National Bank of Gloversville v. Johnson.

The specific power given to National banks (R. S., § 5, p. 136), is "to carry on the business of banking by discounting and negotiating promissory notes, drafts, bills of exchange and other evidences of debt." So that the discount of negotiable paper is the form according to which they are authorized to make their loans, and the terms "loans " and "discounts" are synonyms. It was

so said in Talmadge v. Pell, 7 N. Y. 328; and in Niagara County Bank v. Baker, 15 Ohio St. 68, the very point decided was that "to discount paper, as understood in the business of banking, is only a mode of loaning money with the right to take the interest allowed by law in advance."

But whether loans and discounts are identical, in the sense of section 5197, or not, is quite immaterial, for both are expressly made subject to the same rate of interest. And unquestionably the transfer of the notes, which forms the basis of this controversy, if not a loan was a discount.

The contention of the plaintiff in error, that under this section whatever by the law of the State is lawful to natural persons in acquiring title to negotiable paper by discount is lawful for National banks, cannot be sustained, and derives no countenance, as is argued, from the decision in Tiffany v. National Bank, 18 Wall. 409; 1 Nat. Bank Cas. 90. All that was said in that case related to loans and to the rate of interest that was allowed thereon; and it was held that where by the laws of a State in which a National bank was located one rate of interest was lawful for natural persons and a different one to State banks, the National bank was authorized to charge on its loans the higher of the two. The sole particular in which National banks are placed on an equality with natural persons is as to the rate of interest, and not as to the character of contracts they are authorized to make; and that rate thus ascertained is made applicable both to loans and discounts, if there be any difference between them. It is not intimated or implied that if in any State a natural person may discount paper, without regard to any rate of interest fixed by law, the same privilege is given to National banks. The privi lege only extends to charging some rate of interest allowed to natural persons, which is fixed by the State law.

If it be said that the rate is allowed by the law of the State,

National Bank of Gloversville v. Johnson.

when it permits the parties to reserve and receive whatever they may agree upon, then the section furnishes the conclusive answer that "when no rate is fixed by the laws of the State, etc., the bank may take, receive, reserve or charge a rate not exceeding seven per centum." So that the transaction in question, in either aspect, is within the prohibition of the statute, and subjects the bank to the penalties sued for.

The conclusion is confirmed by the provision which declares that "the purchase, discount or sale of a bona fide bill of exchange, payable at another place than the place of such purchase, discount or sale, at not more than the current rate of exchange for sightdrafts in addition to the interest, shall not be considered as taking or receiving a greater rate of interest." Here the purchase, discount and sale of bills of exchange are classed as one, and subject to the same rule and rate of interest. In section 5198, the forbidden transaction for which the penalties are prescribed, is spoken of as usurious; but this reference is to the prohibitions of the preceding section, and not to the laws of the State.

In the present case the paper was transferred by an indorsement, imposing the ordinary liability upon the indorser. It may perhaps be distinguished from cases where the title to the paper is transferred by an indorsement without recourse, or by mere delivery. The advance in such cases, to the previous holder, of the agreed consideration, can hardly be considered a loan, for the relation of debtor and creditor as between them is not created by the transaction, if made, as supposed, in good faith and not as a cover for usury. Whether it be a discount, within the meaning of the sections we have considered, and therefore subject to the same rule as to the rate of interest at which it may be discounted, which we have decided to be applicable to the transaction described in the present case; and if not, but is to be treated as a purchase of the paper, lawful at any proportion which the price paid bears to the amount ultimately payable by the parties to it, whether in that case National banks are authorized by the law of their organization to acquire title to it in that way, are questions which do not arise in this case, and upon which we express no opinion.

We find no error in the judgment, and it is accordingly affirmed. Judgment affirmed.

The personal assets and personal property of an insolvent National bank in the hands of a receiver appointed by the Comptroller of the Currency, in accordance with the provision of section 5234 of the United States Revised Statutes, are exempt from taxation under State laws.

A

PPEAL from Circuit Court, Eastern District of Missouri.

Leverett Bell, for appellant.

J. M. Krum & C. H. Krum, for appellee.

WAITE, C. J. The single question in this case is, whether the personal assets and personal property of an insolvent National bank in the hands of a receiver appointed by the Comptroller of the Currency in accordance with the provision of section 5234 of the Revised Statutes are exempt from taxation under State laws; and we have no hesitation in saying that in our opinion they are.

