State ex rel. v. Citizens Bank.

"We are unanimously of opinion, that the law passed by the Legislature of Maryland, imposing a tax on the Bank of the United States, is unconstitutional and void.

"This opinion does not deprive the States of any resources which they originally possessed. It does not extend to a tax paid by the real property of the bank, in common with the other real property within the State, nor to a tax imposed on the interest which the citizens of Maryland may hold in this institution, in common with other property of the same description throughout the State. But this is a tax on the operations of the bank, and is, consequently, a tax on the operation of an instrument employed by the Government of the Union to carry its powers into execution. Such a tax must be unconstitutional."

Subsequently, Congress passed that which is now known as Section 5219, United States Compiled Statutes 1901, Chapter Three, Volume Three, page 3502, which reads 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 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 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." [See Act, June 3, 1864, ch. 106, sec. 41, 13 Stat. III; also Act Feb. 10, 1868, ch. 7, 15 Stat. 34.]

274 Mo.-5.

State ex rel. v. Citizens Bank.

In Home Savings Bank v. Des Moines, 205 U. S. 1. c. 516-17, Mr. Justice MOODY, in behalf of the Supreme Court of the United States, said:

"The right to tax the shares of national banks arises by Congressional authority, but the right to tax shares of State banks exists independently of any such authority, for the State requires no leave to tax the holdings in its own corporations. The right of such taxation rests upon the theory that shares in corporations are property entirely distinct and independent from the property of the corporation. The tax on an individual in respect to his shares in a corporation is not regarded as a tax upon the corporation itself." (Italics ours.)

The law as announced in the above authorities has been clearly recognized and followed from an early date in this State, as shown by the following cases: Lionberger v. Rowse, 43 Mo. 67; First National Bank of Hannibal v. Meredity, 44 Mo. 500; City of Springfield v. The First Natl. Bank of Springfield, 87 Mo. 441; State ex rel. v. Catron, 118 Mo. 1. c. 284-5; City of Stanberry v. Jordan, 145 Mo. 1. c. 377-8; State ex rel. v. Bank, 160 Mo. 1. c. 647-8; State ex rel. v. Shryack, 179 Mo. 424; State ex rel. v. Bank of Carterville, 180 Mo. 717; State ex ex rel. Wilson v. Miners' Bank of Joplin, 181 Mo. 1; State ex rel. v. Bank of Tipton, 196 Mo. 516; State ex rel. v. Lesser, 237 Mo. 310; State ex rel. Campbell v. Brinkop, 238 Mo. 298; National Bank of Commerce v. Allen, 211 Fed. 1. c. 746-7; National Bank of Commerce v. Allen, 223 Fed. 1. c. 475-6.

Considered in the light of foregoing authorities, no recovery can be sustained on the facts disclosed in the tax bill filed with the petition, because it appears therefrom that the assessment of 1913 was made against the Birch Tree State Bank, and not against the stockholders thereof.

II. While the tax bill, by virtue of Section 11498, Revised Statutes 1909, is prima-facie evidence that the amount claimed in the suit is just and correct, yet it

Liability of Bank.

State ex rel. v. Citizens Bank.

is not conclusive in respect to these matters. [State ex rel. v. Vogelsang, 183 Mo. 1. c. 22; State ex rel. v. Cunningham, 153 Mo. 642; State ex rel. v. Fullerton, 143 Mo. 682.] The assessment list, referred to in the preceding statement, was introduced in evidence by respondent, and it shows that the assessment on which the taxes in controversy are based, was properly made against the stockholders of the Birch Tree State Bank, and not against the corporation. The case The case as it now stands before us, is an action by the Collector of the Revenue, in the name of the State, against the defendant, as the purchaser of the assets of said Birch Tree State Bank, to recover $127.69 on account of taxes past due, levied upon an assessment made in 1913 against the stockholders of said Birch Tree State Bank.

It is manifest from the former rulings of this court, in connection with the previous and present legislation upon that subject, that it was the intention of our lawmaking power in the enactment of Section 11357, Revised Statutes 1909, to place national and state banks upon a common plane; to require the corporations in each instance to pay the taxes assessed against their real estate, and that the personal property of such institutions shall be assessed against the respective stockholders thereof, as their interests may appear from the statement furnished the assessor by the chief officers of said banks. The purpose, in having the stockholders of banks assessed with the payment of taxes upon the personal property of said institutions, instead of assessing the banks direct, was to meet the obstacles presented by Chief Justice MARSHALL in the Maryland. tax case supra, in which it was held that the National Bank could not be legally assessed with the payment of taxes like those in controversy here. It therefore becomes important at the outset, to ascertain and determine whether the Birch Tree State Bank could have been held liable for these taxes, had no sale of its assets been made, and it had been sued therefor.

