Hills v. National Albany Exchange Bank.

every community. It does not help the validity of the law for us to declare that it is pro tanto void, and in fact make a new law for the State. Its validity must be decided by its actual form and terms. If these cannot stand the law is void.

In an action by a National bank against the State tax officers, in behalf of its shareholders, to enjoin the collection of a State tax on the shares of the bank alleged to be unlawful on the ground that indebtedness was not deducted, held (1), that such a suit was maintainable; (2) that an injunction would lie in behalf of a shareholder who was entitled to a deduction and who had made the affidavit and demand therefor required by the State law; and (3) it being clearly shown that an affidavit and demand would have been unavailing, that shareholders might be permitted to show in the action the deductions to which they were entitled and the collection of the amount of such deductions would be enjoined.

A

case.

PPEAL from the Circuit Court of the United States for the Northern District of New York. The opinion states the

MILLER, J. This is an appeal from a decree in chancery of the Circuit Court for the Northern District of New York, and it presents very much the same questions that have just been decided in the case of Supervisors of Albany County v. Edward Stanley. That was a common-law action to recover for taxes unlawfully exacted for years prior to 1879 on shares of the National Albany Exchange Bank, and the present suit was brought to enjoin the appellants from collecting a similar tax assessed and yet unpaid for that year. In this case the bank sued in right of and as representing all the stockholders, and the Circuit Court made a decree perpetually enjoining the collection of all taxes on shares of said bank. Several questions are raised or rather sug

Reversing 2 Nat. Bank Cas. 456.*

Hills v. National Albany Exchange Bank.

gested which we think have heretofore been decided by this court, such as the right of the bank to maintain a suit on behalf of its shareholders. This was established by the cases of Cumming v. National Bank, 101 U. S. 153; 2 Nat. Bank Cas. 74; Pelton v. National Bank, 101 U. S. 143; 2 Nat. Bank Cas. 85. There is also an attempt to show that there was a settled rule or purpose on the part of the assessors to value the shares of the appellee bank higher in proportion to their real value than in the case of other banks, bankers and moneyed corporations. We think the proof fails to establish this in a manner to justify the interference of a court of equity. National Bank v. Kimball, 103 U. S. 732, p. 9. The bill however in its main feature asserts the right to an injuno tion, on the ground that the act of 1866, under which the bank shares were assessed, is absolutely void because it makes no provision for deduction from the assessed value of these shares, of the debts honestly owing by the shareholders. And the court, proceeding upon the idea that both the statute and the assessment made under it are absolutely void, decreed relief accordingly. Under the ruling just made on that subject this decree must of course be reversed, because as to the larger number of the shareholders whose taxes are enjoined, there is no evidence that they owed any debts whatever at the time the assessment was made.

The allegations of the bill on this subject are: 1. That one shareholder owning five hundred and thirty-two shares of the stock made affidavit that the value of personal estate owned by him, including said bank shares, after deducting his just debts and other investments not taxable, did not exceed one dollar, and presented said affidavit to the board of assessors, with a demand that they should reduce the assessment of his shares accordingly, which was refused. The evidence shows this to have been Mr. Chauncey P. Williams.

2. The further allegation of the bill on that subject is that other shareholders were indebted to an amount equal to or in excess of the personal property owned by them, including their bank shares, but omitted to make affidavit and demand the proper reduction, because they knew such demand would be refused by the board, both from information of their refusal in other cases, and from knowledge of the decisions of the Court of Appeals of New

Hills v. National Albany Exchange Bank.

York that they had no authority to make such deduction. This allegation is also supported by the evidence of four or five shareholders who are represented in this action.

While the decree of the court enjoining the collecting officers as to all the tax assessed on the shares of this bank must be reversed, the question arises, what shall be done with the cases in which it appears that there are shareholders taxed who owed just debts entitled to deduction.

With regard to the case of Mr. Williams, we have no doubt that there should be an injunction to the amount of his tax. He made the requisite affidavit and the proper demand for deduction, and his affidavit shows that no assessment should be made on his shares. He has not yet paid the money and is entitled to relief by injunc tion.

