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that an express company which was a joint stock company organized under a statute of another state, although it possessed certain of the attributes of a corporation, was not a corporation, and consequently was not taxable on its capital stock under a statute providing that the capital stock of a foreign corporation doing business in the state should be liable to taxation.90

§ 4597. Corporations existing in two or more states. Where a corporation is chartered by different states, each of the states by which it is incorporated may tax the corporate property which is within its limits.91 In other words, the property of each constituent corporation is subject to taxation in the state where it is situated.92 A corporation formed by the consolidation of corporations of different states is in its relation to each state a separate corporation governed by the laws of that state as to its property therein, and subject to taxation in conformity with the laws of such state, and to all the police power of the state in respect to its property and franchise within such state.93 Thus where a corporation was formed under the laws of Illinois by the consolidation of other corporations, some of which were domestic corporations, and others foreign, it was held that the new corporation thus formed was to be considered as one of the "companies incorporated under the laws of this state," within the terms and meaning of a statute providing for the taxation of such corporations, and the capital stock, located or used in the state of such corporation was subject to be assessed and taxed as such.94

Where a domestic corporation has been consolidated with a corporation formed by the consolidation of two corporations of two other states, the domestic corporation is alone of the consolidated organizations to be considered a corporation "formed under" the laws

90 Sanford v. Gregg, 58 Fed. 620. 91 Easton Bridge Co. v. County, 9 Pa. 415.

92 Ohio & M. R. Co. v. Weber, 96 Ill. 443; Quincy Bridge Co. v. Adams County, 88 Ill. 615.

Where by statute it is provided that the capital and surplus of all private corporations should be liable to taxation, it was held that one-half of the capital and surplus of a bridge company incorporated in the state and also in an adjoining state was taxable

in the former state. Easton Delaware Bridge Co. v. Metz, 32 N. J. L. 199. 93 Ohio & M. R. Co. v. People, 123 Ill. 467, 14 N. E. 874, citing Graham v. Boston, H. & E. R. Co., 118 U. S. 161, 30 L. Ed. 196; Delaware Railroad Tax Cases, 18 Wall. (U. S.) 206, 21 L. Ed. 888; Covington & C. Bridge Co. v. Mayer, 31 Ohio St. 317; Sprague v. Hartford, P. & F. R. Co., 5 R. I. 233. 94 Ohio & M. R. Co. v. Weber, 96 Ill. 443.

of the state by which it was created, within the meaning of a statute which imposes a tax upon the gross receipts of a railroad corporation, formed under the laws of the state, in the proportion which the length of its road in the state bears to its entire road.95

§ 4598.-Exempt corporations. A corporation between which and the state there exists a valid contract for exemption from taxation is, of course, not taxable either by the state or by any one of its political subdivisions during the period for which, under the contract, the exemption is to be in force. Such a contract, however, has no extraterritorial operation or effect, and, therefore, does not prevent a foreign state from exercising its taxing power when the corporation comes within its jurisdiction. But, since the subject of exemptions is treated at length in subsequent sections of this chapter, 96 this matter will not be gone into further at this point.

§ 4599. Discriminations against national banks or their shares Rate of taxation. While the federal statute 97 allows the state in which a national bank is located to determine and direct the manner and place of taxing its shares, it expressly provides that "the taxation shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of the state." As might have been expected, the vagueness of this provision has given rise to much litigation, and the courts,

95 Chicago & N. W. R. Co. v. Auditor General, 53 Mich. 79, 18 N. W. 586.

96 See §§ 4630-4650, infra. 97"Nothing herein [the National Bank Act] 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 shares, 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 other moneyed capital in the hands of individual citizens of such State, and that the shares of any

including the Supreme Court

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.' U. S. Rev. St. 5219; 6 Fed. Stat. Ann. (2nd Ed.), p. 796; 5 Fed. Stat. Ann. (1st Ed.), p. 157.

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The only taxes contemplated by this statute are taxes on shares of stock and taxes on the banks' real estate. First Nat. Bank of Albuquerque v. Albright, 208 U. S. 548, 52 L. Ed. 614; Owensboro Nat. Bank v. Owensboro, 173 U. S. 664, 43 L. Ed. 850.

of the United States, have frequently been called upon to construe and apply it to the tax laws of the various states. The result of the decisions is not entirely clear, but some points seem to be settled.

