Sargent Chase, for the plaintiffs.
I. The statute authorizes the taxation of the surplus capital on hand of banking
institutions, — not their money on hand, at interest, or on deposit. Gen.
St., c. 49, s. 5.
The tax in question, being assessed upon the plaintiffs' money on hand, at interest,
or on deposit, was unauthorized by statute, and is therefore illegal, and should
be abated.
It is a rule, universally adopted, that statutes authorizing taxation must be strictly
followed. In fact, all statutes authorizing the
taking of private property for public uses are so applied and construed. The safety
of individual rights requires that it should be so. The individual presumably gives
his assent to the statute as adopted, and is willing to be bound by it, and to have
his property taken from him for public uses; in accordance with its term; but if
the court, by a forced, liberal, or equitable construction of the statute, takes
his property from him, he can justly claim that it is done without his assent, and
is oppressive. And so courts, in applying such statutes, keep within the letter
of the law.
Under s. 11, c. 53 of Gen. St., it has been held that the court are to make such
orders upon petitions for abatement of taxes as justice requires. Mills v. Manchester, 58
N.H. 38 . This doctrine has been applied only in those cases where the amount of
the taxes is in question, and not the manner of their assessment. Justice requires
that the law as it is written shall be administered. If a tax has been assessed
without authority, justice requires that it shall be abated, although the person
against whom it is assessed may be liable to an equal amount of taxation upon other
property which has escaped taxation in some way.
II. In this case the plaintiffs' surplus capital, including undivided profits,
at the time it was taxed, was invested in United States bonds. Such investment exempts
it from taxation.
Surplus capital is not an intangible, imaginary thing, but a substantial reality,
existing either in money, notes, bonds, real estate, or other tangible property.
Its taxation is the taxation of property existing in some form. It has an owner:
we cannot conceive of its existence without some owner. That owner may control it
as he may other kinds of property belonging to him, and may change its form of existence
or investment from time to time at pleasure. Such owner may own other capital from
which this surplus has arisen — presumably does — and he may put his
capital into one kind of property and his surplus into another. He may invest his
surplus in property that is subject to taxation by the laws of the land, or he may
invest it in property that is exempt from such taxation; in short, he may deal with
it as he may with any other of his absolute possessions. In this case the owner
of this surplus capital, whoever that owner may be, has seen fit to invest the same
in U.S. bonds; in other words, said surplus capital is U.S. bonds, and vice versa.
The plaintiffs are the owners of the surplus capital in question, or, which is the
same thing, of the U.S. bonds in which it is invested. The stockholders of said
bank do not own any part of such bonds, or any interest in them as such, but only
a right to their proportion of the net income of the entire property of the bank
and of its net assets, as before stated. And so the city authorities have properly
treated the matter under our statutes, in making the assessment in question: they
have assessed the tax against the First National Bank of Concord, treating this
corporation
as the owner of the property taxed. The tax in question is therefore a tax upon
United States bonds against the exclusive owner thereof.
If these same bonds were owned by an individual, or by a manufacturing or other
corporation aside from a national bank; or, if they had been divided, in kind, among
the stockholders of the bank, or, belonging to them, were held undivided in trust
for them by some person or corporation, it is certain that they could not be taxed.
The question then arises, What peculiarity is there in the nature of national banks
that renders such property taxable when owned by them, whereas it is not taxable
when owned by individuals or other corporations?
We have been unable to discover any such peculiarity. In fact, the character of
the property itself is what renders it non-taxable, not the character of its owner
or the manner of its ownership. The laws under which such bonds were issued and
sold provided that they should not be taxed, no matter by whom or in what manner
owned — Rev. St. U.S. 736, s. 3701 — so that they would not be any more
subject to taxation even if it should be held that they belong directly or indirectly
to the stockholders of the bank.
The supreme court of the United States, in several cases, has decided substantially
in accordance with the foregoing views; and their decisions should control in cases
of this kind, as they are the tribunal of final resort, to which this and all similar
cases may be taken by writ of error. See Rev. St. of U.S. 132, s. 709; Waite v.
Dowley, 4 Otto 532; National Bank v. The Commonwealth, 9 Wall. 353; Van Allen v.
The Assessors, 3 Wall. 573; People v. The Commissioners, 4 Wall. 244; Bradley v.
The People, 4 Wall. 459; — also, see State v. City of Newark, 10 Vroom 380,
a case directly in point, to which we ask special attention.
C. P. Sanborn, for Concord, furnished no brief.