restrictions" which are particularly mentioned; and therefore, by necessary implication, free from all other restrictions. of taxing them, "subject only to, the two [ly recognized in the decisions of this court ever since the earliest establishment of the national banks. The court having in the year 1862 decided that a state tax, imposed upon a bank according to the valuation of its capital and surplus as upon the property of individual citizens, was invalid in so far as it was based upon an investment in the stocks, bonds, and securities of the United States themselves exempt from taxation by the state (Bank of Commerce v. New York City, 2 Black, 620, 17 L. Ed. 451); and having held two years later that the same rule must be applied to a state tax imposed against a bank under another statute which made banks 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," etc. (Bank Tax Case, 2 Wall. 200, 17 L. Ed. 793); the question was raised in the year 1865, in Van Allen v. Assessors, 3 Wall. 573, 584, etc., 18 L. Ed. 229, whether under section 41 of the National Bank Act of June 3, 1864 (13 Stat. 99, 112, c. 106), from which the present section 5219, Rev. Stat., is derived, a state possessed the power to authorize the taxation of shares of national banks in the hands of stockholders where the capital was wholly invested in stock and bonds of the United States. Bank of Commerce v. New York City, 2 Black, 620, and Bank Tax Case, 2 Wall. 200, 17 L. Ed. 793, were referred to as calling for a negative answer; but the court sustained the tax upon the ground of the very distinction between the stockholders and the bank that is now under consideration, the language of the opinion being (3 Wall. 583, 584, 18 L. Ed. 229): The opinion seems to adopt the view that to treat the Mills National shares as assets of the California National Bank amounts to imposing a "twofold tax," a "double burden," or "two taxes" upon a single property interest. But if there are two taxes it is only because there are two banks, the stock in each of which is valued separately because the ownership is separate and distinct. It is said that section 5219 regards the ultimate beneficial interest and treats the interest of the stockholder and that of the bank as one. I cannot accept this view, for several reasons in addition to the implied exclusion of restrictions other than those expressly mentioned in the section. In the first place, the stockholder and the bank are entirely different entities, not merely in form but in substance; and this ought to be sufficient to rebut any inference that would rest upon an assumed identity in order to raise a limitation upon the already moderate scope of the scheme of taxation expressly prescribed. In the second place, the property interest of the stockholder is, in a most substantial sense, different from that of the bank. The bank, if taxable with respect to its property, would be taxable upon all of its assets, saving any that might be expressly exempted. But the stockholders are in no proper sense the owners of the entire assets of the bank. Their interest, so far as they have any interest in the assets as such, is only in the residue that remains after payment of all outstanding liabilities. This is capable of enjoyment in possession only in the rare event of a winding-up and liquidation of the bank's affairs. Short of this, and as is true in the particular case of the California Bank, the interest of the stockholders is almost the opposite of a property interest in the assets themselves; it being confined to a right to have those assets employed in the current operations of a going concern of which they are only part proprietors, with the right to participate at proper intervals in the gains derived therefrom. Hence, while "book value" that is, the excess of assets over outstanding liabilities may be laid hold of, as it appears to have been laid hold of in this case, as a convenient mode of estimating the value of the stock interest, not only is it a matter of familiar knowledge that such an estimate is a mere approximation, but it is entirely clear that both in law and in the common experience of mankind the beneficial interest of the stockholder in the concerns of the bank is very substantially different from the beneficial interest of the bank in its assets. * * * "The tax on the shares is not a tax on the capital of the bank. The corporation is the legal owner of all the property of the bank, real red upon it by the charter, and for the purposes and personal; and within the powers conferfor which it was created, can deal with the corporate property as absolutely as a private individual can deal with his own. This is