Richardson v. State National Bank

Opinion ok the Court by

Judge Hobson

Reversing.

The State National Bank brought this suit to enjoin the city of Frankfort from assessing its shares of stock for taxation for city purposes for the year 1906 under Acts 1906, p. 134, e. 22; it being alleged in the petition that a special hoard of supervisors had been appointed under an ordinance of the city council, and were about to assess tbe property. The city filed an answer, in which it was alleged that no assessments of the shares had been made for city purposes for tlie year 1906, and that no tax had been paid thereon, admitting that it was the intention of the board to assess the shares of stock without deducting therefrom the value of the United States bonds held by the bank. The plaintiff demurred to the answer, the court sustained the demurrer, and, the city failing to plead further, a judgment was entered granting an injunction as prayed in the petition. The city appeals.

Section 3403, Ky. St. (Russell’s St. Sec. 1467), which is part of the act governing cities of the third class to which Frankfort belongs, among other things provides as follows: “Where any property has not heretofore been assessed for taxation or where same has been irregularly or improperly assessed, or where notice of the time and place of the meeting of the board of supervisors of tax has not heretofore been properly or regularly given, said city is authorized to pass an ordinance directing the assessment of such property' and making correction in any assessment irregularly or improperly made, and giving notice of the place and time of the meeting of any board of tax supervisors, so that any taxpayer may appear before same. The object of this section is to insure the collection of any unpaid taxes, and for that purpose any of the said cities may, if it deems it necessary, appoint a special board of tax supervisors, whose duty it shall be to assess for taxation any omitted property or to correct any improper or irregular assessments, or to hear any complaints as to the assessment or value of any property upon which the taxes have not' been paid. When any property is assessed or any assessment corrected, or where any taxpayer has the opportunity of being heard for previous years, the tax rate and levies and liens for such years shall apply and the provisions of this section shall not extend back for more than five years.” The ordinance passed by tbe council was enacted pursuant to this section. Tbe proceedings by tbe city were regular. Tbe first question in tbe case is: Was tbe defendant liable to tbe tax? For it is admitted that tbe property bas not been assessed and tbe tax bas not been paid.

Tbe act of 1904, providing for tbe taxation of tbe. shares of national banks, required them to make certain reports on tbe 1st day of March, .and to pay tbe taxes on tbe 1st day of July. Tbe provision of tbe act as to tbe assessment of tbe shares is as follows: c ‘ Tbe Auditor, Treasurer, and Secretary of State are hereby constituted a board of assessment for tbe purpose of fixing tbe value of shares of all national banks in tbis state. It shall be tbe duty of the Anditor, immediately after tbe board of assessment bas fixed the value of the shares of national banks to furnish each bank-with a statement of tbe value fixed on its shares and tbe amount of tax due thereon, and tbe bank shall have thirty days from tbe time of receiving tbe notice to go before the board, and ask for a change in the valuation, and tbe board, after bearing such evidence as may be submitted, may change tbe valuation and assessment as it may deem proper, and tbe action of tbe board shall be final. Each bank shall be entitled to have deducted from tbe total valuation placed on its shares by said board, the assessed value of its real estate in tbis state. It shall be tbe duty of tbe national banks to list with the county assessor of each county its real estate, and pay 'the taxes thereon to ■ the sheriff. Tbe Auditor shall at tbe expiration of thirty days after final action by said board, certify to tbe county clerks of said counties where national banks are located, tbe value of tbe shares of tbe bank, less tbe assessed value of its real estate, and such certificates shall be by each county clerk filed in his office and be by him certified to the proper collecting ■ officer of the county, city, town or taxing district, for collection, and each county, city, town or taxing district shall be entitled to collect taxes on such valuation, except in such cities and towns as otherwise provided.” Acts 1904, p. 146, c. 66. This act only applied to national banks. It did not apply to state banks. Under the act, the assessment was made for city taxes in Frankfort, not by a local assessor, but by the state board, and the tax was collected by the city on the assessment as certified by that board.

