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of civil appeals. Subsequently the supreme, in the state. It was contended, as it is concourt expressed itself explicitly in State v. tended here, that this provision made one Shippers' Compress & Warehouse Co. 95 law of the act and the act of 1895, and that Tex. 603, 69 S. W. 58, and State v. Laredo the exemptions of the latter became part of Ice Co. 96 Tex. 461, 73 S. IV. 951.

the former and made it unconstitutional. The object in State v. Shippers' Compress In other words, the effect was (we quote & Warehouse Co. was to forfeit the charter from the opinion of the court) “thereby to of the compress company for violating the give exemption from prosecution under the anti-trust law of 1895, in that the incorpo- law of 1899 to those persons who are exrators combined “to restrict aids to com- empted by the provisions of the law of merce." The law was attacked as unconsti- 1895." The supreme court of Texas retutional. To the contention the court said: jected the contention. Its reasoning was

“The defendant insists that the law is not very direct or circumstantial, but it in unconstitutional, therefore void in whole, effect held that the act of 1899 did not conand will not support the action to forfeit the tinue the provisions of the prior acts, wheth. charter. Upon the same objection we helder constitutional or unconstitutional, merethe anti-trust law of 1889 to be constitu- ly because it was declared to be cumulative. tional, and there is no such difference be. And the court decided the law of 1899 to be tween the two laws as would affect the de- constitutional, because it did not contain cision of this question. We believe that our the discriminating features of the prior decision is correct; that the law is not in laws. Under the laws of Texas, therefore, contravention of the Constitution of the combinations of the kind described in the state, nor of the United States. Houck v. various anti-trust laws, whether by agriculAnheuser-Busch Brewing Asso. 88 Tex. 189, turalists or organized laborers or others, are 30 S. W. 869."

forbidden and penalized, and the oil comThe court then referred to Connolly v. pany is not discriminated against. Union Sewer Pipe Co. 184 U. S. 540, 46 L. But it may be said that, if the inequalied. 679, 22 Sup. Ct. Rep. 431, and in sub- ties of prior anti-trust acts have been remission to its authority held the law of moved by the act of 1899, they still remain 1895, so far as it came within the terms of in the Revised Statutes of the state and in that case, invalid, and would not support the Penal Code, and by those statutes and an action by the state to recover a penalty that Code the excepted classes are exempted for a violation of the law; nor would it, from indictment and punishment, while the in suits between corporations and individ- oil company is subject to both. We need uals, support a defense based upon the fact not consider the statutes referred to or conthat the right of action originated in viola- sider how far this discrimination can exist, tion of the anti-trust law. “But,” the court in view of the decision of the supreme court remarked, “to the extent that the statute of of the state in State V. Laredo Ice Co. this state is not embraced in the decision of Granting it can exist, the case at bar is not the Supreme Court of the United States, we a criminal prosecution. It involves only the shall adhere to our former decision that it anti-trust laws and their prohibitions, and is constitutional and valid, and therefore penalties. And in them, we have seen, by enforceable by the state."

the effect of the act of 1899 there is no inThat is, the court decided the act of 1895 equality of operation. It is the effect of was valid to the extent that it authorized that decision also that the laws of the state the state to revoke the license of a foreign against combinations and trusts are formed corporation, and to forfeit the charter of a into a harmonious system, of which the domestic corporation. The other provisions criminal provisions in other statutes and the of the act were held invalid, and the right Code are a part, and that their provisions to make this distinction was based on Wa. can be adjusted and reconciled so as to have ters-Pierce Oil Co. v. Texas.

constitutional operation. State v. Laredo Ice Co. was instituted to

Judgment affirnied. recover penalties for the violation of the

(197 U. S. 134) anti-trust law of 1899. The ice company SOUTHERN COTTON OIL COMPANY et was a domestic corporation, and it was pro

al., Plffs. in Err., ceeded against for having formed a combination to regulate and fix prices. In de

STATE OF TEXAS. fense, the company asserted the unconstitu- Constitutional lare validity of Texas antitionality of the act.

trust lawsdue process of law-equal It is provided in § 14 of the act of 1899

protection of the lawsconclusiveness of that the provisions of preceding sections and

state court's construction of state statthe fines and penalties provided for viola

utes. tions of the act shall be held and construedThis case is governed by the decision in Nato be cumulative of all laws now in force tional Cotton Oil Co. y. Texas, ante, 379.

