Roberts v. Am. Natl. Bank of Pensacola

"National Banks are not merely private moneyed institutions' but agencies of the United States created under its laws to promote its fiscal policies; and hence the banks, their property and their shares cannot be taxed under state authority except as Congress consents and then only in conformity with the restrictions attached to its consent. Des Moines NationalBank v. Fairweather, 263 U.S. 103, 106, and cases cited. The early legislation respecting these banks contained a restricted consent, which afterwards became Sec. 5219 of the Revised Statutes. By it Congress assented to the taxation of the shares to their owners under the laws of the state where the bank was located, subject to the restriction that 'the taxation shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such state,' and further assented to the taxation of the real property of the bank for state, county, and municipal purposes 'to the extent, according to its value, as other real property is taxed.' This consent thus restricted was in force when the tax here assailed was levied.

"The restriction on the taxation of the shares often has been considered by this Court. The earlier decisions have been reviewed from time to time in later cases, and all, taken collectively, may be summarized as showing, so far as is material here,

"1. The purpose of the restriction is to render it impossible for any state, in taking the shares, to create and foster an unequal and unfriendly competition with national banks, by favoring shareholders in state banks or individuals interested in private banking or engaged in operations and investments normally common to the business of banking. Mercantile NationalBank v. New York, 121 U.S. 138, 155; Des Moines National Bankv. Fairweather, supra, 116.

"2. The term 'other moneyed capital' in the restriction is not intended to include all moneyed capital not invested in national bank shares, but only that which is employed in such way as to bring it into substantial competition with the business of national banks. Mercantile National Bank v. NewYork, supra, 157; Aberdeen Bank v Chehalis County,166 U.S. 440, 461.

"3. Moneyed capital is brought into such competition where it is invested in shares of state banks or in private banking; and also where it is employed, substantially as in the loan and investment features of banking, in making investments, by way of loan, discount or otherwise in notes, bonds or other securities with a view to sale or repayment and reinvestment. Mercantile National Bank v. New York, supra, 155-157; Palmer v. McMahon, 133 U.S. 660, 667-668; Talbot v.Silver Bow County, 139 U.S. 438-447.

"4. The restriction is not intended to exact mathematical equality in the taxing of national bank shares and such other moneyed capital, nor to do more than require such practical equality as is reasonably attainable in view of the differing situations of such properties. But every clear discrimination against national bank shares and in favor of a relatively material part of other moneyed capital employed in substantial competition with national banks is a violation of both the letter and spirit of the restriction. People v. Weaver,100 U.S. 539; Boyer v. Boyer, 113 U.S. 689, 701; National Bank ofWellington v. Chapman, 173 U.S. 205, 216." First National Bank of Guthrie Center v. Anderson, County Auditor, 269 U.S. 341, text 347-8, 46 Sup. Ct. Rep. 135.

The Federal Statute is as follows: "In the case of a tax on said shares the tax imposed shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such state coming into competition withthe business of national banks: Provided, That bonds, notes, orother evidences of indebtedness in the hands of individualcitizens not employed or engaged in the banking or investmentbusiness and representing merely personal investments not madein competition with such business, shall not be deemed moneyedcapital within the meaning of this section."

The Italicized words constitute an amendment by the Act of 1923. Such amendment does not change the meaning of the Act as previously interpreted. First National Bank of Guthrie Center v. Anderson, County Auditor,269 U.S. 341, text 350, 46 Sup. Ct. Rep. 135.

Where equity may properly be invoked to restrain the collection of state taxes on the ground of invalidity of the assessment, the complainant must make a complete case for equitable relief by excluding every reasonable hypothesis of a legal assessment against him. See 3 Cooley on Taxation (4th ed.), Sec. 1000; Amoskeag Sav. Bank of Manchester, N.H., People of State of New York ex rel. v. Purdy, 231 U.S. 373, 34 Sup. Ct. Rep. 114; Aberdeen Bank v. County of Chehalis,166 U.S. 440, 17 Sup. Ct. Rep. 629.

An unequal tax assessment cannot be held in violation of the equal protection clause of the Fourteenth Amendment, where a purpose of the assessing board to discriminate is not clearly established and where the discrimination may be attributed to an honest mistake of judgment.

