Montana National Bank v. Yellowstone County, 276 U.S. 499 (1928)

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Montana National Bank of Billings v. Yellowstone County

No. 207

Argued January 20, 1928
Decided April 9, 1928
276 U.S. 499

ERROR TO THE SUPREME COURT

OF THE STATE OF MONTANA

Syllabus

1. A substantial discrimination against national banks in favor of incorporated state banks resulting from taxation of national bank shares upon a valuation equal to that of the assets of the bank, including bonds and like securities of the United States, while the shares of the state banks are not taxed and the state banks themselves are taxed only on the value of their assets after excluding United States bonds and securities, violates Rev.Stats. § 5219. P. 502.

2. Taxation of shares of state corporate banks must be like that of shares of national banks so far as necessary to prevent discrimination; in neither case does the exemption of federal securities held by the bank apply in taxation of the shares. Des Moines Bank v. Fairweather, 263 U.S. 103, distinguished. P. 503.

3. Where the shares of a national bank were taxed and the tax paid, under statutes then construed by the state supreme court as not permitting shares of state corporate banks to be taxed, but only the state banks themselves, thus creating a discrimination due to the inclusion of United States securities owned by the national bank in the valuation of its shares and to the necessary exclusion of like securities owned by the state banks in assessing their assets, held -- (1) that the right of the national bank, suing for its shareholders, to challenge the validity of the statutes as so construed and applied, and to recover the taxes paid, was not affected by a decision of the state supreme court in the suit repudiating the earlier construction and declaring the state bank shares taxable; (2) that the fact that, under the later decision, the taxing officials were empowered to tax the shares of state banks and thus bring about equality, was not an obstacle to the suit, no intention to exercise the power having been manifested, and (3) that failure to apply to the county board of equalization for administrative relief was no bar to maintenance of the action, since the board had no power to grant it under the statute as construed when the taxes were imposed and collected. P. 504.

78 Mont. 62 reversed.

Error to a judgment of the Supreme Court of Montana denying relief in an action by the bank to recover taxes on its shares collected by the county.