The main purpose of Congress in thus limiting the power of the states to tax investments in shares of national banks was to render it impossible for a state, in levying such a tax, to create and foster an unequal and unfriendly competition by favoring institutions or individuals carrying on a similar business and operations and investments of like character; and this must be taken into consideration in construing the act.98 It is clear, therefore, that the provision renders illegal and inoperative any attempt by a state to tax national bank shares at such a rate or in such a mode as to impose a greater burden of taxation upon capital thus invested than is imposed upon other moneyed capital in the hands of individual citizens, and thus make a discrimination against capital invested in shares of national banks, and in favor of other moneyed capital.99 So, a tax

98 Aberdeen Bank V. Chehalis County, 166 U. S. 440, 41 L. Ed. 1069; Mercantile Bank v. New York, 121 U. S. 138, 30 L. Ed. 895; Providence Inst. for Savings v. City of Boston, 101 Mass. 575.

Section 5219 does not require that the scheme of taxation shall be so arranged that the burden shall fall upon each and every shareholder alike, without distinction arising from circumstances personal to the individual." New York v. Purdy, 231 U. S. 373, 58 L. Ed. 274.

San Francisco

99 United States. Nat. Bank v. Dodge, 197 U. S. 70, 49 L. Ed. 669; Aberdeen Bank v. Chehalis County, 166 U. S. 440, 41 L. Ed. 1069; Davenport Bank v. Davenport Board of Equalization, 123 U. S. 83, 31 L. Ed. 94; Mercantile Bank v. New York, 121 U. S. 138, 30 L. Ed. 895; Boyer v. Boyer, 113 U. S. 689, 28 L. Ed. 1089; Adams v. Nashville, 95 U. S. 19, 24 L. Ed. 369; New York v. Commissioners of Taxes, 4 Wall. 244, 18 L. Ed. 344; Van Allen v. Assessors, 3 Wall. 573, 18 L. Ed. 229; First Nat. Bank v. Covington, 103 Fed. 523; Whitney Nat. Bank v.

Parker, 41 Fed. 402; First Nat. Bank
of Utica v. Waters, 19 Blatchf. 242,
7 Fed. 152; St. Louis Nat. Bank v.
Papin, 4 Dill. 29, Fed. Cas. No.
12,239; City Nat. Bank v. Paducah,
2 Flip. 61, Fed. Cas. No. 2,743.

Alabama. Pollard v. State, 65 Ala.

628.

California. McHenry v. Downer, 116 Cal. 20, 45 L. R. A. 737, 47 Pac. 779.

Indiana. Wasson V. First Nat.
Bank of Indianapolis, 107 Ind. 206,
8 N. E. 97; Wright v. Stilz, 27 Ind.
338; Craft v. Tuttle, 27 Ind. 332.

Massachusetts. Providence Inst. for
Savings v. Boston, 101 Mass. 575.
Pennsylvania. Boyer's Appeal, 103
Pa. St. 387.

Texas. Rosenberg v. Weekes, 67
Tex. 578, 4 S. W. 899.

Validity of retrospective tax on
shares as to domestic shareholders,
see Citizens' Nat. Bank v. Kentucky,
217 U. S. 443, 54 L. Ed. 832; as to
foreign shareholders, see Covington
v. First Nat. Bank, 198 U. S. 100,
49 L. Ed. 963.

If the statutes of a state do not give municipal corporations the power

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on shares in national banks is illegal if they are valued on the assessment rolls at a higher proportion of their actual value than that at which other moneyed capital is valued. "Any system of assessment of taxes," said Mr. Justice Miller, "which exacts from the owner of the shares of a national bank a larger sum in proportion to their actual value than it does from the owner of other moneyed capital valued in like manner, does tax them at a greater rate within the meaning of the act of Congress." 2

§ 4600. - Mode of assessment.

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Before an assessment of taxes upon shares in a national bank can be held invalid on the ground that it is in violation of the act of Congress, it must affirmatively appear that a higher rate or burden of taxation is imposed upon the capital thus invested than is imposed upon other moneyed capital. It is not enough to show merely that the laws provide a different mode for taxing other moneyed capital. Thus, in a case which

to tax shares of stock in state banks, they cannot tax shares in national banks. Craft v. Tuttle, 27 Ind. 332.

1 Pelton v. Commercial Nat. Bank of Cleveland, 101 U. S. 143, 25 L. Ed. 901; People v. Weaver, 100 U. S. 539, 25 L. Ed. 705; First Nat. Bank v. Lindsay, 45 Fed. 619; First Nat. Bank of Toledo V. Treasurer of Lucas County, 25 Fed. 749. Compare Deposit Bank of Owensboro v. Daviess County, 102 Ky. 174, 44 L. R. A. 825, 39 S. W. 1030; Wagoner v. Loomis, 37 Ohio St. 571.

