the tax upon the shares of its stockholders, it has been held that the State may force the bank to pay the tax by distraint of its property.1 The distinction however between a tax upon the bank as the statutory agent of its shareholders and a tax upon the bank property as such must be preserved, as the former tax is authorized by the act of Congress, and the latter is not. Thus an assessment upon the property as such, or against the bank upon the stock in solido, is invalid.2 This distinction is essential for the further reason that in States where deduction of debts is allowed in the assessment of other moneyed capital," the national bank shareholder is entitled to a deduction of his personal indebtedness. 3

Making a national bank the agent of the State to collect taxes assessed against the shares of the bank has been held by the Supreme Court to be a mere matter of procedure, and there is no discrimination against national banks where the State banks are not thus compelled to pay taxes for their shareholders, and the shareholders are looked to directly for such payment. 4

1 First National Bank of Omaha v. Douglas County, 3 Dillon 330. It was said by Judge Dillon: "Undoubtedly the bank could be made liable to pay such taxes by suit, and no reason is seen why the collection may not be enforced by distraint in the same manner as other taxes are col lected."

2 First Nat. Bank of Hannibal v. Merideth, 44 Mo. 500; City of Springfield v. First Nat. Bank, 87 Mo. 441, where it was held that the refusal of the officers of the bank to furnish the assessor with a list of the shareholders did not justify him in making the assessment and enforcing the tax against the property of the bank. First Nat. Bk. v. Fancher, 48 N. Y. 524; Nat. Bank of Chemung v. Elmira, 53 N. Y. 49; First Nat. Bk. v. Richmond, 42 Fed. R. 877; Albuquerque Nat. Bk. v. Perea, 5 N. Mex.

664; 1st Nat. Bk. v. Chehalis Co., 6 Wash. 64; Miller v. Merchants' Nat. Bk. (Ohio), 3 Nat. Bk. Cases 711.

3 First Nat. Bank of Richmond v. City of Richmond, 39 Fed. Rep. 309.

• Merchants' Bank v. Pennsylvania, 167 U. S. 461.

§ 270. Place of taxation.

The Act of Congress provides that the legislature of each State may determine the manner and place of taxing the shares, subject to the restriction that those owned by nonresidents of the State shall be taxed in the city or town. where the bank is located and not elsewhere.1 Where within the State the shares shall be taxed therefore, whether in the town or city where the bank is located or in the locality of the shareholder's residence, is subject to the determination of the State.2

3

The shares of non-residents of the State however are only taxable at the location of the bank. The holder of national bank shares is thus protected against double taxation under competing State authority, for such shareholder cannot be taxed at his domicil on shares in a national bank located in another State. The Supreme Court of Massachusetts said, in the case cited, that, "whatever may have been the design or motive, we can have no doubt that it is within the constitutional power of Congress to establish a national bank in any State and to provide that its shares shall have such a local nature as to be exempt from taxation by other States; and that this power has been exercised in the present instance.'

A national bank has under the law but one location, and

1 The act of 1864 provided for including the shares in the valuation of personal property at the place where the bank was located and not elsewhere, and there was a conflict of judicial opinion as to whether the word "place" meant the State or the town where the bank was located. Opinion of Justices, 53 Me. 594; Austin v. Aldermen, 14 Allen 359; Markoe v. Hartranft, 6 Am. Law Reg. 487. A statute of Illinois provid ing for the taxation of shares in the city where the bank was located was valid, see Tappan v. Merchants' Nat. Bank, 19 Wall. 490. But the court did not decide whether the State could provide for the taxation of shareholders at any other place within its jurisdiction. See also Austin v. Aldermen, 7 Wall. 694; Waite v. Dowley, 94 U. S. 527. 2 Buie v. Commissioners of Fayetteville, 79 N. C. 267. 3 Flint v. Board of Aldermen of Boston, 99 Mass. 141.

Where

therefore only one taxable situs based on location. the bank was located in New Jersey, and, for the convenience of its customers in Philadelphia, maintained a clerk in that city to receive deposits, it was held not to become subject to taxation in Philadelphia.1

Where the statute of a State directs, as it lawfully may, that residents of the State owning stock in national banks located in the State shall be assessed for taxation thereon at their respective residences in the State, such shares must be returned for taxation like other personal property, and they would not therefore be taxable at the location of the bank.2

§ 271. Manner of assessment.

