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act in several other cases recently determined. People v. Weaver, 100 U. S. 539; Pelton v. National Bank, 101 U. S. 143; Cummings v. Same, Id. 153; Superoisors v. Stanley, 105 U.S. 305; Evansville Bank v. Britton, Id. 323. From these cases may be deduced certain rules for the construction of that act: (1), That the words "at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens" refer to the entire process of assessment, which, in the case of national bank shares, includes both their valuation and the rate of percentage on such valuation; consequently, that the act of congress is violated if, in connection with a fixed percentage applicable to the valuation alike of national bank shares and of other moneyed investments or capital, the state law establishes or permits a mode of assessment by which such shares are valued higher in proportion to their real value than is other moneyed capital. (2) That a state law which permits individual citizens to deduct their just debts from the valuation of their personal property of every kind, other than national bank shares, or which permits the tax-payer to deduct from the sum of his credits, money at interest or other demands to the extent of his bona fide indebtedness, leaving the remainder to be taxed, while it denies the same right of deduction from the cash value of bank shares, operates to tax the latter at a greater rate than other moneyed capital.

These decisions show that, in whatever form the question has arisen, this court has steadily kept in view the intention of congress not to permit any substantial discrimination in favor of moneyed capital, in the hands of indi. vidual citizens, as against capital invested in the shares of national banks. In People v. Weaver the court said: “As congress was conferring a power on the states which they would not otherwise have had, to tax these shares, it undertook to impose a restriction on the exercise of that power, manifestly designed to prevent taxation which should discriminate against that class of property as compared with other moneyed capital. In permitting the states to tax these shares it was foreseen that the states might be disposed to tax the capital invested in these banks oppressively. This might have been prevented by fixingta limit on the amount. But congress, with due regard to the dignity of the states, and with a desire to interfere only so far as was necessary to protect the banks from anything beyond their equal share of the public bur. dens, said: You may tax the real estate of the banks as other real estate is taxed, and you may tax the shares of the bank as the personal property of the owner, to the same extent you tax other moneyed capital invested in your state. It was conceived that by this qualification of the power of taxation equality would be secured and injustice prevented."

We come now to consider whether the laws of Pennsylvania, under which defendants propose to levy a tax, for county purposes, upon the plaintiff's shares of stock, are open to the objection that they violate the principle of equality, which the act of congress intended to establish between capital invested in such shares, and other moneyed capital. By a law of that state, passed March 31, 1870,-upon which the defense mainly rests,—it is provided "that all the shares of national banks, located within this state, and of banks and savings institutions incorporated by this state, shall be taxable for state purposes at the rate of three mills (subsequently four) per annum upon the assessed value thereof; and for county, school, municipal, and local purposes at the same rate as now is or may hereafter be assessed and imposed upon other moneyed capital in the hands of individual citizens of this state." Laws Pa. 1870, p. 42. This act suggests, upon its face, the inquiry as to what moneyed capital, in the hands of individual citizens, is subject to taxation for county and other local purposes; for such capital, if exempted from local taxation at the date of the passage of that act, remains exempt, unless the legis. lature of the state has since subjected it to taxation. Evidently, in respect of taxation for local purposes, the legislature did not intend, by the act of 1870, to remove the then existing exemptions, and subject all moneyed capi.

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tal, of whatever description, to such taxation; but only to establish a uniform rate of local taxation as between capital invested in national bank shares, and such, and only such, moneyed capital as was then, or might thereafter be, subjected to taxation.

