State v. Central Savings Bank

Robinson, J., delivered the opinion of the Court. This suit is brought to recover the tax assessed by the Act of 1814, chap. 483, which in sec. 85, provides: “The president or other proper officer of any Savings Bank, institution or corporation which shall receive deposits and allow interest thereon, shall furnish to the Comptroller on or before the first day of July in each year, the aggregate amount of deposits in such corporation ; and shall pay to the Treasurer on or before the first day of January succeeding, out of the interest due to the depositors, the State tax on said deposits.” The question is whether the deposits of the appellee invested in ground rents, reserved under leases of ninety-nine years renewable forever, on property, which, by the law of this State is assessed to, and the taxes thereon paid by, the leasehold owner, are within the operation of this Act. The contention is that the tax thereby imposed is in effect a tax on property held by the appellee in trust for its depositors, and to hold that the deposits invested in ground rents are liable to the payment of this tax, would he to subject the same property to double taxation, which is forbidden by the State Constitution. And in view of the decision in State vs. Sterling, 20 Md., 502 , this contention is, we think, well founded.

The pre ²⁹³ cise question arose in that case upon the construction of the 95th sec. of Art. 81, of the Code, which in terms is identical with Act of 1874 ; and the Court being of opinion that the tax thereby assessed, was a tax upon the property of the institution, decided, 1st. That the deposits invested in Government securities, which by the Act of Congress were exempt from State taxation, were not within the operation of the law ; and 2ndly. That the deposits invested in shares of stock or other funds, upon which taxes were paid by the corporation, or other persons, were not subject to the payment of the tax imposed by the Act, because to hold otherwise would subject the same property to double or unequal taxation. This decision was made in 1867, and in passing the Act of 1874, identical in terms with the Act thus construed by the Court, we must presume the Legislature meant and understood it, in the same sense in which the prior Act had been interpreted construing the Act of 1874.

Then according to the intention of the Legislature, as thus ascertained, we must hold that the deposits of the appellee invested in ground rents, the taxes on which have been pa'id by the leasehold owner, are not within the operation of the Act of 1874. In so deciding, however, we are not to be understood as concurring with the Court in the construction placed upon the Act in Sterling’s Case. With due deference, the tax imposed by that Act on the deposits in Savings Banks, is not, in our opinion, a tax on the property held by such Banks in trust for the depositors. It is not a tax on the property nor upon the investments held by the Bank; nor is it a tax levied on each deposit at a certain rate in proportion to its amount, but it is assessed on the amount of all deposits in the Bank ascertained and fixed by the average sums which it has had in its hands, during the six months preceding a specified day.

It is nothing more or less than a tax on the Bank itself, — upon its franchises, and assessed in consideration of the privileges thus conferred by ²⁹⁴ the State. The average deposits during a specified time are hut a measure of the extent to which such institutions have exercised their ‘franchises, and furnishes the basis by which the amount to be paid may be computed. It can hardly be necessary to say that the franchises conferred on Savings Banks are important and valuable, and there is no reason why such institutions should not bear their proportion of the public burdens. The depositors who through the exercise of such franchises enjoy all the advantages and benefits derived from large investments, which the aggregate deposits enable these banks to make, surely have no right to complain. “Nothing can be more certain in legal decision,” say the Supreme Court, “than that the property and franchises of a private corporation, and all trades and avocations by which the citizen acquires a livelihood, may be taxed by a State for the support of the State government.” And, if Savings Banks can avoid the operation of the Act of 1874 by investing the deposits in non-taxable securities, or in ground rents, the taxes on which are paid by the leasehold owner, it is easy to see they may escape altogether the tax imposed by the Act.

Nor do-we see the force of the argument that in directing the tax to be paid out of the interest, due to depositors, it thereby becomes a tax on property. Savings Banks are not Banks of discount, nor have they any capital stock. The interest, therefore, due the depositors- is derived solely from the use or investment of deposits, and any tax imposed on such Banks, must necessarily, to some extent, diminish the interest to he received ,by depositors, and may he said therefore to be paid out of the interest due to them. So the tax imposed by the Act in Sterling’s Oase, and the tax assessed by the Act of 1874, are not in our opinion taxes on the property of Savings Banks held by them in trust for depositors, hut a tax on the franchises which such institutions enjoy through the favor of ²⁹⁵ the State.

And so the Supreme Court in Society for Savings vs. Coite, 6 Wall., 594 , and Provident Inst. vs. Commomwealth of Massachusetts, 6 Wall, 611, have decided. In the former case, the question arose upon an Act passed hy the Legislature of Connecticut, which required the several Savings Banks of that State, to pay annually to the Treasurer a sum equal to three-fourths of one peícent. on the total amount of deposits on the 1st day of July, in lieu of all other taxes. In that case as in this, it was contended that the tax thus imposed was a tax on the property of such Banks, and that the deposits invested in government bonds,' which were hy the Act of Congress exempt from State taxation, were not subject to the tax thereby assessed. But a majority of the Supreme Court, affirming the decision below, held that the tax-was not a tax on the property, hut on the franchises of the Bank, and that the defendant corporation had no right to claim exemption therefrom, to the extent of its deposits invested in non-taxable securities of the United States.

