Flint v. Board of Aldermen , 99 Mass. 141 ( 1868 )

Hoar, J.

The petitioner is a resident of the city of Boston, and has been assessed in that city upon the shares owned by him in a national banking association located in the city of New York. We think the case must be governed by the principles stated in the decision in Austin v. Aldermen of Boston, 14 Allen, 359. The national banks are artificial bodies created by the laws of the United States. The power of congress to establish them arises from their being suitable instruments for the performance of functions pertaining to the national government. As such instruments, they are not subject to taxation under state authority. And although the shares in their capital stock are so far distinct from the corporations themselves as to be the subject of state taxation, if such taxation is not restricted or prohibited by congress, yet it has been expressly decided by the supreme court of the United States that they are “ a subject matter over which congress and the states may exercise a concurrent power, but from the exercise of which congress, by reason of its paramount authority, may exclude the states.” Van Allen v. Assessors, 3 Wallace, 573. In that case it was held that a tax on shares in national banks was invalid, which was not levied in conformity with the stipulations in the proviso of the U. S. St. of 1864, c. 106, § 41.

By the construction which was given to that proviso by this court in Austin v. Aldermen of Boston, congress has thereby prohibited the assessment of taxes by any state upon the shares of a national bank established in any other state. The purpose may have been to attract banking capital, and induce the formation of national banks within those states where the rate of taxation is low. But whatever may have been the design or motive, we can have no doubt that it is within the constitutional power of congress to establish a national bank in any state, and to provide that its shares shall have such a local nature as to be exempt from taxation by other states; and that this power has been exercised in the present instance. Abbott v. Bangor, 54 Maine, 540. Certiorari to issue.