Appeal, No. 27, May T., 1953, from decree of Court of Common Pleas of Dauphin County, Commonwealth Docket, 1940, No. 1501, in case of Commonwealth of Pennsylvania v. Mellon National Bank and Trust Company. Judgment affirmed.
Harry F. Stambaugh, Special Counsel, with him Robert E. Woodside, Attorney General, for appellant.
Charles E. Kenworthey, with him Roy J. Keefer, Joseph G. Robinson, Hull, Leiby & Metzger and Reed, Smith, Shaw & McClay, for appellee.
Before Stern, C.j., Stearne, Jones, Bell, Musmanno and Arnold, JJ.
OPINION BY MR. JUSTICE JONES
The question raised by the Commonwealth on this appeal is whether the court below followed the proper formulae, as indicated by statutory and decisional law, for determining the Pennsylvania tax liability of the defendant National bank for the year 1934 on its issued and outstanding shares of capital stock. The matter came before the court below on the bank's appeal from the settlement of its tax for the year in question which the Board of Finance and Revenue had approved in the sum of $145,783.65. The appeal was tried in the court below without a jury on stipulated facts and unobjected-to exhibits and resulted in a final order directing entry of judgment in favor of the Commonwealth and against the defendant for $15,796.40 with direction to the Commonwealth to refund or credit the defendant in the sum of $129,987.25 representing the excess paid by the defendant on account of the tax on its shares for the year 1934 as finally settled by the Department of Revenue and approved by the Department of the Auditor General.
Section 5219 of the Revised Statutes of the United States (12 USCA § 548) permits the States to impose a tax upon the shares of National banks, provided, inter alia, that "(b) In the case of a tax on said shares the tax imposed shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such State coming into competition with the business of national banks."
By Act of July 15, 1897, P.L. 292, amended by the Act of May 31, 1933, P.L. 1130 (72 PS § 1931), Pennsylvania imposed a tax upon the shares of State and National banks "... at the rate of four mills upon each dollar of the actual value thereof; the actual value of each share of stock to be ascertained and fixed by adding together the amount of capital stock paid in, the
surplus, and undivided profits, and dividing this amount by the number of shares...." When this Act was passed and for some time thereafter, trust companies were not classed as banks. But, by Act of June 13, 1907, P.L. 640 (72 PS § 2001), a tax was imposed upon the shares of trust companies "... at the rate of five mills upon each dollar of the actual value thereof," the actual value of each share to be ascertained by a calculation similar to that prescribed by the Act of 1897, supra.
For the year 1934, which is the only year here involved, the Act of 1907, supra, as last amended by the Act of May 31, 1933, P.L. 1132, allowed deductions from the total of the capital stock, surplus and undivided profits of trust companies, in ascertaining the actual value of their shares, to the extent of such companies' investments in shares of corporations liable to pay the Pennsylvania capital stock tax or specifically relieved therefrom by law. Corresponding deductions were not allowed by the Act of 1897, supra, in determining the actual value of the shares of State or National banks subject to tax under that Act. But, that is of no present moment. The defendant concedes that so long as the deductions allowed trust companies were limited to the value of the stock they owned in Pennsylvania corporations, any seeming inequality of treatment in respect of a National bank was adequately counteracted by the differential in millage favorable to a bank (State or National) and adverse to a trust company and that, since neither identity of the taxing formulae nor mathematical equality of the tax exaction is required, Section 5219 of the Revised Statutes was not violated.
It so happens that, in 1935, the Supreme Court of the United States held that an assessment of tax upon the shares of a ...