STATE BANKS AND TRUST COMPANIES. EXECUTIVE HON. NORRIS S. LIPPITT, HARTFORD, July 25, 1911. Dear Sir: You request me to answer the following questions: "Will you kindly give me your opinion on Section 3403? 'No State bank or trust company shall discount any paper made', etc., etc. What is discount? Cannot that be interpreted to mean commercial paper upon which the only security is the name of the maker and indorser, and not apply to loans made on good collateral? Section 3411 sanctions loans to directors upon certain conditions. All presidents and vice-presidents are directors. Whom shall I consider an executive officer under Section 3403? " Under Section 3403 of the General Statutes " no State bank or trust company shall discount any paper made, accepted or indorsed by any of its executive officers or clerks, or by any partnership of which any one of such officers or clerks is a member." In the meaning of this statute " executive officers" are the president, vice-president, secretary and treasurer. In Section 3411 of the General Statutes we find directors and trustees in a different category. Here the law provides that such officers may become obligated for personal loans to their own bank or trust company. However, any director or trustee, who is also an executive officer, is necessarily bound by said Section 3403 of the General Statutes, so far as discounting paper is concerned, but not otherwise. "Discount" as it is understood in the business of banking is simply a mode of loaning money with the right to take the interest allowed by law in advance. It is the advance of money not due till some future day, less the interest which would be due thereon when payable. You further request my opinion as to whether an officer of a trust company can lawfully borrow from its savings department. Section 1 of Chapter 85 of the Public Acts of 1907 provides that "All banks and trust companies maintaining a savings department, or soliciting or receiving deposits as savings, shall invest all such deposits hereafter so received according to the requirements of the statute laws of this State concerning the investment of deposits in savings banks." This law places savings departments of trust companies on the same footing with savings banks in the matter of investing their deposits. And Section 3446 of the General Statutes regulates officers' relationship to investments as follows: "No officer of a savings bank shall be a borrower or surety for a borrower, of any of its funds, or receive any money or valuable thing, for negotiating, procuring, or recommending any such loan from such bank, or for selling or aiding in the sale of any stocks or securities to such savings bank." Therefore, I am of the opinion that an officer of a trust company cannot be a borrower from its savings department. Respectfully submitted, JNO. H. LIGHT, Attorney-General. NATIONAL BANKS CANNOT DEDUCT FROM THE STATE TAX SPECIAL TAXES FOR LOCAL IMPROVEMENTS. HARTFORD, July 26, 1911. HON. COSTELLO LIPPITT, STATE TREASURER, Hartford, Conn. Dear Sir: I have before me the correspondence had with the Birmingham National Bank of Derby, together with the written opinion of counsel for the bank, relative to the right of the bank to deduct a street sprinkling assessment from the tax payable to the State, and note the point in controversy. Chapter 54 of the Public Acts of 1905 imposes upon every national bank an annual tax of one per centum on the market value of each share of its stock, as such value may be determined under the provisions of Section 2332 of the General Statutes, less the amount of taxes paid by such corporation upon its real estate in Connecticut during the year ending on the thirtieth day of September next prior to the time when said tax is made due and payable. Said tax is for public purposes, and it is used to provide for the general expenses of the State; and the local tax on real estate which the law permits the bank to deduct must likewise be for public purposes. The legislature, in effect, has divided the tax imposed on banks between the State and the local governments, giving the latter the tax on real estate. The special assessment for sprinkling streets is a peculiar species of taxation, standing apart from the general burdens im posed for state and municipal purposes, and it is necessarily governed by principles which do not apply universally. In the case of the City of Bridgeport v. New York & New Haven R. R. Co., 36 Conn., 262-263, the Court say: And "It is doubtless true that such an assessment of benefits is an exercise of the taxing power and, in a general sense, a tax. It was so regarded by this Court in Nichols v. Bridgeport, 23 Conn., 207, to which we have been referred. But it is never spoken of in the charters of cities and boroughs, or in the general law, or in popular intercourse, as a tax. although thus strictly and in a general sense a tax, it is one of a peculiar nature. It is a local assessment imposed occasionally, as required, upon a limited class of persons interested in a local improvement; who are assumed to be benefited by the improvement to the extent of the assessment; and it is imposed and collected as an equivalent for that benefit, and to pay for the improvement. It has consequently never been regarded as a tax, or termed such in legislative proceedings, in our public or private laws, or in popular intercourse." The whole theory of a special assessment is based on the doctrine that the property against which it is levied derives some special benefit from the