Rockingham Ten Cent Savings Bank v. Portsmouth

Under the statute of 1869, ch. 4, all the deposits and accumulations in the several savings hanks in this State, however such deposits and accumulations may be invested, are to be taxed to the banks; and such taxes are to be paid to the State, in the first instance. And such deposits, &c., are not liable to any other tax. Real estate owned bya savings bank, and purchased with the deposits and accumulations of the bank, is not, under said statute, subject to taxation as real estate in the place where the same is located. A fundamental principle in taxation is, that the same property shall not be subject to a double tax payable by the same party. Thus, when it is decided that a certain class or kind of property is liable to be taxed under one provision of the statute, it follows, as a legal conclusion, that the legislature could not have intended that the same property should be subject to another tax. This court has no jurisdiction by bill in equity to restrain a town or the collector thereof from the collection of a tax which is illegally assessed, as the party has a plain and adequate remedy at law. An application for abatement is the proper remedy in such cases, not only when the assessment is made upon an over valuation, but also when the whole assessment is illegal. A bill in equity, one of the prayers in which (with others) is that the court will abate the tax, may be considered and treated as a simple application for abatement, if the necessary preliminary steps have been taken.

In Equity. This cause having been tried by the court at the October trial term, 1871, the following facts were found: The plaintiffs are a banking corporation, holding all their deposits, funds, and accumulations in trust for depositors. By the provisions of their charter, granted July 5,1867, the corporation is declared to be “ capable of receiving and holding such buildings and real estate as shall be necessary and convenient for managing its affairs ; provided such real estate, held at any one time for such purposes, shall not exceed in value, at the time of the purchase or acceptance thereof by said corporation, the sum of ten thousand dollars.” In the year 1869 the plaintiffs purchased the two lots of land described in the defendants’ answer to the plaintiffs’ bill, paying therefore $6,550 from the deposits and accumulations of said bank; and the same, with the improvements thereon, hereafter mentioned, have ever since been held and are now held by the bank in trust for the depositors, as property acquired by and derived from the deposits of their depositors and the accumulations thereon. The principal lot, purchased at the cost of $6,000, contained at the time of said purchase a brick store, four stories in height, fronting on Market street. The other lot, subsequently purchased at the cost of $550, is directly in the rear of the main lot, and by its purchase the plaintiffs acquired all the land extending from the rear of the main lot to Penhallow street. Before the purchase of the back lot, the plaintiffs had no, means of communication with Penhallow street except by a right of way from the rear of the former lot to said street. At the time of its purchase, it was intended that the rear lot should be kept clear from any erection of buildings thereon, and retained by the plaintiffs, in order to avoid the obstruction of their light, and to afford-extra security against fire; but the plaintiffs have since considered that it is expedient, and they propose to sell a portion of it, reserving a passage-way to Penhallow street. -It was not only convenient, but it was essential that banking-rooms and a safe or vault should be provided for the use of the bank, in place of the inconvenient and unsafe provision for the custody of the funds and the conduct of the business, which was afforded prior to the purchase of this property; and the purchase of all the aforesaid property was regarded by the trustees as a legal, prudent, and economical investment of their trust funds. Shortly after the purchase, the plaintiffs began to remodel the old building, converting it into three stories instead of four, the intention at first being to use the whole building for no other than banking purposes ; but finding that the whole building would not be required for such uses, it was deemed practicable and expedient to construct rooms to be rented for offices in the upper portion of the building. This intention, however, was finally abandoned, and the ultimate determination, which was carried out, was, to convert the second and third stories into a dwelling-tenement, — the trustees considering that such occupation would promote the safety of the funds and securities of the bank, and enable the corporation to dispense with the services of a special watchman. With this view the