The good faith of tax assessors and the validity of their acts are presumed; when assailed the burden of proof is upon the complaining party. Sunday Lake Iron Co. v. Township of Wakefield, 247 U.S. 350, 38 Sup. Ct. Rep. 495.

Unjust discrimination through intentional, systematic undervaluation by state officials of other taxable property of the same class when plaintiff's property is assessed and taxed much higher, is ground for an injunction, preventing the taxation of his property at a higher rate than the property so favored. It is not enough, however, that taxing officials have made a mistake, or that the court, were its judgment properly invoked, might reach a different conclusion as to the taxes; there must be a clear, affirmative showing that the difference is an intentional discrimination adopted as a practice. Chicago, R.I. P. R. Co. v. Kendall, 266 U.S. 94, 45 Sup. Ct. Rep. 55.

The shares of national banks can be taxed by the states only in the manner and to the extent authorized by Section 5219, U.S. Rev. St. (U.S. Comp. St. No. 9784), and the construction given to that statute by the Federal courts is binding on the state courts. Under that statute such shares cannot be taxed at a greater rate than moneyed capital in the hands of individual citizens employed in competition with such banks. State v. First Nat. Bank of St. Paul, 164 Minn. 235, 204 N.W. Rep. 874, affirmed by U.S. Supreme Court in 273 U.S. 468, 47 Sup. Ct. Rep. 468, March 21st, 1927.

The State Constitution and statutes specify what classes of property shall be exempt from taxation, and the classes of property referred to in the bill of complaint are not exempt from taxation under the law. See Sec. 1, Art. IX Constitution; Sec. 697 Rev. Gen. Stats. 1920.

The allegation in the bill of complaint that the capital stock and other personal property of the complainant's competitors in business were not assessed or taxed, but "were exempt from all taxation," must have reference to a failure of the tax assessor to assess as required by the statute, and not to "exemption" from taxation, since the statute requires taxes to be paid on "all taxable personal property" "to include all goods and chattels, moneys and effects, all boats and vessels, all debts due or to become due from solvent debtors, whether on account, contract, note or otherwise, all public stocks or shares in all incorporated or unincorporated companies." The rate of taxation is the same on all property that is assessed. The State statute is not invalid as in First National Bank of Guthrie Center v. Anderson, County Auditor, 269 U.S. 341, 46 Sup. Ct. Rep. 135; Merchants' Nat. Bank of Richmond, Va. v. City of Richmond, 256 U.S. 635, 41 Sup. Ct. Rep. 619; State of Minnesota v. First Nat. Bank of St. Paul, 273 U.S. 561, 47 Sup. Ct. Rep. 468, affirming State v. First Nat. Bank of St. Paul, 164 Minn. 235, 204 N.W. Rep. 874; First Nat. Bank of Hartford, Wis. v. City of Hartford,273 U.S. 548, 47 Sup. Ct. Rep. 462, reversing First Nat. Bank of Hartford v. City of Hartford, 187 Wis. 290, 203 N.W. Rep. 721; McFarland, Sheriff v. Georgetown Nat. Bank, 208 Ky. 7, 270 S.W. Rep. 995, affirmed on the evidence in Georgetown Nat. Bank v. McFarland, Sheriff, 273 U.S. 568, 47 Sup. Ct. Rep. 467, March 21, 1927.

Even if the allegations of the bill of complaint may be considered insufficient to show an intentional, unjust discrimination by the assessing officer in making assessments that would violate the due process and equal protection provisions of controlling organic law (Sunday Lake Iron Co. v. Wakefield Tp., supra; City of Tampa v. Palmer, 89 Fla. 514, 105 So.2d Rep. 115), yet the allegations may be regarded as a sufficient basis for adducing proof that in violation of Section 5219 U.S. Revised Statutes "the tax imposed" on complainant's shares is "at a greater rate than is assessed upon other moneyed capital employed in the investment business and coming into competition with the business of national banks," by showing that such competing capital is so employed and is not assessed at all, while complainant's "shares" are assessed, 47 Sup. Ct. 462. See contra, Aberdeen Bank v. County of Chehalis, 166 U.S. 440, 17 Sup. Ct. Rep. 629.