familiar law, and will be found in every work that may be opened on the subject of corporations. The interest of the shareholder entitles him to participate in the net profits earned by the bank in the employment of its capital, during the existence of its charter, in proportion to the number of his shares; and, upon its dissolution or termination, to his proportion of the property that may remain of the corporation after the payment of its debts. This is a distinct independent interest or property, held by the shareholder like any other property that may belong to him. Now, it is this interest which the act of Congress has left subject to taxation by the states, under the limitations prescribed." In the same case, the court found in the context of the National Bank Act most cogent reasons for holding that Congress intended to permit the states to tax the entire Thirdly, the distinction has been constant- interest of the stockholder, without regard *493 *494 rington v. Tennessee, 95 U. S. 679, 687, 24 L. Ed. 558; Tennessee v. Whitworth, 117 U. S. 129, *136, 6 Sup. Ct. 645, 29 L. Ed. 830; Bank of Commerce v. Tennessee, 161 U. S. 134, 146, 16 Sup. Ct. 456, 40 L. Ed. 645; New Orleans v. Citizens' Bank, 167 U. S. 371, 402, 17 Sup. Ct. 905, 42 L. Ed. 202) were summarized and quoted from in the opinion of the "In view of these several provisions in which court in Owensboro National Bank v. Owensthe term shares, and shareholders, are men- boro, 173 U. S. 664, 677-682, 19 Sup. Ct. 537, tioned, and the clear and obvious meaning of the 43 L. Ed. 850, where the distinction was emterm in the connection in which it is found, ployed to demonstrate the substantial want namely, the whole of the interest in the shares of equivalency either in law or in fact beand of the shareholders; when the statute pro- tween a tax on the franchise or property of vides, that nothing in this act shall be construed the bank, such as had been imposed by the to prevent all the shares in any of the said associations, etc., from being included in the valua- state in that case, and a tax upon the shares tion of the personal property of any person or of stock in the names of the shareholders, corporation in the assessment of taxes impos- permitted by section 5219, Rev. Stat. U. S. ed by state authority, etc., can there be a The solid basis of the distinction may be doubt but that the term 'shares,' as used in this further emphasized by considering the pracconnection, means the same interest as when tical effect of according to the stockholders used in the other portions of the act? Take, for of the California Bank, in the estimation examples, the use of the term in the certificate of the value of their shares for the purpose of the numbers of shares in the articles of association, in the division of the capital stock of taxation, a deduction of the entire value into shares of one hundred dollars each; in the of the stock held by this bank in the Mills personal liability clause, which subjects the National. This value, according to the admitshareholder to an amount, and, in *addition, to ted facts, is $625,546.30, which is about 4 per the amount invested in such shares; in the elec- cent. of $15,775,252.67, the entire estimated tion of directors, and in deciding all questions at value of the 85,000 shares of California Nameetings of the stockholders, each share is entional stock (excluding real estate from the titled to one vote; in regulations of the pay-computation). It is incorrect to take the latments of the shares subscribed; and, finally, in the list of shares kept for the inspection of the state assessors. In all these instances, it is manifest that the term as used means the entire interest of the shareholder; and it would be singular, if in the use of the term in the connection of state taxation, Congress intended a totally different meaning, without any indication of such intent. This is an answer to the argument that the term, as used here, means only the interest of the shareholder as representing the portion of the capital, if any, not invested in the bonds of the government, and that the state assessors must institute an inquiry into the investment of the capital of the bank, and ascertain what portion is invested in these bonds, and make a discrimination in the assessment of the shares. If Congress had intended any such discrimination, it would have been an easy matter to have said so. Certainly, so grave and important a change in the use of this term, if so intended, would not have been left to judicial construction. Upon the whole, after the maturest consideration which we have been able to give to this case, we are satisfied that the states possess the