Manhattan Co. v. Blake

after stating the case, delivered the opinion of the court.

The statute of the United States pnder which the tax was assessed was § 110 of the act of June 30, 1864, c. 173, 13 Stat. 277, afterwards * embodied in § 3408 of the Revised Statutes, which latter section reads as follows: “ There shall be levied, collected and paid, as hereinafter provided: First. A tax of one twenty-fourth of one per centum each month . upon the average amount of the deposits of money, subject to payment by check or draft, or represented by certificates of deposit or otherwise, whether- payable on demand or at some future day, with any person, bank, association, company or corporation, engaged in the business of banking.” Although this ta,x on deposits in banks was repealed by the act of Congress ,of March 3, 1883, c.'121,.22 Stat. 488, yet the latter act expressly excepted “ such taxes as are now due and payable.”

It was contended for the plaintiff (1) that the contract before set forth, made July 13, 1840, under the provisions of which the ,..pioney in question was sent by the treasurer of the State td the-plaintiff, and the manner in which that money was • credited and disbursed by ti^e plaintiff, show that the ordinary relation of banker and depositor never arose; that Congress did not contemplate the including of such money for purposes of taxation, under the general title of “deposits” S', -used in § 3408; and that the bank, as to the funds in question, was-merely the salaried disbursing agent of-.the State and a trustee for the creditors of the State; (2) that the money paid by the plaintiff, which it now seeks to recover, was the proceeds of a tax collected by the agent of the United States and levied upon all the money in the hands of the plaintiff, including money of the State of New York, then in the possession of an agent of that State and held for immediate disbursement by that agent to the creditors of the State, such agent receiving a salary to effect such disbursement; that such tax was,, to that extent, a tax upon the revenues of the State in-the hands of its disbursing agent; and that such money could not *424 be included constitutionally in tbe term “ deposits,” as used in the statute of tbe United States.

Tbe money in question was deposited with tbe plaintiff by the treasurer of tbe State of New York, to be afterward disbursed by tbe plaintiff, as agent of tbe State, for certain purposes designated in tbe statute of the State and in tbe contract of July 13, 1840. The money, when so deposited, became tbe property of tbe plaintiff, and was credited by it to tbe treasurer of tbe State in account, and was thereafter drawn for by drafts made by the treasurer of tbe State and sent to tbe plaintiff. If such money bad been lost or stolen while in tbe bands of tbe plaintiff, tbe plaintiff, and not tbe State, would have borne tbe loss. Tbe identical money received by tbe plaintiff from tbe treasurer of tbe State was not to be returned to tbe treasm’er,- or paid to his drawee, or kept distinct from tbe other funds of tbe plaintiff. It was not only a deposit of money, but was subject to payment by check or draft, and was payable either on demand or at some future day, all within tbe terms of tbe 'taxing statute of tbe United States. That statute covered general deposits, and not special deposits.

There is no foundation for the contention on tbe part of tbe plaintiff that a trust was oreated in its bands in favor of each creditor of tbe State intended to be paid through tbe plaintiff, as a consequence resulting from each deposit of money made by the treasurer' of tbe State with tbe plaintiff. Tbe money so deposited was not placed, by the mere fact of tbe deposit, irrevocably beyond tbe control of tbe State. Neither the money credited to tbe account called “Interest New York State stocks, canal loan,” nor that credited to tbe account entitled “ Interest loan for payment of bounties to volunteers,” became, by such respective credits, the property of tbe holders of the securities for tbe respective loans, so as to create a title in them to tbe money as interest money. ' If the money bad been withdrawn by tbe State from tbe plaintiff, tbe latter could not have been liable therefor to tbe creditors bolding such securities. ' '

