may have rather been assumed that the stock We do not admit the claim made by the coun. was not subject to taxation as against the cor-sel for appellee, that the Farrington Case must poration, or that the whole stock was exempt in whosesoever hands it was, the matter actually decided was the exemption from taxation of these shares in the hands of the sold. ers. In the suit that was instituted it was agreed that if in any event the decision was adverse to Farrington, judgment should be rendered against him for a certain number of dollars, the amount of the tax assessed against him, and if the decision should be in his favor, then the judgment was to be that the taxes were illegally assessed, and that said shares of stock were to be exempt from all other taxation, except the of 1 per cent to the state, as provided for in the 10th section of the bank's charter, and the collection of any further tax was to be enjoined. The trial court rendered a decree enjoining the collection of the tax, which was reversed by the supreme court of the state on the ground that the shares of stock were not the property or thing exempted, and it was therefore adjudged that Farring ton should pay to the state the sums of money assessed upon his shares. Farrington thereupon sued out a writ of error, and coming into this court the judgment of the supreme court of Tennessee was reversed, and it was held that the charter tax was upon the shares of stock in the hands of its shareholders, and that they were consequently exempt from the payment of any further tax. have decided the exemption of the stock of the corporation, because in the case of Wicks v. Tennessee (mentioned in note to Farrington v. Tennessee, 95 U. S. 679 [24: 558], at page 690 [561]), as is claimed, the exemption was of the capital stock of the corporation which was held nevertheless to come within the principle of the main case decided. There was no material difference in the meaning of the exemption clause in the various cases mentioned in the note to the Farrington Case. Those clauses were of substantially the same import as that in the Farrington Case, and they are set forth in the dissenting opinion of Mr. Justice Strong at page 692 [562] of the report. The whole court was of one opinion upon the subject that there was no substantial difference in the extent of the exemptions contained in the several charters, although there was some difference in their phraseology, but the question was, as stated by Mr. Justice Strong, Which of the parties was to *receive the benefit of the exemption, [155 namely, Was it to be the corporation, or was it intended for the individual stockholder? It was upon that question that the court divided; those in the minority believing that the exemption was intended in each case for the corporation, while the case as actually decided holds that the individual shareholder was ea titled to the benefit from the exemption, and there is no adjudication that that exemption extended also to the corporation and its prop There are undoubtedly some expressions in the opinion of Mr. Justice Swayne which lendertv. color to the idea that, in his belief, not only Other cases in this court are cited by counsel were the shares in the bands of the sharehold for the appellee, which it is claimed are au ers exempt from any further taxation than that thority for their proposition of exemption of imposed by the charter, but that the property the corporate property from further taxation. of the corporation was itself exempt from any Among them is the Piqua Branch of State Bank taxation other than that provided for in that of Ohio v. Knoop, 57 U. S. 16 How. 369 [14: section; the latter question, however, was not 977]. The 16th section of the general banking before the court and was not decided by it, and law of the state of Ohio, passed in 1845, rewe are of opinion that essuming that the char- quired the bank to set off 6 per cent of each ter tax was laid upon the shares of stock in the semi-annual dividend made by it for the use bands of the shareholders, the exemption from of the state, which sum or amount so set off 154] *further taxation applies to the subject was to be in lieu of all taxes to which the comwhich was taxed under the charter, and is not of pany or stockholders therein would otherwise any greater scope, and that it would not, there be subject. Subsequently, the state passed an fore, include the exemption from taxation of act providing for other and different taxation. either the capital stock or the surplus, which is The bank refused to pay, whereupon the the property of the corporation itself. We come treasurer of the county brought an action to to this conclusion because of the fact, well estab-enforce payment of such tax, and it was claimed lished by the decisions of this as well as many state courts, that there is a clear distinction between the capital stock of a corporation and the shares of stock of such corporation in the hands of its individual shareholders. So separate are these properties, and so distinct in their nature, that the taxation of the one property is not the taxation of the other. This is no new doctrine, and the distinction between the two properties was recognized by the supreme court of Tennessee as long ago as in the case of Union Bank v. State, 9 Yerg. 490, decided in 1836. It was held that, under the clause of the charter there under consideration, any further tax on the capital stock than that which was provided for in the charter itself was void, but that the state might tax the shares of stock in the hands of individuals notwithstanding the exemption from further taxation on the capital stock. 