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[No. 38.]

ing state banks and other moneyed corpora

tions from that adopted for the taxation of drgued November 1, 2, 1904. Decided Feb- national banks does not necessarily conflict

with U. S. Rev. Stat. § 5219 (U. S. Comp. ruary 27, 1905.

Stat. 1901, p. 3502), authorizing state tax

ation of shares of stock in national banks, ERROR to the Court of Civil Appeals

but exacting that the tax, when levied, shall in and for the Third Supreme Judicial be at no greater rate than that imposed on District of the State of Texas to review a other moneyed corporations. judgment which affirmed a judgment of the 2. A discrimination against national banks, District Court of Travis County, in that

and in favor of state banks and other mon

eyed corporations, forbidden by U. S. Rev. State, forfeiting the license of a foreign

Stat. $ 5219 (U. S. Comp. Stat. 1901, p. corporation to do business in that State, be

3502), results from the taxation of shares of cause of its violation of the anti-trust laws. stock of national banks, under Cal. Pol. Affirmed.

Code, 88 3608-3610, at their market value, See same case below (Tex. Civ. App.), 72

while the construction given by the highest S. W. 1135.

state court to the provisions for the taxation

of the “property" of state banks and other The facts are stated in the opinion.

moneyed corporations does not require, alMessrs. William V. Rowe, R. S. Lov- though property is defined by Cal. Const. ett, Ralph Oakley, and James A. Baker for art. 13, § 1, as including "franchises," that plaintiffs in error.

the assessing officers shall include in the Mr. C. K. Bell for defendant in error.

assessment all the intangible elements of value which form part of the market and

selling value of shares of stock. Mr. Justice McKenna delivered the opinion of the court:

[No. 44.] The Southern Cotton Oil Company is a New Jersey corporation doing business in Argued November 7, 1904. Decided Feb. the state of Texas by virtue of a permit is

ruary 27, 1905. sued June 3, 1897, under the laws of the

state. The object

of this suit is to forfeit APPEAL from the United States Circuit

Court of the anti-trust statutes of the state. The to review a decree which affirmed a decree violation of the statutes alleged against it of the Circuit Court for the Northern Disis the same as that alleged against the Na-trict of California, dismissing a suit to retional Cotton Oil Company in No. 37. [Na- strain the enforcement of taxes on shares tional Cotton Oil Co. v. Texas, 197 U. s. of stock of a national bank. Decrees of both 115, 25 Sup. Ct. Rep. 379, 49 L. ed. -] courts below reversed and the cause reThe defenses are the same, and were pre- manded to the Circuit Court for further prosented by demurrer. The demurrer was ceedings. overruled, and, the Southern Cotton Oil The facts are stated in the opinion. Company declining to plead further, judg. Messrs. William S. Wood, E. S. Pillsment was entered forfeiting its permit to bury, Alfred Sutro, and Lloyd & Wood for do business in the state, except such as appellant. might be and constitute interstate commerce.

Messrs. William Irwin Brobeck and The judgment was affirmed by the court of Percy V. Long for appellee. civil appeals. A rehearing was denied, and

A a writ of error from the supreme court re- Mr. Justice White delivered the opinion fused. This writ of error was then sued of the court: out.

The appellant bank sued to restrain the The questions are identical with those pre-enforcement of, state, county, and city taxes, sented in No. 37, and on its authority the levied for the year 1900, upon shares of judgment of the Court of Civil Appeals is af- stock of the bank. Adequate averments firmed.

were made to show equitable jurisdiction.

Cummings v. Merchants' Nat. Bank, 101 U. (197 U. s. 70)

S. 153, 157, 25 L. ed. 903, 904; Hills v. SAN FRANCISCO NATIONAL BANK, National Albany Exch. Bank, 105 U. S. 319, Appt.,

26 L. ed. 1052; Lander v. Mercantile Nat. v.

Bank, 186 U. S. 458, 46 L. ed. 1247, 22 Sup. WASHINGTON DODGE, as Assessor of the Ct. Rep. 908. The taxes were alleged to be City and County of San Francisco. in conflict with the law of the United States.

Rev. Stat. 8 5219, U. S. Comp. Stat. 1901, State taxation of national bank stock-dis. p. 3502. crimination.

The case was submitted upon the plead

ings and an agreed statement of facts. A 1. The adoption of a different method for tax-'decree of dismissal was affirmed by the circuit court of appeals for the ninth circuit. assessed and taxed, but no assessment shall That court deemed that the cause was con- be made of shares of stock; nor shall any trolled by the reasoning of an opinion de holder thereof be taxed therefor.” livered in deciding a previous case (Nevada The act of 1899, under which the tax in Nat. Bank v. Dodge), the opinion in which this case was levied, amended the section case is reported in 50 C. C. A. 145, 119 just quoted, by providing that all property Fed. 57.

belonging to corporations shall be assessed Before considering the contentions relied and taxed, “save and except the property on we quote the text of the Constitution of of national banking associations, not assessCalifornia directly relating to the subject able by Federal statute;” and by adding to in hand, and briefly advert to the legisla- the provision commanding that no assesstion of that state which preceded the actment shall be made of shares of stock in under which the assailed tax was levied. any corporation the following words: “Save

Section 1 of article 13 of the Constitu- and except in national banking associations, tion of California provides :

whose property, other than real estate, is "All property in the state, not exempt exempt from assessment by Federal statunder the laws of the United States, shall ute.” To carry out the change made by the be taxed in proportion to its value, to be provision just referred to two sections were ascertained as provided by law. The word added to the Political Code, viz., 3609 and ‘property,' as used in this article and sec- 3610. Section 3608, as amended by the act tion, is hereby declared to include moneys, of 1899, and the two new sections resultcredits, bonds, stocks, dues, franchises, and ing from that act, are in the margin.* all other matters and things, real, personal, The first contention is that the law of and mixed, capable of private ownership. 1899 is on its face in conflict with § 5219

The legislature may provide, except of the Revised Statutes, because it taxes in the case of credits secured by mortgage shares of stock in national banks, and does or trust deed, for a reduction from credits not tax such shares in state banks and of debts due to bona fide residents of this other state moneyed corporations. As it is state.”

patent that the state banks and corporaCarrying out the command to provide for tions are taxed on their property, the propthe ascertainment of the value of property osition reduces itself to this: That the to be taxed, it was enacted (Pol. Code, & states may not pursue the method permit3627) that all taxable property shall be as-ted by the act of Congress of taxing shares sessed "at its full cash value," and (Pol. of stock in national banks, unless the same Code, § 3617) that "the terms 'value' and

+3608. Shares of stock in corporations pog'full cash value' mean the amount at which

sess no intrinsic value over and above the actual the property would be taken in payment of a value of the corporation which they stand for just debt due from a solvent debtor." and represent; and the assessment and taxa.

Prior to 1881 shares of stock of all cor- tion of such shares, and also all the corporate porations were taxed, and § 3640 of the Po- property, would be double taxation. There litical Code commanded that the market fore, all property belonging to corporations value of the stock of a corporation should ing associations, not assessable by Federal

(save and except the property of national bankbe taken as the value of the shares for as- statute) shall be assessed and taxed. But no sessment. Where the shares of stock were assessment shall be made of shares and stocks taxed no tax was levied upon the corporate in any corporation (save and except in national property. This was because the supreme than real estate, is exempt from assessment by

banking associations, whose property, other court of California had decided that to tax

Federal statute). both the stock and the corporate property 3609. The stockholders in every national would be double taxation. Burke v. Badlam, banking association doing business in this state, 57 Cal. 594.

and having its principal place of business loIn the year 1881 the general system of cated in this state, shall be assessed and taxed

on the value of their shares of stock therein; taxing shares of stock was abandoned, and and said shares shall be valued and assessed a rule was put in force taxing the corporate as is other property for taxation, and shall be property. Section 3608 of the Political included in the valuation of the personal propCode, which embodied this change, was as

erty of such stockholders in the assessment of follows:

the taxes at the place, city, town, and county “Shares of stock in corporations possess cated, and not elsewhere, whether the said

where such national banking association is lono intrinsic value over and above the ac- stockholders reside in said place, city, town, or tual value of the property of the corpora- county, or not; but in the assessment of such tion, which they stand for and represent, shares each stockholder shall be allowed all and the assessment and taxation of such

the deductions permitted by law to the holders shares and also of the corporate property its, in the same manner as such deductions are

of moneyed capital in the form of solvent credwould be double taxation. Therefore, all

allowed by the provisions of paragraph 6 of 9 property belonging to corporations shall be

3629 of the Political Code of the state of Call25 S. C.-25.

method is employed as to the stock of state | peals and in this court, and was elaborately banks and other state moneyed corporations. discussed by both parties in the argument

In Davenport Nat. Bank V. Board of at bar, viz., that, irrespective of the face of Equalization, 123 U. S. 83, 31 L. ed. 94, 8 the state law, that law is void because of a Sup. Ct. Rep. 73, it was decided that the discrimination against national banks, withprovision of $ 5219 of the Revised Statutes in the principles settled in the Davenport [U. S. Comp. Stat. 1901, p. 3502], au-Case. thorizing the taxation of shares of stock To determine this latter contention rein national banks, but exacting that the tax quires an analysis of the two systems which when levied should be at no greater rate the law of California enforces, in order that than that imposed on other moneyed capi- the two may be accurately compared. tal, did not require the states, in taxing Under the law the shares of national their own corporations, “to conform to the banks must be valued at their "full cash system of taxing national banks upon the value,” which the statute defines to mean shares of their stock in the hands of their the amount at which they "would be taken owners."

for a just debt due from a solvent debtor.” True it is in the Davenport Case it was These words are but synonymous with the also decided that the prohibition in the act requirement that, in assessing shares of of Congress of a higher rate of taxation of stock, their market value must be the cri. shares of stock in national banks than on terion. This is the case, for, eliminating ex. other moneyed capital operated to avoid any ceptional and extraordinary conditions, givmethod of assessment or taxation, the usual ing an abnormal value for the moment to or probable effect of which would be to dis- stock, it is apparent that the general market criminate in favor of state banks and value of stock is its true cash and selling against national banks. True, also, is it | value. That such is the meaning of the that in the same case it was held that, even words in the legislation of California is inwhere no such discrimination seemingly disputable, in view of the provision of 3 arose on the face of the statute, neverthe- 3640 of the Political Code, which made marless, if from the record it appeared that the ket value the rule for assessing shares of system created by the state in its practical stock during the period when the taxation execution produced an actual and material of shares of stock generally prevailed, and discrimination against national banks, it that such requirement was mandatory was would be the duty of the court to hold the in effect held by the supreme court of Cali. state statute to be in conflict with the act of fornia. Miller v. Heilbron, 58 Cal. 133, Congress, and therefore void.

138. As, then, no conflict necessarily arises What, then, was embraced in the assessbetween the act of Congress and the state ment of the shares of stock at their full law, solely because the latter provides one cash or selling or market value? It emmethod for taxation of state banks and braced, not only the book value of all the other moneyed corporations and another assets of the corporations, but the good method for national banks, it follows that will, the dividend-earning power, the ability the contention, that the state law, for that with which the corporate affairs were manreason, is repugnant to the act of Congress, aged, the confidence reposed in the capacity is without merit. And this brings us to and permanency of tenure of the officers, consider the contention of the appellant, and all those other indirect and intangible which we think was embraced in the plead- increments of value which enter into the ings, which was expressly covered by the estimate of the worth of stock, and help to stipulated facts, the overruling of which was fix the market value or selling price of the assigned as error in the circuit court of ap- shares. Considering this subject in Adams fornia. In making such assessment to each after he has made such assessment, give written stockholder there shall be deducted from the notice to each national banking association of value of his shares of stock such sum as is in such assessment of the shares of its respective the same proportion to such value as the total shareholders; and no personal or other notice value of its real estate and property exempt to such shareholder of such assessment shall be by law from taxation bears to the whole value necessary for the purpose of this act. And, in of all the shares of capital stock in said na- case the tax on any such stock is unsecured by tional bank. And nothing herein shall be con- real estate owned by the holder of such stock, strued to exempt the real estate of such national j then the bank in which said stock is held shall bank from taxation. And the assessment and become liable therefor; and the assessor shall taxation of such shares of stock in said na- collect the same from said bank, which may tional banking associations shall not be at a then charge the amount of the tax so collected greater rate than is made or assessed upon to the account of the stockholder owning such other moneyed capital in the hands of individ- stock, and shall have a lien, prior to all other ual citizens of this state.

liens, on his said stock, and the dividends and 3610. The assessor charged by law with the earnings thereof, for the reimbursement to it of assessment of said shares shall, within ten days such taxes so paid.

Exp. Co. v. Ohio State Auditor, 166 U. S. to requiring that the assessing officers, in 211, 41 L. ed. 974, 17 Sup. Ct. Rep. 604, the valuing the property of a corporation, should court said:

assess as property its good will, its divi“The capital stock of a corporation, and dend earning power, the confidence reposed the shares of a joint-stock association, rep- in its officers, etc. From this analysis it resent, not only tangible property, but also results that in the one case, that of nationthe intangible, including therein all corpo al banks, not only the value of all the rate franchises, and all contracts, privileges, tangible property, but also the value of all and good will of the concern.”

the intangible elements above referred to, And in Pullman's Palace Car Co. v. Cen is assessed and taxed, whilst in the other tral Transp. Co. 171 U. S. 138, 43 L. ed. 108, case, that of state banks and other moneyed 18 Sup. Ct. Rep. 808, this was reiterated. corporations, their property is taxed, but The court, after observing that, while the the intangible elements of value which we franchise was one of the things entering have indicated are not assessed and taxed; into the computation of market value of the consequence being to give rise to the disshares of stock, said (p. 154, L. ed. p. 115, crimination against national banks and in Sup. Ct. Rep. p. 815):

favor of state banks and other moneyed cor“The probable prospective capacity for porations forbidden by the act of Congress. earnings also enters largely into market In the argument at bar this conclusion, value, and future possible earnings again it is insisted, is avoided, because, whilst depend to a great extent upon the skill with under the text of the state statutes it may which the affairs of the company may be be that all the elements of value which are managed. These considerations, while they included in the assessment of shares of stock may enhance the value of the shares in the are not eo nomine assessed against state market, yet do not in fact increase the value banks and other moneyed corporations as of the actual property itself. They are mat- property, they are, nevertheless, assessed ters of opinion upon which persons selling against such corporations under the denomiand buying the stock may have different nation of “franchise,” the duty of the asviews.”

sessing officer to do so being imperative, That this doctrine is the rule in Califor- as the result of the interpretation given to nia is clearly shown by Bank of California the taxing law by the supreme court of the v. San Francisco, 142 Cal. 276, 64 L. R. A. state. The proposition is thus stated in 918, 100 Am. St. Rep. 130, 75 Pac. 832, the argument of counsel : for in that case the court, speaking of such “Under the California system, all the elements of value as “dividend or profit property of California corporations is asearning power, or good will,” said (p. 289, sessed, including their franchises. It is freL. R. A. p. 924, Am. St. Rep. p. 141, Pac. quently the case that the market value of p. 838):

the stock of the corporation is greatly in “In this connection, it will be observed excess of the value of its property, other that these elements, so far as they may than its franchise. This fact was called to enter into the value of shares of stock, the attention of the state court, which recwould be included in an assessment of such ognized the force of this suggestion, and shares to the stockholders."

held, the Constitution and laws of the state The state banks and other corporations require the assessment and taxation of the are assessed on their property. Conceding franchise of the corporation, and that its that every species of property is assessed value, for the purpose of such assessment which is specifically enumerated as taxable and taxation, was properly ascertained by in the state Constitution, it does not follow deducting from the market value of its that the assessment of property as such in-stock the value of its corporate property and cludes good will, dividend earning power, assessing the remainder as franchise.” confidence in the ability of the management,

It may be conceded that, if the statutes and all those other intangible elements

have been interpreted by the supreme court which necessarily enter into the cash or selling value of shares of stock. As said in of the state as thus asserted, and that, as the passage already quoted from the Pull- so interpreted, they have been applied by the man Case, 171 U. Š. 138, 43 L. ed. 108, 18 assessing officers, there would be an end Sup. Ct. Rep. 808, such elements “may en- to the discrimination which we have seen hance the value of the shares [of stock] in arises from the consideration of the result the market, yet [they] do not in fact in- of the statutes when not so interpreted. crease the value of the actual property it- The question then is, Do the decisions of self. They are matters of opinion upon the supreme court of California, as contend which persons selling and buying the stock ed, place the positive duty on the assessor may have different views.” In the argu- of including in an assessment of the franment at bar no law of the state was referred 'chises of state corporations all the elements

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