power to tax the whole of the interest of the shareholder in the shares held by him in these associations, within the limit prescribed by the act authorizing their organiza ter sum as the value of all the assets of the California National. There is nothing in the tion." to the character of the investments held by the bank. After referring to certain of the provisions of the act respecting the amount of the capital stock, its division into shares, and the responsibility of the shareholders for the debts of the bank, the opinion proceeds as follows (3 Wall. 587-588, 18 L. Ed. 229): This distinction between bank and shareholder has been recognized consistently in the decisions of this court from that time until the present. It will not be necessary to analyze the cases, since the principal ones (New York v. Commissioners, 4 Wall. 244, 258, 18 L. Ed. 344; National Bank v. Kentucky, 9 Wall. 353, 359, 19 L. Ed. 701; Far According to its Report of Resources and Lia bilities at close of business September 2, 1915, plaintiff in error had total resources of $67,396,982. Report of Comptroller of Currency, 1915, vol. 2, p. 585. $495 *496 holders would escape taxation altogether, | from the taxable value of national bank although participating in the profits of two shares because the bank happens to hold banking institutions. stock in another national bank is not only contrary to the clear intent of section 5219, but is inconsistent with all previous decisions of this court bearing upon the point, especially those that have denied a similar deduction because of tax-exempt securities held by the bank, or because of real estate taxed against it. As we have seen, the decisions of this court establish that under section 5219 the holder of shares in a national bank is not entitled to have the estimate of their taxable value reduced by reason of the fact that the capital and surplus of the bank are invested in securities that are exempted from state taxation. It also is clear that while the section in terms permits the real property of the bank to be taxed against it, this does not entitle the shareholder to an allowance from the assessed value of his shares by reason of the fact that the bank is thus taxed. It is true that many of the states, when authorizing the taxation of real estate against the bank, make an allowance for this by deducting the value thus taxed when computing the amount at which the shares shall be taxed; but this is not because of (Submitted Oct. 14, 1918. 1919.) No. 115. In Error to the Supreme Court of the State of California. any requirement in the federal statute. In Commercial Bank v. Chambers, 182 U. S. 556, 561, 21 Sup. Ct. 863, 45 L. Ed. 1227, this court expressly so held with respect to a claim for a deduction from the value of national bank shares because of real estate owned by the bank situate outside of the taxing state. In People's Natl. Bank v. Marye (C. C.) 107 Fed. 570, 579, it was held that section 5219 contemplates that the tax on real estate may be imposed independently *of the tax upon the shares of the stockholder (affirmed upon another ground, 191 U. S. 272, 24 Sup. Ct. 68, 48 L. Ed. 180). And in Amoskeag Savings Bank v. Purdy, 231 U. S. 373, 34 Sup. Ct. 114, 58 L. Ed. 274, we sustained a tax imposed upon a shareholder under a statute that, while not exempting the real estate of the bank situate in the same state, allowed no deduction of its value in the computation of the taxable value of the shares. It seems to me that to allow a deduction Mr. Justice BRANDEIS and Mr. Justice CLARKE concur in this dissent. (248 U. S. 497) BANK OF CALIFORNIA, NATIONAL ASS'N, v. ROBERTS, Treasurer of State of California. Decided Jan. 27, Action by the Bank of California, National Association, against E. D. Roberts, State Treasurer of California. Judgment for plaintiff was reversed by the Supreme Court of California (173 Cal. 398, 160 Pac. 225), and plaintiff brings error. Reversed and remanded. Mr. E. S. Pillsbury, Mr. F. D. Madison, Mr. Alfred Sutro, and Mr. Oscar Sutro, all of San Francisco, Cal., for plaintiff in error. *PER CURIAM. This case is controlled by the opinion in Bank of California v. Richardson. 248 U. S. 476, 39 Sup. Ct. 165, 63 L. Ed. 372, briefs upon the briefs filed in that case. just decided. Indeed, it was submitted without the reasons stated in the previous case, thereFor fore, the judgment here must be reversed and the case remanded for further proceedings not inconsistent with this opinion. *498 *499 in error to enjoin the City of Hope from enforcing an ordinance that forbids the storing of petroleum, gasoline, &c. within three hundred feet of any dwelling, beyond certain small quantities specified. A demurrer to the complaint was sustained by the Supreme Court of the State. 