and not elsewhere," but contained no provision that the tax imposed should not exceed the rate imposed upon the shares of banks organized under State authority. The act was held void, because there was no tax laid on the shares of State banks at all, although there was a tax on the capital of such banks. It was claimed by the counsel of the national banks, and the position sustained by a minority of the court, that so much of the capital of the national banks as was invested in United States bonds was not liable to taxation, on the principle of the case of The Bank of Commerce v. New York. It was an actual, though indirect, taxation of the bonds, and it was doubted. whether Congress had power, without express reservation in the loan acts, to authorize such taxation; and it was attempted to be shown that Congress did not intend to authorize the taxation of the shares of these banks without reference to the amount of capital invested in national securities, but this view was repudiated by the majority, upon plain and well-known principles of law. Large and important privileges were granted to the corporators of these banks, and the taxes imposed by the government of the United States, and allowed to be imposed by the States, were burdens imposed as conditions of the grant of the charters; the tax was on the franchise, not upon the bonds; and should the view be deemed even plausible, that the tax was on the bonds, then it was a tax on the new use and new privilege conferred upon the holders of these bonds, a tax annexed as a condition to the enjoyment of this new use and new application of the bonds. Further, the bonds are owned by the corporation, a distinct person from the shareholders; the latter are interested in the property of the bank, but they are not the owners of it; they are entitled to participate in the profits of the bank earned in the employment of its capital during its existence, in proportion to the number of shares held, and upon its dissolution, to their proportion of its property that may remain after payment of its debts; it is this interest which the States may tax, and not the capital of the bank. It is to be observed, in connection with this opinion of the minority of the court, that in the leading case on this subject, where the Bank of the United States was a public corporation, created for public and national purposes, it was conceded that the shares of the stockholders were subject to taxation by the State; that they were properly subject to the jurisdiction

'Van Allen v. Assessors, 3 Wall. 573. City of Utica v. Churchill, 33 N. Y. 161.

Ibid. Chase, J., 589.

For an able discussion of this subject see

3 Ibid. Nelson, J., 582-584.

'McCulloch v. State of Maryland, 4 Wheat. 316.

of the State. Soon after this decision, in April, 1866, New York passed another act, taxing shares of the national banks as other personal property, in the place where located, with this proviso: "But not at a greater rate than is assessed upon other moneyed capital in the hands of individuals in this State." At the December term, 1866, of the Supreme Court of the United States, this act was held to be in conformity to the act of Congress, and valid. Three of the judges dissented upon the same ground taken in the previous case.1 Where a State imposes a tax on the capital of State banks, the shares in the hands of the stockholders being exempt, a law imposing a tax on the shares held in national banks violates the act of Congress of 1864, and is void.2

3

The State of Kentucky passed a law imposing a tax on bank stock or stock in any moneyed corporation of loan or discount, of fifty cents on each share thereof equal to one hundred dollars, and directed that the cashier of a bank whose stock is taxed should, on the first day in July of each year, pay into the treasury of the State the amount of tax due on the shares of the bank; imposing a penalty on the cashier and his sureties for a failure to comply with the law. This is a tax on the shares of the stockholders and not upon the capital of the bank. The circumstance that the tax is collected through the officers of the bank does not alter the character of the tax. It is a common mode of collecting such taxes. The officer of the bank is made the tax collector of the State. The doctrine of the exemption of the instrumentalities of the federal government from taxation by the States, and its limitation, of which this case is an example, is well stated by Miller, J. : "The doctrine has its foundation in the proposition, that the right of taxation may be so used by the States as to destroy the instrumentalities by which the government proposes to effect its lawful purposes in the States. **** The limitation is, that the agencies of the federal government are only exempted from State legislation so far as that legislation may interfere with or impair their efficiency in performing the functions by which they are designed to serve that government. Any other rule would convert a principle founded alone in the necessity of securing to the government of the United States the means of

1 People v. The Commissioners, 4 Wall. 244; People v. The Commissioners of Taxes, 35 N. Y. 423.

Bradley v. People, 4 Wall. 459.

