Scobee v. Bean

Opinion op the court by

CHIEF JUSTICE HAZELRIGG

Reversing.

In September, 1899, the appellees, Ilean and cithers, were the owners of certain -shares of stock in the Clark County National Bank. The assessor of that county, in virtue of the general revenue laws of the State, assessed these shares for taxation at their fair cash value, in the hands of the various- owners. When the sheriff, in due course, was about to collect the tax, this suibwa-s brought to prevent him, on the ground that shares of stock in national banking associations in Kentucky are not assessable or *529taxable, because tbe Legislature bias not determined and directed the manner and place of taxing such shares. The chancellor upheld the plaintiff’s contention, and the sheriff has appealed.

It is to be noted at the outset that this species of property can not be taxed within the various States except as permitted by Federal law, and the statute so permitting and by which we are to be guided (Rev. St. U. S. section 5219), is as follows: “Nothing herein shall prevent all the shares in any association from being included in the valuation of the personal property of the owner or holder of such share, in assessing taxes imposed by authority of the State within which the association is located; but the Legislature of each State may determine and direct the manner and place of taxing all the shares of national banking associations located within the State, subject only to the two restrictions, that the taxation shall not be at a greater rate than is assessed upon moneyed capital in the hands of itisdivid-ual citizens of such State, and that the shares of any national banking association owned by non-residents of any State shall be taxed in the city or town where the bank is located, and not elsewhere. Nothing herein shall be construed to exempt the real property of associations from either State, county or municipal taxes, to the same extent, according to its value, as other real property is taxed.” As, admittedly, the assessor has included the shares of stock in question in the valuation of the personal property of their owners, the question is narrowed down to this: Had the Legislature in 1899 determined or directed the manner and place of taxing shares in national banking associations? And, if we answer this question in the af*530firmative, then a second question is presented, namely: Does the law thu® provided by the Legislature discriminate against national bank shares, by requiring them to be taxed at a greater rate than is assessed upon moneyed capital in the hands of individual citizens of the State?

Touching the first question, it is admitted by appellant that our revenue .statutes do not designate this character or class of property, eo nomine, for taxation; but section 4020, Kentucky Statutes, thus provides: “All real and personal estate within this State and all personal estate of persons residing in this State; .and of all corporations organized under the laws of this State, whether the property be in or out of this State, including intangible property, which ishall be considered and estimated in fixing the value of corporate franchises as hereafter provided, shall be subject to taxation unless the same be exempt from taxation by the Constitution, and shall be assessed at its fair cash value estimated' at the price it would bring at a fair voluntary sale.” Section 4022 further provides: “For the purposes of taxation, real estate shall include all lands within this1 State and improvements thereon; and personal estate shall include every other species and character of property — that which is tangible as well as that which is intangible.” By sections1 4047 and 4052 the taxpayer is required to list, under oath, all and every species of property belonging to him or in his possession, subject to taxation, on the 15th day of September of each year, and be bound for the tax. Section 4050 provides thus: “Personal property of every kind shall be separately stated and valued in the appropriate column of the tax-book herein provided, and if there be no appropriate column, it shall be valued and stated in. the column headed ‘Miscellany.’ ” Item 10 of the schedule provided by sec*531tion 4058 reads thus: “(10) Amount of stock in joint stock companies or associations of this State not paid on by the company or association.” That this' language is intended to make a distinction, not between national and State corporations, but merely between resident and foreign ones, is shown by the next item (No. 11), which reads: “Amount of stock in foreign corporations.” And the schedule (section 4058), after an elaborate enumeration, provides the following as the first item under “Miscellany:” “(74) Value of all property not mentioned above.” If, as contended by the appellees, and, indeed, as seems to be settled by a number of cases' — notably, in Owensboro Nat. Bank v. City of Owensboro, 173 U. S., 664; (19 Sup. Ct., 537); (43 L. Ed., 850) -the association is not taxable directly or on its franchise, then our statutes, by necessary implication, require the stockholder to list his shares of stock for taxation; for by section® 4085 and 4088 the individuals owning shares of stock in corporations which are required to list property are not required to list it so long as the corporation does so. This means, necessarily, that, if the corporation does not list the property and pay the tax, the individual must do so. We think the various statutes are sufficiently broad to constitute a legislative determination and direction of the manner and place of taxing every species of personal estate to be found in the State, and under them such estate is to be taxed, unless by more specific provisions it is to be taxed otherwise; and as the statutes which were intended to apply to the taxation of banking associations and bank stocks, including national banks, have been held void as to national banks, it follows that there is no specific provision for the taxation of the species of personal property in question, and its taxation must be held to be regulated by general law. It *532is argued by counsel for appellees, in this connection, that these general revenue laws were not intended to apply to the taxation of bank stock, and as the particular law under which it was intended such stock was to be taxed has been held to be ineffectual and void as to shares of stock in, national banks, there is no law at all under which such shares can be taxed. But it is to be noticed that the general laws are merely declaratory of the requirements of the Constitution (section 174), which declares that “all property, whether owned by natural persons or corporations, shall be taxed in proportion to its value, unless exempted’;” and while the general provisions of our statute were not intended, perhaps, to be the particular provisions under which bank stocks were in fact to be assessed, still the general provisions, constitutional and statutory, lie at the foundation of the authority to tax, and are- sufficiently specific to ..authorize the taxation of every species of moneyed capital in the State.