State ex rel. v. Citizens Bank.

The Legislators of this State evidently contemplated that a large portion of the stock in both state and national banks might be held by non-residents of the State; that in some of the banks there might be a large number of shareholders, whose respective interests were small; that it would be both inconvenient and expensive for the collector to recover the tax from the delinquent stockholders as provided in Sections 11461, 11463, and in the Laws of 1913, at pages 739 and 740. Hence, Section 11359, Revised Statutes 1909, was enacted to meet the above difficulties. Said section reads as follows:

"The taxes assessed on shares of stock embraced in such list [referring to Section 11357, supra] shall be paid by the corporations, respectively, and they may recover from the owners of such shares the amount so paid by them, or deduct the same from the dividends accruing on such shares; and the amount so paid shall be a lien on such shares, respectively, and shall be paid before a transfer thereof can be made."

The language used in this section is plain, unambiguous and mandatory in its terms. It should receive a reasonable construction at our hands, and unless the Birch Tree State Bank, without any sale of its assets having been made, in a suit against it for these taxes, could have shown that it had under its control no funds or property with which to pay the same, the collector, on the record before us, would have been entitled to a judgment against said bank for the taxes aforesaid. [State ex rel. v. Shryack, 179 Mo. 1. c. 440; National Bank v. Commonwealth, 76 U. S. (9 Wall.) 353; Cummings v. National Bank, 101 U. S. 153; New Orleans v. Houston, 119 U. S. 265; Aberdeen Bank v. Chehalis County, 166 U. S. 1. c. 446; Merchants' Bank v. Pennsylvania, 167 U. S. 1. c. 465-6; Carstairs v. Cochran, 193 U. S. 10; Citizens Natl. Bank v. Kentucky, 217 U. S. 1. c. 450-2; Clement Natl. Bank v. Vermont, 231 U. S. 1. c. 140; Hawley v. Malden, 232 U. S. 1. c. 9; Carstairs v. Cochran, 95 Md. 488; The Commonwealth v. Gaines & Co., 80 Kentucky, 489; Commis

State ex rel. v. Citizens Bank.

sioners' Court v. State ex rel., 172 Ala. 1. c. 253-4, 55 So. 627; Union Bank v. City of Richmond, 94 Va. 1. c. 319; Railroad v. Morrow, 87 Tenn. 1. c. 427; Eyke v. Lange, 90 Mich. 592, s. c., 104 Mich. 26; St. Johns Natl. Bank v. Tp. of Bingham, 113 Mich. 1. c. 206; City of Boston v. Beal, 51 Fed. 306; Charleston Natl. Bank v. Melton, 171 Fed. 743; City of Muskegon v. Lange, 104 Mich. 19.] A recovery is not permitted on the theory that the bank is primarily liable for the taxes assessed against the shareholders, but upon the principle that the latter have been legally assessed with the payment of same; that the bank is required by Section 11359, supra, to pay the taxes thus assessed; that it has refused to pay the same, although having in its possession funds or property applicable to the payment thereof.

On the facts above stated, the Birch Tree State Bank could have been held as garnishee for the taxes assessed against the respective stockholders. In order to avoid a multiplicity of proceedings against the stockholders, the Legislature saw fit to provide a more direct way of dealing with the subject, by the passage of Section 11359, which requires the bank to pay the tax, and to become re-imbursed as therein provided. We are of the opinion that there is neither hardship nor injustice under the circumstances aforesaid, in requiring the bank to pay the tax, nor in holding it liable therefor, in case of its neglect or refusal to pay the same.

In State ex rel. v. Shryack, 179 Mo. l. c. 440, we said: "After the assessment is thus made against the shares of stock in the names of the shareholders, it is legal to make the bank pay the tax and recover it from the stockholders. [Sec. 9155, R. S. 1899; National Bank v. Commonwealth, 9 Wall. 353; Aberdeen Bank v. Chehalis Co., 166 U. S. 440.]" (Italics ours.)

In National Bank v. Commonwealth, 76 U. S. (9 Wall.) 353 and following, the Supreme Court of the United States had under consideration the construction of a Kentucky statute which required the cashier of the bank to pay the taxes assessed against the shareholders