of cases there is sometimes great practical difficulty in determining that an assessing board considered only proper elements of valuation in calculating the value of property within the State, and this may be a practical embarrassment in the judicial review of the action of such quasi judicia] tribunals.

As to the right to have the property, when the value in the State is ascertained, assessed equally with other property, see infra, Chapter XVI," Equal Protection of the Laws."

preme Court in relation to the taxation of interstate carriers in the address of Robert Mather, Esq., of Chicago, on "Constitutional Construction and the Commerce Clause," before the American Bar Association in 1897, 20 Vol. Reports of Am. Bar Ass'n. 279.

CHAPTER IX.

TAXATION OF NATIONAL BANKS.

§ 264. Taxing authority of States over national banks.

265. Amendment of 1868.

266. Supreme Court on U. S. statute authorizing State taxation of

national banks.

267. Method of State taxation allowed by U. S. statute is exclusive. 268. State franchise tax not enforceable against national banks. 269. State may require bank to pay tax for shareholders.

270. Place of taxation.

271. Manner of assessment.

272. Real estate in other States not deducted from value of shares. 273. Territories have same taxing power as States over national banks. 274. No deduction on account of holding United States securities. 275. Discrimination through taxation of State banks on capital or property.

276. Other moneyed capital is "other taxable moneyed capital." 277. Equality of taxation with other moneyed capital.

278. Discriminations through exemptions from taxation.

279. Allegations of discriminating exemption held to require answer. 280. Rules of Supreme Court as to discrimination.

281. Discriminating exemption must be of competing moneyed capital. 282. Meaning of "other moneyed capital."

283. No discrimination in New York taxation of railroad, business, mining or insurance companies.

284. No discrimination in New York taxation of trust companies. 285. Nor in exemption of savings banks, building and loan associations or stock in foreign corporations.

286. Discrimination through deduction of debts from "other moneyed capital."

287. No discrimination in deduction of debts from non-competing capital.

288. No discrimination in deduction of debts of unincorporated banks. 289. Discrimination through failure to assess other moneyed capital. 290. Discrimination must be substantial.

291. Difference in the rate of taxation not necessarily discriminative. 292. Equality of taxation requires equality in valuation as in rate of taxation.

293. Supreme Court on assessors' practice of valuation.

294. Inequality must be intentional and habitual.

§ 295. Mere mistake in judgment no discrimination.

296. Formal resolution not necessary for intentional discrimination. 297. Difference in valuation between different classes of personalty not discriminative against national banks.

298. Taxation of real estate of national banks.

299. Double taxation of national banks.

300. Enforcement of tax.

301. Visitorial power of State over national banks.

§ 264. Taxing authority of States over national banks.1 National banks, organized under Act of Congress, are instrumentalities of the Federal government created for national public purposes, and as such are subject to the paramount authority of the United States. It has been held by the Supreme Court, not only that any attempt by a State to define their duties or control the conduct of their affairs is absolutely void, but that the "respective States would be wholly without power to levy any tax, either direct or indirect, upon the national banks, their property, assets or franchises, were it not for the permissive legislation of Congress.

2

The first Act of Congress providing for the organization

1 A number of decisions have been rendered in the State courts and United States Circuit Courts on the subject of State taxation of national banks, where subsequently the questions discussed have been definitely decided by the Supreme Court. Other decisions of these courts relate to the question of construction of State statutes, which are not within the scope of this work. It has been the aim however to give such of the State decisions as apply and distinguish the rules laid down by the Supreme Court, or which bear upon questions not included in the decisions of that court.

2 Owensboro National Bank v. Owensboro, 173 U. S. 664, 1. c. p. 668; Davis v. Elmira Savings Bank, 161 U. S. 276. This limitation upon the taxing power of the State is more comprehensive than that laid down by the court in McCulloch v. Maryland, supra, § 7. The taxes declared void in that case and in Osborn v. United States, supra, § 8, were upon the operations of the bank, and the ruling was declared not to extend to a tax on the real property of the bank nor to a tax on the interest of citizens in the bank, when taxed in common with other property of the same description.

of national banks, passed February 25, 1863,1 contained no grant of power to the States to tax national banks in any form; but the amendatory Act of June 3, 1864,2 section 41, provided as follows:

"(1) Provided that nothing in this act shall be construed to prevent all the shares in any of said associations, held by any person or body corporate, from being included. in the valuation of the personal property of such person or corporation in the assessment of taxes imposed by or under State authority, at the place where such 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. (2) 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 of any of the banks organized under authority of the State where such association is located. (3) Provided, also, that nothing in this act shall exempt the real estate of associations from either State, county, or municipal taxes to the same extent, according to its value, as other real estate is taxed."

It is also provided in section 40 that the president and cashier shall cause to be kept a full and correct list of the names and residences of all the shareholders and the number of shares held by each, in the banking office, and that the list shall be subject to the inspection of all shareholders and creditors of the association and the officers authorized to assess taxes under State authority, during the business hours of each day.

§ 265. Amendment of 1868.

In 1868, the section of the statute authorizing the taxation of national banks was amended and re-enacted in the

1 c. 58, 12 Statutes 665.

2 c. 106, 13 Statutes 99.

form in which it has since appeared in the Revised Statutes, as follows: :

"Sec. 5219. Nothing herein shall prevent all the shares in any association from being included in the valuation of the personal property of the owner or holder of such shares, in assessing taxes imposed by authority of the State in which the association is located; but the legislature of each State may determine and direct the manner and place of taxing all shares of national banking associations located within the State, subject only to the two restrictions, that the taxation shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such State, and that the shares of any national banking association owned by non-residents of any State, shall be taxed in the city or town where the bank is located, and not elsewhere. Nothing herein shall be construed to exempt the real property of associations from either State, county, or municipal taxes to the same extent, according to its value, as other real property is taxed."

It will be observed that the provision in the original act, that the tax should not exceed the rate imposed upon the shares of any of the banks authorized under the authority of the State where the association was located, is stricken out. This amendment however was not material, as the prohibition of discrimination in favor of State banks is included in the provision that the shares shall be taxed at no greater rate than is assessed upon other moneyed capital' in the hands of individual citizens of the State; for this clearly includes shares of stock in State banks.1 The only other amendment relates to the place of assessment, the original act providing that the assessment must be at the place where the bank is located and not elsewhere, while in the amended act the legislature may determine the manner

1 Mercantile Bank v. New York, 121 U. S., p. 156.