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Domenech v. National City Bank of New York, 294 U.S. 199 (1935)

Domenech v. National City Bank of New York

No. 386

Argued January 15, 16, 1935

Decided February 4, 1935

294 U.S. 199


1. The system of national bank laws extends to Puerto Rico, ex proprio vigore and by force of the congressional declaration (U.S.C., Title 48, § 734) that the federal laws which are " not locally inapplicable," except the internal revenue laws, shall have the same force and effect there as in the United States. P. 294 U. S. 205.

2. A tax on a branch of a national bank is a tax on the bank. P. 294 U. S. 204.

3. Puerto Rico, being a dependency of the United States, may not tax an agency of the United States, such as a national bank, except by the clear and explicit consent of Congress, and the general power of taxation conferred on the insular government cannot be construed as a consent. Pp. 294 U. S. 204-205.

Page 294 U. S. 200

4. Revised Statutes, § 5219, as amended, U.S.C. Supp., Title 12, § 741, defining and limiting the permitted taxation of national banks and their shares by States, applies to Puerto Rico. P. 294 U. S. 205.

5. This section applies to taxation by Puerto Rico of a local branch of a bank having its principal place of business in a State, notwithstanding that, in such case, the permission granted by it to tax shares may not be availed of by Puerto Rico. P. 294 U. S. 205.

6. A tax imposed by Puerto Rico upon the branches maintained there by a New York national bank, based upon the amount of its capital (other than real property) employed in the Island, held not permitted by R.S., § 5219, and invalid. P. 294 U. S. 206.

7. The fact that § 25 of the Federal Reserve Act, as amended, refers to branches of national banks in dependencies or insular possessions in common with those in foreign countries as " foreign branches" is not indicative of an intention to subject them to general taxation by the dependencies or possessions. P. 294 U. S. 204.

71 F.2d 13 affirmed.

Certiorari, 293 U.S. 549, to review a judgment reversing a judgment of the U.S. District Court for Puerto Rico against the national bank in a suit to recover taxes paid under protest to the Treasurer of Puerto Rico.

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