Honolulu Republican, Volume IV, Number 499, 17 January 1902 — BANKS NOT LIABLE TO TAXATION [ARTICLE]

BANKS NOT LIABLE TO TAXATION

Attorney Genera! Dole Giles Opinion in Wailokn Case. MIIOHIL BASKS IBE EXEMPT 1 » LICENSE IS NOT REQUIRED FROM THE GOVERNMENT OF TERRITORY. Attorney-General Edmund P. Dole, at a mating between the Governor and the heads of the Territorial departments in the Capitol yesterday morning, read an opinion answering a question from Treasurer Wright relative to a Territorial license for the National Bank of Waiiuku. concluding that such a license is not required, being, in fact, disallowed by Federal law. The opinion, in full, is as follows : Territory of Hawaii. Office of the Attorney-General. Honolulu. H. .1. Jan. 10th. 1902. Honorable Wm. H. Wright, Treasurer of the Territory of Hawaii: Dear Sir; ! am in receipt of your request for my opinion whether the First National Bank at Wailuku. Maui, should take out a banking license as required in Sections 724 and 727 of the Penal Laws of 1597." Sections 724 and 725 are as follows: "The annual fee for a banking license; shall be seven hundred and fifty dollars. The term ‘banking’ for the purposes of this act. shall mean the engaging in. buying or selling drafts on bills of exchange on banks or persons in other countries, or the receiving of deposits and paying of checks thereon. Any person holding a hanking license may also under such license loan his own money, or collect for. or receive, or take the money of another, and loan or advance the same to another, or others, charging a higher rate of interest than is al-1 lowed to the depositor; or may loan the moneys of another, or negotiate a loan to or from another, for a commission or other compensation." Sections 5214 and 5219 of the Revised Statutes of the United States are as follows: “In lieu of ail existing taxes, every association shall pay to the Treasurer of the United States, in the months of January and July, a duty of one-half of one per centum each half year upon the average mount of its note's in circulation, and duly of one-quarter of one per cental' each half year on the average mount of its capital stock, beyond ho amount invested in United States bonds. Nothing herein shall prevent ail the shares in any association from being included in the valuation of the personal property of the owner or holder of such shares, in assessing taxes imposed by authority of the ( State within which the association is located: but the legislature of each State may determine and direct the manner and place of taxing all the shares of national banking associations located within the State, subject only to the two restrictions, that the taxation shall not be at a greater rate than is assessed upon other,

moneyed capital in the hands of individual citizens of such State, and that ike shares of any national bonking association owned by non residents of any State shall be ;n the city or town where the hank is located, and not elsewhere. Nothing herein shall be construed to exempt : - th<- r«ra! property of associations from either State, county or municipal tajto the same ezter. according to its value. as other real property is taxed." • National banks are not liable to a privilege tax imposed by city ordinance. Chattanooga vs Mayor, etc.. 9 H- -f. T-nn->-ee S‘.4. Nor in view of tie fact that the shares alone are taxable, to any tax upon their business imposed by the municipal authorities of the city where the bank is located. Mayor of Macon v. First Natione.l Bank. 59 Ga. •’> IS. In the case of McCulloch v. th • State of Maryland. 4 Wheaton 316 it was held that Congress had the constitutional right to authorize the incorporation of banks; that a bank so incorporated had a right to establish its offices of discount and deposit within any Sta: , and that when so established the State could not tax it This deI - cision was made with reference to , the qu--st! 'n whether the State of . Maryland couid impose a tax on a bank of the United States incorpor at J under an Act of Congress. April Bith. ls>.6. The principal therein announced has been reaffirmed and applied to the Act of Congress authorizing the incorporation of National banks in the following cases; Van Allen v. Assessors. 3 Wall 573; Bradley v. People. 4 Wall. 459; 1-ionberger v. Rouse. 9 Wall. 468; Tappan v. Bank. 19 Wall. 490; Hepburn v. School Districts. 23 Wall. 480; People v National Bank. 69 Am. St. R. 32. In all these cases it was held that a State could impose only such taxe~ as were authorized by the Act of Congress creating National banks, and that said act only authorized a tax on the shares in such bank, and not npon its capital: and that such banks derived their authority to do business in the State by virtue of a United States statute, which is supreme. Therefore, it follows that the right of such banks to do business in a State is not dependent upon a license to be obtained from the State authorities. The right of a National bank to conduct its business as a banking institution is in no way dependent on a license to be obtained either from the 1 State or any of its municipalities. City of Carthage v. First National < Bank of Carthage. 71 Mo. 50.8. A National hank derives its existence and its powers from the Government of the United States. It pays a revenue to the United States in lieu of all local taxes, except such as the United States authorizes. Its shares are taxable to shareholders by the Territorial government, and its real estate, if it has any. is taxable by the Territorial government the same a? other real estate.Jf it has any. is tax-: able by the Territorial government the same as other real estate, pursuant to Section 5219 of the Revised Statutes of the United States. Rut it is beyond the lawful power of the Territory either in the form of a license or otherwise to tax its franchise or banking privilege. I think it clear that Sections 724 and 725 of the Penal Laws of 1897 cannot be applied | to the First National Bank of Wailuku. or to any other National bank in this Territory. Very respectfully yours. E. P. DOLE. Attorney General.