S. v. Bank of America, (1883) 15 Fed. Rep. 730; (1883) 17 Op. Atty. Gen. 539; (1878) 16 Op. Atty.-Gen. 187; (1877) 15 Op. Atty.-Gen. 218; (1877) 15 Op. Atty. Gen. 371; Van Schaick v. U. S., (1886) 21 Ct. Cl. 7; Bailey v. Clark, (1874) 21 Wall. (U. S.) 284; Stanwood v. Green, (1870) 2 Abb. (U. S.) 184; U. S. v. Claflin, (1876) 14 Blatchf. (U. S.) 55. As to tax on circulation, see Hollister v. Mercantile Inst., (1884) 111 U. S. 62; U. S. r. Wilson, (1882) 106 U. S. 620;. Philadelphia, etc., R. Co. v. Pollock, (1884) 19 Fed. Rep. 401; In re Aldrich, (1883) 16 Fed. Rep. 369; Deposit Sav. Assoc. v. Mager, (1876) 7 Fed. Cas. No. 3,813; (1893) 20 Op. Atty.-Gen. 681; (1888) 19 Op. Atty.-Gen. 100; Merchants' Nat. Bank v. State Nat. Bank, (1870) 10 Wall. (U. S.) 604; Veazie Bank v. Fenno, (1869) 8 Wall. (U. S.) 533. As to exemptions on deposits in savings banks, see German Sav. Bank v. Archbold, (1881) 104 U. S. 710; (1878) 15 Op. Atty.Gen. 452; German Sav. Bank v. Archbold, (1878) 15 Blatchf. (U. S.) 398; Oulton v. German Sav., etc., Inst., (1872) 17 Wall. (U. S.) 109; Bank for Savings v. Collector, (1865) 3 Wall. (U. S.) 495. An act to reduce internal-revenue taxation, and for other purposes. [Act of March 3, 1883, ch. 121, 22 Stat. L. 488.] [SEC. 1.] [Internal-revenue taxes repealed on banks, checks, matches, medicinal preparations, etc.] That the taxes herein specified imposed by the laws now in force be, and the same are hereby, repealed, as hereinafter provided, namely: On capital and deposits of banks, bankers, and national banking associations, except such taxes as are now due and payable; and on and after the first day of July, eighteen hundred and eighty-three, the stamp tax on bank checks, drafts, orders, and vouchers, and the tax on matches, perfumery, medicinal preparations, and other articles imposed by Schedule A following section thirty-four hundred and thirty-seven of the Revised Statutes: Provided, That no drawback shall be allowed upon articles embraced in said schedule that shall be exported on and after the first day of July, eighteen hundred and eightythree: Provided further, That on and after May fifteenth, eighteen hundred and eighty-three, matches may be removed by manufacturers thereof from the place of manufacture to warehouses within the United States without attaching thereto the stamps required by law, under such regulations as may be prescribed by the Commissioner of Internal Revenue. [22 Stat. L. 488.] See Manhattan Co. v. Blake, (1893) 148 U. S. 423; (1899) 22 Op. Atty.-Gen. 570; (1883) 17 Op. Atty.-Gen. 539. SEC. 22. [When tax not to be assessed on insolvent or bankrupt bank.] That whenever and after any bank has ceased to do business by reason of insolvency or bankruptcy, no tax shall be assessed or collected, or paid into the Treasury of the United States, on account of such bank, which shall diminish the assets thereof necessary for the full payment of all its depositors; and such tax shall be abated from such national banks as are found by the Comptroller of the Currency to be insolvent; and the Commissioner of Internal Revenue, when the facts shall so appear to him, is authorized to remit so much of said tax against insolvent State and savings banks as shall be found to affect the claims of their depositors. [Remainder of section relating to tax on deposits on savings banks superseded by Act of March 3, 1883, ch. 121, § 1, ante.] [20 Stat. L. 351.] This is from the Act of March 1, 1879, ch. 125. 66 Relief of depositors. This statute was passed for the undoubted purpose of relieving depositors in national banks from the payment of certain taxes, not assessed upon them, but upon the banks of which they are only customers; taxes which, under the pre-exist- * * and the loss of its entire capital, and its in- Johnston "It was clearly the intention of the statute to relieve the innocent customers of the bank, between whom and the government there were no relations of taxpayer and taxreceiver, and not to relieve the owners of the institution from their just liabilities." Jackson v. U. S., (1885) 20 Ct. Cl. 304. Sec. 3409. [Taxes, when payable.] The taxes provided in the preceding section shall be paid semi-annually, on the first day of January and the first day of July; but the same shall be calculated at the rate per month as prescribed by said section, so that the tax for six months shall not be less than the aggregate would be if such taxes were collected monthly. [R. S.] Act of June 30, 1864, ch. 173, 13 Stat. L. 277; Act of July 13, 1866, ch. 184, 14 Stat. L. 146; Act of June 6, 1872, ch. 315, 17 Stat. L. 256. This section appears to have nothing on which to operate. See note under section 3408. For payment of taxes on circulating notes, see infra. Sec. 3410. [Capital of banks expired or converted into national banks.] The capital of any State bank or banking association which has ceased or shall cease to exist, or which has been or shall be converted into a national bank, shall be assumed to be the capital as it existed immediately before such bank ceased to exist or was converted as aforesaid. [R. S.] Act of March 3, 1865, ch. 78, 13 Stat. L. 486; Act of