improvement. Chicago, R. I. & P. R. Co. v. Ottumwa, 112 Iowa, 300. Adler v. Whitbeck, 44 Ohio St., 539. Denver v. Knowles, 17 Col., 204. Simpson v. Kansas City, 46 Kan., 138. Daly v. Morgan, 69 Md., 460. On the other hand, the general levying of taxes is understood to be the contribution made to meet the public expense growing out of the administration of the laws for individual protection and the general public good. Therefore, if the contention of the bank be correct, the general public would be called upon to pay for a special benefit to private property out of the general tax fund of the State. It is clear that this claim cannot be supported on principle, or by any authoritative decisions. Such a construction would be likely to render the statute unconstitutional. Judge Swift's rule of construction may be applied in this case: "An equitable construction of statutes is sometimes necessary; so that acts within the law shall not be considered within the meaning, and acts not within the law shall be considered within the meaning." Counsel for the bank gives the statute a more liberal construction, but this is never permissible when opposed to the intention of the legislature. The intent must be allowed to prevail over the letter, and the letter will, if possible, be so read as to conform to the spirit of the act. It is true that the intent of the legislature must be derived from the words used to express it, but, on the other hand, the manifest reason and the obvious purpose of the law should not be sacrificed to the literal interpretation of its words. Brown's Appeal, 72 Conn., 150. Parity of reasoning would lead counsel to claim that any amount of taxes paid on assessments for special purposes, such, for instance, as improving streets or constructing sewers, should be deducted from the State tax. Of course, such reasoning would be untenable. It is well settled that a general exemption from taxation cannot be extended to special assessments for local improvements, such as paving and repairing streets, etc. Cooley on Taxation, (3 R. D. Ed.) Vol. 1, 362. By like reasoning we are led to the conclusion that where the legislature imposes a general State tax, and provides that certain local taxes of a general character may be deducted from the State tax, such right cannot be so extended as to include special taxes for local improvements. For the reasons given, I am of the opinion that the amount paid by the bank as a tax for sprinkling streets cannot be deducted from the State tax imposed under Chapter 54 of the Public Acts of 1905. Respectfully submitted, JNO. H. LIGHT, SUCCESSION TAX-$10,000 EXEMPTION CANNOT BE EXTENDED TO COLLATERALS. HON. WILLIAM H. CORBIN, TAX COMMISSIONER, Hartford, Conn. HARTFORD, July 27, 1911. My dear Sir:- Your favor enclosing a copy of a letter from Charles F. Clarke, Esq., attorney and counsellor at law, is here, and I note that he asks you whether under a proper construction of Section I of Chapter 218 of the Public Acts of 1909, being an amendment to the succession tax law, the ten thousand dollar exemption may not in certain cases extend to collaterals. I am of the opinion that the exemption cannot be so extended. A careful reading of the statute referred to will inevitably lead to this conclusion. The first sentence provides that "the estate of every deceased person, to the amount of ten thousand dollars, when said estate shall pass to the parent or parents, husband, wife, or lineal descendants, or legally adopted child of the deceased person, shall be exempt from the payment of any succession tax" etc. There is no room for construction in this part of the statute; the language is as clear as day. But it further provides that "when a portion of the property passes to or for the use of the parent or parents, husband, wife, or lineal descendants, or legally adopted child of the deceased person, and the remaining portion to collateral kindred or strangers of the blood, or to a corporation, voluntary association, or society, the amount exempted from taxation shall be that proportion of ten thousand dollars which the value of the property passing to these persons mentioned in the first class bears to the total value of the whole estate." For instance, if $4,000 of an estate of $5,000 passes to the persons mentioned in the first class, or lineals, and $1,000 to the persons mentioned in the second class, or collaterals, the $4,000 only gets the benefit of the exemption. This is clearly so, for $4,000 is the proportion of $10,000 which the value of the property passing to the lineals bears to the total value of the whole estate. The legislature intended to make $10,000 the maximum exemption and to limit the exemption in all cases to those persons mentioned in the first class. The practice of your office, under the statute in question, is consonant with my opinion, and I believe it to be correct. Respectfully submitted, JNO. H. LIGHT, SECTION 4899 OF THE GENERAL STATUTES RELATIVE REGISTRATION OF DEVICES ON BOT- HON. MATTHEW H. ROGERS, SECRETARY OF STATE, Hartford, Conn. HARTFORD, July 27, 1911. Dear Sir: You ask my opinion as to whether the requirements of Section 4899 of the General Statutes, relative to "trademarks," extends to the registration of devices on bottles, siphons and boxes. I am of the opinion that said statute cannot be so extended. Chapter 293 of the General Statutes covers three distinct subjects, namely: Trade-Marks, Labels of Trades Unions, and Devices on Bottles, Siphons, and Boxes, and each is subject to separate requirements. Respectfully submitted, JNO. H. LIGHT, |