Under this act it was held in Marion Nat. Bank v. Burton, 121 Ky. 876, 90 S. W. 944, 28 Ky. Law Rep. 864, 10 L. R. A. (N. S.) 947, that national banks were entitled to a deduction of their United States bonds for the reason that the state banks which were assessed under a different statute were entitled to the' deduction, and that, under the act of Congress, the national banks must be placed on the same footing as the state banks. This ruling applied to all taxes, both state and local. That opinion was delivered on January 31, 1906. The Legislature was then in session, and, to remedy this evil, it enacted the act of 1906, which placed state banks and trust companies on the same footing as national banks, and required their shares of stock and the shares of stock in national banks all to be assessed in precisely the same manner. There had, in fact, been no discrimination • under the previous act, but it was the possibility of a discrimination that required the court to hold that under the act of 1904 national banks were entitled to a deduction of their United States bonds. The act of 1906, after providing that the state board should assess shares of stock of all banks and trust companies, contained this provision as to the assessment for local taxation: “Every state bank and trust company incorporated under the laws of this commonwealth, and every national bank doing business therein and located in any county, city, town or taxing district in this commonwealth shall make to the assessing officer of the county, city, town, or taxing district a report similar to that required by this sub-division to be made to the state board of valuation and assessment for assessment for state purposes.

The assessing officer of the county, city, town, or taxing district wherein any trust company, state and national bank is situate, shall assess the shares of such trust company, state and national bank for taxation for county, city, town and taxing district purposes in the manner prescribed in this subdivision for assessing the same by the state board of valuation and assessment for taxation for state purposes, and such officer shall make out and return the assessment to the proper authorities of the county, city, town or taxing district, at the same time and manner as prescribed by law for the return of the assessment of personal property therein. In assessing the shares of banks for county purposes the assessor shall make the return upon a separate blank and shall not be included in the recapitulation sheet made by the county clerk and furnished to the Auditor, but shall be returned to the county board of supervisors. The equalization, collection, penalties and all laws relating thereto, now provided by law for other personal property in the county, city, town or taxing district, shall apply in like manner to the collection of the taxes herein provided for; any county, city, town or taxing district, not now having the right to collect such taxes by suit, is hereby authorized and empowered so to do.” See Acts 1906, p. 136, c. 22.

The act also contained these provisions: “All laws or parts of laws in conflict or inconsistent with this act, providing for other methods of taxation of shares of national banks, or the taxation of trust companies and state banks, incorporated under the laws of this commonwealth, and the collection of taxes thereon, are hereby repealed. All national banks, trust companies and state banks shall file with the Auditor their reports herein provided for on or before the 15th day of April, 1906, and annually thereafter on or before March the first. Said reports shall be made up to and including the first day of the preceding September.”

The act contained no emergency clause. It was approved March 15, 1906, and so took effect 90 days after the adjournment of the Legislature. The last clause of the act is in these words: “If any section in this bill shall be held to be unconstitutional, that fact shall not affect any other section of the act, it being the intention of the G-eneral Assembly in enacting this bill to enact each section separately, and if any proviso or exception contained in any section of this bill shall be declared unconstitutional, that fact shall not affect the remaining portion of said section; it being the intention of'the Legislature to enact each section of said bill and each proviso and exception thereto separately.” In Hager v. Citizens’ National Bank, 127 Ky. 192, 105 S. W. 403, 914, 32 Ky. Law Rep. 95, the act was held valid by this court and applicable to state taxes for the year 1906; that is to say, it was held that the state taxes for the year 1906 should be assessed and collected under this act, and that the national banks as to their state taxes were not entitled to a deduction for that year of the value of the United States bonds held by them, but the question as to their right to the deduction as to local taxes was not there before the court, and was not passed on. That question is presented on this appeal.

In point of fact the state board of valuation had not allowed to any state hank a deduction on acount of United States bonds held by it previous to the act of 1906. The state banks were in fact discriminated against under the decision in Marion National Bank v. Burton; for the national banks when given the deduction of their United States bonds as followed under that decision were placed in a more favorable position than the state banks enjoyed, and they were thus given an. immunity from taxation which the Legislature had not intended to allow. The result was that the Legislature undertook to remedy the evil by the act of 1906, and to this end the provisions of that act as to the returns for the year 1906 were inserted. The court in Hager v. Citizens’ National Bank held that, if the state board had made an assessment before the act of 1906 took effect, it would have been its duty to make another assessment after that act took effect. The court said: “If it had not been intended that the taxes for 1906 were to be assessed under the act, there was no need for a special repealing clause in this subdivision; and the sixth clause must otherwise be rejected as meaningless. It is true that the act did not take effect until June 11th, but the Legislature plainly intended that the assessment should be made under it, and it was done. Even if an assessment for 1906 had been made before the Legislature met, it should have directed another assessment-to be made and the taxes to be paid under it. And so, if the board had made an assessment under the act of 1904, it would have been its duty after June 11, 1906, to have made an assessment under the act of 1906, and the taxes should have been paid under that assessment.”

