The question presented in this case is, whether a shareholder in a bank, or banking association, who has been assessed upon the value of his shares therein, pursuant to the act of 1866 (Sess. Laws, 1866, chap. 761), is entitled, at the hands of the assessors, to a reduction of such valuation on account of his debts.
Upon a careful examination of the statute above referred to, in connection with the other statutes of the State on the subject of taxation, I do not think it contemplates the allowance of any such reduction.
The act itself shows that it was intended as a substitute for the then existing mode of assessing and taxing that portion of the property of the State invested in the capital of these moneyed corporations.
It begins as follows: "No tax shall hereafter be assessed upon the capital of any bank, or banking association, organized under the authority of this State or of the United States, but the stockholders in such banks and banking associations shall be assessed and taxed on the value of their shares of stock therein; said shares shall be included in the valuation of the personal property of such stockholder in the assessment of taxes, at the place, town or ward where such bank or banking association is located, and not elsewhere, whether the said stockholder reside in such place, town or ward, or not; but not at a greater rate than is assessed upon other moneyed capital in the hands of individuals in this State."
The reason of this substitution, as no one can doubt, is to be found in the fact that, because of the investment of almost the entire banking capital in the State in the bonds and other securities of the United States, this large amount of personal property was escaping taxation (the banks not being taxable upon that portion of their capital so invested), and that by assessing and taxing the shares of stock in the hands of the *Page 70 stockholders (which are taxable), the entire amount might be reached, and made to bear its proportionate part of the burdens of State taxation.
To regard the act as intended merely to render taxable against individuals a species of property never before taxed, and to leave it to be treated, in reference to taxation, like all other taxable personal property, without any reference to the incidents and limitations which affected the taxation of corporations upon their capital, as the respondent's counsel insists it should be regarded, seems scarcely a correct view to take of it. Such was not, I think, the scope and object of the statute, but, as already intimated, to secure to taxation the entire amount lost by the withdrawal of the capital of the banks therefrom. This is manifested, not only by the history of recent legislation and judicial decision on the subject of bank taxation, but by the provisions of the statute itself. The making of the stock taxable at the place where the bank is located, and requiring the bank to pay the tax from the dividends of the stockholder, if not paid by him, is a strong indication of the object above assigned.
The banks had not the right to reduce the valuation upon which they were taxable, on account of their indebtedness; and there is nothing in the statute under consideration expressly giving the stockholder such right. Reasoning from the plain object of the act, as being, not to reduce the amount of property subject to taxation, but to produce the same amount of taxation in a different way, the inference is, that no such right was intended to be given.
It is insisted, however, that the right is, in effect, given by the provision that the "shares shall be included in the valuation of the personal property of such stockholder in the assessment of taxes," understanding it as a direction to add the value of the shares of stock to the value of all the taxable personal property owned by the stockholder, and then, from the aggregate to deduct his debts, as required by the general statute in regard to the assessment of personal property. (1 R.S., 391, § 9, subd. 4, 1st ed.) *Page 71
This general statute provides (and the special statute for the city of Albany is the same) that the assessors in preparing their assessment roll shall set down in the fourth column thereof "the full value of all taxable personal property owned by such person,after deducting the just debts owing by him." What, then, is "the valuation of the personal property of such stockholder in the assessment of taxes" in which the shares are to be included? Not the value of all his taxable personal property before the deduction of his debts, but the residue which shall remain after such deduction; "the full value * * after deducting the just debts." The assessment of the personal property mentioned is necessarily independent of that of the bank shares, for the valuation of the personal property in which they are to be included is not arrived at until after debts are deducted. Until all deductions on account of debts have been made, there is to be no including of bank shares in the amount. So that, even if we are to understand by the words, "shall be included in," an adding and aggregating of amounts into one, I do not see any opportunity for deducting debts from the value of the shares of stock, the assessment of which is provided for in this act.