With respect to the ¡second question, it is to be observed that there is no averment that, as matter of fact, the shares cf appellees have been taxed at a greater rate than other moneyed capital. Still, if the law under which they have been assessed is of such a character as that discrimination against 'this kind of moneyed capital necessarily results, then the Legislature has not provided such a law for the taxation of such shares as is permitted by the act cf congress in the section of the law quoted above1. We think that here there is no serious difficulty. Admittedly, if the very terms of the Federal statute are to be observed, the correct method of taxing these shares has been adopted. The shares of the banking association have been assessed in the names of the shareholders, and, as required *533by that statute, have been included in the valuation of the personal property of the various shareholders. It is not material to the matter in issue if the method of taxing other moneyed capital or other bank stocks is different from that followed in the taxation of shares in national banks. It does not follow that a different method for taxing national bank shares, will result in their taxation at a greater rate than that imposed on other bank shares. I't may result in taxing them at a less rate. We understand the law as announced by the United States Supreme Court to be that no inquiry will be made into the method a State might adopt for taxing its “other moneyed capital,” so long as its laws do not discriminate against the moneyed capital which is evidenced by shares in national banks. Mercantile Bank v. City of New York, 121 U. S., 138; (7 Sup. Ct., 826); (30 L. Ed., 895); Davenport Nat. Bank, v. Davenport Board of Equalization, 123 U. S., 83; (8 Sup. Ct., 73); (31 L. Ed., 94.) In this; State the taxation of other banking institutions is by the imposition of a franchise tax. Section 4077, Kentucky Statutes. The Value of the franchise is fixed by the board of valuation and assessment. The data for fixing it are furnished by reports made by these institutions to the auditor of public accounts. In these reports various facts are to be stated. For example: “The amount of capital stock, preferred and common; the number of shares of each; the amount of stock paid up; the par and real value thereof; the highest price at which .such stock was sold at a bona fide sale within twelve months next before- the date of assessment; the amount of surplus fund and undivided profits and the value of all other assets; the total amount of indebtedness as principal; the amount of gross. *534or net earnings or income, including interest on investments and incomes' from; all other sources for twelve months nest before date of assessment the amount, kind and value of taxable property in this State,” etc. From these reports the board fix the value of the capital stock, and it is manifest that it is largely a matter in their discretion and judgment what that value shall be. From their valuation of the capital stock is to be deducted the assessed value of the tangible property, and the remainder will be the value of the franchise. It can not be said that this method of assessment and taxation will necessarily result in a discrimination against national banks; and, if not, then if, as a matter of fact, in any given case, a discrimination results, it must be averred and established as any other fact, which, as we have seen, is not done here.

In our opinion; the assessment of the shares in question was properly made, and the taxes thereon are collectible in the manner sought in this case. Whereupon the judgment is reversed, and the cause remanded for proceedings consistent herewith.