holders and inhabitants of the village according to law, a moneyed or stock corporation having its banking-house for the transaction of business within such village was declared to be an inhabitant within the meaning of the act.

In 1838 the General Banking Law hereinbefore mentioned was enacted, (ch. 260). Associations formed under it were held to be corporations, and as such liable, like other moneyed institutions, to taxation on their capital.**

Other decisions with respect to the method of assessment were also rendered, it being held that the legislature intended taxing corporations upon the nominal amount of the stock, and not upon its actual value to the stockholders, and that by the term "personal estate" was meant so much of the capital stock paid in, or secured to be paid in, as will remain after deducting therefrom the actual cost of the real estate of the company, and such portions of the stock as were exempt from taxation.45

No other law relating to the subject was passed until December, 1847, when the legislature enacted (ch. 419, §§ 4, 5), that all banks and individual bankers "Should be subject to taxation on the full amount of capital paid in, or secured to be paid in, as such capital, by them severally, at the market value of such securities, to be estimated by the Comptroller, without any deduction for the debts of such individual banker or banking association." It having been decided 46 that corporations which were liable to taxation on their capital could not be taxed on their surplus profits remaining on hand and undivided, the legislature next amended the Revised Statutes so as to render the surplus profits or reserved funds of all corporations, over and above ten per cent. of their capital, liable to taxation in addition to their former liability, (ch. 65, Laws of 1853). Under this statute the banks were held to be liable to city, but not to county taxes on their personal property.

Thus the law remained till 1857, in which year another statute was enacted (ch. 456), the third section of which subsequently gave

44 Thomas v. Dakin, 22 Wend. 9; Warner v. Beers, 23 id. 103; People v. Assessors of Watertown, 25 id. 686.

45 Bank of Utica v. City of Utica, 4 Paige, 399, 27 Am. Dec. 72; Farmers' Loan & Trust Co. v. The Mayor, etc., of the City of New York, 7 Hill, 261. 46 Bank of Utica v. City of Utica, supra.

rise to much conflicting litigation respecting the right of the State to directly or indirectly tax securities of the United Sates which are or may be thereafter exempted by Congress from State taxation.

The law of Congress, passed February 25, 1862, declared, "That all stocks, bonds and other securities of the United States, held by individuals, corporations or associations within the United States, shall be exempt from taxation by or under State authority." 47

The State courts held that taxing the paid-up capital stock of a corporation was not equivalent either in fact or principle to the taxation of the property in which the money paid in for that capital was invested. 48 It was also decided that so far as this act of Congress was intended to withdraw from State taxation, securities of the United States already subject thereto, it (the act) was extra-constitutional and void.49

The latter decision seems to have been acquiesced in, as no appeal was taken, but the former was carried to the United States Supreme Court and there reversed,50 thus rendering nugatory the law of 1857.

The attempt to tax United States securities in the hands of the National banks by taxing the portion of capital stock they represented having thus failed, it was next attempted to reach these securities by taxing the banks on a valuation equal to the amount of their capital stock. The law of 1863 (ch. 240), passed for this purpose, declared that, "All banks, banking associations and other moneyed corporations and associations should be liable to taxation on a valuation equal to the amount of their capital stock paid in or secured to be paid in, and their surplus earnings (less than ten per cent. of such surplus), in the manner now provided by law, deducting the value of the real estate held by any such corporation or association, and taxable as real estate." The State courts upheld the validity of this act,51 but were again reversed by the U. S. Supreme Court.52

"The effect of these decisions of the Federal court," says Mr.

47 Acts 1861-62, 346.

48 People v. Com. of Taxes, 23 N. Y. 192; S. C. 34 Barb. 509.

49 People v. Com. of Taxes, 26 N. Y. 163.

50 2 Black, 620, 17 L. ed., 451. See also editorial note to State B'd of Equalization v. People ex rel. Goggin, 58 L. R. A. 513, 568, on taxation of capital stock of corporations, where the cases bearing on this phase of the question are presented.

51 People v. Com. of Taxes, 40 Barb. 334.

52 People v. Com. of Taxes, 2 Wall. 200, 17 L. ed. 793.

Justice Marvin, in the People v. Board of Education, 46 Barb. 594, "is nothing more and nothing less than that the State cannot by any system of taxation assess and tax the securities of the United States, whether held or owned by corporations or individuals, nor can such holder and owner be taxed on account of such securities."