A more difficult question is presented in regard to those who made no affidavit or demand for deduction, but who have shown that they would have been entitled to deduction if the demand had been properly made. The question is, whether the fact clearly established that their demand would have been unavailing dispensed with the necessity of making the affidavit and demand. It is a general rule that when the tender of performance of an act is necessary to the establishment of any right against another party, this tender or offer to perform is waived or becomes unnecessary, when it is reasonably certain that the offer will be refused — that payment or performance will not be accepted. Such is the doctrine established by this court in repeated decisions in regard to another branch of the law concerning the collection of taxes. Bennett v. Hunter, 9 Wall. 326; Tacey v. Irwin, 18 id. 549; Atwood v. Weems, 99 U. S. 183.

Without elaborating the matter we are of opinion, that considering the decision of the Court of Appeals of New York, the action of the assessors in the case of Mr. Williams, and their own testimony in this case, it is entirely clear that all affidavits and demands for deduction which could or might have been made would have been disregarded and unavailing, and that the assessors had a fixed purpose, generally known to all persons interested, that no deductions for debts would be made in the valuation of bank shares for taxation. It is therefore not now essential to show

Evansville National Bank v. Britton.

such an offer when it is established that there were debts to be deducted and when the matter is still in fieri, the tax being unpaid. And we are of opinion that it is open to the court below when this case returns to permit such amendment of the pleadings as will enable plaintiff to make proper allegations on that subject, or by reference to a master to allow each shareholder to establish the amount of deduction to which he was entitled at the time of the assessment, and to enjoin the collection of a corresponding part of the tax. But as the assessment is not void, but only voidable, it must stand good for all of the assessment in each case which is not shown to be in excess of the just debts of the shareholder that should be deducted.

The decree of the Circuit Court is reversed, and the case remanded for further proceedings in accordance with the opinion. Decree reversed.

The Indiana statute relating to taxation provides that a tax payer may, in estimating his taxable property, deduct his indebtedness from his "credits or money at interest; ""all other demands against persons or body corporate; " "total amount of all credits."

Held, that the shares in a National bank, subjected to State taxation, were entitled to a deduction of indebtedness, and an injunction would lie to restrain the collection of a tax upon such shares where such deduction was not allowed.

A

PPEALS from the Circuit Court of the United States for the District of Indiana. The opinion states the case.

MILLER, J. These are cross-appeals from a decree of the Circuit Court for the District of Indiana, rendered in a suit in chan-cery, in which the Evansville National Bank was complainant and Britton, as treasurer of Vanderburgh county, was defendant.

The case is in all essential points analogous to that of Hills v. National Albany Exchange Bank, just decided, ante.

*Affirming 18 Fed. Rep. 867.

Evansville National Bank v. Britton.

And the principal question of law is the same as that discussed and decided in the case of Supervisors of Albany v. Stanley. In fact the three cases were advanced out of their order, and heard consecutively, because they involved important questions concerning taxation by State statutes of the shares of National banks, and the argument, able and exhaustive throughout, has been almost wholly directed, on the part of the banks, to establish the proposition, that where the law of the State either makes or permits a discrimination operating only against a particular class of holders of National bank shares, in the manner of assessing those shares as regards other moneyed capital in the State, all the laws for such assessments are void, and all such assessments are absolutely void, and no tax on National bank shares can be collected in the State.

The brief of counsel in this case in various forms repeats the idea that the bill was brought, not so much to assert the rights of stockholders who may have been injured by the enforcement of the statute, as to obtain a judicial declaration of this court that the act is void, and the attempt to tax the shares of the bank equally so.

We have rejected this proposition in the case of The Supervisors against Stanley, and have there given our reasons for it, and shall not repeat them here.

The objection made to the Indiana statute is the same as that made against the New York statute,` namely, that it permitted the tax payer to deduct from the sum of his credits, money at interest, or other demands, the amount of his bona fide indebtedness, leaving the remainder as the sum to be taxed, while it denies the same right of deduction from the cash value of bank shares.

A distinction is attempted to be drawn between the Indiana statute and the New York statute, because the former permitted the deduction of the tax payer's indebtedness to be made from the valuation of his personal property, while in Indiana he can only deduct it from his credits. And undoubtedly there is such a difference in the laws of the two States. But if one of them is more directly in conflict with the act of Congress than the other, it is the Indiana statute. The subject of taxation from which the VOL. III-7.