bank vault, subsequently built, was so constructed as to cause the sound of operations about the safe therein contained to be communicated to the rooms intended for the' occupation of the family above. A small room was also constructed in the rear of the main building and adjoining thereto, communicating by a stairway with the upper portion of the main building, and used in connection therewith for a cooking-room. The upper rooms, and this small room in connection therewith, have been occupied ever since November, 1870, by the family of Mr. I-iand, one of the trustees, at the rent of $225 per year. One Whittemore occupied the same premises a little less than three months, just preceding Mr. Rand, paying rent to the bank therefor at the rate of $350 per annum. The rest of the building is used exclusively for banking purposes. The repairs upon the building were so far completed that the plaintiffs commenced the occupation of the same as a bank in September, 1870. Some small bills relating to the repairs and the construction of the vault remain unsettled, but the expense of the whole operations connected with this property is substantially as follows: Price paid for all the real estate and building at the time of the purchase, $6,550 ; for expense of altering the building to fit it for the use of the bank, $4,881.32; for an iron and steel safe, $3,800; for building foundation of stone for safe and for surrounding brick work, $486; for counters, gas fixtures, &c., $682.56; total, $16,399.88. Nearly all these expenditures, except the price paid for the original purchase of the real estate (viz., $6,550), were incurred after the assessment of the tax hereinafter named. On April 1, 1870, the city of Portsmouth, by their assessors, appraised the real estate of the plaintiffs (being the same land and buildings heretofore described), for the purposes of taxation for the year 1870, at $5,000, and assessed . a tax thereon for that year of $122 ; and the defendants claim the right and intend to inforce the collection' of said tax. The assessment was in legal form, duly and properly made, and the bank is liable to pay the said tax unless exempted therefrom by law. The plaintiffs have complied with all the provisions contained ill sections 1 and 2 of chapter 4 of the laws of this State, and the statement of the deposits and accumulations of said bank, made in compliance therewith, contains and includes the deposits, &c., which have been invested in said real estate and building, and the expenses aforesaid, so far as the same had been then incurred. The State treasurer, in compliance with the provisions of section 14, chapter 58 of the General Statutes, has paid to the defendants the sum of $500, as such part of the tax paid to the State treasurer by the plaintiffs as aforesaid, as was in proportion to the amount of the deposits and accumulations of said bank, held by residents of Portsmouth, April 1,1870, and the defendants have received and retain the same. The whole amount of the deposits and accumulations of the bank, on April 1,1870, including the amounts invested in the real estate and furniture of the bank building aforementioned, was $218,562.44; of which sum $123,993.33 were the deposits and accumulations of residents of Portsmouth. The court finds, as matter of fact, that all the buildings and real estate and furniture of said bank, including its safe and vault, are convenient for managing the affairs of the bank ; but that the rear lot, and small addition to the rear of the main building, and the tenement in the upper part thereof, are not necessary for that purpose; and that the said property, in the aggregate, exceeds in value the sum of $10,000, and is of the value of $16,399.88 ; but that the same did not exceed in value the sum of $10,000 at the time of the assessment of the tax. The plaintiffs, by their bill, pray the direction of the court in the premises, and that the defendants may be enjoined from collecting the' tax assessed by them ; or, that they be required to refund to the plaintiffs such sum as they have already received from said taxes, through the State treasurer, more than they should have received by reason of the premises ; or, that they abate such portion of said tax, or all thereof, as may be just, and for general relief. And for specific direction, order, or decree in the premises, the case and the questions of law therein involved were reserved for determination by the whole court. The main question which the parties wish decided in this suit is, whether the plaintiffs can hold any real estate under their charter and the statutes of this State, free from local taxation: in other words, whether the plaintiffs can invest of their deposits and accumulations in a banking-house and appurtenances ; and if so, to what extent free from local taxation. Now, it appears that