Lionberger v. Rouse
ERROR to the Supreme Court of Missouri, the case being this:
Prior to 1857, there had been in Missouri, and there were in the State at that time, several institutions which-under the name, for the most part, of savings banks, loan institutions, saving associations, and the like, though sometimes with the title of banks only-transacted business often known as 'banking;' that is to say, which received deposits, lent money, and dealt in exchange; but which had not the privilege of issuing notes to circulate as money; not, therefore, banks of issue.
In the year just named, 1857, the State established ten banks, which, in addition to the powers of receiving deposits, lending money, and dealing in exchange, had also the power of issuing paper money; the ordinary banks of deposit, discount, and issue or circulation. There were thus in the State, 'banks' which were not banks of issue, and banks which were banks of this kind. The act establishing the ten banks of issue declared that'Each banking company (incorporated under it) agrees to pay to the State annually one per cent. on the amount of capital stock paid in by the stockholders other than the State, which shall be in full of all bonus and taxes to be paid to the State by the respective banks.'
And an act amendatory of the act of incorporation provided that this one per cent. on the amount of capital stock should be a full compensation for all taxes of every kind whatsoever.
In 1863, these ten banks of discount, deposit, and issue, as also numerous other banks not banks of issue, but banks of the sort first above described, being in existence, Congress, by act of 25th of February, of that year, entitled 'An act to provide for a National currency,' authorized the establishment of National banks; giving power in the act to State banks to become National ones. Under this act of Congress (the State legislature also authorizing any bank, savings institution, savings association, or other corporation having banking powers and privileges in the State, under the laws thereof, to form associations for the purpose of doing a banking business under the act of Congress of February 25th, 1863), eight of the already mentioned ten banks of issue, and which had the privilege while State banks to pay the one per cent. annually in lieu of all taxes, made themselves National banks. Two, however, did not. These two remained State institutions with the privilege of the one per cent., as before. The old associations, that is to say, the banks not of issue, all of which had charters independently of the act of 1857, and which had not the privilege to pay one per cent. in lieu of all other taxes, remained State institutions.
In this state of things, Congress, on the 3d of June, 1864, passed an act regulating the right of States to tax the shares of National banks. The 41st section of this act  provided:
'That nothing in this act shall be construed to prevent all the shares in any of the said associations, held by any person, from being included in the valuation of personal property of such person in the assessment of taxes imposed by or under State authority, at the place where such a 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.
'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 in any of the banks organized under the authority of the State where such association is located.'
These enactments, Federal and State, being in force, the legislature of Missouri, by an act of the 4th February, 1864, concerning revenue, provided that 'shares of stock in banks and other incorporated companies' should be subject to assessment as other property. The statute provided the mode of assessment as follows:
'Persons owning shares in banks and other incorporated companies, taxable by law, are not required to deliver to the assessor a list thereof; but the President or other chief officer of such corporation shall deliver to the assessor a list of all shares of stock held therein, and the names of the persons who hold the same.
'The tax assessed on shares of stock, embraced in said list, shall be paid by the corporations respectively, and they may recover from the owners of such shares the amount so paid by them, or deduct the same from dividends accruing on such shares.'
Under this act, a tax of nearly two per cent. was levied by the State on the assessed valuation of the shares of one Lionberger, a resident of St. Louis, and a shareholder in the Third National Bank of St. Louis. Payment of the tax being refused, the collector, a certain Rouse, collected it forcibly. Lionberger thereupon brought suit against him, in one of the State courts, for the alleged wrongful act; asserting that the proviso in the 41st section of the act of 1864, imposing a limitation on the power of the States, had reference to banks of issue alone; that the State had disabled itself by its contract with them to tax that sort of bank otherwise than it had contracted for (one per cent.), and that the assessment and collection, if made under color of law, were without any legal authority whatever. It was not denied that the two State banks of issue held a very inconsiderable portion of the banking capital of the State, and that the shares of all other associations in the State (of which there were many, some created after 1857, and some before), with all the privileges of banking except the power to emit bills, were taxed like the shares in National banks. The court in which the suit was brought decided adversely to the position set up, and on appeal the Supreme Court of the State-observing that the moneyed associations, saving and banking institutions of the State, were banks to all intents and purposes, and that their shareholders were taxed at the same prescribed rate as the shareholders in the National institutions affirmed the decision. The case was now brought here for review. Many shareholders in the National banks in Missouri had also refused to pay the tax laid under the State statute, and the present case was in the nature of a test case to settle its validity; more than $300,000 of such taxes, as was said, being dependent on the judgment.
Messrs. Evarts and Broadhead, for the plaintiff in error:
1. We assume, as matter of law, that the State of Missouri has disabled itself by contract with the two now existing State banks of issue from laying any tax upon them, or upon their shares, but that of one per cent.  And we assume also, that no taxation by the State upon the capital of the National banks can be at present made, under any Federal legislation existing, nor any upon the shares except under the permissive and restrictive authority of the 41st section of the act of Congress of June 3d, 1864.  How, then, can the tax in question, even admitting it to be a tax on shares, as distinguished from one on capital, be justified? The fact that certain State institutions-sometimes called banks, and without impropriety-are subjected to the same rate and method of taxation as are applied to the National banks is no answer to our question; for the 41st section provides, as the final condition to the validity of State taxation of the shares of National banks, that the tax so imposed 'shall not exceed the rate imposed upon the shares in any of the banks organized under the authority of the State,' where the National bank is located. But,
2. The tax is really a tax on the capital of the banks. The shares are not taxed at all. The shareholder has nothing, under the Missouri statute, to do with the matter. He makes no return of his shares. It is 'the president or other chief officer of such corporation' who delivers to the assessor the list of all the shares in the bank; and it is the corporation which, by the express words of the State statute, pays the tax. That the corporation gets it afterwards, as it can and if it can, does not change the case.
Messrs. Blair and Dick, contra:
1. The Supreme Court of Missouri has decided that the two institutions organized under the act of 1857, are not the only 'banks' in the State, but on the contrary, that the banking institutions organized under the laws of the State which confer banking privileges without the power of issuing paper, are banks; and this is in harmony with the ruling of this court in the case of The Bank for Savings v. The Collector,  which says:
'Banks, in the commercial sense, are of three kinds, to wit: 1st, of deposit; 2d, of discount; 3d, of circulation; all or any of these functions may be and frequently are exercised by the same association; but there are still banks of deposit, without authority to make discounts, or issue a circulating medium.'The revenue laws of Congress also recognize banks without circulation as 'banks' for the purposes of taxation.
The meaning given by the plaintiff to the State statute, assumes that the word 'banks' means, always, 'banks of issue,' which it does not always mean.
2. The bank is made by the State statute the agent of each individual shareholder, and acts merely as such. This is a convenience to him as also to the State; and is not unlawful.
Mr. Justice DAVIS delivered the opinion of the court.
^1 13 Stat. at Large, 111.
^2 Home of the Friendless v. Rouse, 8 Wallace, 430.
^3 Gordon v. The Appeal Court, 3 Howard, 133; Van Allen v. The Assessors, 3 Wallace, 573; People v. The Commissioners, 4 Id. 244; Bradley v. The People, Ib. 459.
^4 3 Wallace, 495, 512.