U.S. Supreme Court
Lionberger v. Rouse, 76 U.S. 9 Wall. 468 468 (1869)
Lionberger v. Rouse
76 U.S. (9 Wall.) 468
1. By the second limitation in the proviso to the 41st section of the National Banking Act, which enacts that the tax which the section allows the states to impose on the shares held by persons in the said banks "shall not exceed the rate imposed upon the shares in any of the banks organized under the authority of the state where such association is located," Congress meant no more than to require of each state, as a condition to the exercise of the power to tax the shares in national banks, that it should, as far as it had the capacity, tax in like manner the shares of banks of issue of its own creation.
2. Accordingly, where a state, having at the time only two banks of issue and circulation, both of which two it had by contract with them disabled itself from taxing beyond a certain amount, had also numerous banks not banks of issue, having a far greater capital than the two of issue, laid a tax on all shares of stock in banks and incorporated companies generally -- the fact that it could not collect a tax past a certain amount in the two banks of issue which it had at that time was held no bar to the collection of the tax on the shares of the national banks for a greater amount.
Prior to 1857, there had been in Missouri, and there were in the state at that time, several institutions which -- under the name, for the most part, of savings banks, loan institutions, saving associations, and the like, though sometimes with the title of banks only -- transacted business often known as "banking" -- that is to say which received deposits, lent money, and dealt in exchange, but which had not the privilege of issuing notes to circulate as money; not, therefore, banks of issue.
In the year just named, 1857, the state established ten banks which, in addition to the powers of receiving deposits, lending money, and dealing in exchange, had also the power of issuing paper money; the ordinary banks of deposit, discount, and issue or circulation. There were thus in the state, "banks" which were not banks of issue, and banks which were banks of this kind. The act establishing the ten banks of issue declared that chanroblesvirtualawlibrary
"Each banking company (incorporated under it) agrees to pay to the state annually one percent on the amount of capital stock paid in by the stockholders other than the state, which shall be in full of all bonus and taxes to be paid to the state by the respective banks."
And an act amendatory of the act of incorporation provided that this one percent on the amount of capital stock should be a full compensation for all taxes of every kind whatsoever.
In 1863, these ten banks of discount, deposit, and issue, as also numerous other banks not banks of issue, but banks of the sort first above described, being in existence, Congress, by act of 25th of February, of that year, entitled "An act to provide for a national currency," authorized the establishment of national banks; giving power in the act to state banks to become national ones. Under this act of Congress (the state legislature also authorizing any bank, savings institution, savings association, or other corporation having banking powers and privileges in the state, under the laws thereof, to form associations for the purpose of doing a banking business under the act of Congress of February 25th, 1863), eight of the already mentioned ten banks of issue, and which had the privilege while state banks to pay the one percent annually in lieu of all taxes, made themselves national banks. Two, however, did not. These two remained state institutions with the privilege of the one percent, as before. The old associations, that is to say, the banks not of issue, all of which had charters independently of the act of 1857, and which had not the privilege to pay one percent in lieu of all other taxes, remained state institutions.
In this state of things, Congress, on the 3d of June, 1864, passed an act regulating the right of states to tax the shares of national banks. The 41st section of this act [Footnote 1] provided:
"That nothing in this act shall be construed to prevent all the shares in any of the said associations, held by any person,
from being included in the valuation of personal property of such person in the assessment of taxes imposed by or under state authority, at the place where such a bank is located, and not elsewhere, but not at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such state."
"Provided further, that the tax so imposed, under the laws of any state, upon the shares of any of the associations authorized by this act, shall not exceed the rate imposed upon the shares in any of the banks organized under the authority of the state where such association is located."
These enactments, federal and state, being in force, the Legislature of Missouri, by an act of the 4th February, 1864, concerning revenue, provided that "shares of stock in banks and other incorporated companies" should be subject to assessment as other property. The statute provided the mode of assessment as follows:
"Persons owning shares in banks and other incorporated companies, taxable by law, are not required to deliver to the assessor a list thereof; but the President or other chief officer of such corporation shall deliver to the assessor a list of all shares of stock held therein, and the names of the persons who hold the same."
"The tax assessed on shares of stock, embraced in said list, 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 dividends accruing on such shares."
Under this act, a tax of nearly two percent was levied by the state on the assessed valuation of the shares of one Lionberger, a resident of St. Louis, and a shareholder in the Third national Bank of St. Louis. Payment of the tax being refused, the collector, a certain Rouse, collected it forcibly. Lionberger thereupon brought suit against him, in one of the state courts, for the alleged wrongful act; asserting that the proviso in the 41st section of the act of 1864, imposing a limitation on the power of the states, had chanroblesvirtualawlibrary
reference to banks of issue alone; that the state had disabled itself by its contract with them to tax that sort of bank otherwise than it had contracted for (one percent), and that the assessment and collection, if made under color of law, were without any legal authority whatever. It was not denied that the two state banks of issue held a very inconsiderable portion of the banking capital of the state, and that the shares of all other associations in the state (of which there were many, some created after 1857, and some before), with all the privileges of banking except the power to emit bills, were taxed like the shares in national banks. The court in which the suit was brought decided adversely to the position set up, and on appeal the supreme court of the state -- observing that the moneyed associations, saving and banking institutions of the state, were banks to all intents and purposes, and that their shareholders were taxed at the same prescribed rate as the shareholders in the national institutions -- affirmed the decision. The case was now brought here for review. Many shareholders in the national banks in Missouri had also refused to pay the tax laid under the state statute, and the present case was in the nature of a test case to settle its validity; more than $300,000 of such taxes, as was said, being dependent on the judgment. chanroblesvirtualawlibrary