McVeagh v. The City of Chicago et al.

banks or banking associations organized under the laws of the United States are or may be located, to assess the shareholders in the same upon the value of their shares, and to assess the real estate, if any, in which any part of the capital stock of such banks or banking asssciations is invested, in the same manner and subject to the same regulations, except as provided in this act, as provided by law for the assessment of other real and personal property, in the same county or town, city or district, such assessment to be made for the year 1867, with regard to the ownership and value of such shares on the first day of July, 1867, and annually thereafter with regard to the ownership and value of the same on the day which may be specified by the laws in force concerning the assessments of other taxable personal property in this State."

The object of this section is quite apparent, being plainly expressed. Assessments before its passage had been made for revenue purposes, upon the capital stock of these banks, and the taxes were in process of collection. This act vacated the assessments, and put a stop to the collection of that tax, and to supply the deficiency in the revenue, which would be thereby occasioned, the assessors were required to assess the shareholders in the banks upon the value of their shares. The act of Congress did not intend to prescribe a mode by which alone the State could tax the shares. That was for State legislation, under the limitations and restrictions prescribed by the act. To get at the shares, it would be proper to require them to be included in the valuation of the personal property, not that they should, but might, occupy a different column in the list. It cannot be understood to mean, as appellant's counsel insist, that it should be included in such valuation, to enable the shareholders to deduct from their value such debts as he might owe, as required by the general revenue law. To us it appears that this part of the proviso was intended merely to indicate to the assessors in making up the assessment roll, to place the value of the shares in the column in which personal property is placed separately, so as to show its separate amount.

In this particular case, the shares could not be included in the valuation of the personal property, for that had been made long before the passage of this act, and the act was intended to supply an omission, as we have before said, and could not contain such a provision. The great object intended by the proviso was that the shares should be assessed at the place where the bank was located, and that they could not be assessed at a greater rate than should be assessed upon other moneyed capital in the hands of individual citizens.

McVeagh v. The City of Chicago et al.

But is the appellant entitled to the deduction he claims? For, if he is not, the first objection is quite immaterial, no matter where, on what portion of the list, those shares are found. If it had been the intention of the Legislature to permit a deduction, they would have used language indicative thereof, by declaring that the bank shares shall be taxed like other property. Having been denied the right to tax the capital stock of the banks, the Legislature declares that the shareholders shall be assessed and taxed on the value of their shares, by which mode as much revenue would be derived as from the former exploded mode:

The language and subject of the act are plain. This is the first section:

"Hereafter no tax shall be assessed upon the capital of any bank or banking association, organized under the authority of this State, or organized under the authority of the United States and located within this State; but the stockholders in such banks and banking associations shall be assessed and taxed on the value of their shares of stock therein in the county, town or district where such bank or banking association is located, and not elsewhere, whether such stockholders reside in such town, county or district, or not, but not at any greater rate than is assessed upon other moneyed capital in the hands of individual citizens in this State. And in case any portion of the capital of such bank or banking association is invested in real estate, then there shall be deducted, in making the assessment of such shares, from the value of the same, such sum as shall bear the same proportion to the value of such shares, as the assessed value of all such real estate bears to the whole capital stock of such bank or banking association;

"Provided, that nothing herein contained shall be held or construed to exempt from taxation the real estate held or owned by any such bank or banking association, but the same shall be subject to State, county, municipal and other taxation, to the same extent and rate, and in the same manner, as other real estate is or may be taxed."

The old system of taxing banks on their capital stock being exploded, this new system was devised, by which an amount of revenue would accrue, equal to that derived from taxing the capital stock. The only deduction allowed by the act, from the value of the shares of each owner, is a proportionate sum for the real estate in which a portion of the capital might be invested.

Appellant's case is not governed by the general law, but by this act, and we look in it in vain for any sanction to the claim for deduction on which he insists. The intention of the Legislature is further evident from the second section of the act, which is as follows:

McVeagh v. The City of Chicago et al.

"SEC. 2. There shall be kept, at all times, in the office where the business of such bank or banking association, organized under the laws of this State, or of the United States, shall be transacted, a full and correct list of the names and residences of all the stockholders therein, and of the number of shares held by each, and such list shall be subject to the inspection of the officers authorized to assess taxes or to assess property for taxation, during the business hours of each day in which business may be legally transacted; and it shall be the duty of each county, town, city or district assessor to ascertain and report to the county clerk of his county, or the other proper officer, as a part of his return of the assessment of property, a correct list of the names and residences of all stockholders in any such bank or banking associations located in his county or town, with the number and value of all such shares held by each of them respectively, showing the name of such banks or banking associations in which such shares are held; and such return shall also show what deduction, if any, is to be made from the value of such shares on account of the investment of any of the capital stock of such bank or banking association in real estate, as set forth in the first section of this act."