* To ascertain what moneyed capital was, at the passage of the act of 1870, or has since become, exempted in Pennsylvania from taxation for county purposes, requires an examination of several statutes, commencing with the one passed in 1844. The latter subjected to taxation, "for all state and county purposes whatsoever,” the following personal property: Mortgages; money owing by solvent debtors, whether by promissory note, penal or single bill, bond, or judgment; articles of agreement and accounts bearing interest, except notes or bills for work and labor done, and bank notes; shares or stock in any bank, institution, or company then or thereafter incorporated by or in pursuance of any law of the state, or of any other state or government; shares of stock or weekly deposits in unincorporated saving fund institutions; public loans or stocks, except those issued by the state; money loaned or invested on interest in any other state. 2 Brightly's Purd. Dig. 1380; Laws Pa. 1844,

In 1850 shares of stock in state banks, created after the state banking act of 1850, were relieved from taxation for county purposes. Laws Pa. 1852, p. 442; Allegheny Co. v. Shoenberger, 1 Grant, 35. And in 1854 all bonds or certificates of loan of any railroad company incorporated in the state were declared liable to taxation “for state purposes only.” 2 Brightly's Purd. Dig. 1369, § 81.

By an act approved April 12, 1859, it was provided that thereafter the capital stock of all banks, savings institutions, and companies whatever, of the state, “shall be subject to and pay a tax into the treasury of the commonwealth annually, at the rate of one-half mill for each 1 per cent. of dividend made or declared by such bank, savings institution, or company;" and in case of no such dividend being declared, then three mills upon a valuation of the capital stock, agreeably to the above act of 1844. The same act exempted from tax upon dividends any institution or company (except banks of issue) then liable for tax on capital stock. It was further declared that that act should not be so construed as to make building associations, plank-road or turnpike companies liable for any tax to the commonwealth, when such companies make or*declare no dividends. Laws Pa. 1859, p. 529. And by an act passed January 3, 1868, it was declared that from and after its passage the shares of stock held by any stockholder in any institution or company incorporated under the laws of the state, which in its corporate capacity is liable to, and pays into the state treasury, the tax imposed by the act of April 12, 1859, “shall not be taxable in the hands of said stockholder, personally, for state, county, or local purposes;” so much of the act of 1844 as imposed a tax for state or county purposes upon any stockholder in his individual capacity being repealed in terms, without relieving such corporations from any tax then imposed by law, or their real estate from any state, county, or local tax to which it then was or might thereafter be subjected. Laws Pa. 1868, p. 1318.

Then followed the act of 1879, by the third section of which every incorporated company or association doing business in Pennsylvania, or having capital employed there in the name of any other company or corporation, except foreign insurance companies, banks, and savings institutions,—was required to pay a certain annual tax on its capital stock into the state treasury. Laws Pa. 1879, p. 112.

This brings us to the act of June 10, 1881, whereby mortgages; moneys owing by solvent debtors, whether by promissory note, penal or single bill, bond or judgment; articles of agreement and accounts bearing interest, ex. cept notes or bills for work and labor done; obligations to banks for money

loaned; bank notes; shares of stock in banks, banking or saving institutions or companies, then or thereafter incorporated under any law of Pennsylvania; public loans or stocks, except those issued by that state or the United States; money loaned or invested in any other state, and all other moneyed capital in the hands of individual citizens of that state, -are declared “to be, and are hereby, taxable for state purposes, at the rate of four mills on the dollar of the value thereof annually: provided, that all mortgages, judgments, and recognizances whatsoever, and all moneys due or owing upon articles of agreement for the sale of real estate, shall, after the passage of this act, be exempt from all taxation except for state purposes: provided,“the provisions of this act shall not* apply to building and loan associations,” the money loaned by them being subjected to the same tax as money loaned by individuals. By the second section of the same act, all corporations paying interest on a loan or loans, taxable for state purposes, whether secured by bond, mortgage, recognizance, or otherwise, are required to report to the auditor general annually the ainount of such indebtedness owned by residents of Pennsylvania, and to pay into the state treasury four mills upon every dollar of such indebtedness, such tax to be deducted by the corporation paying it from the interest on such indebtedness; whereupon “such indebtedness, whether secured by bond, mortgage, judgment, or otherwise, shall be exempt from other taxation in the hands of the holders thereof.” Laws Pa. 1881, p. 99.

