averred in the bill that the act of March 21, permitting the former decree enjoining the 1900, which undertakes to impose taxes for assessment and levying of taxes before the the years 1893 and following, is unconstitu- passage of the law to stand. 129 Fed. 792. tional and void, and operates to discrimi- From so much of the decree as enjoined nate against the complainant, in violation the taxes assessed prior to March 21, 1900, of § 5219 of the Revised Statutes of the the city appealed; from so much thereof as United States (U. S. Comp. Stat. 1901, refused the injunction and dismissed the p. 3502).

The defendants having filed a bill as to taxes assessed after that date, the plea to the jurisdiction and a general de bank appealed. Both appeals are now bemurrer to the bill, upon motion for a tem-fore this court: porary injunction, attempt to enforce taxes levied or assessed upon the shares of capital Messrs. Shelley D. Rouse, Edmund F. stock at any time previous to March 21, Trabue, James S. Pirtle, John C. Doolan, 1900, were enjoined. 103 Fed. 523.

and Attilla Cox, Jr., for the bank. December 17, 1900, a decree was entered, Messrs. F. J. Hanlon, J. H. Hazelrig, but, not being final, the writ of error was and Ira Julian for the city of Covington. dismissed. 185 U. S. 270, 46 L. ed. 906, 22 Sup. Ct. Rep. 645. After the case was Mr. Justice Day delivered the opinion of sent back to the circuit court the prior de- the court: cision in that court was followed, and it was That the acceptance of the provisions of further held that the judgment of the state the so-called Hewitt law did not constitute court was not a bar to the right to collect an irrevocable contract, releasing the bank taxes for other years than the year directly from taxes upon compliance with its terms, involved in the judgment set up, and that, has been settled. Bank Tax Cases, 102 Ky. as the Hewitt law and its acceptance by the 174, 44 L. R. A. 825, 39 S. W. 1030; Citibank had been conclusively held not to con- zens' Sav. Bank v. Owensboro, 173 U. S. stitute an irrevocable contract as to taxes 636, 43 L. ed. 840, 19 Sup. Ct. Rep. 530. between the state and the complainant, and Reference is made to the various cases leadas the law was valid as to future taxation, ing up to this result in Deposit Bank v. the injunction could not be granted as to Frankfort, 191 U. S. 499, 508, 48 L. ed. 276, taxes assessed under the law of March 21, 279, 24 Sup. Ct. Rep. 154. We are there. 1900, after its passage. A decree was, therefore left upon this branch of the case to fore, entered, dismissing the complainant's consider the effect of the judgment of the bill as to taxes levied after said date, and state court of Kentucky, set up in the com

of no effect in so far as the same provides for | 1892, said bank shall be excepted from the the taxation of the franchise of national banks. operation of this section as to said year or in consequence of which decision there is not years : And provided further, That where any now, and has not been since adoption of said national bank has heretofore, for any year or article in 1892, any adequate mode of taxing years, paid state taxes under the Hewitt bill national banks, while state banks are now, and in excess of the state taxes required by this hare been ever since 1892, taxable for all pur- act for the same year or years, said bank shall poses, state and local; therefore :

be entitled to credit by said excess upon its “Be it enacted by the General Assembly of state taxes required by this act. the Commonwealth of Kentucky:

"Sec. 3. All assessments of shares of stock “Section 1. That the shares of stock in each contemplated by this act shall be entered upon national bank of this state shall be subject to the assessor's books, certified, and reported by taxation for all state purposes, and shall be sub- the assessing officers as assessments of real ject to taxation for the purposes of each county, estate are entered, certified, and reported, and city, town, and taxing district in which the the same shall be certified to the proper collectbank is located.

ing officers for collection as assessments of real “Sec. 2. For purposes of the taxation pro- estate are certified for collection of taxes therevided for by the next preceding section, it shall on. be the duty of the president and the cashier “Sec. 5. The assessments of said shares of of the bank to list the said shares of stock stock and collection of taxes thereon, as conwith the assessing officers authorized to assess templated by this act, may be enforced as asreal estate for taxation, and the bank shall be sessments of real estate, and collection of taxes and remain liable to the state, county, city, thereon may be enforced. town, and district for the taxes upon said "Sec. 6. The purpose of this act is to place shares of stock.

