State v. German Savings Bank

Schmucker, J., delivered the opinion of the Court. The State of Maryland sued, the appellee in this case to recover the franchise tax, on the deposits held by it on January 1st, 1904, claimed to be due under sec. 86 of Art. 81 of the Code of 1888. ¹⁹⁸ The declaration alleges that prior to and during the year 1904 the defendant was a savings bank duly incorporated and Organized for receiving deposits of money and paying interest thereon and that it operated and carried on the general business of a savings bank in the city of Cumberland; that it reported, through its proper officer, to the State Tax Commisinissioner on or before May 1st, 1904, that on the first day of January in that year it held deposits to the amount of $732,574.67, but it failed to pay to the State Treasurer, as it’ was required to do by sec. 86 of Art. 81, the franchise tax of one-fourth of one per cent on its said deposits. The further allegation is made that on or before the first day of June, 1904, the State Tax Commissioner calculated the sum of $457.85 to be the amount of the franchise tax, due by the defendant, and certified it for collection to the Comptroller who notified the defendant of the said apportionment and levy against it according to law whereby it became the duty of the defendant to pay the tax on or before the 1st day November,^ 1904, and upon its failure to make the payment it became liable to the State for a penalty of five per cent amounting to $22.89 making a total indebtedness of $480.74 for the recovery of which the suit was brought. The appellee as defendant demurred to the declaration but after a hearing of the demurrer it was overruled.

The defendant then filed a plea in the case, averring that it was not, at the time in the declaration alleged, a savings bank but had from long prior to January 1st, 1904, been an ordinary State bank with a paid up capital of $100,000, upon which it had duly paid the State taxes for the years 1904 and 1905; that it had been duly authorized to carry on a general banking business by the Act of 1898, ch. 266, which is set out at length in the plea; that since the passage of that Act it had. not conducted a banking business for receiving deposits and paying interest thereon but had done a general banking business and had not received and does not receive weekly or monthly deposits or deposits at any regular interval or in regular amounts but receives deposits in any amount and at any ¹⁹⁹ time and pays a fixed rate of three per cent upon deposits to the credit of accounts standing six months or longer but pays no interst on other deposits and that all deposits with it are subject to check at any time. The plea further alleges that the defendant also discounts negotiable paper, lends money on real or personal security and transacts its business in the same manner as all other ordinary commercial State banks and that its deposits are not subject to the franchise tax imposed on savings banks by sec. 86 of Art. 81 of the Code. The State demurred to this plea, and, its demurrer having been overruled, it declined to reply whereupon a judgment on rule replication was entered for the defendant, from which the present appeal was taken. The appellee both in the Court below and in this Court relied, in support of its demurrer to the declaration, upon the Act of 1904, ch. 212, it being conceded by both parties' to the suit that if that Act be valid the declaration is bad but if the Act be invalid the declaration is good.

The Act provides that sec. 86 of Art. 81 of the Code, imposing the franchise tax on savings banks, shall not “apply to or in any manner affect any savings bank, institution or corporation which has a capital stock of $20,000, or over subject to taxation under the laws of this State and which merely receive time deposits at a fixed rate but do not receive weekly and monthly deposits.” It is admitted that the appellee has a capital stock of $100,000. The State insists that the Act of 1904 is unconstitutional, first, because its title is defective and secondly because it provides an unequal and unfair rate of taxation of savings banks with different amounts of capital stock. The title of the Act is “An Act to add an additional section to Article 81 of the Code of Public General Laws of Maryland, title ‘Revenue and Taxes,’ sub-title ‘Payment of Taxes by Corporations,’ to follow sec. 81A and be designated as sec. 81B.” The body of the Act then enacts the additional section already mentioned “to follow section 86A, and to be known as section 86B.” There was in fact at the date of the ²⁰⁰ passage of the Act of 1904 no section 81 A. in the Article. There was at that time a section 81 but it did not have relation to the franchise tax on the deposits of'savings banks so that if any person had looked at that section to ascertain the purpose of the Act he would have been misled.

We have then before us .the question of the validity of an attempt to .declare inoperative, as to a large number of corporations, the provisions of an important section of the Code by an Act whose title neither indicates its-contents nor correctly mentions the section of the Code .to be affected by it. Does this tifie gratify the requirements of sec. 29 of Art. 3 of the Constitution of this State? We have repeatedly had occasion to consider and pass upon the purpose and operation of this section of the fundamental law of the State. In the very recent case of Kafka v. Wilkinson, 99 Md. 238 , we said in referring to the frequency with which it had been before us in reference-to its.application to Acts of the Legislature, “It has received a liberal construction and the Courts have been -reluctant in any case to give it an operation that would defeat the legislative intent.

Yet they have not hesitated to strike down legislative Acts that were clear infractions of its purpose and object. These have b.een declared to be two-fold; the first is to prevent the combination in-one Act of several distinct and incongruous subjects, and the second is that the Legislature and the people of the State may be fairly advised of the real nature of impending legislation. It would seem that if the object of the constitutional -provisions in question is to be respected and is to have meaning and effect in controlling .legislation, the considerations which have just been mentioned must have a controlling effect .in applying it.” • The Act now under consideration, fails in our opinion to gratify the second of the two constitutional purposes referred to.in the last-mentioned case in that its title does not fairly advise the Legislature and the people of the real nature of the .legislation sought to be accomplished by the passage of the Act. ²⁰¹ If the title had stopped with the designation of the Article, title and sub-title to which the additional section was to be-added we would have been authorized to hold it sufficient under the rulings in State v. Norris, 70 Md. 94 ; Lankford v. Co. Commrs., 73 Md. 118 ; Second German Am. Bldg.

Assn. v. Newman, 50 Md. 62 and Garrison v. Hill, 81 Md. 551 . But the title goes further and locátes the new section to be enacted as a sub-section of No. 81 to follow 81 A, and be designated as 81B. As0 there was at the date of the passage of that Act no section 81 A, in Article 81, and section 81 of that Article related to the failure of any collector of county or city taxes to account for taxes collected by him, a subject wholly foreign to the purpose of the new section to be enacted that reference in the title tended to create a false impression as.to the purpose of the Act. As was said in Stiefel v. Md. Inst. for the Instruction of the Blind, 61 Md. 148 , “Publicity and a knowledge of the true effect and operation of every bill brought before the Legislature are the great safeguards against ill-considered and improper legislation.

The provision,in question is-oneatnong many others in the Constitution designed to promote those objects. Bills are sometimes read, especially the first time, by their titles only and the titles only are spread upon the journal. It is therefore important that the title to the bill should never be misleading and that at least a general idea of the purport of the law may be gathered from it.” In our opinion the title to the Act now under consideration was so misleading as to be obnoxious to sec. 29 of Art. 3. of the Constitution and the Act was therefore void and the demurrer to the declaration was properly overruled. The defendant in the attempt to uphold the validity of the Act of 1904 relied especially upon the case of Strauss v. Heiss, 48 Md. 296 , in which ch. 471 of the Acts of 1868, that enacted the gen.eral corporation law of the State, was held valid although its title, in addition to other matters, purported to repeal secs. 99 — 103 of Art. 16 of the.

Code which sections relate to chancery proceedings and have no reference to corporations. What the Court held in that case was simply that a ²⁰² whole law otherwise constitutional