No rule for the taxation of depositors' credits is prescribed, and, such property being normally subject to the state's taxing power, there is no ground for implying a restriction which would extend beyond the requirements of protection from the prejudicial effect of such exactions as would be unjustly discriminatory. Clement Nat. Bank v. Vermont, 231 U. S. 120, 58 L. Ed. 147.

2 Pelton v. Commercial Nat. Bank of Cleveland, Ohio, 101 U. S. 143, 25 L. Ed. 901.

The first statute, authorizing state taxation of national bank shares, pro

vided that the tax thereon should not exceed the rate imposed upon the shares of state banks, and, under this statute, it was held that, when state banks were taxed on their capital, a tax on national bank shares was invalid even though it was provided that such tax should not exceed the par value of the shares, since the capital of state banks might consist of bonds of the United States and thus be exempt from state taxation. Van Allen v. Assessors, 3 Wall. (U. S.) 573. 18 L. Ed. 229.

3 New York v. Purdy, 231 U. S. 373, 58 L. Ed. 274.

4 Mercantile Bank v. New York, 121 U. S. 138, 30 L. Ed. 895; Richards v. Town of Rock Rapids, 31 Fed. 505; Commissioners Silver Bow Co. V. Davis, 6 Mont. 306, 12 Pac. 688.

A state is not required to apply the same system to the taxation of national banks that it employs in the taxation of other property, provided no injustice, inequality, or unfriendly discrimination is inflicted upon such banks. New York v. Purdy, 231 U. S. 373, 58 L. Ed. 274.

arose in New York, it was held that a tax upon the shares in national banks was not invalid because shares in trust companies created under the laws of that state were not directly taxed, where such companies were taxed upon the value of their capital stock, with deductions on account of property in which it was invested, and which was either otherwise taxed or not taxable, and were additionally taxed upon their income by way of franchise tax, it not appearing that the rate of taxation thus imposed upon such companies, and indirectly on their shareholders, was less than that imposed on national bank shares.5 Of course, a state cannot, by taxing other money capital in a different mode from that in which national bank shares are taxed, indirectly impose a greater burden of taxation upon the latter, any more than it can do so directly by prescribing a different rate of taxation.

§ 4601. - Deduction of debts. If the laws of a state allow persons having credits subject to taxation, and which constitute a material portion of the moneyed capital of the state in the hands of its citizens, to deduct their debts therefrom for the purpose of taxation, while they deny to the holders of shares in national banks the right to deduct their debts from the assessed value of their shares, they are to such extent in violation of the act of Congress, as they, in effect, tax such shares at a greater rate than is assessed upon other moneyed capital. It has been held, however, that a shareholder

5 Mercantile Bank v. New York, 121 U. S. 138, 30 L. Ed. 895.

• Pelton v. Commercial Nat. Bank of Cleveland, Ohio, 101 U. S. 143, 25 L. Ed. 901; People v. Weaver, 100 U. S. 539, 25 L. Ed. 705.

7 United States. First Nat. Bank of Garnett v. Ayers, 160 U. S. 660, 40 L. Ed. 573; Evansville Bank v. Britton, 105 U. S. 322, 26 L. Ed. 1053; Board Sup'rs Albany Co. v. Stanley, 105 U. S. 305, 26 L. Ed. 1044; People v. Weaver, 100 U. S. 539, 25 L. Ed. 705, rev'g 67 N. Y. 516; Mercantile Nat. Bank of Cleveland v. Shields, 59 Fed. 952; Whitney Nat. Bank Parker, 41 Fed. 402; Richards v. Town of Rock Rapids, 31 Fed. 505.

V.

Alabama. Pollard v. State, 65 Ala.

628.

California. McHenry v. Downer, 116 Cal. 20, 45 L. R. A. 737, 47 Pac. 779.

Indiana. Wasson V. First Nat. Bank of Indianapolis, 107 Ind. 206, 8 N. E. 97.

Kansas. First Nat. Bank of Leoti v. Fisher, 45 Kan. 726, 26 Pac. 482.

Michigan. First Nat. Bank of St. Joseph v. St. Joseph, 46 Mich. 526, 9 N. W. 838.

New Hampshire. Peavey v. Greenfield, 64 N. H. 284, 9 Atl. 722; Weston v. Manchester, 62 N. H. 574.

North Carolina. McAden v. Board Com'rs Mecklenburg Co., 97 N. C. 355, 2 S. E. 670.

Wisconsin. Ruggles v. Fond du Lac, 53 Wis. 436, 10 N. W. 565. Compare Bressler v. Wayne County,

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