national banks of this state, with respect to “Sec. 3. When any of said shares of stock taxation, upon the same footing as state banks have not been listed for taxation for any of as nearly as may be consistently with said said purposes under levy or levies of any year article three (3) of the revenue law and said or years since the adoption of the revenue law decision of the supreme court. of 1892, it shall be the duty of the president “Sec. 7. Whereas, it is important that state and cashier to list the same for taxation under banks and national banks should be taxed equalsaid levy or levies : Provided, That where any ly for all purposes, an emergency exists, and national bank has heretofore, for any year or this act shall take effect and be in force from years paid taxes upon its franchise as provided and after its passage.” in article three (3) of the revenue law of Approved March 21, 1900.

plainant's bill as an adjudication of the ferent rule prevails in the courts of the rights of the parties and a final determina- United States. The reasons therefor were tion that the acceptance of the Hewitt law stated in an opinion by Mr. Justice White, had the effect of a valid contract. When this speaking for the court, in the case of New case was before the circuit court for the sec- Orleans v. Citizens' Bank, 167 U. S. 371, 42 ond time (129 Fed. 792), Judge Cochran, aft- L. ed. 202, 17 Sup. Ct. Rep. 905, and in er an elaborate review of the Kentucky cases, cases arising in a Federal jurisdiction the reached the conclusion that, as the taxes doctrine therein announced will doubtless involved in the case in which the adjudica- be adhered to. The learned counsel for the tion was had were for a different year than plaintiff in error refer to the decision of those involved in this suit, the former judg- this court in Deposit Bank v. Frankfort, ment did not have the effect of an estoppel 191 U. S. 499, 48 L. ed. 276, 24 Sup. Ct. Rep. between the parties, being only conclusive, 154, as authority for the doctrine that,

, under the Kentucky decisions, as to taxes where a contract right has been adjudicated in the years involved in the suit in which which involves an exemption from all taxathe judgment was rendered. We do not | tion, such adjudication will conclude the doubt that this is the settled law of the parties as to the right to legally tax for supreme court of Kentucky. Nor does it other years, although the particular year was make any difference, in the view which that not directly involved in the suit in which court takes of the matter, that the adjudi- the adjudication was made. But in that cation as to the right to collect the taxes case the court was dealing with the effect involved the finding of an exemption by con- to be given to a judgment of a Federal court tract, which included, not only the taxes in which such contract right had been adfor the years in suit, but all taxes which judicated, when the Federal judgment was might be levied under the authority of the set up in a state court; and in that case it contract. The ground upon which the court was recognized, in the opinion of the court based its decision with reference to the as well as in the dissenting opinion, that effect of such adjudication is stated in the the courts of Kentucky, in giving effect to case of Newport v. Com. 106 Ky. 444, 45 the judgments of their own courts, were L. R. A. 518, 50 S. W. 845, 51 S. W. 433, as guided by a different rule, and in that

, follows:

state an adjudication involving taxes for “The only question remaining for decision one year cannot be pleaded as an estoppel is upon the plea of res judicata. The plea in suits involving taxes for other years. in this case avers that the subject-matter 191 U. S. 514, 524, 48 L. ed. 282, 24 Sup. of the former suit was identical with that Ct. Rep. 154. involved in this action, and that the facts The case of Deposit Bank v. Frankfort were the same in both actions, except that was only concerned with the effect to be the former action attempted to collect a tax given to a Federal judgment adjudicating for the year 1893, and the present action a contract right, when pleaded in a state was attempting to collect a tax for the year court.

court. We are now dealing with the weight 1894.

to be attached to a state judgment when “The authorities seem to hold that when pleaded as res judicata in a Federal court. a court of competent jurisdiction has, upon That was the very question decided by this a proper issue, decided that a contract, out court in the case of Union & Planters' Bank of which several distinct promises to pay v. Memphis, 189 U. S. 71, 47 L. ed. 712, 23 money arose, has been adjudged invalid in Sup. Ct. Rep. 604, wherein it was held that a suit upon one of those promises, the judg- the Federal courts were not required to give ment is an estoppel to a suit upon another to such judgments any greater force or effect promise founded on the same contract. But than was awarded to them by the courts taxes do not arise out of contract. They of the state where they were rendered. Upon are imposed in invitum. The taxpayer does this branch of the case the question then is, not agree to pay, but is forced to pay, and What effect is given in the courts of Kenthe right to litigate the legality of a tax tucky to such pleas of estoppel ?

