by Congress to carry into effect the powers vested in the national government, and hence, that it is not competent for Congress to impose a tax on national banks,1—- it must follow that the right of the State to tax the property, capital, or shares, of a national bank, can exist only under a power granted by Congress, and that it must find its limitations in the terms of the grant. Such a power has been granted by Congress in a provision of the National Banking Act, quoted in the next section. § 2856. Text of the Federal Statute Permitting Such Taxation. It is provided by the act of Congress known as the National Banking Act, 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 1 McCulloch v. State, 4 Wheat. (U. S.) 316; Osborn v. Bank of U. S., 9 Wheat. (U. S.) 738. On the same theory it is held that a tax imposed by or under a State law, on stocks issued for loans made to the United States, is unconstitutional and void. Weston v. Charleston, 2 Pet. (U. S.) 449. It has been furthermore held that a State law taxing the loans of the United States is unconstitutional where it imposes a tax upon the stocks or bonds of the United States issued for such loans, eo nomine, or includes it in the aggregate of the tax-payer's property, to be appraised, like the rest, on its value. The imposition of such a tax is a restriction upon the constitutional power of the United States to borrow money, and the power so to tax might be used, if conceded to exist, so as to defeat the Federal power altogether. People v. Commissioners, 2 Black (U. S.), 620. On the same theory, it is held that a State tax on banks, "on a valuation equal to the amount of their capital stock paid in, or secured to be paid in," is a tax on the property of the bank, and, in so far as such property is invested in securities of the United States, the tax is void. Bank Tax Case, 2 Wall. (U. S.) 200. On the same theory, the capital stock of a national bank, which is invested in government securities, is not liable to State taxation; but, as elsewhere seen (post, §§ 2856, 2863, etseq.), the shares of the stockholders are taxable at the same rate as other moneyed capital in the hands of citizens of the particular State, without regard to the mode of investment, and although the entire capital of the bank may be invested in non-taxable government securities. National Bank v. Commonwealth, 9 Wall. (U. S.) 353. On the like theory, United States legal tender notes, issued to circulate as currency, are exempt from taxation, and a bank holding such notes is entitled to a deduction from its assessment in respect of them. Bank v. Supervisors, 7 Wall. (U. S.) 26. And so are the certificates of indebtedness, issued by the United States to its creditors for supplies furnished to it in carrying on the War of the Rebellion. Banks v. Mayor, 7 Wall. (U. S.) 16. such shares, in assessing taxes imposed by authority of the State § 2857. Capital not Taxable in Solido. This section in- 1 Act. Cong. June 3, 1864, § 41; 13 2 First Nat. Bank v. Richmond, 39 Bank v. § 2858. Personal Property of Such Banks not Taxable.— - § 2859. Taxing their Circulating Notes in the Hands of 4 § 2860. Taxing their Surplus, Profits, etc.- Their surplus § 2861. Taxing a State Bank Reorganizing as a National The personal § 2862. State Taxation after Insolvency. 1 National State Bank v. Young, 25 2 Commissioners v. Elston, 32 Ind. 3 Horne v. Green, 52 Miss. 452; s. c. Fenno, 8 Wall. (U. S.) 533; s. c. 1 4 St. Louis Nat. Bank v. Papin, 1 5 State v. Newark, 39 N. J. L. 380; 6 Com. Manf. &c. Bank, 2 Pearson's 7 Rev. Stat. U. S., § 5234. bank, though in the hands of a receiver, to be administered under the law. The bank does not cease to exist on the appointment of a receiver. Its corporate capacity continues until its affairs are finally wound up and its assets distributed. If the shares have any value, they are taxable in the hands of the holders or owners under this section; but the property held by the receiver is exempt to the same extent it was before his appointment.1 A tax levied on the property of the bank subsequent to its insolvency is subordinate to the rights of a receiver appointed after the levy.2 3 § 2863. Shares and not Capital Taxable.