127 Ark. 38, 191 S. W. The plaintiff is engaged in the business of selling petroleum oil and gasoline and has tanks on the right of way of a railroad in the city, which it moved to that place at the city's request. The mode of construction is set forth and it is alleged that an explosion is impossible and that the presence of the tanks in no way endangers any buildings. The tanks are necessary for the business; the present position diminishes the cost of transferring oil from cars and cannot be changed without considerable expense and a reduction of the plaintiff's lawful profits. The plaintiff adds that it knows of no available place in the city where the tanks could 3. PLEADING 214(4)—ALLEGATIONS ADMIT- be put and oil stored without violating the TED BY DEMURRER. ordinance, that the ordinance is unnecessary and unreasonable, and that the enforcement of it will deprive the plaintiff of its property without due process of law contrary to the Fourteenth Amendment of the Constitution of the United States. (248 U. S. 498) PIERCE OIL CORPORATION v. CITY OF HOPE. (Submitted Jan, 16, 1919. Decided Jan. 27, 1919.) No. 137. 1. CONSTITUTIONAL LAW 296(2)- EXPLO-405. SIVES 3-DUE PROCESS STORING DAN- A state may, without violating the due pro- Averment that ordinance is unnecessary and unreasonable is not admitted by demurrer, whether regarded as a conclusion of law or an allegation that facts exist that lead to that conclusion; only facts well pleaded being confessed. There are limits to the extent to which can be accepted, even on demurrer, such an allegation as that plaintiff's plant is safe and does not threaten the damages that led to passage of the ordinance, enforcement of which is sought to be enjoined, prohibiting storing of petroleum and gasoline within certain distance of a dwelling. 4. EXPLOSIVES 3 OILS. Even if the necessarily general form of an ordinance prohibiting storing of petroleum and gasoline in quantities within certain distance of a dwelling embraces some innocent objects, that of itself is not enough to invalidate it or remove such an object from its grasp. [1, 2] A long answer is not necessary. A state may prohibit the sale of dangerous oils, even when manufactured under a patent STORING DANGEROUS from the United States. Patterson v. Kentucky, 97 U. S. 501, 24 L. Ed. 1115. And it may make the place where they are kept or sold a criminal nuisance, notwithstanding, the Fourteenth Amendment. Mugler v. Kansas, 123 U. S. *623, 8 Sup. Ct. 273, 31 L. Ed. ́ 205. The power “is a continuing one, and a business lawful today may in the future, because of the changed situation, the growth of population or other causes, become a menace to the public health and welfare, and be required to yield to the public good." Dobbins v. Los Angeles, 195 U. S. 223, 238, 25 Sup. Ct. 18, 21 (49 L. Ed. 169). The averment that the ordinance is unnecessary and unreasonable, if it be regarded as a conclusion of law upon the point which this Court must decide, is not admitted by the demurrer. If it be taken to allege that facts exist that lead to that conclusion, it stands no better. For if there are material facts of which the Court would not inform itself, as in many cases it would, Prentis v. Atlantic Coast Line Co., 211 U. S. 210, 227, 29 Sup. Ct. 67, 53 L. Ed. 150, an averment in this general form is not enough. Southern Ry. Co. v. King, 217 U. S. 524, 534, 535, 30 Sup. Ct. 594, 54 L. Ed. 868. Only facts well pleaded are confessed. 5. CONSTITUTIONAL LAW 121(2) — IMPAIRING CONTRACT OBLIGATIONS—POLICE POWER. That removal of petroleum and gasoline tanks to a certain place was at the city's request does not import a contract not to legislate if public welfare should require it; and such a contract, if made, would have no effect against subsequent ordinance prohibiting such a location. In Error to the Supreme Court of the State of Arkansas. Suit by the Pierce Oil Corporation against the City of Hope. Decree sustaining demurrer to the complaint was affirmed by the Supreme Court of Arkansas (127 Ark., 38, 191 S. W. 405), and plaintiff brings error. Affirmed. Messrs. W. E. Hemingway, G. B. Rose, and J. F. Loughborough, all of Little Rock, Ark. John D. Johnson, of St. Louis, Mo., and V. M. Miles, of Little Rock, Ark., for plaintiff in error. [3-5] Then as to the allegation that plaintiff's plant is safe and does not threaten the *Mr. Justice HOLMES delivered the opin- damages that led to the ordinance being pass ion of the Court. ed, there are limits to the extent to which such an allegation can be accepted, even on This is a complaint brought by the plaintiff For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes *500 *501 demurrer; as in the old case of a plea that | larger district, is for decision of the local authe defendant threw stones at the plaintiff thorities, and their judgment is conclusive, in molliter and that they fell upon him molli- the absence of arbitrary action. ter, "for the judges say that one cannot throw stones molliter." 