Crocker v. Whitney.

It was not

the Union with uniform organization and powers. intended to allow National banks in any State to take mortgages to secure future loans, and to prohibit banks in another State from doing so, depending upon the nature and character of a mortgagee's interest in the land so defined by the laws of different States. The bank becomes a holder of real estate by taking a mortgage thereon within the true meaning and intendment of the 28th section of the act.

Having reached the conclusion that the National Bank of Genesee was prohibited from taking a mortgage of real estate except to secure a pre-existing indebtedness, the further conclusion seems to follow that the mortgage from Whitney cannot be enforced. It was not, at the time of the sale upon which the surplus moneys were realized, a subsisting valid lien upon the land, and as the equity of redemption was not bound by the mortgage, the bank had no claim upon the surplus moneys.

It is perfectly well settled in the law that the courts will not enforce a contract, the subject-matter of which is either malum prohibitum, or malum in se.

A contract made in violation of a statute is void, and it is immaterial that it is not so declared in the statute itself. The law adjudges it to be so, and courts do not undertake to pass upon the wisdom of the policy of the Legislature in enacting prohibitory statutes. Our attention has been called to the case of The Silver Lake Bank v. North, 4 Johns. Ch. 370.

The statute under consideration in that case, as the chancellor construed it, did not prohibit the taking of the mortgage of the bank. There is no room, we think, in this case to doubt upon the language of the Bank Act, that it was the intention of Congress to prohibit banks taking a mortgage on lands to secure futurs advances, and this being so, a security taken for such a purpose is void within numerous authorities. North River Ins. Co. v. Lawrence, 3 Wend. 482; Life and Fire Ins. Co. v. Merchants' Ins. Co., 7 id. 31; New York Ins. Co. v. Ely, 2 Cow. 678; Bank of Salina v. Alvord, 31 N. Y. 472, and cases cited.

The construction we have given to the 28th section of the National Bank Act is supported by the following cases: Fowler v. Scully, 72 Penn. St. 456 (post); National Bank v. Rowell, 2 Dill. C. Ct. R. 371 (ante, p. 264); Ripley v. Harris, 3 Biss. C. Ct. R. 190. The order should be affirmed.

"All concur. RAPALLO, J., not voting; FOLGER, J., absent.”

People v. Commissioners of Taxes and Assessments.

PEOPLE ex rel. TRADESMEN NATIONAL BANK V. COMMISSIONERS OF TAXES AND ASSESSMENTS. *

Taxation Rate of, how determined in New York - Deduction for real estate.

In assessing shares of stock in National banks in New York, the assessors must determine the actual value of the shares- taking into consideration all the capital of the bank, whether surplus or in real estate or otherwise, and then deduct from such value, such sum as represents the proportion which the assessed value of the real estate bears to the assessed value of the entire capital.t

Thus, the capital of a National bank was $1,000,000, and was represented by 25,000 shares of $40 each. The assessors assessed the shares at $56 each, making in the aggregate $1,400,000, and the real estate at $200,000. Held, that they should deduct from the assessed value of each share $8, being one-seventh or the proportion which the real estate bore to the aggregate assessed value of the shares.

A

PPEAL from the order of the General Term of the Supreme Court modifying an assessment. The case was reported below in 9 Hun, 650.

Hugh L. Cole, for appellants.

Horace Barnard, for respondents.

MILLER, J. The relator claims relief upon the ground that the commissioners of taxes and assessments did not obey the mandate of the statute in making the proper deduction from the value of each share of the capital stock of the bank as the law required. The capital of the bank was $1,000,000, and was represented by 25,000 shares at $40 a share. The commissioners valued the shares

*This case will appear in 68 New York Reports.

See People v. Commissioners of Taxes and Assessments, ante, p. 130, which is an affirmance of the decision of the Court of Appeals in the case of People ex rel. Gallatin National Bank mentioned in the following opinion. See, also, Hepburn v. The School Directors, ante, p. 113.

In the Matter of The Farmers' National Bank of Iludson, 1 Thomp. & C. 383, it was held that, in the absence of proof to the contrary, assessors, in assessing National bank stock, will be presumed to have made the proper deduction for the real estate of the bank; and further, that if there be an omission to deduct the real estate, it is not "a manifest clerical or other error," to be corrected under chapter 695, Laws 1871.-REP.

People v. Commissioners of Taxes and Assessments.

at $56 each, and assessed the real estate at $200,000, making the total value of the capital stock, including the real estate, $1,400,000. They deducted from the value of each share $8, being the one-seventh, or the proportion which the real estate bore to the whole amount of the capital stock, including the real estate, making the entire assessment upon the shares $1,200,000. It is urged that this deduction was erroneous, and that instead thereof one-fifth of the value of each share, $11.20, should have been deducted, thus reducing the value of each share to $44.80 in the place of $48, the amount of the actual assessment, and making a difference of $80,000 in total amount of the taxable property assessed.