National Bank v. Commonwealth, 9 Wall. 353. People v. Bradley, 39 Ill. 130, and McVeigh v. Chicago, 49 Ill. 318, support the doctrine that shares of national banks may be taxed by the States; s. P. Smith, Co. Treas. v. Webb, 11 Minn. 500; Baker v. First Nat'l Bank of Springfield, 65 Ill. 44.

exercising its legitimate powers, into an unauthorized and unjustifiable invasion of the rights of the States."1

Where a State imposes a tax on the shares of a national bank, at the same rate as State banks, with the exception of two banks, as to which it had previously disabled itself by a contract from taxing beyond a certain amount, the rate upon the national banks, though at a rate higher than on these latter banks, is not a violation of the act of 1864. That act only requires the State to tax as far as it has capacity the shares of national banks in like manner as banks of its own creation. So where there is a tax on shares of national banks at the same rate as other moneyed capital, but some moneyed capital in the county where the bank is located is exempt from taxation, the tax is valid. The principle has been applied to cases where there is a tax upon shares of national banks and no tax upon shares of State banks, eo nomine, and the tax imposed on the State banks is a full equivalent for that imposed on the shares of the national banks, as a tax of threequarters of one per cent. on the amount of the capital stock of State banks, regardless of the fact that a portion of their capital is invested in United States securities, or has been lost in business; but where the tax imposed on the capital, profits and time deposits of State banks is subject to a deduction for real estate and United States bonds, it is not regarded as an equivalent for that imposed on the national banks." Although the tax is in form upon the capital of the bank, that is, is regulated by the amount of the capital, if there be no deductions, and the same rate of tax is required, the burden on the stockholders or on the shares is the same; but if there are deductions, then the tax on the State banks is diminished, and to that extent the rate is higher on the shares of the national banks.

The national banking act requires the shares to be taxed "at the place where the bank is located, and not elsewhere." The courts of Maine and other States hold that the place contemplated is the town or district in which the bank is situated, while others hold that the

1

1 Miller, J., 9 Wall. 361, 362. It seems that the surplus capital of national banks, in excess of the amount they are required by act of Congress to carry to their surplus fund semi-annually, may be taxed by the States. Such taxation is not a taxation of the means or agencies of the federal government, but is a tax on the property of such agents-property not necessary to carry out any purpose of that government, in the execution of its constitutional powers. The right to tax such property has never been surrendered by the States. First Nat'l Bank v. Peterborough, 56 N. H.

2 Lionberger v. Rouse, 9 Wall. 468.

4

3 Everitt's Appeal, 71 Penn. St. 216.

* Van Slyke v. State, 23 Wisc. 655; Bagnall v. State, 25 Id. 112. Frazer et al. v. Seibeon et al. 16 Ohio, N. S. 614.

Packard v. Lewiston, 55 Maine, 456; Abbott v. Bangor, 56 Id. 310; s. P. Stratham v. Mandeville, 33 Ind. 111; People v. The Commissioners of Taxes, 35 N. Y. 423–438.

"2

3

place intended is the State, and that the State, in exercising the right of taxing the shares, may assess them either at the residence of the owner or at the town in which the bank is located.1 In 1868, Congress gave a legislative construction to the act of 1864, by amending that act and declaring that the words, "the place where the bank is located, and not elsewhere," shall be construed to mean, "the State within which the bank is located." 2 This act abolishes the rule as to shares in national banks, that personal property of an intangible character follows the person for the purposes of taxation, and gives it a situs of its own, to wit, that of the State in which the bank is located, and such State may tax these shares, whether the owners are residents or non-residents of the State. The case last cited from Massachusetts speaks of this act as giving to national bank shares to some extent the character and fixity of real estate, and the latter is authority for the position that such shares may be assessed in the town in which the bank is located, whether the owners are residents of the town or reside in some other part of the State, or are nonresidents of the State. But it is submitted that it is also true that residents of the State may still be assessed at their residence when it is different from the location of the bank. A statute contemplating such an assessment has been held valid, but in that case the residence of the party assessed and the location of the bank were the same, and the court refused to express any opinion as to the validity of such an act, if the residence and location were different. The cashier of a national bank may be compelled under a State law to transmit to the town clerk a list of the stockholders in his bank, to facilitate the taxation of the shares therein.5

