case are such as to lead to satisfactory evi- | James Travers calling Sophia his wife durdence of such a contract having taken place; ing that period may be laid on one side. the acknowledgment of the parties, their conduct towards each other, and the repute consequent upon it, may be sufficient to prove a marriage."" P. 41. See also 2 Greenl. Ev. Harriman's ed. §§ 461, 462, and notes; 3 Wigmore, Ev. §§ 2082, 2083, and authorities cited.

HOME SAVINGS BANK, Plff. in Err.,

V.

CITY OF DES MOINES and the City Council of Said City as a Board of Review. (No. 82.)

PEOPLE'S SAVINGS BANK, Plff. in Err.,

V.

CITY OF DES MOINES and the City Coun-
cil of Said City as a Board of Review.
(No. 83.)

DES MOINES SAVINGS BANK, Plff. in
Err.,

V.

CITY OF DES MOINES and the City Council of Said City as a Board of Review. (No. 92.)

Taxes-immunity of national securities from state taxation.

The immunity of national securities from state taxation is violated by a tax imposed under the authority of Iowa Code, § 1322, directing that shares of stock of state banks shall be assessed to such banks, and not to individual stockholders, the substantial effect of which is to require taxation upon the property, not including the franchises, of such banks, and to adopt the value of the shares as the measure of the taxable valuation of such property, without permitting any deduction from such valuation on account of bonds of the United States owned by the banks. *

[Nos. 82, 83, 92.]

tion. The plaintiffs in error were banking institutions incorporated under the laws of the state of Iowa. Upon each of them a tax was levied under a law of that state, which provided that "shares of stock of state and savings banks and loan and trust companies shall be assessed to such banks and loan and trust companies, and not to the individual stockholders." The material sections of the Code are printed in the margin.†

Each bank owned at the time to which the assessment related United States bonds, the value of which they insisted should be deducted from the valuation of the property assessed to them. The taxing authorities refused to make that deduction, and their action was sustained by the supreme court of the state, whose judgment has been brought here by writs of error for review.

These banks were corporations created by the state of Iowa. In imposing burdens upon them, their property, or their shares, the state does not, as in the case of national banks, require any authority from the United States. Its own governmental power is sufficient for the imposition of such taxes, assessed by such methods, and under such standards of valuation, as it may choose, unless something is done which violates some provision of the Constitution, or of a Federal law which, by that Constitution, is made supreme. The only claim of violation of Federal right which need be considered here is that bonds. of the United States have been taxed. It is conceded, and cannot be disputed, that

Federal

Argued November 2, 5, 1906. Ordered for
reargument December 3, 1906. Reargued
March 5, 1907. Decided April 22, 1907.
IN ERROR to the
N ERROR to the Supreme Court of the these securities are beyond the taxing pow-

State of Iowa to review three judgments which affirmed judgments of the District Court of Polk County, in that state, affirming the action of the Board of Review of the City of Des Moines in refusing to

†Sec. 1322. Shares of stock of national banks shall be assessed to the individual stockholders at the place where the bank is located. Shares of stock of state and savings banks and loan and trust companies,

shall be assessed to such banks and loan

and trust companies, and not to the individual stockholders. At the time the assessment is made, the officers of national banks shall furnish the assessor with a list of all the stockholders and the number of

deduct from the assessment of certain state banks upon their shares of stock the state banks upon their shares of stock the amount of government bonds owned by Reversed and remanded for further proceedings. See same case below (Iowa) 101 N. W. shares owned by each, and he shall list to 867.

them.

The facts are stated in the opinion. Messrs. William G. Harvison and Horatio F. Dale for plaintiff in error in No.

82.

each stockholder, under the head of corporation stock. the total value of such shares. To aid the assessor in fixing the value of such shares, the corporations shall furnish him a verified statement of all the matters provided in the preceding section, which shall also show, separately, the amount of capital stock, and the surplus and undivided earnings, and the assessor, from such statement and other information he can obtain, including any statement furnished to and information obtained by the auditor of state, which shall be furnished him on request, shall fix the value of such stock, taking into account These cases raise the same Federal ques- the capital, surplus, and undivided earnings. *Ed. Note.-For cases in point, see Cent. Dig. vol. 45, Taxation, § 20.

