the cases of
People v. Cassity,
46 N.Y. 46;
Gordon v. Cornes, 47
id. 608;
In
the Matter, &c., Village of Middleton, 82
id.
196.
If we examine the statute before us on principle, we shall find
but little reason to hold it to be wholly void as regards bank
shares. If the statute stood alone, there is nothing in it in
conflict with the act of Congress. It is only when we look to the
other statute, which permits the deduction of debts from the entire
value of personal property, that we discern the discrimination
Page 105 U. S. 315
against bank shares. The act declares that bank shares shall be
taxed according to their value, after deducting the real estate and
other property on which the bank itself pays tax. This is eminently
just. It provides for a mode of ascertaining their value, the
officers who shall do it, and how the tax shall be collected. In
all this the law is valid, except that it does not authorize a
deduction for debts of the shareholder. This is a distinct and
separable principle. When the shareholder has no debts to deduct,
the law provides a mode of assessment
for him, which is
not in conflict with the act of Congress, and the law in that case
can be held valid. Under the decision in
Austin v. The
Aldermen, it is valid as to him.
If he has debts to be deducted, the case of
People v.
Weaver, 100 U. S. 539,
shows that in taking the steps which this Court has held he may
take, he can secure that deduction, and when secured, the rest of
the law remains valid. In other words, in such a case, so much of
the law as conflicts with the act of Congress in the given case is
held invalid, and that part of the state law which is in accord
with the act of Congress is held to be the measure of his
liability. There is no difficulty here in drawing the line between
those cases to which the statute does not apply and to those to
which it does, between the cases in which it violates the act of
Congress and those in which it does not. There is therefore no
necessity of holding the statute void as to all taxation of
national bank shares when the cases in which it is invalid can be
readily ascertained on presentation of the facts.
It follows that the assessors were not without authority to
assess national bank shares; that where no debts of the owners
existed to be deducted, the assessment was valid, and the tax paid
under it a valid tax. That in cases where there did exist such
indebtedness, which ought to be deducted, the assessment was
voidable but not void. The assessing officers acted within their
authority in such cases until they were notified in some proper
manner that the shareholder owed just debts which he was entitled
to have deducted.
If they then proceeded in disregard of the act of Congress, the
assessment was erroneous and the case of
People v. Weaver,
supra, shows how that error could be corrected.
Page 105 U. S. 316
The case before us shows no error in any case but that of
Williams, and in that case he has obtained the judicial decision of
this Court that the tax he paid was illegally exacted from him. Nor
do the facts of his case raise the question whether, in a case
where the debts of the shareholder do not equal the assessors'
value of his shares, the tax is wholly erroneous or only so much as
represent the assessment of his indebtedness that should have been
deducted, for his affidavit was that his debts equaled the value of
his bank shares. Nor do the findings of fact raise the question
whether, without making affidavit and demand on the assessors, a
suit can be maintained to recover, when such indebtedness actually
existed, for he did make affidavit and demand, and no other
taxpayer has shown any such notice or demand, or that he had any
indebtedness to be deducted. There is neither finding of fact nor
averment in the pleadings on either point as to any other assignors
of plaintiff than Williams. It results from these considerations
that the judgment of the Circuit Court will be reversed and that on
the finding of facts judgment will be rendered for the plaintiff on
the fourth count for the amount of the tax paid by Williams, with
interest, and on all the other counts for defendants.
It is so ordered.
MR. JUSTICE BRADLEY dissented.
MR. JUSTICE MILLER delivered, at a subsequent day of the term,
the further opinion of the Court.
Since the opinion in this case was delivered, a suggestion has
been made to modify the order of the Court for judgment so far as
to permit a trial in the circuit court on issues not decided by
that court in the former trial.
The conclusions of law found by the circuit court, if sound,
disposed of the whole case, and the facts found were sufficient to
meet that view. As our opinion differed in one important point from
that on which the circuit court acted, it became a question whether
the facts found were still sufficient to dispose of the whole
case.
In a bill of exceptions, signed by the judge and found in
the
Page 105 U. S. 317
record, it is said:
"There was evidence given in the case upon the subject of other
allegations contained in the complaint, but the court did not pass
upon such allegations, as the following admission and the decision
of the court herein duly show."
Then follows a stipulation, signed by counsel or each party,
that the case was decided solely upon the invalidity of the New
York statute, and that other allegations contained in the complaint
had not been passed on.
Under these circumstances, we should have little difficulty in
directing the court below to grant a new hearing as to such issues,
if we could find in the record any material issue in regard to
which the court made no finding.
Attention has been called to the following language, which is a
part of each count in the complaint:
"And the plaintiff also says, upon information and belief, that
the assessment of said shares of stock in said banking association
by said board of assessors was at a greater rate than was assessed
by said board of assessors upon shares of stock in a bank organized
under the laws of the State of New York, located in said Sixth
Ward, and was at a greater rate than was assessed by said board
upon other moneyed capital in the hands of individual citizens of
the State of New York, and that for these reasons said assessment
of said shares of stock, and the levy of tax thereunder, were
illegal and void."
If this is a sufficient allegation of a distinct ground of
recovery, it seems just that the plaintiff should have a hearing on
it, as the defendant took issue on it and it has not been disposed
of.
We have, however, much difficulty in finding a solid ground of
recovery in this statement. It is divisible into two parts: 1. That
the shares of the national bank were assessed at a greater rate
than was assessed on shares of a bank organized under the laws of
the State of New York, located in said Sixth Ward.
We are quite clear that the shares of the plaintiff are not
relieved from taxation because a single bank of the state has been
favored by mistake or by intention.
For errors of this kind the statutes of New York provide the
correction, which should be taken in time, and we should
Page 105 U. S. 318
be very reluctant to hold that when it has been shown that a
single bank or a single individual has been taxed less than he
should be, all other taxes, however just, are thereby
invalidated.
That the assessment of the shares of the Exchange Bank "was at a
greater rate than was assessed upon other moneyed capital in the
hands of individual citizens of the State of New York."
If by this it is supposed that a few individual instances may be
shown of partial assessments favoring citizens as compared with the
national banks, we think it is erroneous. But if it is intended to
allege that apart from the question of the right of the shareholder
to deduct for his debts -- a question which, in this case, was
disposed of and was in issue -- it can be proved that the assessors
habitually and intentionally, or by some rule prescribed by
themselves, or by some one whom they were bound to obey, assessed
the shares of the national banks higher in proportion to their
actual value than other moneyed capital generally, then there is
ground for recovery, and a hearing as to that should be
granted.
As we have said, it may be well doubted if plaintiff intended to
allege this, or to rely on proving it.
But as it is a question of pleading under the New York Code, and
as no injustice can occur by leaving the matter to the court below,
the judgment will be so far modified as to permit the court below,
in its discretion, to hear evidence on that point, and, if
necessary, to allow an amendment of the pleading to present it
properly; and it is
So ordered.