The revenue law of Kentucky imposing a tax on bank stock of fifty cents on each share equal to one hundred dollars of stock was held valid as to national banks 1 because the tax was clearly intended to be at the rate of fifty cents per one hundred dollars or one-half of one per cent on the share, whatever the par value of the stock.

§ 291. Difference in rate of taxation not necessarily discriminative.

The statute forbids discrimination between national and State banks or in favor of other moneyed capital in the hands of private individuals, but it does not prohibit a difference in rate between national banks under different circumstances, provided State banks and competing moneyed capital are treated in the same way. Thus the statute of Pennsylvania provided that, where any bank collected from its shareholders a tax of eight mills on the dollar upon the par value of its shares and paid the same into the State treasury, its shares and so much of its capital and profits as should be invested in real estate should be exempted from local taxation; but if any national bank failed to collect the tax of eight mills on the dollar upon the par value of its shares, it must then make a return showing the full number of shares of capital stock issued by it and the actual value thereof, which should be assessed for taxation at the same rate as that imposed upon other moneyed capital in the hands of individual citizens, that is to say, at the rate of four mills on the dollar of the actual value thereof. Thus if the bank had a large surplus and its stock was in consequence worth several times its par value, it would naturally elect to pay the eight mills, and thus in fact pay at a less rate on the actual value of its stock than a bank without a surplus whose stock was only worth par. The court held

1 National Bank v. Commonwealth, 9 Wall, 353.

that this was no violation of the National Banking Act.1 It was urged that there was discrimination, because, in case the State banks did not elect to pay the eight mills, the State would look to the stockholders directly for the regular four mills tax; whereas as to national banks it would reach the stockholders through the bank itself, and hence some shareholders in State banks might escape taxation. But the court said that this was a mere matter of procedure and did not affect the validity of the law.

§ 292. Equality of taxation requires equality in valuation as well as in rate of taxation.

It is obvious that inequality in taxation is effected as surely through difference in valuation by the assessors as by difference in the rate of taxation imposed by law. Such inequality between the assessment of national bank shares and other competing moneyed capital involves a discrimination in violation of the Act of Congress. This principle has been applied in several adjudged cases and the rule established that the inequality, to constitute discrimination, must be something more than sporadic and occasional, must in fact be habitual and intentional, so as to constitute a rule of conduct.

Thus the Supreme Court said in a New York case: 2"This valuation, then, is part of the assessment of

taxes.

"It is a necessary part of every assessment of taxes which is governed by a ratio or percentage. There can be no rate or percentage without a valuation. This taxation, says the act, shall not be at a greater rate than is assessed on other moneyed capital. What is it that shall not be greater? The answer is, taxation. In what respect shall

1 Merchants' & Manufacturers' Bank v. Pennsylvania, 167 U. S. 461. 2 People v. Weaver, 100 U. S. 539, l. c. p. 545.

it be not greater than the rate assessed upon other capital? We see that Congress had in its mind an assessment, a rate of assessment, and a valuation; and, taking all these together, the taxation on these shares was not to be greater than on other moneyed capital."

In an Ohio case it appeared that the city of Cleveland generally assessed bank shares higher than other personal property, and that this was not a mere occasional incident, but a rule of conduct deliberately adopted. The tax on national bank shares was about sixty per cent of its real value greater than that on other moneyed capital.1

§ 293. Supreme Court on assessors' practice of valuation. In another Ohio case from Toledo, it appeared that a rule of valuation had been established by the assessors, whereby ordinary personal property was assessed at about one-third of its actual value, money or invested capital at three-fifths of its actual value, while the assessment of shares of incorporated banks was fully equal to their selling price and true value in money. It was said that while the constitution and statutes of nearly all the States have enactments designed to compel uniformity of taxation and assessments at the actual value of all property liable to taxation, yet it is a matter of common observation that in the assessment of real estate this rule is habitually disregarded.2

The opinion concluded, 1. c. page 163:

“And while it may be true that there has not been in

1 Pelton v. National Bank, 101 U. S. 143.

2 Cummings v. National Bank, 101 U. S. 153, Chief Justice Waite dissenting. As to the presumption of violation of official duty in such cases, see comments on this opinion in New York ex rel. v. Barker, 179 U. S. 279, l. c. 286. But it was held in Texas, Engelke v. Schlenker, 75 Tex. 559, that the legality of the assessment of a tax upon the property of a national bank which does not exceed its true value cannot be affected by the custom of the assessor to assess other property at a uniform valuaLion less than its true value.

other States such concerted action over a large district of country by the primary assessors in fixing the precise rates of departure from actual value, as is shown in this case, it is believed that the valuation of real estate for purposes of taxation rarely exceeds half of its current salable value. If we look for the reason for this common consent to substitute a custom for the positive rule of the statute, it will probably be found in the difficulty of subjecting personal property, and especially invested capital, to the inspection of the assessor and the grasp of the collector. The effort of the land owner, whose property lies open to view, which can be subjected to the lien of a tax not to be escaped by removal, or hiding, to produce something like actual equality of burden by an undervaluation of his land, has led to this result. But whatever may be its cause, when it is recognized as the source of manifest injustice to a large class of property around which the constitution of the State has thrown the protection of uniformity of taxation and equality of burden, the rule must be held void, and the injustice produced under it must be remedied so far as the judicial power can give remedy."

§ 294. Inequality must be intentional and habitual.

In both these Ohio cases injunctions were granted, complainants having paid into court the amount admitted to be due. This principle that inequality in valuation constitutes discrimination has been followed, but with the qualification already noted, that it must affirmatively appear that the inequality is intentional and habitual. Thus in a New York case, where the assessors had adopted the plan of valuing bank shares at par,1 and an action at law had been brought to recover taxes alleged to have been illegally col

1 Stanley v. Supervisors of Albany, 121 U. S. 535. See also as to procedure, Williams v. Supervisors, 122 U. S. 154.

lected, the court held that the testimony did not warrant the inference that there was an habitual assessment of national bank shares at a higher rate than other moneyed capital, and commented on the assessment at par as follows, 1. c. page 548:

"A different method might have led to perplexing difficulties, owing to the great fluctuations to which shares in banking institutions are subject, their value depending very much on the skill and wisdom of the managers of those institutions. Intelligent men constantly differ in their estimate of the value of such property, and the stock market shows almost daily changes. Presumptively the nominal value is the true value, any increase from profits going, in the natural course of things, in dividends to the stockholders. This method, applied to all banks, national and State, comes as near as practicable, considering the nature of the property, to securing, as between them, uniformity and equality of taxation; it cannot be considered as discriminating against either. Both are placed on the same footing.

It was said that the proper remedy in such a case, if relief was not afforded by the State revising boards, was by application to a court of equity to restrain the collection of the excess upon payment or tender of what was admitted to be due.

In another Ohio case it appeared that other moneyed capital was valued on a sixty per cent basis and bank shares at a rate of sixty-five per cent, and the collection of the excessive five per cent was restrained.1

In a case from Illinois, where it appeared that the assessments were partial, unequal, unjust, and lacking in uniformity, but that there was no intentional discrimination

1 Whitbeck v. Mercantile National Bank of Cleveland, 127 U. S. 193.