161 U. S. U. S., Book 40. 41 on the part of the treasurer that the provision of the general banking law, above mentioned, was not a contract fixing the amount of the tax, but was a law prescribing a rule of taxation until changed by the legislature. This court held that it was a contract, and that as the operation of the law providing for a different tax increased the tax upon the bank, it was protected by the terms of its contract, and was not bound to pay that increase. The claim was also argued in that case, on the part of the state, that it was not within the power of any legislature to tie up the hands of subsequent legislatures in the exercise of the powers of taxation, and hence the provision in question, if construed as an attempt to accomplish that end, must be held to be void. But it was held in this court that the legislature had the power to pass the act in question, and that the bank was entitled to be protected from any 653 further or other taxation. The question, which of the two properties, the bank or the shares 156 of stock in the hands *of the shareholders, was liable to taxation, was not in the case, and was not decided, but the language of the statute is totally different and much more comprehensive than the language of the charter now be fore the court. In the Ohio Case the payment was to be in lieu of all taxes to which the company or the stockholders would otherwise be subject, embracing both propositions. The case is certainly no authority for the claim made on the part of this appellee. The next case is that of Dodge v. Woolsey, 59 U. S. 18 How. 331 [15: 401]. This is substantially the same case as that just above mentioned, with the sole difference that the state in 1851 adopted a new Constitution, in which it was declared that taxes should be imposed upon banks in the mode which an act subsequently passed in 1852 purported to carry out. An assessment was made upon the bank which would result in a larger tax than that provided for in the charter, and one of the shareholders in the bank commenced a suit in equity against the directors to prevent them from paying the tax, on the ground that the bank was exempt from any such payment, and that it would be a misapplication of the capital or profits of the bank if either were taken to pay such tax. This court again decided as to the validity of the contract in favor of the bank, and that there was no material distinction between the two cases arising from the fact that the state of Ohio had adopted a new Constitution in the meantime and under that had passed an act providing for a different method of assess ing the property of the bank. This was held to be wholly immaterial as having no effect upon the validity and binding force of the original contract for exemption contained in the charter of the bank. The same question again came before this court in Jefferson Branch Bank v. Skelly, 66 U. S. 1 Black, 436 [17: 173], the only purpose of which case seems to have been to ask of this court a re examination of the questions already decided and a reversal of its judgments already twice rendered. This was refused, and the opinion closed by citing the language of the Chief Justice in Knoop's Case as follows: "I think that by the 16th section of the act of 1845, the state of Ohio bound itself by a contract 157]*to levy no higher tax than the one there mentioned upon the banks or stocks of banks organized under that law during the continuance of their charters. Iu my judgment, the words used are too plain to admit of any other construction." Nothing in those cases, construing the charter of the Ohio bank, affords any countenance to the claim made here. One other case from this court is cited, that of Gordon v. Appeal Tax Court. 44 U. S. 3 How. 133 [11: 529]. The question in that case depended upon the constitutionality of a tax imposed by the legislature of Maryland in 1841, it being alleged to be in violation of a contract made by the legislature in 1821. The legislature of Maryland in 1821 continued the charters of several banks to the year 1845, upon condition that they would make a road and pay a school tax, and it was provided that if any banks should accept and comply with ་ the terms and conditions of the act the faith of the state was pledged not to impose any further tax or burden upon them during the continuance of their charters under the act. Subsequently a tax was levied upon the stockholders as individuals, according to the amount of their stock. and it was held that by the legislation of 1821 continuing the charters of the banks upon conditions which had been accepted and performed by the banks, a contract was created relating to something beyond the franchise, and that it exempted the stockholders from the tax which the state endeavored to levy upon them thereafter. This case lends some color to the claim made by the appellee, and yet we do not think it is