Hepburn v. The School Directors
1874 U.S. LEXIS 1325 · 23 L. Ed. 112 · 23 Wall. 480 · 90 U.S. 480
February 15, 1875 · Docket 174
Headnotes
Generated summaries- Headnote 1
The Court examined the language of the congressional act and concluded that “moneyed capital” includes bank stock and that the statute permits valuation beyond par value.
- Headnote 2
The statute provides a ceiling of market value for the appraisal and gives the taxpayer a right to appeal the appraisal to the Auditor‑General for correction of any error.
- Headnote 3
The Court held that the statutory review process is mandatory, and a litigant who skips the administrative step cannot rely on the federal act to avoid the state assessment.
- Headnote 4
The Court applied the principle of expressio unius est exclusio alterius, finding no manifest legislative intent to extend the exemption to bank shares, which are therefore subject to local taxation.
- Headnote 5
The Court affirmed the judgment, reasoning that the taxpayer had no statutory basis for relief and had not exhausted the required administrative remedy.
- Headnote 6
The Court examined the congressional act and held that the term “moneyed capital” includes bank stock and permits valuation beyond par value, rejecting the argument that only the nominal value may be taxed.
- Headnote 7
Pennsylvania’s statute directs that appraisal of moneyed capital be limited to market value to prevent abuse, establishing the permissible ceiling for tax assessments of bank shares.
- Headnote 8
The opinion stressed that the statutory review process is a prerequisite to court relief, and that bypassing the administrative avenue forfeits the right to contest the assessment in court.
- Headnote 9
The Court applied the principle of expressio unius est exclusio alterius, finding that the exemption listed mortgages, judgments, etc., and did not extend to bank stock absent an explicit inclusion.
- Headnote 10
Relying on the prior holdings, the Court concluded that the lower court’s decision was consistent with both federal and state statutes and constitutional principles.
- Headnote 11
The Court examined the congressional statute and concluded that the term “moneyed capital” was meant broadly enough to cover bank stock, allowing the valuation for tax purposes to be based on market appraisal instead of the nominal value printed on the certificate.
- Headnote 12
The statutory scheme requires an official appraisal limited to market value, preventing assessments above that ceiling, and creates a statutory right to seek review by the Auditor‑General to correct any mistake in the appraisal.
- Headnote 13
The Court stressed that the statute imposes an exhaustion requirement: the taxpayer must exhaust the administrative appeal before seeking judicial relief, and neglecting that step precludes a court from substituting its own view of the federal limitation.
- Headnote 14
The Court read the exemption narrowly under the principle that inclusion of certain items implies exclusion of those not mentioned, and found no manifest intent to include bank stock among the enumerated exemptions.
- Headnote 15
Having declined to use the statutory audit‑general process and lacking a legitimate statutory or constitutional basis to limit assessment to par value, the taxpayer’s reliance on an alleged federal restriction was unsupported, so the lower court’s decision stood.
- Headnote 16
The Court notes that the act of Congress defines moneyed capital broadly and includes bank stock, allowing assessment at an amount exceeding nominal value.
- Headnote 17
The statute directs the Commonwealth to appraise bank shares, limiting the appraisal to the prevailing market price and providing an appeal to the Auditor‑General for correction.
- Headnote 18
The statute requires an appeal to the Auditor‑General; failure to use that remedy forecloses a judicial challenge based solely on the taxpayer’s own interpretation of federal limits.
- Headnote 19
The Court finds no manifest legislative intent to include bank shares in the exemption, which was limited to mortgages, judgments, recognizances, and similar items.
- Headnote 20
Since Hepburn failed to appeal the appraisal to the Auditor‑General and relied on an unsupported federal argument, the appellate court found no error in upholding the assessment.
Opinion
delivered the opinion of the court.
The most important question presented by the assignment of errors is, whether shares of stock in a National bank can be valued for taxation by the State in which the bank is located, at an amount exceeding their par value. It is certain that they cannot be taxed at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of the State. Such is the express provision of the act of Congress.
It is contended that the term “ moneyed capital,” as here used, signifies money put out at interest, and that as such capital is not taxed upon more than its par or nominal value, the par value of these shares is their maximum taxable value.
We cannot concede that money at interest is the only moneyed capital included in that term as here used by Congress. The words are “ other moneyed capital.” That certainly makes stock in these banks moneyed capital, and would seem to indicate that other investments in stocks and securities might be included in that descriptive term.
But even if it were true that these shares can only be taxed as money at interest is, the result contended for would not necessarily follow. The money invested in a bank is not money put out at .interest. The money of the bank is so put out and the share of the shareholder represents his proportion of that money. What the amount of this share is, must, in some form, be ascertained in order to determine its taxable value. If the nominal or par value of the stock necessarily indicated this amount, there might be some propriety in making that the taxable value; but, as all know, such is not the case. The available moneyed capital belonging to a bank may be diminished by losses or increased by accumulated profits. Therefore some plan must be devised to ascertain what amount of money at interest is actually represented by a share of stock. The State of Pennsylvania has provided that this may be done by an official appraisement, taking care to prevent abuses by declaring that such appraisement shall not be higher than the current market value of the stock at the place where the bank is located, and by giving an appeal to the Auditor-General, who is authorized to inquire into the value and correct any errors that, may appear. There certainly is no apparent injustice in this. It is not the amount of money invested which is wanted for taxation, but the amount of moneyed capital which the investment represents for the time being.
If the value set upon the share does not exceed this amount it will not be assessed at a greater rate than other money at interest. Other plans may be devised to aecom plish the same end, but it is sufficient for the purposes of this ease that this plan is not unreasonable. If a shareholder is not satisfied with the original appraisement, all he has to do is to appeal to the Auditor-General, make known to him the actual condition of the affitirs of the bank, and have the error if any exists corrected. Hepburn did not see fit to avail himself of this right which he had. He preferred to rest upon his supposed right, under the act of Congress, to limit the power of assessment to the par value. This right, we think, he did not have.
It is next insisted that no municipal or school taxes could be assessed upon the shares of the First National Bank of Carlisle, a National bank located within the borough of Carlisle, because by the laws of Pennsylvania, as is claimed, other moneyed capital in the hands of individual citizens at that place is exempt from such taxation.
In support of this claim it is shown that all mortgages, judgments, recognizances, and moneys owing upon articles of agreement for the sale of real estate are exempt from taxation in that borough except for State purposes. This is a partial exemption only. It was evidently intended to prevent a double burden by the taxation both of property and debts secured upon it. Necessarily there may be other moneyed capital in the locality than such as is exempt. If there is, moneyed capital, as such, is not exempt. Some part of it only is. It could not have been the intention of Congress to exempt bank shares from taxation because some moneyed capital was exempt. Certainly there is no presumption in favor of such an intention. To have effect it must be manifest. The affirmative of the proposition rests upon him who asserts it. In this case it has not been made to appear.
Judgment affirmed.