But that provision of the act, it seems to me, was intended merely to indicate that the assessors, in making up their assessment roll, should place the value of the shares in the column in which personal property is placed, so that it shall, in the assessment roll, comprise a part of the personal property there represented, not aggregated with the personal property of the stockholder, but separately placed, so as to show its separate amount, and ultimately, when the fifth column comes to be supplied by the supervisors, the amount of tax with which it is separately chargeable. In such way it is embraced, or "included" in the valuation of the stockholder's personal property, in the assessment of taxes. It is true there is no specific direction to keep the amount separate in the roll, and yet it is impossible to carry out the other provisions of the law unless that is done; and there is *Page 72 no reason to be drawn from the act, or the other acts relating to assessments against it.
The meaning of the term "included in," insisted upon by the respondent, cannot be literally followed, for these shares are to be assessed in the place, town or ward where the bank, or banking association is located, without reference to the residence of the stockholder. Unless he resides at the place where the bank is located, he will have no valuation of personal property there to which they can be added; and, applied to such cases, the language must mean that they shall be comprised in the valuation of personal property upon the roll, and assessed to the stockholder, though not a resident.
Again, by the sixth section of the act, it is made the duty of the bank to retain from the dividends of the stockholder, so much as may be necessary to pay the taxes assessed upon his stock pursuant to the act. It is necessary to the performance of this duty, that it shall appear what tax has been assessed, distinctively, upon the stock; and hence the necessity of a separate statement of its value by the assessors, and a separate carrying out of the tax by the supervisors. The incongruity of the right claimed with this provision is manifest. If, when the stockholder resides at the place where the bank is located, the stock is to be mixed with his other taxable property, and then his debts deducted, how can it be ascertained what tax remains unpaid upon his stock, so that the bank can pay it, and deduct it from his dividend? If, in the ward where the bank is located, and in which the stockholder does not reside, as in the present case, he has stock assessed, for example, at $5,000, while in his own ward his personal property is assessed at $5,000, and he comes before the assessors and shows that he is entitled to a deduction for debts to the amount of $7,000, so that the value of the personal estate owned by him, including his stock, after deducting his debts, etc., does not exceed $3,000, which assessment is to stand? At which place is he to be taxed upon this amount? The want of any provision on the subject, so plainly necessary if the right claimed exists, indicates a want of intention to recognize and allow it. *Page 73
The words used in the act to impose the tax, are, "but stockholders in such banks and banking associations, shall be assessed and taxed on the value of their shares of stock therein." This language is not consistent with the claim of the respondent, that they shall be taxed on the value, after deducting debts.
The general statute (1 R.S., 389, § 5, 1st ed.) provides that "every person shall be assessed in the town or ward where he resides where the assessment is made, for all personal estate owned by him." "Assessed for all personal estate owned by him," is, by subdivision 4 of section 9, construed to mean all his "taxable personal property, after deducting the just debts owing by him" — that is, the net personal estate, what a man is worth exclusive of his lands and other property not taxable, is what the general law intends to tax him upon, as personal property. The different language used in the act under consideration, is significant of a different intent in regard to this specific kind of property; "shall be assessed and taxed on the value," devotes the whole value to taxation, without reduction for debts, as has ever been the policy of the State in reference to the property which this is made to represent, and in perfect accordance with what we have seen to have been the object of the statute.
The view above taken does not at all conflict with the provision in the act that the shares shall not be assessed "at a greater rate than is assessed upon other moneyed capital in the hands of individuals in this State." This clause in the act is adopted from the forty-first section of the act of congress, passed June 3d 1864, known as the National currency act, and inserted for the purpose of conforming the taxation directed by this to the requirements of that act. The clause in that act has just received a construction in the Supreme Court of the United States, in the case of The People ex rel. Duer v. TheCommissioners of Taxes, etc., and is there held to mean "that no greater proportion or percentage of tax on the valuation of the shares should be levied than upon other moneyed taxable capital in the hands of the citizens." This *Page 74 is in accordance with the view of this court in the same case, as expressed in the opinion of the court, delivered by the chief judge. So that the fact that the assessment of this property is not subject to reduction for debts, while the assessment of other taxable personal property is, is no contravention of the restriction contained in the act.
For the reasons above assigned I am of the opinion that the order appealed from should be reversed, with costs.
PORTER and BOCKES, JJ., dissent.
Order reversed. *Page 75