decisive in favor of that claim. It was a peculiar case. The banks were all in existence, and the question was in regard to their accepting a condition upon compliance with which their charters were to be extended. The act of acceptance, it was stated, would be that of the individual shareholders. The tax was on the shares, and the question which was made was whether the act of the legislature of Maryland of 1841, in imposing a tax upon those shares, impaired the obligation of the contract theretofore entered into between the bank and the state of Maryland. There were two classes of banks, designated as the old and new banks. The old were those which were chartered previous to the *year 1821, and the new those [158 which were chartered after the year 1830, and taxes bad always, since the incorporation of the banks, been assessed upon their real and per sonal property in all the cities and counties of the state in the same manner as upon property of the same kind belonging to individuals, aud they bad always been paid by the banks up to this time. Mr. Justice Wayne in the course of his opinion puts the question: "Does it (the act in question) exempt the respective capital stocks of the banks, as an aggregate, and the stockholders from being taxed as persous on account of their stock? We think it does both. The aggregate could not be taxed, without its having the same effect upon the parts that a tax upon the parts would have upon the whole. Besides, the legislature, in proposing the terms and conditions of the act, used the word 'banks' with reference to the consent or acceptance of the act being given by the stockholders, according to a fundamental article of their charters. The acceptance of the act could only be made by the stockholders. They did accept, and the state_recognized it as the act of the stockholders. It could not have been given or been recognized in any other way. True it is that when accepted and recognized it became a contract with the banks. But its becoming a contract with the banks determines of itself nothing. We must look in what character or by whose assent it was to become a contract with the state, to ascertain the intention of the legislature in making the pledge, 'that upon any of the aforesaid banks accepting of and complying with the terms and conditions of this act, the faith of the state is hereby pledged not to impose any further tax or burden upon them during the continuance of their charters under this act."' " The Justice then proceeded in the opinion to discuss the question as to what was meant by the language of exemption, and it was claimed that by reason of the peculiar nature of the act of acceptance. which was that of the stock holders as distinguished from the corporate action of the bank by the board of directors, the exemption was offered and directed to that authority which could accept the condition and perform it, namely, the stockholders them159 selves, and hence it was *worked out that the meaning of the legislature, under the circumstances of that case, was to exempt from further taxation the shares of stock in the hands of the shareholders. An examination of this case shows that the question of the exemption of both the corporation and the shareholders did not technically arise, although in the course of his opinion Mr. Justice Wayne gives an exemption to both, as above quoted. That case has been the subject of criticism in several instances, notably in the case of New York v. Tax Comrs. 71 U. S. 4 Wall. 244 [18: 344], and in New Orleans City & L. R. Co. v. New Orleans, 143 U. S. 195 [36: 122], and cases therein cited. Giving to the Gordon Case the full weight of authority for the point actually decided, it does not hold that language such as we have in the case under consideration operates to exempt both the capital stock of the corporation and the shares of stock in the hands of its shareholders from all taxation beyond that mentioned in the charter, and we are entirely unwilling to unnecessarily extend the authority of that case so as to cover the question here. Long after that case was decided this court in many cases, notably that of Churchill v. Utica ("Van Allen v. Assessors") 70 U. S. 3 Wall. 573 [18: 229], and New York v. Tar Comrs. supra, recognized the separate and distinct character of the two properties, the capital stock and the shares thereof in the hands of individual shareholders, and such separate property in our opinion is strong proof of the limitation of the exemption to the property which is taxed. Another case decided in this court is that of Bank of Commerce v. Tennessee, 104 U. S. 493 [26: 810]. That was a case where the questions arose under this same general statute of exemption. The taxing authorities had taxed the bank on all its real estate, consisting of its banking house, a portion of which only it used for the transaction of its own business and it rented the balance, and it was taxed also for three other pieces of real estate bid in by it upon sales under trust deeds to secure indebtedness. The charter provided that the bank might "purchase and bold a lot of ground for the use of the institution as a place of business, and at pleasure sell and exchange the same, and may hold such real or personal property or estate as may be