A deduction for real estate investment being specially named, excludes the idea of any other deduction. It is quite apparent that owners of bank shares, under the system inaugurated by this act, were not intended to be placed on the same footing with owners of other personal property. The object of this act was to supply the place of a system which has been overturned by a decision of the Supreme Court of the United States, in Bradley's case, and to substitute for the capital stock the full shares into which that stock was divided, without any deduction save for investments in real estate, and which was taxable as other real estate, and thus obtain from the bank and the shareholders together as much as it did before from tax on the capital.

That a new system was devised, is further discoverable from section 4:

"SEC. 4. The collector of taxes, and the officer or officers authorized to receive taxes from the collector, may all, or either of them, have an action to collect the tax assessed on any share or shares of stock owned by non-residents of this State, from the avails of the sale of such share or shares; and the taxes assessed against such share or shares shall be and remain a lien thereon till the payment of said tax."

No such provision as this is found in the revenue law, nor is such an one as is contained in section 5, found in it:

"SEC. 5. For the purpose of collecting such taxes, and in addition to any other law not in conflict with the Constitution of the United States, relative to the imposition of taxes, it shall be the duty of every such bank or banking

McVeagh v. The City of Chicago et al.

association, and the managing officers thereof, to retain so much of any dividend or dividends belonging to such stockholders as shall be necessary to pay any taxes assessed in pursuance of this act, until it shall be made to appear to such officers that such taxes have been paid; and any officer of any such bank, who shall pay over or authorize the paying over of any such dividend, or any portion thereof, contrary to the provisions of this seetion, shall thereby become personally liable for all such tax, and if the said tax shall not be paid, the collector of taxes where the bank is located, shall sell said share or shares to pay the same, like other personal property."

In view of this legislation, it must be apparent that a system of taxation for bank shares was designed, peculiar to itself and independent of the general revenue system of the State.

No deduction being allowed under this system, except for investments in real estate, the objection that the shares are valued at a greater rate than other moneyed capital of the State falls to the ground. Value of property is one thing, and the rate at which it shall be taxed is entirely different. Rate is the proportion or percentage which property shall bear, no matter what its value. It does not vary as values vary, but it is always the same. cent or three per cent on an ascertained valuation applies to all property equally, however much the values may differ. The meaning of the act evidently is, that the rate or percentage of taxation on bank shares shall be no greater than the rate imposed on other property. No violation of the act is shown in this regard.

One per

This provision of the fifth section is attacked by appellant, on several grounds. We do not deem it necessary to defend it, as the remaining portions of the act would be effectual for the purpose intended, if that was stricken out, save the last clause, to which no objection has been made. Under that clause, should a collector be compelled to sell the shares for non-payment of the taxes, and the bank refuse to transfer them to the purchaser on the books of the bank, a court of chancery, on a bill filed for such purpose, would compel the transfer. But on principle, we can perceive no valid objection to the section.

The State is entitled to its revenues. It has a right to use all the means, summary or otherwise, not prohibited by a higher power, to collect them. In case of bank shares, if they are taxed and the tax remains unpaid through the dividends as provided by this law, the State could by mandamus compel the officers of the bank to appropriate the dividends, or such portions as might be necessary to pay the taxes.

First National Bank of Mendota v. Smith.

This question is fully discussed by the Court of Appeals of Maryland, in the case of The State v. Mayhew, 2 Gill, 487, in most of the reasoning of which, and in the conclusion, we concur, and are in accordance with what we have said above.

Upon the last point made, that appellant has no notice of the assessment, it is sufficient to say, that it is not necessary he should have actual notice, the law requiring only that notice of the assessment should be published in a newspaper of the city, a certain length of time. It is not denied such notice was given.

Perceiving no error in the record, the decree dismissing the bill must be affirmed.

Decree affirmed.

FIRST NATIONAL BANK OF MENDOTA V. SMITH.

(65 Illinois, 44.)

Taxation of National banks -Place where taxable - Power of Legislature to fix situs of shares for taxation - Nature of shares.

A State statute providing that shares of stock in National banks shall be taxed in the county, town, or districts where such banks are situated, whether the shareholders reside in such county, town, or district or not, is valid.* Semble, that shares in National banks are in the nature of choses in action. They are mere demands for dividends as they become due. The certificates of stock are merely evidence of the holder's title to a given share in the property and franchises of the corporation of which he is a member. The bank is the trustee of the stockholders, who must come to its counter for their dividends and their share of assets on final liquidation, and no transfer of stock can be completed until shown upon the books of the bank.

A

PPEAL from the Circuit Court of La Salle county; the Hon. EDWIN S. LELAND, Judge, presiding.

Frank J. Crawford and Crooker & Hunter, for appellant.

Mayo & Widmer, for appellee.

Mr. Justice MCALLISTER delivered the opinion of the court. This was a bill in equity exhibited in the Circuit Court of La

*The doctrine of this case is affirmed by Tappan v. Merchants' National Bank, ante, p. 100, where in the same statute was construed.-REP.