Commercial National Bank of Ogden v. Chambers/Opinion of the Court

by Edward Douglass White

United States Supreme Court

182 U.S. 556

Commercial National Bank of Ogden  v.  Chambers

 Argued: and Submitted April 26, 1901. --- Decided: May 27, 1901

It is urged that 'by the action of the taxing officer and the supreme court of Utah the shareholders of the Commercial National Bank of Ogden were treated contrary to the provisions of § 5219 of the Revised Statutes of the United States; and, further, that they were denied the equal protection of the laws.' Subsidiarily, it is contended, first, that the assessor erroneously refused to deduct the bona fide debts of nonresident shareholders from the value of their shares of stock, contrary to the provisions of the laws of Utah and the requirements of said § 5219 of the Revised Statutes of the United States (excerpted in the margin ), and, second, that the bank was entitled to a deduction from the assessed valuation of the stock, not only of the value of its real estate situated in Utah, but the value of real estate situated outside of the limits of the state.

We will first consider the contention respecting the failure to deduct bona fide debts from the value of the stock of nonresident shareholders. The supreme court of Utah, referring to the provisions of the Constitution of Utah noted in the margin of the statement of facts preceding this opinion, held that as the Constitution of the state distinguished between stock and credits, and authorized only a deduction of debts from credits, shares of stock were not credits, and both resident and nonresident shareholders were not entitled to deduct bona fide indebtedness from the value of their shares of stock. This construction of the statute is binding on this court. First Nat. Bank v. Ayers, 160 U.S. 660, 664, 40 L. ed. 573, 574, 16 Sup. Ct. Rep. 412; First Nat. Bank v. Chehalis County, 166 U.S. 440, 444, 41 L. ed. 1069, 1072, 17 Sup. Ct. Rep. 629. The claim of the benefit of the provisions of § 5219 of the Revised Statutes of the United States is unavailing, for the reason that there was neither averment nor proof of facts taking the case out of the operation of recent decisions of this court. Those decisions held that the term 'moneyed capital,' as employed in § 5219 of the Revised Statutes, forbidding greater taxation of shareholders of national banks than is imposed on other moneyed capital, does not include capital which does not come into competition with the business of national banks, and that it must be satisfactorily made to appear by the proof that the moneyed capital claimed to be given an unjust advantage is of the character just stated. First Nat. Bank v. Chapman, 173 U.S. 205, 219, 43 L. ed. 669, 674, 19 Sup. Ct. Rep. 407, and cases cited.

There is obviously no merit in the further contention that reversible error was committed because of the refusal to deduct from the value of the shares of stock of the bank the assessed value of real estate owned by the bank, situate in other states than Utah. There was no proof that such a deduction was authorized by the laws of Utah in valuing shares of stock of other than national banking associations. On the contrary, the supreme court of Utah, from an examination of the several constitutional and statutory provisions respecting the subject of taxation in Utah, concluded that the only deductions which were authorized in the assessment of the shares of stock of national banks or other corporations organized and doing business in the state, were deductions from the value of the shares of the value of real estate situate in Utah. Manifestly, the purpose was to prevent double taxation by the state, a tax on the real estate as such, and a further tax thereon by a tax on the stock to the extent that such real estate entered into the value of the stock. As the national banking law, however, permits the taxation of shares of stock of a national bank in the state where the bank is domiciled, the state of domicil is, of course, entitled to collect taxes upon the full value of such shares of stock. While real estate of a bank situated outside of the state of domicil is taxed in the state of its situs, yet the value of such real estate necessarily enters into and is considered in estimating the value of the shares of stock; and to deduct the value of the real estate would, to the extent of such deduction, reduce the real value of the shares, without a compensatory equivalent. These views and those expressed by the supreme court of Utah accord with the doctrine enunciated in Dwight v. Boston, 12 Allen, 316, 323, 90 Am. Dec. 149; and American Coal Co. v. Allegany County comrs. 59 Md. 185, 193. In the latter case the principle was thus expressed (p. 194):

'The true criterion, as fixed by the statute, is the true value of the stock, without reference to the question where, or in what manner or nature of property or security, the capital stock may be invested. Whether that be invested in real estate, or other property beyond the jurisdiction of this state, the latter having control over the shares and their true value, the peculiar nature and value of the investment of the capital stock of the corporation, beyond the limits of the state, can form no proper subject for specific deduction or abatement from the true value of the shares of stock, when presented to be assessed for purposes of taxation. It is exclusively with the shares of stock and their true value, as representing the entire corporate assets, that the tax commissioner has to deal, and not with the nature and locality of the investment of the capital stock of the corporation, except as to the real estate of the company situate within this state.' As the shares of stock were taxed as other similar property in Utah, and no discrimination was occasioned, we can perceive no ground for concluding that the refusal to deduct the value of the real estate in question constituted either a violation of § 5219, Revised Statutes, or a denial of the equal protection of the laws.

Judgment affirmed.

Notes