First National Bank of Wellingtion, Ohio v. Chapman
This action was brought to restrain the collection of taxes, through or by means of the bank, by the defendant in error, levied under a statute of Ohio, upon certain individual shareholders in the bank, on the ground, as alleged, that the assessments upon such specified shareholders were illegal, as having been made without regard to the debts of such individual owners, contrary to the case of other moneyed capital in the hands of individual citizens whose debts were permitted to be deducted from the value of such capital before the assessment of taxes thereon.

The petition contained allegations intended to show a case for the interposition of a court of equity, and a tender was therein made of the amount of the taxes which the plaintiff admitted to be due on such shares after deducting the debts.

The answer, while not taking any objection that a case for equitable relief by injunction was not made, provided the contention of the petition as to the assessments being illegal was well founded, claimed, substantially, that, by the laws of the United States and of Ohio, the assessments were legal, and the petition should therefore be dismissed. Upon trial in the court of common pleas of Lorain county, the court found the following facts:

'First. Plaintiff is a national banking association, incorporated under and by virtue of an act of congress, entitled 'An act to provide for the national currency, secured by a pledge of United States bonds, and to provide for the circulation and rede ption thereof,' approved June 3, 1864, and the amendments thereof, and is established and doing business in the village of Wellington, county of Lorain, and state of Ohio.

'Second. The defendant is the duly elected and qualified treasurer of the county of Lorain and state of Ohio.

'Third. The plaintiff has a capital stock of $100,000, divided into 1,000 shares of $100 each, all of which are fully paid up, and certificates for the shares are outstanding and owned by a large number of persons.

'Fourth. That in accordance with section 2765 of the Revised Statutes of Ohio, then and now in force, the cashier of plaintiff duly reported in duplicate, to the auditor of said county, the resources and liabilities of said banking association, at the close of business on the Wednesday next preceding the second Monday of May, 1893, together with a full statement of the names and residences of the shareholders therein, with the number of shares held by each, and the par value thereof, as required by said section; that included in said return so made by said cashier was the real estate owned by the plaintiff, valued at $3,420, separately assessed and charged on the tax duplicate of said county; that thereupon said auditor proceeded, as required by section 2766 of the Revised Statutes of Ohio, to fix the total value of said shares according to their true value in money, and fixed the same at $74,710, exclusive of the assessed value of plaintiff's real estate, and made out and transmitted to the annual board of equalization of incorporated banks a copy of the report so made by said cashier, together with the valuation of such shares as was fixed by said auditor; that said state board of equalization, acting under section 2808 and 2809 of the Revised Statutes of Ohio, did examine the return aforesaid, made by said cashier to said county auditor, and the value of such shares as fixed by said county auditor, and did equalize said shares to their true value in money, and fixed the valuation thereof at $74,710, exclusive of the assessed value of plaintiff's real estate; and the auditor of said state did certify said valuation to the auditor of said county of Lorain, which said auditor of said county did enter upon the tax duplicate of said county for the year 1893.

'Fifth. That the following named stockholders of said bank were on the said day next preceding the second Monday of April, 1893, the owners of the number of shares of stock of said bank set opposite their respective names, to wit:

S. S. Warner.................. 150 shares.

R. A. Horr....................  10 shares.

W. Cushion, Jr................  50 shares.

C. W. Horr.................... 120 shares.

O. P. Chapman.................  10 shares.

E. F. Webster.................  10 shares.

W. R. Wean....................  20 shares.

S. K. Laundon................. 120 shares.

'That said shares were valued by said state board of equalization for the year 1893 at $36,607.90, and certified by said board to the auditor of Lorain county as the taxable value of the same; that the rate of taxation for all taxes assessed and collected for the year 1893 within said county and village was $0.0255 on a dollar's valuation, and amounted on said value of said shares to $933.50.

'Sixth. That on said day next preceding said second Monday of April, 1893, and at the time the cashier of said banking association made return to the auditor of said county of the names and residences of the shareholders of said association, with the numbers and par value of the shares of capital stock of said banking association for the year 1893, to wit, between the first and second Mondays of May of said year, each of said abovenamed shareholders was indebted and owing to others of legal bona fide debts a sum in excess of the credits, from which, under the laws of Ohio, he was entitled to deduct said debts to an amount equal to the value of said shares; that proof of said indebtedness was duly made to said auditor by the shareholders aforesaid, at the time that the valuation of said shares of stock was so fixed by him; and that said auditor refused to allow the deduction o  any indebtedness of said shareholders from the value of said shares, as so fixed by said board of equalization; and the auditor of said county carried upon the duplicate delivered to the treasurer the entire valuation of said shares so made, without allowing any deductions therefrom, by reason of any bona fide indebtedness of said shareholders to others, from the valuation so fixed by said board of equalization.