A like construction was placed on an Act of the Legislature of Massachusetts which required the tax to be paid “on account of the depositors,” which is substantially the same as the Act of 1874, which provides the tax shall be paid out ■of the interest due the depositors. Provident Inst. vs. Mass., 6 Wall., 611 . Entertaining these views, we should hold that the deposits of the appellee invested in ground rents are not exempt from the operation of the Act of 1874, but for the fact that the Act was passed after the decision in Sterling’s Oase, upon the construction of a prior Act identical in terms with the Act of 1874. If by the latter Act, the Legislature meant to tax the deposits, whether invested in non-taxable securities, or ground rents on which taxes were paid by the leasehold owner, this intention, in view of the decision in Sterling’s Oase, ought to have been expressed in clear and explicit terms. ²⁹⁶ (Decided 21st June, 1887.) The decision in Mayor, &c., of Baltimore vs. Canton Company of Baltimore, 63 Md., 218 , rests altogether on ■different principles.

It was decided under the Act of' 1880, chap. 20, which required that the real estate belonging to corporations should be valued and assessed to-such corporations, and that the taxes thus levied should be paid by them, and that the Tax Commissioners should deduct the assessed value of such real property from the aggregate value of the shares of stock. The Canton Company, being the owner of certain ground rents, claimed that the value of the ground rents should be deducted from the assessed value of its shares of stock. But the Court-said no, under our forms of leases for ninety-nine years renewable for ever, the law treats the tenant as owner, and the taxes levied on the premises are assessed to and paid bv him. The Act of 1880 allows deductions only for real estate owned by and assessed to the corporation, and on which it pays taxes. “Those corporations only,” say the Court, “are to be regarded as owners of real estate, the valuation of which is to be deducted from the valuation of their stock, to whom the land is directly assessable, and who are primarily chargeable with the taxes thereon.” Judgment affirmed.

Alvey, C. J., filed the following opinion: I fully concur in the affirmance of the judgment of the • Court below, and for the reasons assigned by the learned Judge of that Court, as we have them set out in the record. I am opposed to overruling the case of State vs. Sterling, 20 Md., 502 , and, in this case, it is wholly unnecessary to the conclusion reached. That case was very fully and ably argued, and it appears to have been carefully considered by the Court. It involved simply th.e construction of a local revenue statute of our own State, and I can see no propriety in overruling the decision ²⁹⁷ there made, because decisions may be found elsewhere founded upon different views or theories of Courts, in the construction' of language employed in statutes somewhat, though in no case exactly, similar to that employed in our statute.

The cases in 6 Wall., 594 , and 611, relied on as maintaining a different view from that in State vs. Sterling, were cases decided upon the reasoning and authority of preceding decisions made in the States from whose Courts the cases in 6 Wallace were taken; and in those cases the Judges of the Supreme Court were nearly equally divided in opinion; the Chief Justice, Mr. Justice Grier and Mr. Justice Miller dissenting, they being of opinion that the tax there in question was, by force of the terms of the statutes, imposed upon property, and not the franchises of the corporations. Whenever the Legislature may intend to distinguish as between a property tax aud a tax on a franchise, it is certainly a very easy thing to indicate its intention by the use of plain words; and clearly the language of the statute before us furnishes no evidence that the Legislature had in mind a franchise as distinguished from a property tax, in the enactment of the statute. In the case of State vs. Sterling substantially the same language as that here presented was held to impose a property tax', and I perceive no sufficient reason for questioning that decision. Moreover, in my judgment, in cases of mere local law, like the present, it is indispensable to the due administration of justice, that a question once deliberately examined and decided by the Court of last resort, should be .considered as settled, and closed to further argument; or otherwise there can be no reliance upon decisions, or termination of disputed questions.

(Filed 23rd June, 1887.) Bryan, J., filed the following opinion: The requirement of the Act of 1874, chapter 483, section 85, is that the president or other proper officer of a- ²⁹⁸ Savings Bank shall pay to the Treasurer “out of the interest due the depositors, the State tax on said deposits.” The language is certainly clear and free from all •ambiguity. The subject-matter on which the tax is levied' is stated to be the deposits, and the payment is to be made out of the interest due the depositors. The Savings Bank holds the deposits for the benefit of those persons who placed them in its keeping. They are the real owners of the sums deposited.

The statute simply directs that the State tax on these sums shall be paid out of the money of the persons to whom the deposits belong. If there were any doubt about the meaning of these words, it would be removed by the latter clause of the section in