On the other side were, Messrs. C. O'Connor, A. J. Parker, R. O'Gorman, and W. Hutchins.
I. The case of Van Allen v. The Assessors, adjudged, in fact, no more than that, under the legislation of New York, as then existing, a tax could not be laid on shares in the national banks. That was the point of the case. Whether such an act as that passed 23d April, 1866, would be valid so far as it taxed bank shares, where the capital of the banks was invested in Federal securities, was not a question necessarily in the case.
[The counsel then proceeded to discuss at large the first question as related to national banks, upon the assumption that this question was still open in this court for discussion.]
II. There is no act of Congress authorizing the taxation of shares of State banks whose capital is invested in United States securities, and the State, in asserting its right to tax such shares, cannot invoke any power or authority from Congress, but must maintain such right as one of State sovereignty. It is evident from the opinions in Van Allen v. The Assessors, that the court, in sustaining the assessment and the State law under which it was made, place its judgment upon the proviso in the forty-first section of the act of Congress.
A question is now presented, whether, in the absence of any act of Congress authorizing the taxation of the shares of STATE banks, whose capital is invested in government securities, such taxation by the State can be supported.
1. The United States securities, in which the capital of the Corn Exchange Bank, which is a State bank, is invested, are included within the provision of the act of Congress, that such securities, 'whether held by individuals, corporations, or associations, shall be exempt from taxation by or under State authority.'
2. It is settled, in adjudications of the Supreme Court of the United States, that the capital of such bank cannot be taxed upon any measure or computation of it which includes the investment in these United States securities, thus exempt by law from State taxation.
3. It is also adjudicated by the Supreme Court of the United States, upon a unanimous judgment of that court, that a tax, incompetent to State authority when assessed to the corporation or association as owner, and upon its capital in bulk, is equally incompetent to State authority when as sessed to the shareholder as owner, and upon his shares.
4. The tax complained of by the relators, depending for its validity, as it does, upon the mere vigor of the legislation of the State of New York, and being without aid from any legislation or permission of Congress, is necessarily invalid as respects the investment of the bank, in United States securities, exempt from taxation.
III. In making the assessment, the commissioners diseriminated against the shareholders of national banks, and in favor of insurance companies and individuals, by refusing to make to the former the same allowance which is made to the latter on account of investments in United States securities, and have thus assessed 'such shareholders at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens,' in violation of the act of Congress above referred to.
The only permissive legislation of Congress touching the subject to State taxation of the shares of national banks is found in the forty-first section of the National Currency Act of June 3d, 1864.
And the only permissive State legislation touching the taxation of shares of State banks is the act of April 23d, 1866, and by each of said acts it is provided that such taxation shall not be 'at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such State.'
The two provisos of the forty-first section of the act of June 3d, 1864, respectively refer to different subject.
The first relates to the valuation at which the shares shall be assessed; and provides that it shall not exceed the rate of valuation at which other moneyed capital in the hands of individuals shall be assessed.
The second refers to the rate at which taxes shall be imposed on such valuation, after such assessment has been made, and provides that such taxes shall not exceed in rate, or percentage, that imposed on shares in State banks.
The question in this case is not as to any rate, or percentage, at which taxes have been imposed, but as to the rate or value at which the shares have been assessed.