2 Rolle's Abr. 548, Trespass, (G) 8. As was well observed by the Court below "we may take judicial notice that disastrous explosions have occurred for which no satisfactory explanations have been offered. The unexpected happens." 127 Ark. 43, 191 S. W. 405. Indeed the answer admits some possible combustion but undertakes to limit its possible effects. If it were true that the necessarily general form of the law embraced some innocent objects, that of itself would not be enough to invalidate it or to remove such an object from its grasp. Purity Extract & Tonic Co. v. Lynch, 226 U. S. 192, 204, 33 Sup. Ct. 44, 57 L. Ed. 184; Hebe Co. v. Shaw, Jan. 7, 1919, 248 U. S. 297, 39 Sup. Ct. 125, 63 L. Ed. 255. Whether circumstances might make an exception from this principle need not be considered here. Reinman v. Little Rock, 237 U. S. 171, 35 Sup. Ct. 511, 59 L. Ed. 900. It is enough to say that the allegations do not raise the question. The fact that the removal to the present situation was made at the city's request does not import a contract not to legislate if the public welfare should require it, and such a contract if made would have no effect. Boston Beer Co. v. Massachusetts, 97 U. S. 25, 24 L. Ed. 989; Texas & New Orleans R. R. Co. v. Miller, 221 U. S. 408, 414, 31 Sup. Ct. 534, 55 L. Ed. 789. Decree affirmed. (248 U. S. 501) MT. ST. MARY'S CEMETERY ASS'N v. 4. CONSTITUTIONAL LAW 233-EQUAL PROTECTION OF LAWS SIMILARITY OF CONDITIONS. Similarity of situation and conditions not being shown, a cemetery association cannot be said to be deprived of equal protection of the laws because its grounds were placed with other lands in a sewer district, while grounds of other such associations were placed in districts by themselves. 5. CONSTITUTIONAL LAW 290(3)—DUE PRO-" CESS OF LAW-NOTICE AND HEARING-SEW- Due process of law is not denied because prior to creation of sewer districts, authorized by legislative authority, owner of land included is not given notice or afforded opportunity to be heard; it having had full opportunity to be heard in judicial proceedings to enforce the tax bills levied, and its contentions of arbitrary action and lack of benefits being considered and decided. In Error to the Supreme Court of the State of Missouri. This suit was begun in the circuit court of Jackson county, Mo., to enforce the liens of MULLINS. (Argued Nov. 15 and 18, 1918. Decided Jan. tax bills upon land of the Mt. St. Mary's 27, 1919.) No. 56. Suit by William C. Mullins against the Mt. St. Mary's Cemetery Association. Judgment for plaintiff was affirmed by the Supreme Court of Missouri (268 Mo. 691, 187 S. W. 1169), and defendant brings error. Affirmed. *Mr. Wm. Moore and Mr. Clarence S. Palmer, both of Kansas City, Mo., for plaintiff in error. Mr. Matthew A. Fyke, of Kansas City, Mo., for defendant in error. Mr. Justice DAY delivered the opinion of the Court. Cemetery Association. The tax bills were assessed in part payment of the cost of two district sewers constructed in a sewer district in Kansas City, Mo. The Mt. St. Mary's Cemetery Association is a corporation organized under the laws of the state of Missouri for the purpose of acquiring and maintaining a cemetery, subdividing it into lots, selling, disposing of, and managing the same. The net proceeds after providing for expenses and a maintenance fund are applied to the support of Catholic orphan asylums. The case has been three times in the Su SESSMENT. Unless an assessment for sewer construc-preme Court of Missouri. In 239 Mo. 681, tion is arbitrary and unreasonable, the extent 144 S. W. 109, it was held that the cemetery of the benefit, essential to justify the assess- land was liable to assessment under the Conment, is a matter within the control of the lo- stitution and laws of Missouri and the charcal authorities. ter of Kansas City. In 259 Mo. 142, 168 S. 450(4)-SEW-W. 685, the court held that the land was chargeable with its share of the cost of con 3. MUNICIPAL CORPORATIONS ER DISTRICT-DETERMINING EXTENT. Whether a cemetery should be made a sew-structing the sewer; that the holder of a er district of itself, rather than included in a lot in the cemetery had no title or interest For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes *502 |
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