The Act of Congress provides that the legislature of each State may determine the manner as well as the place of taxation, subject to the other provisions of the act. Bank shares are therefore taxable, as other personal property of like character is taxable under the laws of the State. The property and also the surplus funds of the bank, in whatever form invested, are included in the valuation of the shares. The shares are to be valued at their fair cash value on the assumption that the bank will continue its business, and not at what they would be worth in case the bank should be wound up, when that is not in contemplation.1

While a State bank is changing into a national bank and before the requirements of the State statute are fully complied with, it is subject to taxation. 5 A national bank is

1 See National State Bank of Camden v. Pierce, U. S. Circuit Court of Pennsylvania, 2 Nat. Bank Cases 177.

2 See Buie v. Commissioners of Fayetteville, 79 N. C. 267; also Goldsbury v. Warwick, 112 Mass. 384.

3 First National Bank. v. Concord, 59 N. H. 75.

4 National Bank of Commerce v. New Bedford, 155 Mass. 313.

5 Commonwealth v. Bank, Penn. Com. Pleas, 2 Pearson 386.

not taxable on increase of stock, that is, the new shares are not taxable, until the certificate of increase is issued by the comptroller.1

Shares owned by a national bank in other national banks may be included in the valuation of the shares of the bank.2 Thus in the case last cited the court said, at page 70: "The manifest intention of the law is to permit the State in which a national bank is located to tax, subject to the limitations. prescribed, all the shares of its capital stock without regard to their ownership. The proper inference is, that the law permits in the particular instance the taxation of the national banks owning shares of the capital stock of another national bank by reason of that ownership on the same footing with all other shares."

This principle has been applied to the case where a bank owns certain of its own shares, the value of which should be divided among the holders of the remaining shares in the assessment of the value of their respective interests." It was contended in a Pennsylvania case that national bank shares could not be assessed at more than par, because other moneyed capital, that is money at interest, was only assessed at par, and that par must therefore be the maximum of taxable value of bank shares. But the Supreme Court held this position untenable, because money invested in a bank is not money put out at interest, and the par value of stock does not necessarily indicate its value." It is immaterial that the bank's property or surplus may be invested in property itself exempt from taxation, see infra, § 274. It is also immaterial that the bank holds stocks of other corporations acquired by it in the course of business, whether such corporations are located in and taxed by the

1 Charleston v. People's Nat. Bank, 5 S. C. 103.

2 Bank of Redemption v. Boston, 125 U. S. 60.

3 Dutton v. Citizens' National Bank, 53 Kansas 440. Hepburn v. School Directors, 23 Wall. 480.

State or not.1 Deductions are not allowed on that account, unless required to conform to similar deductions allowed in the case of other moneyed capital in the State.

§ 272. Real estate in other States not deducted from value of shares.

The value of real estate, located in other States and assessed for taxation there under their laws, is not required to be deducted from the value for taxation of shares of national banks. This was decided by the Supreme Court in a recent case from Utah,2 where the refusal of the assessors to make such a deduction was made an objection to the validity of the tax. The court said that the State of domicil is entitled under the National Banking Law to collect taxes upon the full value of the shares of stock, and to permit a deduction for the real estate located in other jurisdictions, the value of which necessarily makes part of the value of the stock, would reduce the real value of the shares for taxation without compensatory equivalent. The language of a Maryland case was adopted, at page 561, as expressing the true rule: 3

"The true criterion, as fixed by the statute, is the true value of the stock, without reference to the question where, or in what manner or nature of property or security, the capital stock may be invested. Whether that be invested in real estate, or other property beyond the jurisdiction of this State, the latter having control over the shares and their true value, the peculiar nature and value of the investment of the capital stock of the corporation, beyond the limits of the State, can form no proper subject for specific deduction or abatement from the true value of the shares of stock, when presented to be assessed for pur

1 Pacific National Bank of Tacoma v. Pierce County, 20 Wash. 675. 2 Commercial Bank v. Chambers, 182 U. S. 556.

3 American Coal Co. v. County Commissioners, 59 Md. 185, 194.