Merchants' & Farmers' Bank v. City of Kosciusko ( 1928 )

Ethridge, P. J.

The Merchants’ & Farmers’ Bank, domiciled in the city of Kosciusko, Miss., in the course of its business, acquired a tract of land outside of the city limits of Kosciusko, prior to the 1st day of February, 1925, for the sum of eleven thousand eight hundred dollars, carrying’ it on its books as real estate, and as such it represented eleven thousand eight hundred dollars of the- capital and surplus of the bank. The bank gave in its assessment within the county at ninety thousand dollars, from which three thousand dollars was deducted as real estate within the city, and eleven thousand eight hundred dollars as that outside of the city limits, these deductions from the capital and surplus being assessed as real estate on the books of the county. The bank was assessed at seventy-eight thousand two hundred dollars by the city assessor on its capital, surplus, and undivided profits, and three thousand dollars on real estate in the city, but the real estate owned by the bank outside of the city limits was not included in this assessment. The city raised the assessment of the bank on its capital, surplus, and undivided profits to ninety-seven thousand dollars, and deducted therefrom the real estate, amounting to three thousand dollars, within the city. The appellant, the Merchants’ & Farmers’ Bank, filed its objection to the assessment of the city, claiming an over-assessment on its capital and surplus, a reduction of three thousand dollars for the real estate in the city, and eleven thousand eight hundred dollars for that outside of the city. The city then reduced its assessment to ninety thousand dollars, three thousand dollars of which was on real estate in the city and eighty-seven thousand dollars on capital, surplus, and undivided profits, but refused to make a reduction for the real estate outside of the city limits.

This cause was submitted on appeal to the judge of the circuit court, without a jury, who affirmed the judgment of the city authorities.

By section 8203, Hemingway’s 1927 Code (chapter 193, Laws of 1920), it is provided:

“The president, cashier, or other officer having like duties, of each bank or banking association in this state, existing by the laws of this state, shall deliver to the assessor of taxes of the county in which it is located, a written statement, on or before the first day of May of each year, under oath, of the number and amount of all the shares of its capital stock paid in, or if it be not a corporation or joint stock company, then the amount of its capital, and of the sum of all undivided profits or surplus or accumulation of any sort constituting part of the assets' of the bank and not including its real estate; and the value of such shares estimated at par and increased by the proportion of the par value of all the shares of stock to the said surplus fund or accumulation, or of the amount of its capital so increased, shall be the basis of the taxation of such shares to the bank or of the capital to the owner thereof in the case the bank be not a corporation or joint stock company, and the taxes levied on such assessment shall be a first lien on the assets of the bank, but if the shares of such bank or banking, association are of less value than par, they shall be valued accordingly. Provided, nevertheless, in case of such bank or banking association existing under the laws of the United States, a precisely similar amount shall be assessed upon and collected from the shareholders thereof at the domicile of the bank as would have been assessed upon and collected from the said bank had it been created under the laws of the state of Mississippi; but each said bank and banking association shall, nevertheless, be liable to pay any taxes assessed as the agent of each of its shareholders and may pay the same out of their individual profit account, or charge the same to their expense ac count, or to the account of such shareholder in proportion to their ownership.”

By section 8206, Hemingway’s 1927 Code (section 4275, Code 1906), it is provided:

‘ ‘ The real estate of a bank or banking’ association shall be assessed and pay taxes-—-state, county, and municipal—according to its value, as other real estate. ’ ’

It will be seen from the first section quoted that the president or cashier of á bank “shall deliver to the assessor of taxes of the county in which it is located, a written statement ... of the number and amount of all the shares of its capital stock paid in, or if . not a corporation or joint stock company, then the amount of its capital, and the sum of all undivided profits or surplus or accumulation of any sort constituting part of the assets of the bank and not including its real estate, ” etc.; and by the last section quoted, that real estate is to be assessed as real estate. We think the statutory scheme contemplates a deduction from its capital, surplus, and undivided profits, of such sums as are invested in real estate, and that its holdings in real estate are not to be included in its assessment on capital stock, surplus, and undivided profits; in other words, from the total assets of the bank, as valued in its capital stock, surplus, and undivided profits, is to. be deducted the amounts invested in real estate, and the balance of the capital stock, surplus, and undivided profits is to be assessed under that heading, and real estate is to be assessed as real estate. As a municipality has no power to tax real estate situated beyond its corporate limits, it has no power to assess the land lying outside of the city limits in this case. Therefore it is clear it could not tax the real estate. If it can tax the money invested in real estate without giving credit therefor on the capital stock, surplus, and undivided profits, it will accomplish the same purpose, and, in effect, the property situated beyond the corporate limits would be taxed by it.- We think real estate situated outside of the city limits should be first deducted from the total capital, surplus, and undivided profits, and the assessment of the city based upon the remainder and such real estate as may lie within the city limits.

The money paid for real estate is necessarily taken from capital, surplus, and undivided profits, and to require the tax on each would, in effect, be doubling the tax on a portion of the bank’s property, and would give a municipality the power to tax beyond the limits of the city. It is not questioned but what the law could permit capital stock, surplus, and.undivided profits to be taxed as such, and make it represent all the assets of the bank; but, to do so would create much confusion in the taxing scheme. We therefore think the court below was in error in not allowing the eleven thousand eight hundred dollars to be deducted from the city assessment. The judgment of the lower court will therefore be reversed, and judgment here rendered for the appellant in accordance with the views herein set forth. In other words, the assessment made in the court below will be reduced to that extent, and judgment will be rendered here accordingly.

Reversed and rendered.