the charter provides that the corporation is capable of purchasing, receiving, and holding such real estate as shall not have cost, at the time of the purchase, over the sum of $10,000. The case finds that this lot cost but $6,550 at the time of the purchase thereof by the bank. It also appears by the case that the purchase money was paid from the deposits and accumulations of said bank, and that the same has been and is held by the bank as property acquired by and derived from the deposits and accumulations. It further appears from the case that “ it was essential that banking-rooms, and a safe or vault, should be provided for the use of the bank,” &c. Also, the building was all bought at first for a banking-house, and all to be used as such. The case finds that the trustees did view it as a “ legal, prudent, and economical investment of their trust funds.” We say the charter has given that discretion to the trustees, and when exercised it is not to be subject to revision unless some fraud or wrong intention has been connected therewith. Here the trustees viewed it as all legal. Therefore we say, that the finding of the court, that, although “ all the buildings and real estate * * * are convenient * * * the rear lot and small addition * * * are not necessary,” &c., is a finding in a matter not in the power of the court to revise, in the absence of fraud or wrong practice on the part of the trustees. Of what use are their discretion and judgment, if the opinion of others can set aside their opinion ? Now, if the bank were to close up to-morrow, what would this land be considered to be ? Would it not be deposits and accumulations to be divided amongst the stockholders ? Deposits and accumulations may be in foreclosed mortgages of real or personal estate, in debts collected by set-off of real estate, and in a thousand ways. The intention of the statute was, not to have a changing taxation, but for the tax to be uniform upon every deposit and every accumulation. It could not have been the intention to tax a deposit and accumulated interest on a mortgage note up to time of foreclosure at one per cent., and then, as soon as foreclosed, to tax it at two or two and a half per cent. It was none the less a deposit and accumulation of the said bank in real estate. They can accumulate in real as well as personal. The law was intended to reach every kind of deposit and accumulation. It is not confined to accumulation of personal property, or stock, or lands, but is “ the whole amount of deposits and accumulations due to the depositors in each town in the State separately, and the whole amount due to depositors not resident in the State. Gen. Stats., ch. 58, sec. 12. Now, is not the amount invested in this real estate “ due to the depositors ?” Is not the price of this estate a portion of “ the whole amount of deposits and accumulations due to depositors ?” But one answer can be made to this. It is due to the depositors, and is a part of the whole amount. Then, by section 12, chapter 58 of the General Statutes, the law is imperative on the treasurer to transmit it to the secretary of State. None of it could or can be left out, — not one dollar of what is due the depositors of any accumulation or deposit, whatever form that accumulation takes. It is nevertheless an accumulation due the depositor, whether in the form of real, personal, or mixed property. If the plaintiffs are correct in this view, then the next step is to pay the tax “ on the whole amount of the deposits and accumulations.” Gen. Stats., ch. 58, sec. 13. Section 12 shows what “ whole amount” is referred to, and how it is to be found. The bank are to pay the tax on the said “ whole amount of deposits and accumulations” of property, real, personal, and mixed, “ due the depositors.” Now, if the plaintiffs are correct in their view of the statute, “ no other tax shall be assessed on said deposits and accumulations” due to the depositors, or against the depositors on account of said deposits or accumulations, whether real, personal, or mixed, or whatever form said property may have assumed, of into whatever property said accumulations have legally come by foreclosure of mortgages, by attachment and set-off, or by purchase of real estate under and in accordance with the charter and statute. Gen. Stats., ch. 58, sec. 13. Now there can be no doubt the legislature have power to declare what property is or shall be taxable and what not, provided they make equal taxation. They can and do exempt certain animals or certain carriages under a certain value, or tax all over a certain value. No property can be taxed unless allowed by the statute laws. Colleges and academies, railroads, charitable and trust institutions, are allowed to hold property free from taxation, by express statutes and charters for the public good, and such property is not and