The important question, which this appeal brings up for our consideration and which, if decided in *Page 54 accordance with the view taken in the court below, will dispose of the whole case, is whether the surplus fund held by a savings bank in this state is liable to taxation, or not. The opinion of Mr. Justice HIRSCHBERG, at Special Term, upon which the justices of the Appellate Division have, in the main, rested their affirmance of this order, very fully and satisfactorily covers the ground of discussion; but, because of the importance of the case, I think that our reasons for affirming the order should be stated. It is quite apparent that the question is of very considerable importance; inasmuch as the aggregate of the amounts of surplus funds held by the savings banks of this state is upwards of one hundred millions of dollars and their exemption from taxation, necessarily, affects, materially, the body of taxpayers. Its decision turns upon the construction to be given to the provisions of the statute under which exemption from liability is claimed. That construction is not to be influenced by considerations other than those which may tend to elucidate the purpose of the law and which bear upon its just interpretation. All property, by the "Tax Law" of this state, is made liable to taxation; except so far as it is expressly exempted by law. That is the general rule and, in order that any property shall be taken out of its operation, the legislative enactment depended upon for exemption must be in unmistakable terms. No person, or property, is impliedly exempt from taxation and it is the rule that where exemption is claimed the statute is to be strictly construed against the claimant.
With the rule in view, which is applicable to the construction of the statute in question, let us consider the provision for exemption. It was, originally, contained in section 4 of chapter 456 of the Laws of 1857, and is now embodied in subdivision 14 of section 4 of chapter 908 of the Laws of 1896, which is known as the "Tax Law." The exemption clause reads as follows: "The deposits in any bank for savings which are due depositors, the accumulations in any domestic life insurance corporation, held for the exclusive benefit of the insured, other than real estate and stocks, now *Page 55 liable for taxation; and the accumulations of any incorporated co-operative loan association upon the shares of such association held by any person." Does this language warrant the view that the legislature, by the language, "the deposits in any bank for savings which are due depositors," intended the exemption to apply to only such amounts as were credited on the books of the bank to depositors and which were immediately demandable by them? Did it intend, thereby, that the surplus fund held by the bank should be the subject of local taxation? Referring to those provisions of the Banking Law, which govern savings banks, we will ascertain what is the status under the law of a savings bank and what are its obligations to its depositors. Section 105 of the Banking Law, (Chap. 689 of the Laws of 1892), authorizes the corporation to receive deposits of money, to invest the same and to declare dividends thereon, and to prosecute the business of a savings bank only as provided in the statute. By section 113, it is provided that the sums deposited, together with the dividends, or interest, credited thereto, shall be repaid to the depositors, after demand, under regulations to be prescribed by the board of trustees. Section 123 provides that the trustees shall regulate the rate of interest, or dividends, not to exceed five per centum upon the deposits, "in such manner that depositors shall receive as nearly as may be, all the profits of such corporation, after deducting necessary expenses and reserving such amounts as the trustees may deem expedient as a surplus fund for the security of the depositors, which, to the amount of fifteen per cent of its deposits, the trustees of any such corporation may gradually accumulate and hold, to meet any contingency or loss in its business from the depreciation of its securities or otherwise." It is further therein provided that, "the trustees of any such corporation whose surplus amounts to fifteen per cent of its deposits, at least once in three years, shall divide equitably the accumulation beyond such authorized surplus as an extra dividend to depositors, in excess of the regular dividends authorized." Further, by other provisions, in the event of the dissolution of the corporation, *Page 56 (Secs. 133, 134, 135), the moneys not paid to depositors must be paid to the superintendent of banks, to be by him distributed, under direction of the Supreme Court. These provisions seem to make it clear that every interest in the properties held by a savings bank is vested in the depositors and that the bank can acquire no interest therein. I think that section 123 can only be regarded as declaratory of the ownership of all the funds by the depositors. They are to receive all the profits; except that expenses are to be deducted and that there may be accumulated a surplus for their security. Such a corporation has neither capital nor shareholders, and its only resources are the moneys of depositors and the income which may be received from investments. The bank, necessarily from the statutory provisions, must be deemed to hold what property it has for the benefit of depositors only. It manages the same through its trustees and officers, and under no circumstances, and in no event, does it, or do its trustees, acquire any interest therein.