By tbe contract of July 13, 1840, tbe plaintiff agreed to act as agent of tbe State in paying out from tbe deposits made *425 with it by the State sums of money in favor of the holders of the obligations of the State, to pay such holders the interest on such obligations. The plaintiff occupied two relations to the State, one that of debtor ás a bank for the money deposited with it by the State, and the other. that of agent of the State to pay out from the money deposited, if it remained on deposit, money for certain specified purposes. The tax was assessed on deposits of money “ subject to payment by check or draft, or represented by certificates of deposit or otherwise, whether payable on demand or at some future day'”'; and the clear purpose of the statute was to tax deposits of money in the situation ■ of those in question. There is nothing in the contract of July .1.3, 1840, to relieve the plaintiff from its liability as a bank for the money deposited with it by the State. The plaintiff did not hold the money as an agent of the State, but was such agent only to disburse the money. The theory that the plaintiff was a trustee of the money deposited, for certain cestuis que trust, on the ground that the right to the money had become vested, by the mere fact of the deposit, in the creditors of the State, would make it necessary that it should be impossible for the State to withdraw the deposit, which was not the fact.

We see nothing to affect these views in the cases cited by the plaintiff, of Mechanics' Bank v. Merchants' Bank, 6 Met. (Mass.) 13; Sharpless v. Welsh, 4 Dall. 279; Van Alen v. American Bank, 52 N. Y. 1; Martin v. Funk, 75 N. Y. 134; Locomotive Works v. Kelley, 88 N. Y. 234; People v. City Bank, 96 N. Y. 32; National Bank v. Insurance Co., 104 U. S. 54; Libby v. Hopkins, 104 U. S. 303; Pennell v. Deffell, 4 De G., M. & G. 372; Frith v. Cartland, 2 Hem. & Mill. 417.

It is distinctly provided, by § 8 of Title 4, chapter 8, part 1, of the Ee vised Statutes of New York, that “all moneys directed by law to be deposited in the Manhattan bank, in the city of New York, to the credit of the treasurer, shall remain in said bank, subject to be drawn for as the same may be required.” This shows clearly that the money put into the plaintiff’s bank by the State is “ deposited” there, and is to lie- *426 there,' to the credit of the treasurer of the State, and may be drawn at <my time when required by the State. Section 9 also shows that the money so deposited is considered by the State as “ deposits.” It thus becomes “ deposits of .money, subject to payment by check or draft,” within the meaning of the statute of the United States imposing the tax.

\ Nor dq we perceive any soundness in the view that the. money on which the tax in question was assessed was a part of'the revenue of the State in the hands of its agent for immediate disbursement, and so not liable for the tax.. ¥e cannot regard the money in question as the money of the State in the hands' of its agent. After it was deposited with the plaintiff it was the money of the plaintiff, and no tax was put upon the •plaintiff as respected its function as agent of the State. It might as well be said that a tax upon the business of the plaintiff would have been invalid because such business embraced transactions with the State. Even regarding the tax as a tax upon the plaintiff as a bank, it was not a tax upon it as agent of the State, but as a bank receiving deposits. • The account of the State was not charged by the plaintiff, with the amount of the tax, nor was that amount deducted from the deposits made by the treasurer of the State with the plaintiff. So the tax did not fall upon the State in any way.

The contention is, however, that if the tax was not on the function of the plaintiff as agent of the State, it was on the revenue of the State. It might as well be contended that a federal tax assessed on, and collected from, the money of a citizen of New York, who was in arrears.to the State in respect of his taxes, was laid on the.revenues of the State, and, therefore, illegal. The cases cited by the plaintiff in this connection, of McCulloch v. Maryland, 4 Wheat. 316; Weston v. City of Charleston, 2 Pet. 449; Dobbins v. Commissioners of Erie County, 16 Pet. 435; Veazie Bank v. Fenno, 8 Wall. 533; Collector v. Day, 11 Wall. 113; United States v. Railroad Company, 17 Wall. 322; Bank of Commerce v. New York City, 2 Black, 620; National. Bank v. United States, 101 U. S. 1; and People v. Commissioners of Taxes, 90 N. Y. 63, have no application to the case in hand. The plaintiff in *427 the present case was not required to withhold, and did not withhold from the State anything that would otherwise be due to the State.

Judgment affirmed.