Such property and assets, in legal contemplation, still belong to the bank, though in the hands of a receiver, to be administered under the law. The bank did not cease to exist on the appointment of the receiver. Its corporate capacity continues until its affairs are finally wound up and its assets distributed. Bank of Bethel v. Pahquioque Bank, 14 Wall. 398; 1 Nat. Bank Cas. 77; Kennedy v. Gibson, 8 Wall. 506; 1 Nat. Bank Cas. 17; Bank v. Kennedy, 17 Wall. 21; 1 Nat. Bank Cas. 77. If the shares have any value they are taxable in the hands of the holders or owners under section 5219 of the United States Revised Statutes, but the property held by the receiver, is exempt to the same extent it was before his appointment.

The decree of the Circuit Court is affirmed.

Decree affirmed.

Supervisors of Albany v. Stanley.

SUPERVISORS OF ALBANY V. STANLEY.

(105 U. S. 305.)

Taxation by State — constitutionality.

In a statute which contains invalid or unconstitutional provisions, capable of separation from the valid, only the former are to be disregarded.

A statute of New York in relation to taxation required the assessors to assess to each tax payer his real estate at its value and his personal estate at its full value after deducting debts owed by him. It further provided that if before the assessments are completed he shall make affidavit, "that the value of the personal estate owned by him after deducting his just debts, and his property invested in the stock of any corporation liable to be taxed therefor, does not exceed a certain sum to be specified in the affidavit, it shall be the duty of" the assessors to value such personal estate at the sum specified in such affidavit and no more. Another statute provided that shareholders in National and other banks should be assessed on the value of their shares, but a deduction of their indebtedness was not allowed. The Federal statute permits shares in National banks to be taxed by a State only at the same rate as other money capital of the citizens of the State.

Held, that the statute in relation to taxing shares of National banks was a valid rule of assessment for the shareholders of such banks having no debts to deduct, not being in conflict with the Federal statute in respect to such shareholders.

Held also, that in the absence of the affidavit above provided for, assessors had authority to assess a shareholder in a National bank the full value of his shares.

IN

N error to the Circuit Court of the United States for the Northern District of New York.

MILLER, J. This is a writ of error to the Circuit Court for the Northern District of New York, in which Stanley, the defendant in error, recovered a judgment against plaintiffs in error for taxes exacted and paid under legal process on shares of the stock of the National Albany Exchange Bank. A large number of the shareholders of the bank who had paid this tax made an assignment of their claims to Stanley, and he recovered a judgment in the action for the sum of $61,991.20, with interest and costs.

The ground of this recovery was that the statute of New York, under which the shares of the bank were assessed, was void, because it did not permit the shareholder to make deduction of the VOL. III-5.

Supervisors of Albany v. Stanley.

amount of his debts from the valuation of the shares of the stock owned by him, in ascertaining the amount for which the shares should be taxed.

The pleadings in the case set out the sums paid by the stockholders and their names, and their assignment to Stanley, the payment under compulsion of legal process, and a demand for the repayment on the Albany county authorities.

The case was submitted to the court on a waiver of trial by jury, and on the finding of facts and conclusions of law thereon by the court, judgment was rendered for plaintiffs. The facts found by the court are thus stated:

"First. That the allegations of the complaint in regard to the citizenship of the plaintiff, the citizenship and powers and liabilities of the defendant, the organization and capital of the National Albany Exchange Bank, the ownership of the shares of capital stock of the National Albany Exchange Bank, the assessment of the stockholders in said bank, named in said complaint, by the board of assessors of the city of Albany, the names and residences of said stockholders, the collection of taxes from said stockholders and the payment of the same to the county treasurer of the county of Albany, and the demand made by Chauncey P. Williams, before the commencement of this action, of the treasurer of the county of Albany, are true as therein set forth.

"Second. That the amounts collected from the said stockholders and paid to the treasurer of the county of Albany, and the times when the said amounts were so paid to said treasurer, were as follows, to-wit:

"Third. That the sums above named were not paid voluntarily by said stockholders, but were forcibly collected by the marshal of the city of Albany, under a warrant issued to such marshal by the receiver of taxes of said city, pursuant to a warrant issued to said receiver of taxes by the board of supervisors of the county of Albany, by levying upon the property of the said stock. holders respectively, as alleged in said complaint.

"Fourth. That the said assessments were made and said amounts collected and received by the treasurer of the county of Albany, as above stated, under