Unless we greatly misapprehend the effect of this legislation, a very large amount of property, made subject by the act of 1844 to taxation for both state and county purposes, has since been relieved from the burdens of county taxation; while the imposition by the act of 1870 upon national bank shares of local taxation at the same rate as was at the latter date, or has been since, imposed upon other moneyed capital in the hands of individual citizens of the state, leaves such shares subject to taxation as provided in the act of 1844. The burden of county taxation, imposed by the latter act, has, at all events, been removed from all bonds or certificates of loan issued by any railroad company incorporated by the state; from shares of stock in the hands of stockholders of any institution or company of the state which, in its corporate capacity, is liable to pay a tax into the state treasury under the act of 1859; from mortgages, judgments, and recognizances of every kind; from moneys due or owing upon articles of agreement for the sale of real estate; from all loans, however made, by corporations, which are taxable for state purposes, when such corporations pay into the state treasury the required tax on such indebtedness,

As the present case comes before us upon demurrer to the bill, we have, excepting the allegations of the latter, no means of determining the value of the capital thus exempted from the county taxation which is imposed upon capital invested in national bank shares. After referring to the acts of 1870 and 1881, the bill charges: “That for the year 1881, as is shown by the public report and by the books of the auditor general of Pennsylvania, the sum of $1,692,938.66 was paid into the state treasury as tax upon the capital stock of such corporations by them in their corporate capacity, which sum of money was paid upon a gross capital stock, of the corporations paying the same, of the value, approximately stated, of 564 millions of dollars. That it appears, as is shown by the books and published report of the secretary of internal affairs for the year 1881, that the total valuation throughout the state for that year of all inortgages, money owing by solvent debtors, whether by promissory note, penal or single bill, bond, or judgment; also all articles of agreement and accounts bearing interest, owned or possessed by any person or persons whatsoever, (except notes or bills for work or labor done, and all obligations given to banks for money loaned and bank notes,) and all public loans or stocks whatsoever, except those issued by this state or the United Sta and all moneys loaned or in sted on inte in any other tate,

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and all other moneyed capital in the hands of individual citizens of the state,'

- amounts to $74,931,765. That for the same year, as is shown by the books and published reports of the auditor general, a tax was paid into the state treasury upon corporation and municipal loans, not probably included in the foregoing sum, upon an aggregate valuation of $51,204,162.50. That by the provisions of section 1 of the act of June 10, 1881, (P. L. 99,) all mortgages, judgments, and recognizances whatsoever, and all moneys due or owing upon articles of agreement for the sale of real estate, were exempt from all taxation except for state purposes.

That section 2 of said act of 1881 ex. empts from local taxation, in the hands of the holders thereof, all loans issued by corporations paying interest thereon, where such corporations pay into the state treasury the state tax of four mills on each dollar thereof; and by act of May 1, 1854, (P. L. 535,) all bonds or certificates of indebtedness of any railroad company*incorporated by this commonwealth be, and the same shall be, liable to taxation for state purposes only.' That the total paid-in capital of all the state banks and savings institutions in said commonwealth, other than national banks, as appears by the books and published reports of the auditor general for the year 1881, is $7,161,740.68, while the total paid-in capital of the national banks located within said state, in said year, amounted to $57,452,051."

The demurrer, of course, admits these allegations of fact to be true. Their materiality is not affected by the circumstance that they are stated to appear, also, upon the books and published reports of the auditor general and the secretary of internal affairs of Pennsylvania. Upon such facts, and in view of the revenue laws of the state, it seems difficult to avoid the conclusion that, in respect of county taxation of national bank shares, there has been and is such a discrimination, in favor of other moneyed capital against capital invested in such shares, as is not consistent with the legislation of congress. The exemptions in favor of other moneyed capital appear to be of such

substantial character in amount as to take the present case out of the operation of the rule that it is not absolute equality that is contemplated by the act of congress; a rule which rests upon the ground that exact uniformity or equality of taxation cannot, in the nature of things, be expected or attained under any system. But as substantial equality is attainable, and is required by the supreme law of the land, in respect of state taxation of national bank shares, when the inequality is so palpable as to show that the discrimination against capital invested in such shares is serious, the courts have no discretion but to interfere.