-The foregoing statute confers upon the States the power to tax the shares of the several shareholders in a national bank located within the State, subject to the two restrictions named, and clothes the legislature of the State with the power to determine and direct the manner and place of taxing the shares. The State legislatures cannot evade the rule which exempts the capital stock of national banks from taxation, by enacting statutes taxing the shares of such banks in the aggregate and requiring the bank or its cashier to pay such tax. The shares must be taxed separately, so that the owner may have his indebtedness deducted and have equalization. But to claim exemption from taxation on its property, it must be made to appear that it is in the precise form of capital." § 2864. What is a Tax on Capital, and What on Shares.A taxon bank stock, of fifty cents on each share thereof equal 1 Rosenblatt v. Johnson, 104 U. S. 462. 2 Woodward v. Ellsworth, 4 Col. 580; s. c. 2 Nat. Bk. Cas. 216. 3 Ante, § 2856. 4 National &c. Bank v. Mobile, 62 Ala. 284; s. c 34 Am. Rep. 15; 2 Nat. Bk. Cas. 440; Sumter County v. National Bank, 62 Ala. 464; s. c. 34 Am. Rep. 30; 2 Nat. Bk. Cas. 449; Miller v. First Nat. Bank, 46 Ohio St. 424; s. c. 3 Nat. Bk. Cas. 711. 129 First Nat. Bank v. Richmond, 39 Fed. Rep. 309. 6 Canal &c. Banking Co. v. New Orleans, 99 U. S. 97; s. c. 2 Nat. Bk. Cas. 22. A statute providing that shares in banks shall be assessed to the shareholders, but requiring the bank to pay taxes so assessed, and authorizing it to collect the same from the shareholders, imposes a tax, not upon banks, but upon its shares. Whitney Nat. Bk. v. Parker, 41 Fed. Rep. 402. 2049 to one hundred dollars of stock therein, owned by individuals, corporations, or societies," is a tax on the shares.1 3 § 2865. Municipal Taxation of Such Shares. — Municipal officers cannot assess national bank shares unless authorized by State law, but it may be done under a statute authorizing "taxation of all shares in moneyed corporations." 2 National banks are not liable to pay a license fee imposed by a city ordinance, although "banks and banking" are included in terms, Where, by a State statute, a national bank is not taxable for "municipal purposes," it may nevertheless be taxed for school purposes or to aid in building a railroad under township donation, as these are not "municipal purposes." Where the State law made national bank shares taxable in the township where the bank was located, except that where a shareholder resided in another township in the same county his shares were to be taxed there, under a village charter authorizing the taxation of all property within the limits of the village, shares of stock of such bank located in such village, but owned by a resident of another township, are not taxable by the village. 4 Referring to § 2866. Place of Assessment and Taxation. a controversy which sprung up under the original act and its solution by an amendatory act of Congress, it was held, under the original act, that a State statute that the shareholders should be taxed in the county, town, or district where the bank was located, whether they resided there or not, was valid.' Dealing with the act as thus amended, it is said that the only 1 National Bank v. Commonwealth, 9 Wall. (U. S.) 343; s. c. 1 Nat. Bk. Cas. 34. 2 Stetson v. Bangor, 56 Me. 274; s. c. 1 Nat. Bk. Cas. 520. 3 National Bank of Chattanooga v. Mayor, 8 Heisk. (Tenn.) 814; s. c. 1 Nat. Bk. Cas. 903; Carthage v. First Nat. Bank, 71 Mo. 508; s. c. 36 Am. Rep. 494; s. c. 2 Nat. Bk. Cas. 279; Macon v. First Nat. Bank, 59 Ga. 648; s. c. 2 Nat. Bk. Cas. 219; Second National Bank v. Caldwell, 13 Fed. Rep. 429. 4 Root v. Erdelmeyer, 37 Ind. 225, 227; s. c. 1 Nat. Bk. Cas. 432. 5 Howell v. Cassapolis, 35 Mich. 471; s. c. 1 Nat. Bk. Cas. 627. 6 Ante, § 2850. 7 Tappan v. Merchants' Nat. Bank, 19 Wall. 490; s. c. 1 Nat. Bk. Cas. 100; overruling Union Nat. Bank v. Chicago, 3 Biss. 82; Whitney v. Ragsdale, 33 Ind. 107; s. c. 5 Am. Rep. 185; s. c. 1 Nat. Bk. Cas. 429; First Nat. Bank v. Smith, 65 Ill. 44; s. c. 1 Nat. Bk. Cas. 390. |