cannot be taxed. Our General Statutes, chapter 49, sections 2 and 4, and part of sections 5, 6, and 9, provide for many cases; and then special charters, like those of savings banks, provide for many others. Now, the clause enabling the bank to “ receive and hold such buildings,” &c., would be entirely inoperative, unless they can receive and take it by means of their deposits and accumulations, for that is all the means they can have. They can “ purchase and accept” the same, if it does not exceed $10,000 in value at the time of purchase. If not to be purchased from deposits and accumulations, how can they do it ? If the plaintiffs are correct, then, in their view, by the last clause of section 13, chapter 58, General Statutes, no other tax can be put upon this real estate more than there could be put upon the depots and tracks of railroads, which cannot be taxed. Gen. Stats., ch. 49, sec. 4. No property is liable to double taxation. Savings Bank v. Nashua, 40 N. H. 398. The opinion in that case on the points in controversy here is not applicable, because tlie legislature liave made a radical change in the law in various respects. In August, 1864, after the assessment in the Nashua case, a new. law was passed entirely altering taxes on savings banks. Trouble had arisen in the Nashua case by the assessment of a tax, and the legislature undertook to settle the whole thing by a certain tax and no other. No decision has ever been made On the amended law. It steers clear of many of the points raised in the Nashua case, and, we say, was intended to go to the root of the whole matter and have but one tax. As the law then was, the court did not agree. The reasoning in that case cannot apply here. Here is a “ tax on all the propertythere, a single tax on but little if any of it. 46 N. H. 408. Here the “ intention of the legislature is clearly manifested there it was not. Here it is not a doubtful provision; there it was. There is no escaping the view that we must pay a tax on all due depositors, and that includes now $16,000 and over, in this land ; and if the land is taxed, the bank does and must pay both taxes, and it amounts to double taxation. It seems to us the law is simple and plain, and it is only by attempting to deny its plain provisions that trouble arises. If the court will call an accumulation an accumulation, and will decide what the legislature enact, then it will be plain sailing; but if they decide that the legislature meant to say that in case a bank should have all their deposits in one huge mortgage of $100,000, and that mortgage should be foreclosed, that in that case, although there are depositors in number 10,000, in varying sums amounting to just $100,000, yet no return is to be made to the State treasurer, because, forsooth, nothing is due depositors, then, to be sure, we should be in a sea of darkness, and the law would be foolishness. A tax of one per cent., to be paid, on amount due depositors — and $100,000 would be due them, which tax must be paid because that amount is due — but yet there are no deposits or accumulations in the bank, because the deposits and accumulations are all in form of real estate, and real estate is not deposits or accumulations. The statute makes no discrimination as to the form the accumulations take. If they are accumulations due the depositors, they must be returned to, the State treasurer and taxed. It would be an accumulation if invested in bonds, notes, stocks, or mortgages. By what authority or power are the court to say that the accumulation is no longer an accumulation because invested in real estate under the charter ? The fact is, the charter and statutes have provided — 1. For the deposit. 2. That deposit and accumulations all belong to depositors. 8. That deposits. and accumulations and profits may be invested in notes and real estate security, liable to be foreclosed, and in a bank building, &c. 4. That these deposits and accumulations, i. e., profits and income, in whatever form they have come to in pursuance of the charter, are investments and all due depositors. 5. That all must be returned to- the secretary of State, whatever form they may have attained, as all are due depositors under the charter by its express provisions. 6. That a tax of one per eent. shall be paid thereon. 