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Des Moines National Bank v. Fairweather, 263 U.S. 103 (1923)

Des Moines National Bank v. Fairweather

No. 17

Argued October 3, 1923

Decided November 12, 1923

263 U.S. 103


1. National banks, their property, or the shares of their capital stock cannot be taxed by the states otherwise than in conformity with the terms and restrictions imposed by Congress in assenting to such taxation. P. 263 U. S. 106.

2. Under § 5219, Rev.Stats. (prior to the amendment of March 4, 1923), national banks and their property were free from state taxation, except on their real property and on shares held by them in other national banks, and all shares in such banks were taxable to their owners, the stockholders, subject to the restrictions that they be not taxed higher than other moneyed capital, employed in competition with such banks, and that the taxing of shares of nonresidents of the state be at the place of the bank's location. P. 263 U. S. 107.

3. Where, under the state law, the shares in a national bank are assessed to the shareholders, and the property of the bank, other than real estate, is expressly exempt, valuation of the shares by the capital, surplus, and undivided earnings, less the real estate, and requiring the bank, primarily, to pay the tax on the shares on behalf of the shareholders (while allowing it ample means of reimbursement through a lien on the shares) do not make the tax on the shares in effect a tax on the bank's property in violation of § 5219, supra. P. 263 U. S. 111.

4. In assessing shares in a national bank for taxation to the shareholders, no deduction need be made on account of securities of the United States, exempt from state taxation, which are part of the assets of the bank by which the value of the shares is measured, since the shares are property of the shareholders, distinct from the corporate assets. P. 263 U. S. 112. Bank of California v. Richardson, 248 U. S. 476, distinguished.

5. The restriction that taxation of national bank shares "shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens" of the state (Rev.Stats. § 5219) is to prevent discrimination against national banks in favor of state institutions or individuals engaged in similar business or

Page 263 U. S. 104

investments, and applies to rules of valuation as well as to tax percentages. P. 263 U. S. 116.

6. This restriction, however, is not violated when the state perforce deducts tax exempt securities of the United States in assessing capital employed in private banking, while taxing (as the act of Congress allows) the value of the shares of national bank without allowance for such tax exempt securities owned by such banks. Id.

191 Iowa 1240 affirmed.

Error to a judgment of the Supreme Court of Iowa sustaining an assessment upon shares of the plaintiff in error bank in proceedings by way of appeal from the action of a board of equalization.

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