conveyed to it to secure 160] debts due the institution, and may sell and convey the same." The supreme court of the state held that while the bank was not liable to be taxed on that portion of its building used by it for the transaction of its business, it was liable for the taxes on the remainder, and also on the other real estate purchased by it. The bank appealed from the decree of the state court, claiming an exemption of the entire property from taxation under its charter. The state did not appeal, although the decree of the court held a portion of the property nontaxable. It will thus be seen that the only question open for review here was, whether the portion actually taxed was exempt, and this court was of the same opinion as the supreme court of Tennessee, and held that as to the portion of the property not used for banking purposes, and as to the other real estate of the bank, it was not exempt from the payment of a tax thereon. The fact of the exemption from taxation of that portion of the property used by the bank in its business seems to have been assumed without argument or decision by this court. There is nothing in that case which affords support to the contention here. Mr. Nor is there anything in the case of Tennessee v. Whitworth, 117 U. S. 129 [29: 830], tending to show that the court in the case of Farrington v. Tennessee, 95 U. S. 679 [24: 558], held that the exemption covered both properties, the corporation and the shares. Chief Justice Waite in the Whitworth Case, on page 136 [832], said, in speaking of the Far rington Case, that the question was whether the clause in the charter, there quoted, exempted the shares in the hands of the stockholders from any further taxation by the state. He said: "The court, three justices dissenting, held that it did, because, as the charter tax was laid on each share subscribed, the further exemption must necessarily have been of the shares in the hands of the holders, although the tax as imposed was payable by the corporation. In all cases of this kind the question is as to the intent of the legislature, the presumption always being against any sur render of the taxing power.” No comfort can be extracted from the remarks of the Chief Justice as even tending to show that the exemption clause covered both the property of the corporation and the shares of stock in the hands of individual shareholders. *We have found no case in this court [161 which is authority for the proposition that language, such as is under consideration in this case, exempts from further taxation both the capital stock of the corporation and the shares of stock in the hands of individual shareholders. As the Farrington Case decides that this language does not import that the charter tax is laid upon the shares in the hands of individual shareholders, and that those shares are exempt from further taxation, that question is set at rest, and there being nothing in any case which extends that language to both properties, we hold that when it is made applicable to the separate shares in the hands of individual shareholders, it does not apply to or cover the case of the capital stock of the corporation, and that such stock is liable to be taxed, as the state may determine. This determines the liability of the capital stock of the Union & Planters' Bank to taxation, and of course it overrules any claim on the part of that bank for exemption from taxation of its surplus or accumulated profits. The question whether such surplus could be taxed if the capital stock itself were to be regarded as exempt has also been decided in the preceding case of the Bank of Commerce. The decree of the circuit court must therefore be reversed, and the cause remanded to that court, with directions to dismiss the bill with costs. Mr. Justice White dissents. MERCANTILE BANK and C. H. RAINE, | 26th of March, 1881, the legislature of the state Piffs. in Err., V. passed an act changing the name of the company to that of the Mercantile Bank, and thereupon Mr. Taylor undertook to sell the STATE OF TENNESSEE for the Use of the charter to John R. Goodwin and others, who CITY OF MEMPHIS. (See S. C. Reporter's ed. 164–173.) Exemption from taxation. organized the bank with a capital stock of $200,000. Since the year 1885 the company has been carrying on a general banking business in the city of Memphis, claiming to be organized under and to have all the rights, priv A judicial sale of the charter of a bank by a re-ileges, *and immunitiesoriginally granted[163 ceiver does not carry an exemption from taxation of shares of stock given by the charter to share holders where there was no sale of any specific shares of stock, and the sale was made after the state Constitution had prohibited exemptions from taxation, although purchasers of the charter were recognized by the legislature as a corporation. [No. 676.] Argued January 20-22, 1896. 