7. And that no other tax shall be put thereon. The first four are provisions of the charter; the last three, of the statutes applied to the charter. It is no more inconvenient that a savings bank, which is a public benefactor, should hold its bank building free from local taxation, than that a railroad should hold its depots free from taxation. There is no danger that any large amount of property will ever be thus exempted from local taxation, as the bank building can be but small, as the charter provides for only a small purchase, and the foreclosure of mortgages will probably be nothing, as banks loan at so small a value that there can be but little danger that any mortgage will ever be allowed to be foreclosed. But the legislature intended a safe rule, — of a tax of but one per cent, on all the property of savings banks, in order that no excessive taxation might ever be placed on any part thereof by any local taxation. The plaintiffs in this case were, by their charter, capable of receiving and holding such buildings and real estate as were necessary and convenient for managing their affairs, not exceeding in value the sum of $10,000 at the time of the purchase. They can hold no other or different real estate than by purchase under their charter, or by the laws of the State. Were the real estate and buildings necessary and convenient for managing the affairs of said bank ? They must be both necessary and convenient, in order to comply with the provisions of the charter authorizing them to hold real estate. The court have not so found. The question to be determined by the court is, whether this real estate is subject to local taxation. This real estate is situate in Portsmouth, is occupied by the plaintiffs who claim to own the same. Real estate shall be taxed in the town where situate, to the person claiming the same. Gen. Stats., ch. 50, sec. 11. This has been done; and the court found that the assessment was in legal form, duly and properly made, and that the bank are liable to pay the same unless exempted therefrom by law. This real estate was not held by said bank in pursuance of the provisions of their charter. The court have found that a portion of the same was not necessary for managing the affairs of the bank. Such being the fact, as found by the court and the trustees themselves, then that part of the real estate which was not necessary and convenient for banking purposes was liable to local taxation, and it was the duty of the city assessors to assess the same. If only the excess of the real estate over and above that which is necessary and convenient for managing the affairs of the bank is liable to taxation, then the tax complained of is an over taxation, and the remedy of the plaintiffs was by an application to the proper authorities of the city for an abatement. This was their only remedy, and has never been done. The plaintiffs having mistaken their remedy, the bill should be dismissed. Gen. Stats., ch. 52, secs. 10,11; Osborn v. Danvers, 6 Pick. 99; Rowe v. Boston, 7 Cush. 278 ; Bates v. Boston, 5 Cush. 93; Lincoln v. Worcester, 8 Cush. 55; Brewer v. Springfield, 97 Mass. 152. Deposits and accumulations of a savings bank are personal estate, and are so to be considered, so far as taxation is concerned, until the same is changed by being invested in real estate, and the real estate made subject to taxation. Savings Bank v. Nashua, 46 N. H. 399. We contend that no tax can be legally assessed except it be a proportional tax upon all estates. Const. N. H., art. 5. All public charges of government, in any part thereof, shall be assessed on polls and estates in the manner which has heretofore been practised, &c. Const. N. JEL, art. 6. In what manner were taxes assessed prior to the adoption of the present constitution ? By the provincial laws, the selectmen of towns were empowered to assess the lands and estates within the bounds of such towns in a just and equal proportion. N. H. Prov. Laws, ch. 2, sec. 5, p. 138, ed. 1771. The act of July 2,1776, enacted that no colony, town, or parish tax should be held legal if not proportional — Acts and Laws of N. H., ed. 1780, p. 6 ; — see, also, N. H. Laws, 1789, p. 212— except excise and revenue taxes. See N. H. Provincial Laws, ed. 1771, p. 109; Acts & Laws of N. H., ed. 1780, p. 142; Laws of N. H., ed. 1789, p. 145. There is no law of this State making personal property generally liable to taxation. It is only such as is specifically enumerated in the statutes which is so liable. The defendant contends that the levying a tax of one per cent, upon all the deposits and accumulations of savings banks cannot be sustained under the constitution of the State, except as an excise or license tax, or a bounty for doing business as a bank. Savings Bank v. Nashua, 46 N. H. 389 ; Portland Bank v. Apthorp, 12 Mass. 252 ; Commonwealth v. Savings Bank, 5 Allen 428 ;_ Commonwealth v. Ramillón Manufacturing Co., 94 Mass. (12 Allen) 298 ; Providence Institution for Savings v. Boston, 101 Mass. 575 ; Jewell v. Boston, 101 Mass. 575; Insurance Co. v. Loud, 99 Mass. 146. The legislature only intended that there should be no other excise tax assessed against savings banks. It cannot have the extended application contended for by the plaintiffs, as it would repeal the law for the taxation of real estate, and thereby tend to confuse and unsettle the whole system for the taxation of the same.