US SUPREME COURT DECISIONS

1. A statute of a state requiring savings societies, authorized to receive deposits but without authority to issue bills, and having no capital stock, to pay annually into the state treasury a sum equal to three-fourths of one percent on the total amount of their deposits on a given day imposes a franchise tax, not a tax on property.

2. Such a tax is valid.

3. Consequently the fact that a savings society so taxed has invested a part of its deposits in securities of the United States declared by Congress, in the act which authorized their issue, to be exempt from taxation by state authority, does not exempt the society from taxation to the extent of deposits so invested.

The Legislature of Connecticut, in 1863, enacted that the several savings banks in the state should make annual return to the comptroller of public accounts "of the total amounts of all deposits" in them respectively on the first day of July in each successive year, and that each should annually pay to the treasurer of the state "a sum equal to three-fourths of one percent on the total amount of deposits" in such savings bank on the days aforesaid. The statute declared that this tax should be in lieu of all other taxes upon savings banks or their deposit.

With this statute in existence, the "Society for Savings" -- one of the savings banks of Connecticut, and as such empowered by its charter to receive deposits of money and improve them for the benefit of its depositors, but having no capital stock or stockholders -- had on the 1st July, 1863, $500,161 of its deposits invested in securities of the United States, which, by the act of Congress authorizing their chanrobles.com-red

Page 73 U. S. 595

issue, were declared to be exempt from taxation by state authority, "whether held by individuals, corporations, or associations." [Footnote 1] Upon the amount of their deposits thus invested, the society refused to pay the sum equal to the prescribed percentage.

On a suit brought by Coite, treasurer of the state, for the purpose of recovering the tax thus withheld, the Supreme Court of Connecticut decided that the tax in question was not a tax on property, but on the corporation as such, and rendered judgment accordingly for the plaintiff. [Footnote 2]

The correctness of the judgment was the point now here on error. chanrobles.com-red

Page 73 U. S. 602