2, 1896. to the Gayoso institution, and that by virtue of this claim neither the defendant company nor its shareholders have paid any taxes whatever to the state, county, or municipality since its organization, except the of 1 per cent, as provided in the charter. Complainant charged that it was wholly incompetent to sell the charter of the Gayoso Savings Institution, and that the defendant Decided March company had no right or title thereto, and especially that it had no rightful claim to immnunity from taxation as contained in that charter, IN ERROR to the Supreme Court of the and it is averred that all the stock of the defendant company was subscribed for and issued since the adoption by the state, on May 4, 1870, of the Constitution of that year. For the year 1891 the capital stock of the company was assessed at a valuation of $160,000. The bill then further alleges the various statutes of the state of Tennessee providing for the assessment of shares or of the capital stock of corporations, and various other allegations are made tending to show a valid assessment either upon the capital stock or the shares of stock in the bands of shareholders, if the claim for exemp tion be not well founded. It prays for a discovery of the names of the shareholders, and that the court may determine whether the corporation or the shareholders have any immu nity from taxation under the charter of that Statement by Mr. Justice Peckham: This also is a bill filed by the state of Tennessee against the Mercantile Bank for the purpose of collecting taxes alleged to be due plaintiff below under the statutes of that state. The bill alleges that the legislature of Tenn-company; and that complainants have a deessee, by an act passed February 29, 1856, in cree against the defendant corporation for such corporated by Gayoso Savings Institution, and taxes, with interest, etc. by the 3d section of the act it was provided that the institution should "pay to the state an annual tax of of 1 per cent on each share of the capital stock, which shall be in lieu of all other taxes." The company, as complainants allege, was duly organized under the act of incorporation, at what date it is not known, but at all events it was engaged in a general bank ing business in the city of Memphis from a date as early as 1856 down to the year 1869. In that year the institution failed, and a bill was filed by its president, John C. Lanier, in the proper court, for an administration of the affairs of the company as an insolvent corporation under the laws of the state. In the course of the proceedings one E. B. McHenry was appointed receiver of the assets of the company by the court, and on the 11th day of June, 1880, the court directed the receiver to sell the charter of the company. On the 28th of June of that year the receiver did sell the charter at public auction for the sum of $201, to Julius A. Taylor, and the sale was afterwards duly reported to and confirmed by the court. On the NOTE.-That taxation of stock or shares in corporation does not impair obligation of contracts; taxation of shares of national banks and other corporations.-see note to Providence Bank v. Billings, 7:939, To that bill the defendants filed a demurrer, and as grounds thereof stated that the defendant, the Mercantile Bank, is treated and sued in the proceeding as a corporation organized under the charter above mentioned, and exercising all the powers and franchises conferred by it and in the enjoyment of the privileges and immunities bestowed by it, and that therefore the complainants cannot treat the defendant as a corporation under such charter and at the same time deny its right and title thereto; that it cannot treat the defendant as a corporation under that charter and then deny the existence of the charter; that it cannot sue the said defendant as a corporation under the charter for the purpose of imposing burdens on it, and then deny the benefit of *the privi- [164 leges and immunities conferred thereunder; that if the Mercantile Bank has no right or title to the charter, and if the charter was destroyed and ended by the judicial proceedings referred to, then there is no such corporation as the Mercantile Bank, and the business conducted under that name is a mere partnership, and the As to exemption from taxation; whether a contract or not; not implied,—see note to Tucker v. Ferguson, 22: 805. As to powers and duties of reccivers, see note to Davis v. Gray, 21: 447. bill should have been filed against the persons | C. Lanier against the institution, mentioned in composing such partnership. Another ground the original bill. of demurrer was, that it appeared in the 3d section of the charter above mentioned, under which the bank was organized, and it appears on the face of the bill, that the bank was to pay to the state an annual tax of of 1 per cent on each share of capital stock, which was to be in lieu of all other taxes, and that this constituted a contract between the state on the one side and the bank or shareholders on the other, under which both the capital of the bank and the shares of stock in the hands of the shareholders were exempt, and that the various acts of the legislature subsequent to the grant of that charter and providing for the assessment of the shares of stock in corporations, if applied to the defendant corporation, impaired the obligations of the contract, and are in conflict with U. S. Const. art. 1, § 10, and are void. It is also stated that on the 5th day of March, 1881, Julius A. Taylor (the purchaser of the charter at the receiver's sale in June, 1880), and eight other persons, who were associated with him, held a meeting as stockholders of the Gayoso Savings Institution, the minutes of which meeting are therein set out. The minutes set forth that on the 5th day of March. 