As we upon all grounds must of necessity exist, have seen, it is there settled that the judg. regardless of former adjudications as to the ment would not be effectual to protect the validity of a different tax.”

alleged contract rights of the complainant It is unnecessary to cite the cases; they as to the taxes involved for years other will be found in Judge Cochran's opinion. than the one directly involved in the adjudiIt is sufficient to say that, if this case had cation set up. We therefore find no error been decided in the state court in Kentucky, in the judgment of the circuit court refusthe adjudication pleaded herein, not involving an injunction upon the ground of an ing taxes for the same years as those now in estoppel by judgment. controversy, would not avail as an estoppel As to the taxes for the years prior to the between the parties. It is true that a dif- passage of the act of March 21, 1900, it is argued by the bank that to give this retro- | 109 Ky. 526, 59 S. W. 860, has held that active effect to the law will be to deprive there was ample statute law in that state it and its stockholders of their property for the taxing of shares in national banks without due process of law, and will be in under the laws of that state providing for violation of § 5219 of the Revised Statutes, the taxation of real and personal property prohibiting discrimination against national of every kind, and that the provision that banks and their stockholders. The act of the individual shareholder in a corporation March 21, 1900, as stated in the preamble, shall not be required to list his property was passed because of a decision of this therein so long as the corporation pays the court holding prior legislation of the state taxes on its property of every kind, imundertaking to tax the property of national pliedly requires the individual to list his banks unconstitutional. Owensboro Nat. shares and pay the tax in the absence of the Bank v. Owensboro, 173 U. S. 664, 43 L. ed. return required by law of the corporation. 850, 19 Sup. Ct. Rep. 537. In the Owens- In that case the court held that there was boro Case it was held that § 5219, Rev. Stat. nothing in its decisions running counter to U. S., was the measure of the power of the § 5219. These views were further enforced state to tax national banks, their property, in Com. v. Citizens' Nat. Bank, 25 Ky. L. or franchises, which power was confined to Rep. 2100, 80 S. W. 158; London v. Hope, 26 the taxing of the stock in the name of the Ky. L. Rep. 112, 80 S. W.817; Citizens' Nat. shareholders and the assessment of the real Bank v. Com. 25 Ky. L. Rep. 2254, 80 S. W. estate of the banks, and that taxation under 479. Following the state court in the inthe laws of the state of Kentucky upon the terpretation of its own statutes, it may be franchise of the bank was not within the said that, as to shareholders residing in purview of the authority conferred by the Kentucky and over whom the state has juact of Congress, and was therefore illegal. risdiction, the supreme court of that state Section 5219, of the Revised Statutes of the has construed its statutes as requiring

as United States is as follows:

shareholders in national banks for the years “Sec. 5219. Nothing herein shall prevent 1893 to 1900, inclusive, to return their all the shares in any association from being shares for taxation; and if they did not included in the valuation of the personal make the return the duty was required of property of the owner or holder of such the corporation. In this view of the law shares, in assessing taxes imposed by au- it may be that, as to local shareholders, the thority of the state within which the asso-act of March 21, 1900, as held by the suciation is located; but the legislature of preme court of Kentucky, created no new each state may determine and direct the right of taxation, but gave simply a new manner and place of taxing all the shares remedy, which by the law, is operative to of national banking associations located enforce pre-existing obligations. It may be within the state, subject only to the two admitted that s 5219 permits the state to restrictions, that the taxation shall not be require the bank to pay the tax for the at a greater rate than is assessed upon other shareholders. First Nat. Banic V.

Bank v. Kenmoneyed capital in the hands of individual tucky, 9 Wall. 353, 19 L. ed. 701; Van Slyke citizens of such state, and that the shares v. Wisconsin, 154 U. S. 581, and 20 L. ed. of any national banking association owned 240, 11 Sup. Ct. Rep. 1168; First Nat. Bank by nonresidents of any state shall be taxed v. Chehalis County, 166 U. S. 440, 41 L. ed. in the city or town where the bank is lo- 1069, 17 Sup. Ct. Rep. 629. cated, and not elsewhere. Nothing herein But there is nothing in the general statshall be construed to exempt the real prop- utes of Kentucky before the act of March erty of associations from either state, 23, 1900, specifically requiring national county, or municipal taxes, to the same ex. banks to return shares of stock in the corpotent, according to its value, as other real ration when such shares are held by perproperty is taxed.”