The assessment in this case, necessarily, proceeded upon the theory that the surplus fund belonged to the bank itself and that what was due to its depositors was only the aggregate of the sums credited to them on their pass books. That is the position of the appellants and they endeavor to support it by the argument that, as the depositors' accounts can be closed at any time and as they can only demand that which stands to their credit on the books, it must, therefore, follow that as to the surplus fund the bank is not their debtor. This argument depends upon a narrow reading of the exemption clause and fails to take into consideration the legal status of the savings bank and of its depositors. The bank neither earns, nor holds, anything for itself, or for its trustees; but holds everything for the depositors. The fact that the surplus represents accumulations, and may not be immediately paid out, cannot affect the question of the ownership of the property. The word "deposits," used in the statute of exemption, means, by a just interpretation, the total amount received for which the bank is accountable and not merely the identical moneys received *Page 57 from particular depositors. The surplus, which has accumulated, is a part of a fund which represents the original deposits and its creation is authorized in contemplation that it may be needed to be used to repay the depositors the amounts put in by them. (Lewis v. Lynn Institution for Savings, 148 Mass. 235;Matter of Suffolk Savings Bank, 149 ib. 1; Huntington v.Savings Bank, 96 U.S. 388.) These cases, to which the learned counsel for the respondent refers us, clearly sustain these propositions. It is difficult to see upon what theory the appellants' contention could be sustained, that only the actual deposits, which are returnable to depositors upon demand, are exempt from taxation. The surplus does not belong to the bank; for it holds it for the security of the depositors; to whom it is due contingently upon the occurrence of circumstances requiring its payment to them. If it is an asset, it is, at the same time, to be treated as a liability of the bank. The clause in question evidently regards "deposits" in savings banks in the same light as it does the accumulations of life insurance companies, or of loan associations, and no greater reason exists for taxing the reserves of savings institutions, than those of the other institutions mentioned.
We are, in nowise, embarrassed by our previous decisions, in the cases of the New London Savings Bank and the GrotonSavings Bank (135 N.Y. 231; 154 ib. 122). In the New LondonSavings Bank case, where the assessment was made upon shares of the capital stock of banks in New York city, standing in the name of the bank, a Connecticut corporation, the views of Judge EARL, who delivered the opinion which is reported, would certainly support the view which is contended for by the appellants. But only one other member of the court concurred with him in his opinion; while the remaining members of the court concurred in the result and refused to express any opinion upon the question of the taxation of deposits. In the subsequent case of theGroton Savings Bank, also a Connecticut corporation, where the assessment was, also, upon that part of the surplus which was invested in the shares of capital stock of New York city banks, *Page 58 the prior case was referred to and it was observed of it that there was nothing there to show that the depositors had any interest whatever in the surplus; or that they could ever be entitled to it. Judge O'BRIEN, who delivered the opinion of the court in the latter case, considered the provisions of the Connecticut statute and observed that it was apparent therefrom that the profits of savings banks belong in equity to the depositors and are a part of the deposits, in the same sense that the stipulated interest is, or may be. He said that the surplus was within the equity of the statute exempting depositors of savings banks from taxation, and that "this surplus fund is a debt, or obligation, due to depositors, just as much as the accumulated interest stipulated to be paid to them. There is no more reason, under these circumstances, for taxing the surplus fund of a savings bank than the accumulations of a life insurance company held for the exclusive benefit of the assured." Neither of these cases may be regarded as concluding us upon this appeal; but the reasoning of the opinion in the latter case, by reason of the general likeness of the particular features of the Connecticut statute to ours, is quite applicable.
There is another view, which favors the conclusion I think we should reach in holding the surplus fund of a savings bank to be exempt from taxation. By chapter 761 of the Laws of 1866 (Sec. 7), the privileges and franchises of a savings bank were made liable to local taxation, "to an amount not exceeding the gross sum of their surplus earned." Chapter 861 of the Laws of 1867, amended the act of 1866, as to its 7th section, by allowing the deduction from the surplus of the amount invested in United States securities. Both of these statutes were repealed by chapter 371 of the Laws of 1875; but, in 1882, chapter 402 of the laws of that year repealed the act of 1875 and the act of 1866; but did not, in terms, repeal the act of 1867. The appellants contend that, as a result, the act of 1867 was revived. I do not think that such was the result; inasmuch as the repeal of the act of 1866, which created the liability to taxation, could hardly be said to have left the *Page 59 amendatory act of 1867 in force as an independent enactment. But, however that may be, the revision of the Banking Law, in 1892, and of the Tax Law in 1896, superseded, as the entire statute law upon the subject, all antecedent provisions affecting savings banks, under the established rule of construction. (Matter ofNew York Institution, 121 N.Y. 234.) Article III of the Banking Law relates exclusively to savings banks; but contains nothing which indicates a revival of the statute of 1867; while section183 of the Tax Law expressly exempts savings banks from the payment of a tax on their privileges and franchises. It seems to be a fair, if not a plain inference, from the course of legislation referred to, that, while the legislature at one time authorized the local taxing authorities to reach the surplus held by savings banks, in subsequently withdrawing that authorization, it must be regarded as adopting a policy of non-taxation in the case of savings institutions. The purpose to allow local taxation, for the benefit of the community, is to be deemed abandoned. It is to be presumed that considerations of public policy have dictated the exemption and that the legislative body has been actuated by the motive of assuring the protection of depositors against the contingencies of losses, or of depreciation in values. The only apparent reason for questioning the policy of such exemption is in the magnitude of the amount of property affected; but that is a reason which must be left to the consideration of the legislature and which does not bear upon the construction of the law.
I think the order appealed from should be affirmed, with costs.
All concur (MARTIN. J., in result), except PARKER, Ch. J., not voting.
Judgment and order affirmed. *Page 60