1881, a meeting of the stockholders of the Gayoso Savings Institution was held in Memphis, at which certain stockholders present and who were therein named, and that one of them was elected chairman of the meeting, and he reported that the *requisite [166 number of shares, 200, had been duly subscribed to as follows (giving the names of the subscribers), and that the sum of $1 per share each had been paid in. It was theu moved and seconded to proceed to the election of six were This demurrer was overruled, with leave to insist upon the grounds thereof upon the hear-directors, which was carried, and such direcing. tors were then elected. Just before the time of this meeting the parties therein named signed and executed a stock subscription paper, which is in the following words: "We, the undersigned, agree to take stock in the Gayoso Savings Institution of Memphis, Tennessee, to the amount set opposite our respective names, and to pay the same in such nianner as may be ordered by the board of directors, having this day paid in the sum of $1 on each Complainants then, by leave of court, filed their amended and supplemental bill, adding various allegations not material to here notice, except that it was stated that by a stipulation between the parties the defendant corporation had assumed the payment of any liability that might be established against the shareholders therein, and that the defendant C. Hunter Raine should be made a defendant in his capacity as a shareholder, and that whatever lia-share." Here follow the names of the subbility should be established against him should be taken as established against all the shareholders in the defendant corporation, and that the liability of all those established should be assumed by the defendant corporation. scribers. These are the "stockholders" who are mentioned in the minutes of the stockholders' meeting. It is stated that this organization of the institution was continued regularly and without intermission, but without the actual transaction of any banking business until 1883, and that in April, 1883, the said Julius A. Taylor and his associates transferred their stock in the corporation, by regular and proper transfer of the certificates of stock, to John R. Godwin and his associates, and on April 17, 1883, John R. Godwin and his associates, at a stockholders' meeting of said corporation, increased the capital stock to $200,000, and began a regular banking business under said charter, and said corporation has, under that organization, continued said banking business down to the present date, with the same capital stock of $200,000. The regularity of the organization from the 5th day of March, 1881, the date when Julius A. Taylor and his eight associates held the stockholders' meeting above mentioned, is not questioned. Of the $200.000 capital stock which was issued by John R. Godwin and his To avoid the labor and expense of taking proof 165] and to *bring the case to a final hearing, the parties then agreed upon certain facts, among which are the following: That the charter of the Gayoso Savings Institution and all amendments thereto referred to in the pleadings are set forth in the statement. The 1st section of the charter named certain individuals, and it was enacted that they and their associates and successors "be, and they are hereby, created a body politic and corporate by the name and style of the Gayoso Savings Institution, and by that name shall have succes sion," etc. Provision is then made for subscription for the capital stock, which is to be divided into shares of $50 each, and when 200 shares shall have been subscribed and the sum of $1 per share paid thereon the shareholders may meet and elect five directors. The 3d section contains the exemption clause, which, as therein set forth, is as follows: "Said in-associates on the 17th of April, 1883, $180,000 stitution shall have a lien on the stock for debts due it by the stockholders, before and in preference to other creditors, except the state for taxes, and shall pay to the state an annual tax of of 1 per cent on each share of capital stock, which shall be in lieu of all other taxes." Section 4 granted to it the usual banking privileges as therein set forth. An amendment to this charter, passed March 26, 1881,changed the name of the Gayoso Savings Institution to the Mercantile Bank of Memphis. The statement also shows who were the owners of the capital stock of the Gayoso Savings Institution at the time of the commencement of the suit of John was new stock, which was divided between said John R. Godwin and his associates. The Gayoso Savings Institution from the time it was originally organized under its charter in 1856 to the date when the bill was filed in the case of John C. Lanier and others in 1869, *regularly paid year after year to the state[167 of Tennessee the commutation tax mentioned in its charter of of 1 per cent on each share of capital stock, and since the 5th day of March, 1881, the defendant corporation, under the name of the Gayoso Savings Institution and the Mercantile Bank, has constantly paid said commutation tax to the state down to this |