Messrs. Nathaniel T. Guernsey and George F. Henry for plaintiffs in error in Nos. 83 and 92.

Messrs. William H. Bremner and M. H. Cohen for defendants in error.

Mr. Justice Moody delivered the opinion

of the court:

er of the state, and the only question, there-, the contrary, is owned by the stockholders. fore, is whether, in point of fact, the state has taxed them. The first step useful in the solution of this question is to ascertain with precision the nature of the tax in controversy, and upon what property it was levied, and that step must be taken by an examination of the taxing law as interpreted by the supreme court of the state. A superficial reading of the law would lead to the conclusion that the tax authorized by it is a tax upon the shares of stock. The assessment is expressed to be upon "shares of stock of state and savings banks and loan and trust companies." But the true interpretation of the law cannot rest upon a single phrase in it. All its parts must be considered in the manner pursued by this court in New Orleans v. Houston, 119 U. S. 265, 278, 30 L. ed. 411, 415, 7 Sup. Ct. Rep. 198, and Home Ins. Co. v. New York, 134 U. S. 594, 33 L. ed. 1025, 10 Sup. Ct. Rep. 593, with the view of determining the end accomplished by the taxation, and its actual and substantial purpose and effect. We must inquire whether the law really imposes a tax upon the shares of stock as the property of their owners, or merely adopts the value of those shares as the measure of valuation of the property of the corporation, and by that standard taxes that property itself. The result of this inquiry is of vital importance, because there may be a tax upon the shares of a corporation, which are property distinct from that owned by the corporation, and with a different owner, without an allowance of the exemption due to the property of the corporation itself, while, if the tax is upon the corporation's property, all exemptions due it must be allowed. Looking, then, further into the law, it appears that the shares are to be "assessed to such banks and not to the individual stockholders." When this is read the doubt instantly arises whether the law intended to tax the corporation for property which it does not own, but which, on In arriving at the total value of the shares of stock of such corporations, the amount of their capital actually invested in real estate, owned by them, shall be deducted from the real value of such shares, and such real estate shall be assessed as other real estate, and the property of such corporations shall not be otherwise assessed.

Sec. 1325. The corporations described in the preceding sections shall be liable for the payment of the taxes assessed to the stockholders of such corporations, and such tax shall be payable by the corporation in the same manner and under the same penalties as in case of taxes due from an individual taxpayer, and may be collected in the same manner as other taxes, or by action in the

Certainly such a purpose, against common
justice and of doubtful constitutionality,
ought not to be attributed to the law if
any other fair construction is possible.
With respect to taxation, usually, if not
necessarily, property and its owners are in-
separable. Taxes are assessed against per-
sons upon the property which they own, not
upon property which others own. We
should be reluctant to suppose that there
has been any departure from this principle
in this law. It, however, is not an uncom-
mon, and is an entirely legitimate, method
of collecting taxes, to require a corporation,
as the agent of its shareholders, to pay in
the first instance the taxes upon shares, as
the property of their owners, and look to
the shareholders for reimbursement. In this
very law we have an example of this meth-
od. By § 1322, national bank shares are as-
sessed to the stockholders, and by § 1325
the corporations are made liable to pay
the tax and are secured by a lien on the
stock and dividends, which may be enforced
by sale. The state banking corporations
are excluded ex industria from this statu-
tory right of reimbursement by confining it
to the cases of "taxes assessed to the
stockholders of such corporation." This can-
not include the case of state bank shares,
which are not so assessed. Nor can the
corporations in the case at bar have, by any
possibility, a common-law right to recover
the tax paid from the shareholders.
law imposes no obligation on the share-
holder. In paying the tax the corpora-
tion has paid its own debt, and not that
of others, and there is nothing in such a
payment from which the law can imply a
promise of reimbursement. These taxes,
therefore, are not to be paid by the banks
as agents of their stockholders, but as their
own debt, and, unless it is supposed that
the law requires them to pay taxes upon
property which they do not own, the taxes
must be regarded as taxes upon the prop-
erty of the banks. The fair interpretation
name of the county. Such corporations may
recover from each stockholder his propor-
tion of the taxes so paid, and shall have
a lien on his stock and unpaid dividends
therefor. If the unpaid dividends are not
sufficient to pay such tax, the corporation
may enforce such lien on the stock by pub-
lic sale of the same, to be made by the
sheriff at the principal office of such cor-
poration in this state, after giving the
stockholders thirty days' notice of the
amount of such tax and the time and place
of sale, such notices to be by registered
letter, addressed to the stockholder at his
post office address, as the same appears up-
on the books of the company, or is known
by its secretary.