July 13, 1866, ch. 184, 14 Stat. L. 146. This section appears to be inoperative. See note under section 3408. Sec. 3411. [Circulation, when exempted from tax.] Whenever the outstanding circulation of any bank, association, corporation, company, or person is reduced to an amount not exceeding five per centum of the chartered or declared capital existing at the time the same was issued, said circulation shall be free from taxation; and whenever any bank which has ceased to issue notes for circulation deposits in the Treasury of the United States, in lawful money, the amount of its outstanding circulation, to be redeemed at par, under such regulations as the Secretary of the Treasury shall prescribe, it shall be exempt from any tax upon such circulation. [R. S.] Act of March 3, 1865, ch. 78, 13 Stat. L. 486; Act of July 13, 1866, ch. 184, 14 Stat. L. 146. Sec. 3412. [Tax on notes of persons or State banks used as circulation, etc.] Every national banking association, State bank, or State banking association, shall pay a tax of ten per centum on the amount of notes of any person, or of any State bank or State banking association, used for circulation and paid out by them. [R. S.] Act of March 3, 1865, ch. 78, 13 Stat. L 484; Act of July 13, 1866, ch. 184, 14 Stat. L. 146; Act of March 26, 1867, ch. 8, 15 Stat. L. 6. This and the following section appear to be superseded by the provisions of the Act of Feb. 8, 1875, ch. 36, secs. 19-21, 18 Stat. L. 311, set out below. Constitutional. The tax of ten per cent. imposed on state banks or national banks paying out the notes of individuals, or state banks used for circulation, is not repugnant to the Constitution as being a direct tax not apportioned among the states nor as impairing a franchise granted by the state. Veazie Bank v. Fenno, (1869) 8 Wall. (U. S.) 533. "State banking association" is used in its most comprehensive sense, as signifying any association of persons engaged in the busi 66 ness of banking within any state- other than a national banking association whether constituted under a private agreement merely or formed under some special or general act of the state. (1874) 14 Op. Atty.Gen. 373. The word " person," in the Acts of 1865 and 1866, was held by the attorney-general not to include a state so as to subject the circulation of certificates or receipts subject to the ten per cent. tax, even if such certificates or receipts were "notes" within the meaning of the statute. (1867) 12 Op. Atty.Gen. 176. The bank's own issues of paper are included within the provisions of this section. "The tax of ten per cent. is imposed on the amount of notes of any person, or of any state bank or state banking association used for circulation and paid out' by any bank, or banking association. To construe this as meaning notes other than its own issue would be to interpolate an exception in the law, which is not found in it, and which would tend to defeat its object if it were. found in it." Deposit Sav. Assoc. v. Marks, (1877) 3 Woods (U. S.) 553. See also (1872) 14 Op. Atty. Gen. 98; Deposit Sav. Assoc. v. Mayer, (1876) 7 Fed. Cas. No. 3,813, in which case the court said: "The fact that Congress at subsequent sessions sought to pass and did ultimately pass an Act approved Feb. 8, 1875, which imposed in terms upon the banks this tax of ten per cent. upon their own notes used for circulation, is not conclusive against the construction given. This might seem to be regarded as going to show the intention of Congress in the first instance." Sec. 3413. [Tax on notes of town, city, or municipal corporations, paid out by banks, etc.] Every national banking association, State bank, or banker, or association, shall pay a tax of ten per centum on the amount of notes of any town, city, or municipal corporation, paid out by them. [R. S.] medium. Such a use is against the policy of the United States. Therefore the banker who helps to keep up the use by paying them out, that is, employing them as the equivalent of money in discharging his obligations, is taxed for what he does. The taxation was no doubt intended to destroy the use; but that, as has just been seen, Congress had the power to do." Merchants Nat. v. U. S., (1879) 101 U. S. 1. See also Veazie Bank v. Fenno, (1869) 8 Wall. (U. S.) 533. SEC. 19. [Tax on circulating notes.] That every person, firm, association other than national bank associations, and every corporation, State bank, or State banking association, shall pay a tax of ten per centum on the amount of their own notes used for circulation and paid out by them. [18 Stat. L. 311.] This and the following sections 20 and 21 are from the Act of Feb. 8, 1875, ch. 36, "to amend existing customs and internal-revenue laws, and for other purposes." "The main object of all the federal legislation on this subject was to secure for the national currency the exclusive use in the United States as a circulating medium; and this object was sought to be effected by imposing upon all competitive paper money such a tax as would make its issue unprofitable." (1897) 21 Op. Atty.-Gen. 558. Effect as to section 3412, supra. "The effect of the Act of Feb. 8. 