*

*

* *

The statute under which the commissioners acted (chap. 761, Laws of 1866, § 1) declares, that the stockholders of any bank "shall be assessed and taxed on the value of their shares of the stock therein " "but not at a greater rate than is assessed on other moneyed capital in the hands of individuals in this State. And in making such assessment there shall also be deducted from the value of such shares such sum as is in the same proportion to such value as is the assessed value of the real estate of the bank to the whole amount of the capital stock of the said bank," etc. The evident object and purpose of the act from which the foregoing provision is cited, was to provide a system of taxation of the stockholders of National banks by which they should be assessed for their shares in the same method and bear the same burthens as are assessed upon other property, and thus be compelled to pay their fair and just proportion of taxes to be levied. The clause in the section cited, to the effect that they were not to be assessed at a greater rate than other moneyed capital, clearly meant that they should be assessed as much and to the same extent and not a less rate than assessments are imposed upon individual owners of such capital according to law. They were to be assessed, as the act provides, on the value of their shares, meaning the market value or the price which such shares would bring without regard to the value of the real estate which was to be assessed separately. When the assessors had fixed upon the value of such shares then the deduction was to be made from the value of the shares of the real estate, and here the real point of the controversy is presented as to what that deduction shall be. It is to be proportionate and as the assessed value of the real estate is to the capital stock. The phraseology last employed must be considered in the connection

People v. Commissioners of Taxes and Assessments.

with the "value of the shares" which have previously been inserted in the statute, and when the statute speaks of the "whole amount of the capital stock," it is reasonable to suppose that it had reference to its fair value and not to the nominal amount of the capital. It certainly includes the value as that constitutes the actual amount, and the important element which was to be taken into consideration in the assessment of the shares. The words last cited, as expressed in the section cited, include evidently every part of the assets of the bank from which an income is derived and from which the dividends earned are to be paid. This clearly comprehends the surplus on hand as well as any other investment which constitutes a portion of the capital. These sources of income represent the capital and form a material part of it, which is liable to be assessed as the act directs. The assessors are to consider every thing which gives value to the shares in fixing the basis of assessment. The People ex rel. Gallatin Bank v. Commissioners, etc., 67 N. Y. 516. Such being the principle upon which the assessment is based it is not apparent in what manner a deduction can be made from the value of the shares in proportion to the nominal capital instead of the real capital according to its value. The word “nominal" is not used, and while the amount of the capital may be nominal it may also, when it has increased in value by profits earned, be far beyond that. And when it has thus become actually more valuable than the nominal amount there is no valid ground for holding that the latter sum should be the criterion. In fact the language cited would seem to indicate that it was intended by the Legislature to exclude any such construction.

In support of the construction placed upon the statute in question it may be observed that it tends to carry out the apparent intention of the law-makers to fix a fair and just valuation upon property of this description, while a contrary rule would operate unjustly and render a uniformity of assessment almost out of the question. No rule appears to be more equitable, rational and fair, than to assess the shares of bank stocks at their value, and then make the deduction in proportion to the real capital, as we think the statute authorizes. If it were otherwise, banking institutions which had been prosperous and successful and whose shares had been raised far above the par value might escape taxation upon a large portion of the amount of their capital, while those which had been unfortunate and reduced in value might be taxed upon a far

Taylor v. Hutton.

greater amount than their entire capital, upon entirely a fictitious basis of value, and upon property which in fact had no existence. This clearly never was intended, and the rule applicable to the construction of statutes does not require such a strict interpretation of the law as will thus frustrate its design and completely pervert the object of the law-makers.

It may also be remarked that the basis of taxation adopted by the commissioners in this case appears to have been followed and approved in the case of The People ex rel. Gallatin Bank v. The Commissioners, etc., supra, recently decided by this court.

The General Term were in error in its decision and the judgment should be reversed and the writ of certiorari quashed.

Judgment reversed.

TAYLOR V. HUTTON.

(43 Barbour, 195.)

Right of directors of National bank to remove officers.

Where the articles of association of a National bank, signed by all the original stockholders, and giving express authority to the directors to remove the president, have been transmitted to the Comptroller of the Currency, who has, on receiving the same, issued circulating notes to the bank, he will be deemed to have approved of the articles, and the directors will have the power to remove the president, even though the bank has never legally adopted any by-laws.

It is not necessary that any by-laws should be adopted before a president may be chosen or removed, and another appointed in his place.

Section 11 of the act of Congress, relative to National banks, authorizes the directors to remove the president of a banking association.

A

PPLICATION for the continuance of a preliminary injunction.

The action was brought by two of the directors and two of the stockholders of the Fourth National Bank, in the city of New York, against the remaining directors, to restrain them from removing the president, Mr. George Opdyke, from his office.

D. D. Field, for plaintiffs.

L. B. Woodruff and Jos. H. Choate, for defendants.