sons domiciled beyond the state. This situs Under the new taxing law (act of March of shares of foreign-held stock in an incor21, 1900), it is declared to be the purpose porated company, in the absence of legislato require the bank to return the shares of tion imposing a duty upon the company to stock for the years prior to 1900, and since return the stock within the state as the the adoption of the revenue law of 1892, agent of the owner, is at the domicil of the with the privileges and deductions stated in owner. Cooley, Taxn. 16. It is true that § 3 of the act. Notwithstanding the prior the state may require its own corporations revenue law had been held invalid, and there to return the foreign-held shares for the was no

no statute specifically taxing these owner for the purposes of taxation. Corry shares of national bank stock on the statute v. Baltimore, 196 U. S. 466, ante, p. 297, books of Kentucky, prior to the passage of 25 Sup. Ct. Rep. 297. Section 5219, Rev. the act of March 21, 1900, the supreme court Stat., authorizes the state to tax all the of Kentucky, in the case of Scobee v. Bean, 'shares of a national banking association, including those owned by nonresidents, as | Revised Statutes (U. S. Comp. Stat. 1901, well as those owned in the state, in the p. 3498), requiring a list of the sharecity or town where the bank is located; but holders to be kept by the bank, has the effect this section does not itself impose the tax; to levy taxes. It is a limitation upon the it is authority for state legislation to thus right of the state, and the state must not tax national bank shareholders. And this discriminate against national banks by the statute is express authority to the state by use of methods of taxation differing from appropriate legislation to make the bank the those in use in taxing other moneyed capiagent of the shareholders for the purpose of tal in the hands of individual citizens. returning the shares and paying the taxes It is averred in the amended bill, and, the thereon.

answer having been stricken from the files In Com. v. Citizens' Nat. Bank, 25 Ky. L. and the case submitted upon the plea to Rep. 2100, 80 S. W. 158, the Kentucky the jurisdiction and general demurrer, it court of appeals seems to have held that a must be taken as true, "that during said national bank might be required, under years [1893 to 1900] many of its sharehold§ 4241, Ky. Stat. 1903, to return the shares ers were nonresidents of the state of Kenheld in it for the years 1893 to 1900, inclu- tucky, who, in many instances, have sold sive, as omitted property. In that case it and transferred their shares of stock during is said: “It was held under the previous said time.” statute that the shares of stock in national The statutes of the state of Kentucky, banks might be assessed to the shareholder which have been construed by the supreme by the assessor, and should be given in by court of that state in the cases cited, to rethe shareholder in the list of his personal quire the payment of taxes by the shareproperty. Scobee v. Bean, 109 Ky. 526, 59 holders or by the bank for its shareholders, S. W. 860.

The act of March 21, 1900, did can have reference only to shareholders not [it was held], therefore, make that tax within the jurisdiction of the state. Whether able which was not taxable before, but sim- the system operates as a discrimination ply provided another mode for the assess-against national banks within the prohibiment of the shares of stock and the payment tion of $ 5219, involving, as it does, a right of the taxes. It was the duty of the assessor of Federal creation, must be ultimately deto make the assessment. It was also the termined in this court. The act of March duty of the president and cashier of the 21, 1900, imposes upon the bank a liability bank to list the shares of stock with the for taxes assessed upon its shareholders, assessor; but when the assessment was not whether within or without the state. This made the property was simply omitted from liability did not exist before the passage of the tax list, and the sheriff is authorized the act, and in Com. v. Citizens' Nat. Bank, by § 4241, Ky. Stat. [1903] to institute the 25 Ky. L. Rep. 2100, 80 S. W. 158, the court proceeding to have any omitted property of appeals of Kentucky held that the statassessed.”

And the court further held the utes of the state made the bank liable for bank liable for the penalty imposed for not a penalty of 20 per cent for the years 1893 listing taxable property. The ground upon to 1900, inclusive. It seems to us that to which this judgment rests is that share-permit the statute to require the bank to holders were bound to return the shares in return the shares of such foreign-held stock, the years from 1893 to 1900 under the then and be subjected to a penalty in addition, existing state law, and the act of 1900 made is imposing upon national banks a burden the bank the agent of the shareholders, and not borne by other moneyed capital within did not require a new duty, but only im- the state. In support of the equivalency posed the duty upon the agent as a means of taxation, which it is the purpose of of making effectual the former obligation $ 5219 to require, this court said, in Owensof the shareholders.

None of the Kentucky boro Nat. Bank v. Owensboro, 173 U. S. 664, cases deals with the effect of the require 676, 43 L. ed. 850, 855, 19 Sup. Ct. Rep. ment under the act of 1900, that the bank 537, 540: “The alleged equivalency, in return the shares of stock held by foreign order to be of any cogency, must of necessity stockholders, who clearly were not required, contain two distinct and essential elements, under the previous laws of that state, to---equivalency in law and equivalency in return shares of stock when neither the fact." shares nor the owners were within the Without considering the question of constate.

