National Bank v Commonwealth wants of the community in respect to a circulating medium, as perfectly as any mixed currency that can be devised. Having thus, in the exercise of undisputed unconstitutional powers, undertaken to provide a currency for the whole country, it cannot be questioned that Congress may, constitutionally, secure the benefit of it to the people by appropriate legislation. To this end Congress has denied the quality of legal tender to foreign coins, and has provided by law against the imposition of counterfeit and base coin on the community. To the same end Congress may restrain, by suitable enactments, the circulation as money of any notes not issued under its own authority. Without this power, indeed, its attempts to secure a sound and uniform currency for the country must be futile. Viewed in this light, as well as in the other light of a duty on contracts or property, we cannot doubt the constitutionality of the tax under consideration. The three questions certified from the Circuit Court of the District of Maine must, therefore, be answered Affirmatively. Mr. Justice NELSON, with whom concurred Mr. Justice DAVIS, delivered a dissenting opinion. NATIONAL BANK V. COMMONWEALTH. (9 Wallace, 353.) State taxation of National banks-Construction of statute - Tax "on bank stock" Where the capital of a National bank is invested in United States securities it cannot be taxed by the State; but the shareholders of such bank may be taxed, provided the tax is not at a greater rate than is assessed on other moneyed capital in the hands of individual citizens of the State. A State statute imposed a tax “on bank stock, of fifty cents on each share thereof equal to one hundred dollars of stock therein, owned by individuals, corporations or societies." Held to be a tax on the shares of the stockholders. The law further required "the cashier of a bank whose stock is taxed" to pay "the amount of the tax due." Held valid. National Bank v. Commonwealth. The implied limitation upon State taxation derived from the express permission to tax shares in the National banking associations, is to be so construed as not to embarrass the imposition or collection of State taxes to the extent of the permission fairly and liberally interpreted.* A CTION to recover of the First National Bank of Louisville the sum of $4,000—that being the amount of tax assessed upon the stock of said bank under the following statute of the State of Kentucky (2 R. S. Stats. 239, 266) laying a tax : "On bank stock, on stock in any moneyed corporation of loan on discount, fifty cents on each share thereof, equal to one hundred dollars, on each one hundred dollars of stock therein owned by individuals, corporations or societies." "The cashier of a bank, whose stock is taxed, shall, on the first day of July in each year, pay into the treasury the amount of tax due. If such tax be not paid, the cashier and his sureties shall be liable for the same, and twenty per cent upon the amount; and the said bank or corporation shall thereby forfeit the privilege of its charter." The answer of the defendant alleged the following four grounds of defense: 1. That the bank was not organized under the law of the State, but under the bank act of the United States, and was, therefore, not subject to State taxation. 2. That it had been selected and was acting as a depository and financial agent of the government of the United States, and, therefore, was not liable to any tax whatever, either on the bank, its capital, or its shares. 3. That its entire capital was invested in securities of the government of the United States, and that its shares of stock represented but an interest in the said securities, and were, therefore, not subject to State taxation. 4. That the shares of the stock were the property of the individual shareholders, and that the bank could not be made responsible for a tax levied on those shares, and could not be compelled to collect and pay such tax to the State. The Commonwealth demurred, and the case resulting in a judgment in its favor in the Court of Appeals, this writ of error was prosecuted by the bank. The act of Congress establishing the National Bank (13 Stat. at Large, 111) enacted : National Bank v. Commonwealth. "SECTION 40. That the president and cashier of every such association shall cause to be kept a correct list of the names and residences of all the shareholders in the association, and the number of shares held by each, and such list shall be open to the inspection of the officers authorized to collect taxes under State authority. "SECTION 41. 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 the personalty of such person, in the assessment of taxes imposed by or under State authority, at the place where such bank is located, and not elsewhere; but not at a greater rate than is assessed upou 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 of any of the banks organized under authority of the State where such association is located." Mr. Wills, for plaintiff in error. Mr. Albert Pike, contra. Mr. Justice MILLER delivered the opinion of the court. In the several recent decisions concerning the taxation of the shares of the National banks, as regulated by sections 40 and 41 of the act of Congress of June 3d, 1864, it has been established as the law governing this court that the property or interest of a stockholder in an incorporated bank, commonly called a share, the shares in their aggregate totality being called sometimes the capital stock of the bank, is a different thing from the moneyed capital of the bank held and owned by the corporation. This capital may consist of cash, or of bills and notes discounted, or of real estate combined with these. The whole of it may be invested in