The

the standard or measure by which the taxable valuation of that property is determined. This we think is consistent with the interpretation of the law by the supreme court of Iowa, which sustained the taxation upon grounds which will be presently considered.

The next question is whether such tax

of the law is that the taxes are upon the property of the banks. In the valuation for taxation the assessor is required to "take into account the capital, surplus, and undivided earnings," must be furnished with "a verified statement of all matters provided by the preceding section," which, by reference, is seen to be a detailed statement showing the assets of the bank (§ 1321).†ation violates any provision of the Federal It is true that the assessor may resort to "other information he can obtain," but, although capital, surplus, and undivided earnings are expressly named, nothing is said of the franchise and good will, essential factors of the value of the shares, though not of the value of the assets of the bank. See People ex rel. Union Trust Co. v. Coleman, 126 N. Y. 433, 12 L.R.A. 762, 27 N. E. 818. Moreover, the section closes with the words, "and the property of such corporation shall not be otherwise assessed," which plainly implies that the assessment already provided for is, in substance, an assessment upon the property of the corporation. That the law was administered upon the theory that the tax was upon the property of the corporation is signally illustrated by the proceedings in these cases. The valuation was first made on the exact figures of the capital, surplus, and undivided earnings, deducting the holdings of United States securities. Then, upon being advised that the deductions was erroneous, the assessor corrected the valuation by adding the value of the securities deducted. We therefore conclude that the substantial effect of the law is to require taxation upon the property, not including the franchise, of the banks, and that the value of the shares, ascertained in a manner appropriate to determine the value of the assets, is only

†Sec. 1321. Private bankers. Private banks or bankers, or any persons other than corporations hereinafter specified, a part of whose business is the receiving of deposits subject to check, on certificates, receipts, or otherwise, or the selling of exchange, shall prepare and furnish to the assessor a sworn statement showing the assets, aside from real estate, and liabilities of such bank or banker on January 1st of the current year, as follows:

1. The amount of moneys, specifying separately the amount of moneys on hand or in transit, the funds in the hands of other banks, bankers, brokers, or other persons or corporations, and the amount of checks or other cash items not included in either of the preceding items;

2. The actual value of credits, consisting of bills receivable owned by them and other credits due or to become due;

3. The amount of all deposits made with them by others, and also the amount of bills payable;

Constitution or of any paramount Federal
law. The state cannot, by any form of
taxation, impose any burden upon any
part of the national public debt. The Con-
stitution has conferred upon the govern-
ment power to borrow money on the credit
of the United States, and that power can-
not be burdened or impeded or in any way
affected by the action of any state. This
principle was announced in Weston v.
Charleston, 2 Pet. 449, 7 L. ed. 481, where
it was held that taxes upon the stock of the
United States, levied by one of the munici-
pal corporations of South Carolina, were in-
valid. From that time no one has questioned
the immunity of national securities from
state taxation. It may well be doubted
whether Congress has the power to confer
upon the state the right to tax obli-
gations of the United States. However
this may be, Congress has
has never yet
attempted to confer such a right. Until
the time of the Civil War it was not
thought to be necessary to express the con-
stitutional prohibition in an act of Con-
gress. But, on the occasion of authorizing
the issue of Treasury notes, it was enacted
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 tax-
ation by or under state authority." Act of

4. The actual value of bonds and stocks of every kind and shares of capital stock or joint stock of other corporations or companies, held as an investment, or in any way representing assets, and the specific kinds and descriptions thereof exempt from taxation;

5. All other property pertaining to said business. including real estate, which shall be specially listed and valued by the usual description thereof;

The aggregate actual value of moneys and credits, after deducting therefrom the amount of deposits and of debts owing by such bank, as provided in this chapter, and the aggregate actual value of bonds and stocks after deducting the portion thereof, exempt or otherwise, taxed in this state, and also the other property pertaining to the business, shall be assessed at 25 per cent of the actual value of the same, not including real estate, which shall be listed and assessed as other real estate.