1875, now under consideration, was to extend section 3412, which included only banks and banking associations, to all persons, firms, associations, and corporations. The subject-matter of the tax, to wit, notes used for circulation paid out by them,' remains the same." Hollister v. Mercantile Inst., (1884) 111 U. S. 62. Without an assessment of the taxes by the commissioner of internal revenue, recovery may be had in an action by the United States. U. S. v. Warrick, (1885) 25 Fed. Rep. 138. Every issue of the notes, whether the original issue or a reissue, is a new issue thereof, and the tax is not limited to the basis of the notes executed and used, no matter how often they may be paid out. U. S. v. Warrick, (1885) 25 Fed. Rep. 138. Notes issued for wages by a railroad company in the form of promises to pay to bearer a round sum at a future day, with interest, and receivable before or at maturity in payment of freight and toll bills and for coal bills, or any other debts due the company, are not notes "used for circulation," but only as evidences of the company's indebtedness to its employees for wages. That they are used by those to whom they are issued to discharge their debts to others, or to purchase subsistence for themselves, is indecisive in determining the character of these instruments, because that is to be imposed upon them by circulation, and paying them out as such. Philadelphia, etc., R. Co. v. Pollock, (1884) 19 Fed. Rep. 401. But see (1879) 16 Op. Atty.-Gen. 342. In U. S. v. Warrick, (1885) 25 Fed. Rep. 138, the court charged the jury, in an action to recover the tax on notes issued in payment of wages, payable five years after date in lawful money, with a stipulation that they would be taken at or before maturity in payment of any debt due the defendants, that it must be shown that it was one of the purposes of the defendants, in paying out the notes, to put them in circulation, considering as evidence of that intent the use of the notes by the workmen and the community with the knowledge of the defendants, and declined to charge that the declarations of the defendants were the only evidence of such intention. are in law negotiable, so as to carry title in their circulation from hand to hand, are the subjects of taxation under the statute. Hollister v. Mercantile Inst., (1884) 111 U. S. 62. The whole tenor of the Act indicates that it was the intention of Congress to tax only such obligations as circulate as money, and not obligations which simply entitle the holder to a certain amount of merchandise - limited to a sum stated at the store of the party who issues them. In re Aldrich, (1883) 16 Fed. Rep. 369. See also (1888) 19 Op. Atty. Gen. 98, as to ice tickets. A note payable "in merchandise silver bullion" is not payable in money, but in silver bullion, which is an article of merchandise, and is not such a note as is embraced within the statute. (1896) 21 Op. Atty.Gen. 336. Notes under the amount of one dollar are liable to the tax. "The suggestion that the United States, or the national banks, issued no currency under that amount with which the notes of the defendants could come in competition has very little pertinency in view of the clear terms of the Act, and the suggestion may be met, if necessary to meet it, by the counter-suggestion that the government does issue specie currency of vari ous denominations less than one dollar." U. S. v. Warrick, (1885) 25 Fed. Rep. 140. But see In re Aldrich, (1883) 16 Fed. Rep. 369. Notes in amounts varying from five cents to five dollars each, in form as follows: "Due the bearer one dollar in goods at our store. Kennedy, N. Y., Oct. 14, 1878. Aldrich, Sweetland & Co.," are not notes "used for circulation." By reference to other provisions in statutes in pari materia, it will appear that "notes used in circulation," circulating notes," and "circulation," as that word is used in relation to banking operations, are equivalent and synonymous terms. U. S. v. White, (1884) 19 Fed. Rep. 723. 66 A clearing-house certificate, on which the association could not be sued in an action at common law and a money judgment recovered by proving and introducing the paper alone, without further evidence, is not a note within the meaning of the statute. (1893) 20 Op. Atty.-Gen. 681. As to interest-bearing bonds issued by county commissioners in denominations of $5, $10, and $20, with a view of using the same as local currency, quære. (1894) 21 Op. Atty.-Gen. 70. SEC. 20. [Tax on circulating notes of others used and paid out.] That every such person, firm, association, corporation, State bank, or State banking association, and also every national banking association, shall pay a like tax of ten per centum on the amount of notes of any person, firm, association other than a national banking association, or of any corporation, State bank, or State banking association, or of any town, city, or municipal corporation, used for circulation and paid out by them. [18 Stat. L. 311.] See note to section 19, supra. Use of foreign bank notes. The use by national banks in the United States of circulating notes issued by banks in Canada for circulation in Canada, which have passed over the line and been received by banks of the United States, and paid out by them within the United States, is subject to the tax imposed by this section. (1897) 21 Op. Atty.