President, Directors of the Tremont Bank v. City of Boston , 55 Mass. 142 ( 1848 )

Dewey, J.

The question, as to the liability of banking corporations, to be taxed for the stocks of incorporated companies, pledged to and held by the former as collateral security, was fully considered and settled by this court in the case of Waltham Bank v. Waltham, 10 Met. 334. To the extent, therefore, of the taxes assessed upon the plaintiffs, for stocks thus held, they will be entitled to recover in the present action.

The further inquiry is, whether a banking corporation is liable to taxation for real estate, held and used by it principally for the purpose of a banking-house. The Rev. Sts. c. 7, § 7, declare, in terms, that all the real estate, within the limits of each town, is a proper subject of taxation by the assessors thereof; and no exception is made, by any direct provision of law, in favor of the real estate of banks. The inquiry, therefore, is the general one, whether the law, relating to the taxation of real estate, was intended by the legislature to apply to the real estate of banks ? It has always been supposed, that the law as to the taxation of personal estate did not apply to the money capital of the banks, existing in the form of personal securities for money loaned, or in gold and silver in their vaults. The provisions of the Rev. Sts. c 9, § 1, imposing a tax of one half of one per cent, semiannually, upon the amount of the capital stock of every bank, payable to the treasurer of the commonwealth, with the further liability of the individual stockholders, severally, to be taxed in the towns where they dwell, for their shares of the capital stock of the bank, must be considered as the extent of the liability of banking corporations to taxation for personal estate. But, in practice, a different rule has been very extensively, if not universally, adopted, as to the taxation of the real estate owned by a bank, although constituting in fact a part of its capital stock.

It may be truly urged, that such a tax upon a bank effects a double taxation upon the capital stock, to the extent that it is invested in real estate ; such capital being liable, at the same time, to an assessment as personal property, in the form of a tax upon the shareholders. Entire equality of taxation would seem to require, that the real estate of banks should be put upon the same footing, in this respect, with the real estate of manufacturing corporations, the value of which, in assessing the stockholders for their shares, is first to be deducted therefrom. Rev. Sts. c. 7, § 10, par. 2.

There being no similar provision however with regard to the property of banking corporations, the liability of those institutions to taxation for the real estate held by them, and the liability of their stockholders to be taxed for the shares of personal estate which they hold, must be governed by the general law regulating the assessment of taxes. The Rev. Sts. c. 7, <§> 7, provide, that “ all taxes on real estate shall be assessed, in the town where the estate lies, to the person, who shall be either the owner or in possession thereof, on the first day of May.” Banking corporations, as well as individuals, may be the owners or-in possession of real estate; and if the real estate owned or held by a bank is to be taxed as such, it is quite obvious, that the proper mode is, for the assessors of the town in which it lies to assess the tax thereon to the corporation itself. The law, we think, fully authorizes such taxation, and justifies the practice, which has hitherto so generally prevailed, of assessing a tax upon banking corporations, for the real estate owned or held by them, including that used for a banking-house, in the town where such estate "ies.

The plaintiffs are entitled to judgment only for the amount of the taxes assessed on the personal estate.