Other Instrumentalities.-The States cannot tax an officer of the United States for his office, nor tax the emoluments of the office. The officers of the government are necessary in its administration; if they could be interfered with in any manner by the States, the government would not be supreme. But an officer of the United States army residing in Philadelphia, although without any domiciliary intention, is liable to be taxed for his household furniture, or other personal property. So an enlisted soldier, possessed of real and per

6

1 Austin v. Aldermen of Boston, 14 Allen, 359; Clapp v. Burlington, 42 Vt. 579. 215 Stat. at Large, 34.

3 Providence Inst. for Savings & Jewell v. City of Boston, 101 Mass. 575; Tappan v. Merchants' Nat. Bank, 19 Wall. 491.

4 Austin v. The Aldermen, 7 Wall, 695.

Newman v. Wait, 46 Vt. 689.

6

Dobbins v. Commissioners of Erie, 16 Pet. 435 (Cond. U. S. 370).

sonal property situated in the town in which he is stationed, is liable to be taxed for such property, although he is not liable to taxation by reason of his being stationed there as a soldier. And as to the tax for which he is liable, he may be arrested for non-payment under the laws of the State.1 Massachusetts imposed a tax on the income from "any profession, trade or employment." A clerk in a post office, who was appointed by the deputy postmaster, and whose appointment was approved by the postmaster general, was assessed upon his income, which included his salary as such clerk. It was held, that this did not come within the rule of Dobbins v. Commissioners of Erie; that was a tax upon the office, this on the income, and the clerk was held liable for the tax.2 It is difficult to see the force of this distinction. A clerk is as necessary in carrying on the operations of the postal department of the government as the postmasters themselves, and a tax on the emoluments of the clerk, although in form a tax on income, is as much a burden upon one of the instrumentalities of the government as a tax on the income of the postmaster himself, and void to the extent that the emoluments of his office constitute that income.

The forts, arsenals, dockyards, mints, post offices, custom houses, and all other public property of the United States, are not liable to State taxation, coming within the description of instrumentalities of the government necessary to the exercise of the power vested in it. The public domain is not liable to taxation by the States. When the government parts with the title under the land laws, it becomes liable to taxation in the hands of the purchaser. The contract of purchase is complete when the certificate of entry is executed and delivered; thereafter the land ceases to be a part of the public domain, and is liable to taxation by the States. Land as such, in the occupancy of a pre-emptor whose right to purchase has not been determined in hist favor, is not subject to taxation until it has been paid for. Up to that time, it is only a proffer to a certain class of persons that they

1 Webster v. Seymour, 8 Vt. 135. Const. U. S. art. 1, § 8, par. 17.

2 Melcher v. City of Boston, 9 Metc. 73.

Since this

Carroll v. Safford, 3 How. 450; Witherspoon v. Duncan, 4 Wall. 210. case the Court has decided that the right to tax land granted by the United States before the issuing of the patent, only existed where the right to the patent is complete. Where the right to the patent is dependent on the payment of the costs of survey, or the land is subject to contingent pre-emption rights, the land is not subject to tax by the State. Railroad Co. v. Prescott, 16 Wall. 603. This doctrine has been modified, so far as it holds that the contingent right of pre-emption exempts. Non-payment of costs of survey still exempts. Railway Co. v. McShane, 22 Wall. 444. So also land not selected by railroad companies under the land grant acts of Congress, is not taxable. Iowa Homestead Co. v. Webster Co. 21 Iowa, 221. 9