-Gen. 558; (1893) 20 Op. Atty.-Gen. 534. Bank circulating notes other than its own.- -The intent and meaning of this section was to apply the tax to the amount of the circulating notes issued by any of the persons or corporations named in the statute and used by the banks and other persons therein named. (1897) 21 Op. Atty.-Gen. 558. the "What effect section 20 could possibly have except to impose a tax on amount of other notes than its own, paid out by a bank as circulation, is difficult to see." (1897) 21 Op. Atty.-Gen. 563. Commenting on the case of Merchants' Nat. Bank t. U. S., (1880) 101 U. S. 1, which held section 3413, R. S., to be constitutional, the attorney-general said: "Had this decision been made before the passage of the Act of Feb. 8, 1875, Congress might have deemed it unnecessary to amend section 3413, R. S., by adding the words used for circulation,' for the Supreme Court, in that opinion, very clearly indicated that the banker who pays out notes thereby helps to keep up their use as a circulating medium.” (1897) 21 Op. Atty.-Gen. 561. SEC. 21. [Returns of amount of notes so used or paid out to be made.] That the amount of such circulating notes, and of the tax due thereon, shall be returned, and the tax paid at the same time, and in the same manner, and with like penalties for failure to return and pay the same, as provided by law for the return and payment of taxes on deposits, capital, and circulation, imposed by the existing provisions of internal revenue law. [18 Stat. L. 311.] See note to section 19, supra. An act to authorize the Secretary of the Treasury to adjust and remit certain taxes and penalties claimed to be due from mining and other corporations, and for other purposes. [Act of March 3, 1875, ch. 167, 18 Stat. L. 507.] [Tax on circulating notes, etc., of mining and other corporations to be remitted-R. S. 3412 limited.] That the Secretary of the Treasury be, and he is hereby, authorized and directed to settle and release any claims for tax on circulation of evidences of indebtedness made against any mining, manufacturing or other corporations other than against any national banking-association, State bank, or banking-association, by such corporations paying the tax, without penalty, that shall have accrued thereon since November first, eighteen hundred and seventy-three; and that the provisions of section three thousand four hundred and twelve of the Revised Statutes of the United States shall not be construed in pending cases, except as to national banking-associations, to apply to such evidences of indebtedness issued and reissued prior to the passage of this act, but said section shall be construed as applying to such evidences of indebtedness issued after the passage hereof. [18 Stat. L. 507.] Sec. 3414. [Banks' and bankers' monthly returns.] A true and complete return of the monthly amount of circulation, of deposits, and of capital, as aforesaid, and of the monthly amount of notes of persons, town, city, or municipal corporation, State banks, or State banking associations paid out as aforesaid for the previous six months, shall be made and rendered in duplicate on the first day of December and the first day of June, by each of such banks, associations, corporations, companies, or persons, with a declaration annexed thereto, under the oath of such person, or of the president or cashier of such bank, association, corporation, or company, in such form and manner as may be prescribed by the Commissioner of Internal Revenue, that the same contains a true and faithfu! statement of the amounts subject to tax, as aforesaid; and one copy shall be transmitted to the collector of the district in which any such bank, association, corporation, or company is situated, or in which such person has his place of business, and one copy to the Commissioner of Internal Revenue. [R. S.] Act of June 30, 1864, ch. 173, 13 Stat. L. 278; Act of July 13, 1866, ch. 184, 14 Stat. L. 147; Act of March 26, 1867, ch. 8, 15 Stat. L. 6; Act of June 6, 1872, ch. 315, 17 Stat. L. 256; Act of Dec. 24, 1872, ch. 13, 17 Stat. L. 403. Returns of circulation, see Act of Feb. 8, 1875, ch. 36, sec. 21, supra, p. 760, superseding part of the above section. Sec. 3415. [In default of return, Commissioner to estimate, etc.] In default of the returns provided in the preceding section, the amount of circulation, deposit, capital, and notes of persons, town, city, and municipal corporations, State banks, and State banking associations paid out, as aforesaid, shall be estimated by the Commissioner of Internal Revenue, upon the best information he can obtain. And for any refusal or neglect to make return and payment, any such bank, association, corporation, company, or person so in default shall pay a penalty of two hundred dollars, besides the additional penalty and forfeitures provided in other cases. [R. S.] Act of June 30, 1864, ch. 173, 13 Stat. L. 278; Act of July 13, 1866, ch. 184, 14 Stat. L. 146; