Washington County v. Durant

ERROR to the Supreme Judicial Court of Massachsetts.

The case was this: By a true interpretation of the rights of the Federal government, as settled by this court, the State have no right to tax is means and instruments of government. However, Congress, in creating the associations known as National banks-and by a statute which obliges the parties applying for banking privileges to designate the 'particular county and city, town or village,' where the business of the association is to be carried on-made a proviso, in these words, as to the right of the States to tax them:

'Provided, that nothing in this act shall be construed to prevent all the shares in any of the said associations, held by any person, from being included in the valuation of the personal property of such person, in the assessment of taxes imposed, by or under State authority, at the place where such bank is located, and not elsewhere,' &c.

In exercising or attempting to exercise the authority thus conferred, Massachusetts-in which State many of these associations were, and under whose system of taxation it is the practice to include in the valuation of the personal property belonging to its taxable citizens, everything of that nature, which they own in any place whatever-enacted a statute thus (act of May 15, 1865, ch. 242):

'The assessors of each city and town, in which any shareholder in such association resides, shall include all shares in such associations held by persons resident and liable to taxation in said city or town, in the valuation of the personal property of such person, for the assessment of all taxes imposed and levied in said town by authority of law, to be assessed,' & c.

In this condition of the statutes, Federal and State, the assessors of Boston valued and assessed the bank shares of Austin, living in Boston, and being the owner of stock in six banks situated there. He objected to this, because, as he maintained, the Massachusetts act, under which it purported to be done, did not conform to the limitation of the act of Congress, as to the place of taxation; that is to say, he maintained that the State law, in order to conform to this limitation, should have authorized the assessors to include the shares of the National banks in the valuation of the personal property of the holders only in the place, i. e., in the city, county or village where the banks were located; whereas the State law had disregarded the limitation as to place, by requiring the assessors to include these shares in the valuation, not in the city, town or village only where the bank is located, but elsewhere, to wit, in the town where the shareholders reside; and so that, under the State act, shareholders in the National banks, residing in cities, towns, or villages where no banks were located, might be assessed there for shares which they owned in banks located in cities, towns, or villages where they do not and never did reside.

On suit brought against him by the Aldermen of Boston, for the tax which the city assessors had assessed on his bank stock in Boston, the Supreme Court of the State decided, that the true construction of the proviso did not confine the assessment of the tax to the place where the bank was located, and that it merely required that the tax, to be valid, should be imposed under the State authority existing at the place where it was thus located; in other words, 'that the reference in the proviso to the place where the bank is located, was designed to define the State authority which was to be allowed to impose a tax, and not to limit the place of assessment.'

It will, of course, be observed by the reader-whether this interpretation of the act was well founded, or whether the one of Austin was right-that-assuming the State act to be valid at all-so far as Austin was concerned, no practical injury was done him, he residing in Boston, and all the banks in which he had stock being situated there; or in other words, that had the State act conformed to the proviso of the act of Congress, as interpreted by him, the result, to him, would have been the same, though it might not have been to persons living out of Boston, and having stock in banks in that city.

The case was now here under the twenty-fifth section of the Judiciary Act, which gives a right of review here to a party where there has been drawn in question in the highest court, the validity of a statute of a State as being repugnant to a law of the United States, and the decision has been in favor of such validity.

Mr. I. J. Austin, for the plaintiff in error, argued that the only question before this court, was this precise one, viz., whether the construction put, by the Supreme Court of the State, upon the proviso, was right? In other words, with what intention did Congress use the phrase, place where such bank is located? Did that word there signify the State, territory, or district, or did it signify the particular city, town, or village in which a National bank was located? The position of the learned counsel was in favor of the last view, and in support of it be submitted various propositions in opposition to the view of the court below.

If, then, the State act did not conform to the permission or proviso of the act of Congress, it mattered not whether Austin was or was not worse off than if it had conformed. The State act was void, and the assessment and tax laid under it was void also. And Austin had a right to have the judgment below reversed, in order that he might have a trial of his rights, without prejudice from any influence which an erroneous construction of an act of Congress might be presumed to have had on the court.

No argument on the other side.

Mr. Justice SWAYNE delivered the opinion of the court.