There was the same necessity for this legislation as to local taxes as there was to state taxes. The Legislature endeavored to correct an imperfection in the existing law, and the correction would have been imperfect if it had not applied to the year 1906; for there was the same necessity for a remedy as to the taxes for the year 1906 as there was for the taxes of the subsequent years. Under the previous act, the assessment for local purposes was made by the state board, and the taxes were collected on their certificate of the amount of the assessment. The act of 1906 took local taxes out of their jurisdiction and required the assessment for local taxes to be made by the local “assessing officer.” If, as has been held, the state board was required to make an assessment for the year 1906 for state purposes, it must follow that the local “assessing officer” was also required to make a similar assessment for local purposes; for the Legislature manifestly did not intend when it simply changed the officer who was to make the assessment to require the assessment to be made for state purposes for 1906, and to omit from assessment for local purposes the shares of stock for that year. The two assessments are provided for in the same act, in the same connection, and manifestly for the same purpose, the local assessment for local purposes being merely substituted for an assessment by the state board as under the former law. The local assessor-could not have assessed the shares of stock in a national bank previous to the time the act of 1906 took effect; for, until that act took effect, he had no authority to make an assessment of such shares of stock for any purpose. It is true that by the previous stalutes he was to return his book, and the assessment was completed long before the act of 1906 took effect; but this was all by statute, and the Legislature which had imposed upon him these duties could impose upon him other duties, and this it manifestly intended to do by that part of the act of 1906 which provides for a local assessment of the shares of stock for local purposes.

It is true that the taxes are levied under the statute as of date January 1st; but, while this is true, the assessment may be made after January 1st, the value of the property to be fixed as of the date when the assessment should have been made. The state may provide for the retrospective assessment of property. In this case no assessment of the property had been made for 1906, and none could be made; for, as held by this court, it was the duty of the state board to proceed under the act of 1906, and under that act they had no jurisdiction to make an assessment for local purposes. When it is settled, as held in Hager v. Citizens’ National Bank, that, if the state board had made an assessment for state purposes before the act of 1906 took effect, it would have been its duty, after that act took effect to make an assessment as provided thereby, it must follow, that, if the state board had made an assessment for local purposes before the act of 1906 took effect, it would have been the duty of the local “assessing officer” after that act took effect in like manner to make an assessment pursuant to it; for the act of the state board as to the assessment for the state and for local purposes stands oh the same plane, and the Legislature had the same power to require a new assessment in one case as in the other. The act of 1906 shows clearly that the state board was not to make local assessments under it, and as no other officer but it could assess these shares before it took effect, when this jurisdiction was taken from it, and transferred to the local “assessing officer,” the manifest meaning was that he was to make the assessment which under the former law the board was to make. The mere change of officers was not intended to exempt the banks from taxation.

We also conclude that, when the local “assessing officer ’ ’ had not made an assessment of the shares of stock of the State National Bank, the council was authorized by section 3403, Ky. St., above quoted, to provide for its assessment; for it was property subject to assessment, and which had not been assessed for taxation. The operation of this section is not confined to property which has been omitted from assessment by the assessor; but it applies in all cases “where any property has not heretofore been assessed for taxation.” When we read the whole section, it is evident that the word “heretofore” is to be read as .referring to the time of the passing of the ordinance. The act creates the board of supervisors of tax, and this section provides for the correction of their work; its object is “to insure the collection of any unpaid taxes; ’ ’ and the five years allowed by the last clause are to be counted, not from the passage of the act, but from the time the assessment Is made. Aside from section 3403, the powers granted the common council of third-class cities are fully as broad a§ those granted towns of the fifth class. Compare Ky. St. sections 3265, 3289, subsecs. 1, 12, 3281, 3637, and 3644 (sections 1282, 1306, 1298, 1643, 1650, and 1682). In Muir v. Bardstown, 120 Ky. 739, 87 S. W. 1096, 27 Ky. Law Rep. 1150, we sustained an ordinance under the latter sections providing for the assessment of property that had escaped taxation.

Judgment reversed, and cause remanded for further proceedings consistent herewith.

Barker, J., dissenting.