stitutional power to tax nonresident shareSection 5219 requires that a state, in tax- holders by means of this retroactive law, ing national banks, shall be subject to the it seems to us that, in imposing upon the restriction that the taxation shall not be bank the liability for the past years, for at a greater rate than is assessed upon other taxes and penalty, upon stock held without capital in the hands of the individual citi- the state, and which before the taking effect zen. Neither this section nor $ 5210 of the of the act under consideration it was not

§

a

required to return, there has been imposed sion so acquired is good as against the trus

tee under the state laws. upon national banks in this retroactive feature of the law a burden not borne by other

[No. 169.] moneyed capital in the state. This law makes a bank liable for taxes upon property Argued March 7, 1905. Decided April 17, beyond the jurisdiction of the state, not

1905. required to be returned by the bank as agent for the shareholders, by a statute passed in pursuance of the authority dele IN ERROR to the Superior Court of the

State of Massachusetts for the County of gated in § 5219; thus imposing a burden Worcester in that state to review a judg. not borne by other moneyed capital within ment for plaintiff in an action by a trustee the state.

in bankruptcy to recover an alleged preferWe think the circuit court was right in ence, entered pursuant to the mandate of that part of the decree which enjoined the the Supreme Judicial Court of that state collection of taxes against the bank for the

on an appeal from a judgment of the Supeyears 1893 to 1900, inclusive.

rior Court in favor of defendant. Reversed. As to the alleged discrimination against

See same case below, 184 Mass. 361, 63 L. share holders in national banks because the R. A. 738, 100 Am. St. Rep. 562, 68 N. E. assessment of the property of state banks

844. is upon the franchise, and not upon the

The facts are stated in the opinion. shares of stock, there is nothing in the bill

Messrs. William H. Brown and Henry to show that this difference in method oper- W. Putnam for plaintiff in error. ates to discriminate against national bank

Mr. Charles T. Tatman for defendant shareholders by assessing their property at

in error. higher rates than are imposed upon capital invested in state banks. And, as to the

Mr. Justice Holmes delivered the opinion deduction of the value of real estate and of the court: other deductions allowed to state banks, the

This is an action brought by a trustee supreme court of Kentucky has held that all in bankruptcy, the defendant in error, to deductions allowed to state banks must be recover an alleged preference. The case was allowed in like manner in assessing the heard on agreed facts, which may be summed property of shareholders in national banks. up as follows: Davis filed a voluntary petiCom. v. Citizens' Nat. Bank, 25 Ky. L. Rep. tion in bankruptcy on May 23, 1901. Two 2100, 80 S. W. 158. Nor does the allegation years before, on May 6, 1899, being then that in cities of the first, second, and third solvent, he executed to the plaintiff in error, class state banks are assessed upon their Humphrey, a mortgage of his present and shares for city taxation, but upon their after-acquired stock in trade and fixtures, franchises and property for state and county which covered the goods in controversy; taxation, in the absence of averments of but the mortgage was not recorded, and the fact showing that thereby a heavier burden goods remained in Davis's possession. On of taxation is imposed upon national than April 30, 1901, Humphrey, having reasonstate banks in such cities, warrant judicial able cause to believe that Davis was ininterference for the protection of sharehold- solvent, took possession of the goods, in ers in national banks. Davenport Nat. accordance, it fairly is implied, with the

, , Bank, v. Board of Equalization, 123 U. S. terms of the mortgage, although against the 83, 31 L. ed. 94, 8 Sup. Ct. Rep. 73.

wishes and protest of Davis. The defend. Judgment affirmed.

ant in error was qualified as trustee on June 18, 1901, and at once demanded the goods without payment of the mortgage

debt. The case went from the superior (198 U. S. 91) JOHN B. HUMPHREY, Piff. in Err.,

court to the supreme judicial court of the state, and the latter court ordered judgment

for the plaintiff (184 Mass. 361, 63 L. R. A. CHARLES T. TATMAN, Trustee in Bank- 738, 100 Am. St. Rep. 562, 68 N. E. 844),

) ruptcy of Nelson H. Davis.

which was entered below, and thereupon the

case was brought here. Bankruptcy - preference taking posses- It may be assumed, in view of the recent sion under unrecorded chattel mortgage. decision in Thompson v. Fairbanks, 196 U.

S. 516, 25 Sup. Ct. Rep. 306, 49 L. ed. 577, Taking possession of the mortgaged property that, if the taking possession was good as

under an unrecorded chattel mortgage does against the trustee in bankruptcy so far as not amount to a preference voidable by the the Massachusetts law is concerned, it mortgagor's trustee in bankruptcy, although

We assume also, such action was taken within four months should be held good here. of the bankruptcy proceedings, if a posses.' without deciding, that if, as against the

0.