'Seventh. That the plaintiff tendered to said treasurer of Lorain county, on the 28th day of December, 1893, and offered to pay to said treasurer, the sum of $485.80, if he would receive the same in full for the tax assessed upon the valuation of the shares of stock owned by the shareholders named in the petition for the entire year of 1893, and said treasurer refused to accept the same, and said treasurer intends, if not enjoined by this court, to use all lawful means for the collection of said tax so assessed upon the valuation of said shares of stock.'

The court also found, as a conclusion of law from the above facts, that the injunction should be denied, and the petition dismissed. The plaintiff appealed to the circuit court of Lorain county, where, after argument, the judgment for defendant was reversed, and judgment ordered for plaintiff enjoining the collection of the tax. The defendant, the treasurer of Lorain county, brought the case to the supreme court of the state, where, after hearing, the court reversed the circuit court, and affirmed the judgment of the common pleas dismissing the petition. Chapman v. Bank, 56 Ohio St. 310, 47 N. E. 54.

The state law on the subject of taxation, so far as it may be claimed to in any way affect the question, is contained in the various sections of the Revised Statutes of Ohio which are set out in the margin. 

W. W. Boynton, for plaintiff in error.

F. S. Monnett and S. W. Bennett, for defendant in error.

Mr. Justice PECKHAM, after stating the facts, delivered the opinion of the court. 

Notes

(a) 'Real property' and 'lands' mean, not only land itself, but everything connected therewith in the way of buildings, structures, and improvements, and all rights and privileges appertaining thereto.

(b) 'Investment in bonds' includes moneys in bonds or certificates of indebtedness of whatever kind, issued by incorporated or unincorporated companies, towns, cities, villages, townships, counties, states, or other incorporations, or by the United States.

(c) 'Investment in stocks' includes all moneys invested in the capital stock of any association, corporation, joint-stock company, or other company, where the capital or stock is divided into shares, transferable by each owner without the consent of the other shareholders, for the taxation of which no special provision is made by law.

(d) 'Personal property' includes (1) every tangible thing the subject of ownership, whether animate or inanimate, other than money, and not forming part or any parcel of real property; (2) the capital stock, undivided profits, and all other means not forming part of the capital  tock of a company, whether incorporated or unincorporated, and all interest in such stock, profits, or means, including shares in a vessel, as therein stated; (3) money loaned on pledge or mortgage of real estate, although a deed may have been given, provided the parties consider it as security merely.

(e) The term 'moneys' includes surplus or undivided profits held by societies for savings or banks having no capital stock, gold and silver coin, bank notes of solvent banks in actual possession, and every deposit which the person owning, holding in trust, or having the beneficial interest therein, is entitled to withdraw in money on demand.

(f) The term 'credits' means the excess of the sum of all legal claims and demands, whether for money or other valuable thing, or for labor or service due or to become due to the person liable to pay the tax thereon,

including deposits in banks, or with persons in or out of the state, other than such as are held to be money as defined in this section, when added together (estimating every such claim or demand at its true value in money), over and above the sum of legal bona fide debts owing by such person; but, in making up the sum of such debts owing, no obligation can be taken into account (1) to any mutual insurance company; (2) for any unpaid subscription to the capital stock of any joint-stock company; (3) for any subscription for any religious, scientific, or charitable purpose; (4) for any indebtedness acknowledged, unless founded upon some consideration actually received and believed at the time of making the acknowledgment to be a full consideration therefor; (5) for any acknowledgment made for the purpose of diminishing the amount of credits to be listed for taxation; (6) for any greater amount or portion of any liability as surety than the person required to make the statement of such credits believes that such surety is, in equity, bound to pay, etc.

Other sections read as follows:

'Sec. 2736. Each person required to list property shall, annually, upon receiving a blank for that purpose from the assessor, or within five days thereafter, make out and deliver to the assessor a statement, verified by his oath, as required by law, of all the personal property, moneys, credits, investments in bonds, stocks, joint stock companies, annuities or otherwise, in his possession, or under his control, on the day preceding the second Monday of April of that year, which he is required by law to list for taxation, either as owner or holder thereof, or as parent, husband, guardian, trustee, executor, administrator, receiver, accounting officer, partner, agent, factor or otherwise; and also of all moneys, credits, investments in bonds, stocks, joint-stock companies or otherwise, held on said day by another, residing in or out of this state, for and belonging to the person so listing, or any one residing in this state, for whom he is required by law to list, and not listed by such holder thereof, for taxation in this state.