Yielding to the hostility exhibited to the law as it then stood, Congress during the year 1864 amended the act of 1862, so as to permit the inclusion of National bank shares held by any person or corporation in the valuation of the personal property of such person or corporation, in the assessment of State taxes at the place where such bank was 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 States; provided further, that the tax so imposed under the laws of any State, upon the shares of the associations, authorized by this act, should not exceed the rate imposed upon the shares of any of the banks organized under the authority of the State where such association is located; provided, also, that nothing in this act should 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." 53 In view of this amendment, the legislature the following year passed an act (ch. 97, Laws of 1865), providing that the shares in all State and National banks held by any person or corporation should be included in the valuation of the personal property of such person or corporate body, etc., the remainder of the act being in conformity to the act of Congress. But this attempt to reach National bank shares by including them in the valuation of the personal property of the holder and owner also proved abortive, for while the Court of Appeals held that the shares in a National bank could be assessed under this law,54 the U. S. Supreme Court decided that as no tax had been laid on shares in State banks at all, the act was void, though there was a tax on their capital. 55

53 Act of 1864, § 41. For an exhaustive presentation of the authorities bearing on the subject of State taxation of national banks, see editorial note to Mellary v. Downer, 45 L. R. A. 737.

54 City of Utica v. Churchill, 33 N. Y. 171; overruling People v. Barton, 44 Barb. 148.

55 Van Allen v. The Assessors, etc., 3 Wall. 573, 18 L. ed. 229; People v. Com. of Taxes, 4 Otto, 415, 24 L. ed. 164.

The legislature now abandoned the taxation of the capital of both State and National banks by enacting the following year (1866), that no tax should hereafter be assessed upon the capital of any bank or banking association organized under the authority of this State, or of the United States, but the stockholders in such banks and banking associations should be assessed and taxed on the value of their shares of stock therein; said shares should be included in the valuation of the personal property of such stockholder, in the assessment of taxes at the place, town or ward where such bank or banking association is located, and not elsewhere, whether the said stockholder resides in said place, town or ward, or not, but not at a greater rate than is assessed upon other moneyed capital in the hands of individuals in this State. And in making such assessment there should also be deducted from the value of such shares such sum as is in the same proportion to such value as is the assessed value of the real estate of the bank or banking association, and in which any portion of their capital is invested, in which said shares are held, to the whole amount of the capital stock of said bank or banking association; it was also provided that nothing therein contained should be construed to exempt from taxation the real estate held or owned by any such bank or banking association; but the same should be subject to State, county, municipal and other taxation to the same extent and rate and in the same manner as other real estate is taxed, (§ 1, ch. 761, Laws of 1866). This act was subsequently unheld by the Court of Appeals in the case of People v. Com. of Taxes,56 which was in turn affirmed by the Supreme Court of the United States,57 and thus after repeated efforts a law was finally secured by which a tax on bank shares and bearing indirectly on the securities of the United States could be legally imposed.

The substance of the last-mentioned decisions of the State and Federal courts was that the shares of stock in a bank, whether its capital be invested in U. S. bonds or other securities, are subject to taxation and assessment under State law at the place where the bank is located and not elsewhere, but not at a greater rate than that imposed on shares in State banks located at the same place, or upon other

56 35 N. Y. 423.

57 S. C. 4 Wall. 244, 18 L. ed. 344.

moneyed capital in the hands of individual citizens of the State imposing the tax. With respect to this last condition it has been held 58 that the provision of the National Banking Act,59 that the taxation of the shares of National banks "shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens," refers to the rate of taxation exclusively and not to the assessed valuation.

It was also decided at the same time that placing the valuation of the bank shares in a separate item, in a column with personal property, does not invalidate the assessment, it being a substantial compliance with both the act of Congress authorizing the shares to be "included in the valuation of the personal property" of the owner, and of the last-mentioned State law.

further decided that the restriction contained in the State law of the place of taxation to the town or ward where the bank is located, whether the stockholders reside there or not, is valid, for this species of property may be considered apart from the owner and a locality given to it for the purpose of taxation.60

As to the mode of ascertaining the valuation at which bank stock shall be assessed, it is held 61 to be the duty of the assessor to deduct from the actual value of each share a sum bearing the same proportion thereto as the assessed value of the real estate of the bank bears to the actual value of all the capital stock. The expression "whole amount of capital stock," as used in the act, refers to the actual value of the stock, not its nominal amount.

Speaking of this system of taxing bank shares, Judge EARL remarks in People v. Com. of Taxes,62 that it "is in entire harmony with that of taxing other personal property. The Revised Statutes provide that all personal estate shall be estimated and assessed by the assessors at its full and true value as they would appraise the same in payment of a just debt from a solvent debtor.' This provision requires the assessment to be for the full and true value,' and that there be no mistake or evasion of this duty, it provides a guide

may

58 Williams v. Weaver, 75 N. Y. 30.

U. S. R. S., § 5219 (U. S. Comp. Stat. 1901, p. 3502).

* See also Tappan v. Merchants' National Bank, 19 Wall. 490, 22 L. ed. 189.

61 People v. Com. of Texas, 69 N. Y. 91; S. C. 9 Hun, 650.

62 67 N. Y. 520.