cured to be paid in, and their surplus earnings." The validity of taxation under the amended law was considered in the Bank Tax Case (New York ex rel. Bank of Commonwealth v. Tax & A. Comrs.) 2 Wall. 200, 17 L. ed. 793. There it was insisted that the tax was imposed upon the corporation, and not its property, and that the statute only prescribed a measure of the amount annually to be paid for the franchises. But the court held that the amendment simply changed the method of fixing the amount of capital, and that the tax was upon the capital, which, so far as invested in national securities, was beyond the power of the state.

ner by which they all sought the same end,

February 25, 1862 (12 Stat. at L. 346, chap. | the amount of capital stock paid in, or se33, U. S. Comp. Stat. 1901, p. 2480). The substance of this enactment is embodied in § 3701 of the Revised Statutes, and has usually, if not invariably, since 1862, been inserted in acts authorizing the issue of bonds. That the tax upon the property of a bank in which United States securities are included is beyond the power of the state, and, what perhaps is of lesser moment, within the prohibition of the statutory law, hardly needs to be proved by authority. But the authority is clear and conclusive. With the beginning of the Civil War large amounts of the national securities began to be issued. So important it was to sustain the national credit that, as we have seen, Congress for the first time The case at bar cannot be distinguished began the practice of accompanying the in principle from these cases. In the first authority for their sale with an express case the tax was on the capital stock at its prohibition of their taxation by the states. actual value; in the second case on the The state banks often invested a large part amount of the capital stock and the surplus or the whole of their resources in these se- earnings; and, in the case at bar, on curities, and the question of their liability the shares of the stock, taking into acto state taxation on their capital and sur- count the capital, surplus, and undivided plus thus invested at once arose. The Bank earnings. It would be difficult for the of Commerce, incorporated under the laws most ingenious mind and the most accomof New York, invested all its capital, ex-plished pen to state any distinction becept its investment in real estate, in Unit-tween these three laws, except in the maned States bonds. Under the authority of a law requiring that the capital stock should be assessed at its actual value a tax was levied. The court of appeals of New York sustained the tax so far as it applied to securities issued before the act of 1862, expressly declaring their exemption, and annulled it so far as it applied to securities thereafter issued. The case came here on a writ of error. New York ex rel. Bank of Commerce v. Tax Comrs. 2 Black, 620, 17 L. ed. 451. This court held the tax in- It is, however, contended that although valid on all securities, without even al- these cases have not been overruled, disluding to the act of 1862, but basing the de-tinctions have been drawn in later cases cision entirely upon the constitutional in- which are applicable here, and withdraw ability of a state to affect, by taxation, the the cases before the court from their auexercise of the sovereign power of the na-thority. These later cases must therefore tion in borrowing money on its credit. This be considered and their exact effect dewas the rule specifically declared in Weston termined. We may quickly put out of view v. Charleston, as an application of the gen- those not relied upon here, in which it has eral rule of the immunity from state control been held that the state may levy a tax of the operations of the Federal government upon the value of the franchise of corporain the region of its supremacy. To the ar- tions created by it, or upon the right of gument, which was strenuously urged, that succession to property on the death of its the tax was not upon the securities, but owner, without first deducting the amount upon the capital of the bank, and that of United States securities owned by the thereby the case was distinguished from corporation whose franchise is taxed, or by Weston v. Charleston, the court, by Mr. the estate transmitted under the inheritJustice Nelson, replied: "We cannot yield ance laws of the state. Society for Savour assent to the soundness of the distinc-ings v. Coite, 6 Wall. 594, 18 L. ed. 897; tion." Provident Inst. v. Massachusetts, 6 Wall. The state of New York then amended its 611, 18 L. ed. 907; Hamilton Mfg. Co. v. law, and enacted that banks should be Massachusetts, 6 Wall. 632, 18 L. ed. 904; "liable to taxation on a valuation equal to | Home Ins. Co. v. New York, 134 U. S. 594,

the taxation of the property of the bank. The slight concealment afforded by the omission of the property eo nomine is not sufficient to disguise the fact that, in effect, it is the property which is taxed. If, included in that property, it is discovered that there is some which is entitled by Federal right to an immunity, it is the duty of this court to see that the immunity is respected.