'Sec. 2737. Such statement shall truly and distinctly set forth, first, the number of horses, and the value thereof; second, the number of neat cattle, and the value thereof; third, the number of mules and asses, and the value thereof; fourth, the number of sheep, and the value thereof; fifth, the number of hogs, and the value thereof; sixth, the number of pleasure carriages (of whatever kind,) and the value thereof; seventh, the total value of all articles of personal property, not included in the preceding or succeeding classes; eighth, the number of watches, and the value thereof; ninth, the number of piano fortes and organs, and the value thereof; tenth, the average value of the goods and merchandise which such

person is required to list as a merchant; eleventh, the value of the property which such person is required to list as a banker, broker or stock jobber; twelfth, the average value of the materials and manufactured articles which such person is required to list as a manufacturer; thirteenth, moneys on hand or on deposit subject to order; fourteen h, the amount of credits as hereinbefore defined: fifteenth, the amount of all moneys invested in bonds, stocks, joint stock companies, annuities or otherwise; sixteenth, the monthly average amount or value, for the time he held or controlled the same, within the preceding year, of all moneys, credits or other effects, within that time invested in or converted into bonds or other securities of the United States or of this state, not taxed, to the extent he may hold or control such bonds or securities on said day preceding the second Monday of April; and any indebtedness created in the purchase of such bonds or securities shall not be deducted from the credits under the fourteenth item of this section; but the person making such statements may exhibit to the assessor the property covered by the first nine items of this section; and allow the assessor to affix the valve thereof, and in such case the oath of the person making the statement shall be in that regard only that he has fully exhibited the property covered by said nine items.'

'Sec. 2746. Personal property of every description, moneys, and credits, investments in bonds, stocks, joint stock companies or otherwise, shall be listed in the name of the person who was the owner thereof on the day preceding the second Monday of April, in each year; but no person shall be required to list for taxation any share or shares of the capital stock of any company, the capital stock of which is taxed in the name of such company.'

'Unincorporated Banks and Bankers.

'Sec. 2758. Every company, association or person, not incorporated under any law of this state or of the United States, for banking purposes, who shall keep an office or other place of business, and engage in the business of lending money, receiving money on deposit, buying and selling bullion, bills of exchange, notes, bonds, stocks or other evidence of indebtedness, with a view to profit, shall be deemed a bank, banker or bankers, within the meaning of this chapter.

'Sec. 2759. All unincorporated banks and bankers shall annually, between the first and second Mondays of May, make out and return to the auditor of the proper county, under oath of the owner or principal officer or manager thereof, a statement setting forth:

'First. The average amount of notes and bills receivable, discounted or

purchased in the course of business, by such unincorporated bank, banker or bankers, and considered good and collectible.

'Second. The average amount of accounts receivable.

'Third. The average amount of cash and cash items in possession or in transit.

'Fourth. The average amount of all kinds of stocks, bonds, including United States government bonds or evidences of indebtedness, held as an investment or in any way representing assets.

'Fifth. The amount of real estate at its assessed value.

'Sixth. The average amount of all deposits.

'Seventh. The average amount of accounts payable, exclusive of current deposit accounts.

'Eighth. The average amount of United States government and other securities that are exempt from taxation.

'Ninth. The true value in money of all furniture and other property not otherwise herein enumerated. From the aggregate sum of the first five items above enumerated the said auditor shall deduct the aggregate sum of the fifth, sixth, seventh and such portions of the eighth items as are by law exempt from taxation, and the remainder thus obtained, added to the amount of item nine, shall be entered on the duplicate of the county in the name of such bank, banker or bankers, and taxes thereon shall be assessed and paid the same as provided for other personal property assessed and taxed in the same city, ward or township.

'Sec. 2759a. The said bank, banker or bankers shall, at the same time, make statement under oath of the amount of capital paid in or employed in such banking business, together with the number of shares or proportional interest each shareholder or partner has in such association or partnership.'

'Incorporated Banks.

'Sec. 2762. All the shares of  he stockholders in any incorporated bank or banking association, located in this state, whether now or hereafter incorporated or organized under the laws of this state or of the United States, shall be listed at their true value in money, and taxed in the city, ward or village where such bank is located, and not elsewhere.

'Sec. 2763. The real estate or any such bank or banking association shall be taxed in the place where the same may be located, the same as the real estate of individuals.'

'Sec. 2765. The cashier of each incorporated bank shall make out and return to the auditor of the county in which it is located, between the first and the second Monday of May, annually, a report in duplicate, under oath, exhibiting, in detail, and under appropriate heads, the resources and liabilities of such bank, at the close of business on the Wednesday next preced-

ing said second Monday, together with a full statement of the names and residences of the stockholders therein, with the number of shares held by each, and the par value of each share.

'Sec. 2766. Upon receiving such report the county auditor shall fix the total value of the shares of such banks according to their true value in money, and deduct from the aggregate sum so found the value of the real estate included in the statement of resources as the same stands on the duplicate, and thereupon he shall make out and transmit to the annual state board of equalization for incorporated banks a copy of the report so made by the cashier, together with the valuation of such shares as so fixed by the auditor.'
United States Supreme Court decisions on taxation Automated categorization