The supreme court of Pennsylvania, after referring to Hepburn v. School Directors, as having involved the same question that is now presented, and observing that the exemption is here as there only partial, says: “Not only is some other moneyed capital of a miscellaneous character taxable for local purposes, but all such capital of the same character as that which you desire to exempt; that is to say, the shares of state banks and savings institutions." Again: "The general assembly has authorized the taxation of the shares of these banks in no other manner and at no higher rate than other capital of a similar character.” If by this language it is meant that an illegal discrimination against capital invested in national bank shares cannot exist where no higher rate or heavier burden of taxation is imposed upon them than upon capital invested in state bank shares, or in state savings institutions, we have to say that such is not a proper construction of the act of congress. Capital invested in national bank shares was intended to be placed upon the same footing of substantial equality in respect of taxation by state authority as the state establishes for other moneyed capital in the hands of individual citizens, however invested, whether in state bank shares or otherwise. As the act of congress does not fix a definite limit as to percentage of value, beyond which the states may not tax national bank shares, cases will arise in

•702

which it will be difficult to determine whether the exemption of a particular part of moneyed capital in individual hands is so serious or material as to infringe the rule of substantial equality. But unless we have failed to comprehend the scope and effect of the taxing laws of Pennsyivania, and unless the allegations of the bill be untrue, the present case is not of that class.

Our attention is called by counsel for the defendants to the fact that Pennsylvania derives, probably, her principal revenues from railroads, and therefore has good reasons to look to her interests as a commonwealth in respect to such improvements. To this fact he refers the legislation which makes railroad securities liable to taxation for state purposes only, and exempts them from local taxation. Upon like grounds he defends the exemptions made, in respect of local taxation, in favor of the bonds and shares of other corporations that pay an annual tax into the state treasury. It is quite sufficient, in respect of such matters, to say that this court has no function to deal with the considerations of public policy which control that coinmonwealth in the assessment of property for purposes of revenue. We have no duty beyond that of ascertaining the intention of congress in its legislation, permitting the several states to tax the shares of institutions organized under national authority for the purpose of providing a national currency, secured by United States bonds. If the principle of substantial equality of taxation linder state authority, as between capital so invested and other moneyed capital in the hands of individual citizens, however invested, operates to disturb the peculiar policy of some of the states, in respect of revenue derived from taxation, the remedy therefor is with another department of the government, and does not belong to this court.

We are of opinion that upon the allegations of the bill the defendants should have been put to their answer. The facts may then disclose a case quite different from that made by the bill. What we have said relates to the case as. now presented. The judgment must therefore be reversed, and the cause romanded for further proceedings not inconsistent with this opinion.

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(113 U. S. 737)

CARTER 0. BURR, Adm'x, etc.

(March 16, 1885.) PROMISSORY NOTE-TRANSFER-IntenT OF PARTIES.

Review of evidence as to certain complex relations between several persons, caused by the transfer of a note (upon payment) from the payee to a third party, the question being whether, by such transfer, the third party succeeded to the rights of the payee, or took the note to hold as his agent. Appeal from the Supreme Court of the District of Columbia.

H. 0. Claughton, for appellant. R. Ross Perry and W. D. Davidge, for appellee.

*WAITE, C. J. The following facts are either conceded by both parties or fully established by the evidence:

On the twenty-ninth of May, 1873, Joseph Daniels bought of John E. Carter certain parts of lots 1 and 24, in square 514, of the city of Washington, for which he paid $4,000 cash in hand, and gave his three promissory notes for $1,000 each, payable respectively in one, two, and three years from date, with interest at the rate of 8 per cent. per annum. The notes were secured on the property by a deed of trust to Dorsey E. W. Carter, trustee. When the first note fell due, in 1874, Daniels was unable to meet it, and John E. Carter, who then held it, pressed him for payment. On the seventh of July, 1874, he entered into a contract with Seth A. Terry, by which he assigned to Terry his interest in what were known as the “Eight-hour Law Cases" and the “Twenty per Cent. Cases,” for the consideration of $10,000, of which $5,000 was paid in ban and the remaining $5,000 was to be paid by taking up, op

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