bonds of the government, or in bonds of the States, or in bonds and mortgages. In whatever it may be invested, it is owned by the bank as a corporate entity, and not by the stockholders. A tax upon this capital is a tax upon the bank, and we have held that when that capital was invested in the securities of the government, it could not be taxed, nor could the corporation be taxed as the owner of such securities. On the other hand, we have held that the shareholders or stockholders, by which is meant the same thing, may be taxed by the States on stock or shares so held by them, although all the capital of the bank be invested in Federal securities, provided the taxation does not violate the rule prescribed by the act of 1864. National Bank v. Commonwealth. It is not intended here to enter again into the argument by which this distinction is maintained, but to give a clear statement of the propositions that we have decided, that we may apply them to the case before us. If, then, the tax for which the State of Kentucky recovered judgment in this case is a tax upon the shares of the stock of the bank, and is not a tax upon capital of the bank owned by the corporation, the first, second, and third grounds of defense must fail. There are, then, but two questions to be considered in the case before us : 1. Does the law of Kentucky, under which this tax is claimed, impose a tax upon the shares of the bank, or upon the capital of the bank, which is all invested in government bonds? 2. If it is found to be a tax on the shares, can the bank be compelled to pay the tax thus levied on the shares by the State? The revenue law of Kentucky imposes a tax "on bank stock, or stock in any moneyed corporation of loan and discount, of fifty cents on each share thereof, equal to one hundred dollars of stock therein, owned by individuals, corporations, or societies." We entertain no doubt that this provision was intended to tax the shares of the stockholders, and that if no other provision had been made, the amount of the tax would have been primarily collectible of the individual or corporation owning such shares, in the same manner as other taxes are collected from individuals. It is clear that it is the shares owned or held by individuals in the banking corporation which are to be taxed, and the measure of the tax is fifty cents per share of one hundred dollars. These shares may, in the market, be worth a great deal more or a great deal less than their par or nominal value, as its capital may have been increased or diminished by gains or losses, but the tax is the same in each case. This shows that it is the share which is intended to be taxed, and not the cash or other actual capital of the bank. It is said that there may be, or that there really are, banks in Kentucky whose stock is not divided into shares of one hundred dollars each, but into shares of fifty dollars or other amounts, and that this shows that the legislature did not intend a tax of fifty cents on the share, but a tax on the capital. But the argument is of little weight. What the legislature intended to say was, that we impose a tax on the shares held by individuals or other corporations in banks in this State. The tax shall be at the rate of fifty National Bank v. Commonwealth. cents per share of stock equal to one hundred dollars. If the shares are only equal to fifty dollars, it will be twenty-five cents on each of said shares. If they are equal to five hundred dollars it will be two dollars and fifty cents per share. The rate is regulated so as to be equal to fifty cents on each share of one hundred dollars. But it is strongly urged that it is to be deemed a tax on the capital of the bank, because the law requires the officers of the bank to pay this tax on the shares of its stockholders. Whether the State has the right to do this we will presently consider, but the fact that it has attempted to do it does not prove that the tax is any thing else than a tax on these shares. It has been the practice of many of the States for a long time to require of its corporations, thus to pay the tax levied on their shareholders. It is the common, if not the only, mode of doing this in all the New England States, and in several of them the portion of this tax which should properly go as the shareholder's contribution to local or municipal taxation is thus collected by the State, or the bank, and paid over to the local municipal authorities. In the case of shareholders not residing in the State, it is the only mode in which the State can reach their shares for taxation. We are, therefore, of opinion that the law of Kentucky is a tax upon the shares of the stockholder. If the State cannot require of the bank to pay the tax on the shares of its stock, it must, because the Constitution of the United States, or some act of Congress, forbids it. There is certainly no express provision of the Constitution on the subject. But it is argued that the banks, being instrumentalities of the Federal government, by which some of its important operations are conducted, cannot be subjected to such State legislation. It is certainly true that the Bank of the United States, and its capital, were held to be exempt from State taxation, on the ground here stated, and this principle, laid down in the case of McCulloch v. Maryland, 4 Wheat. 316, has been repeatedly affirmed by the court. But the doctrine has its foundation in the proposition, that the right of taxation may be so used in such cases as to destroy the instrumentalities by which the government proposes to effect its lawful purposes in the States, and it certainly cannot be maintained that banks or other corporations or instrumentalities of the government, are to be wholly withdrawn from the operation of |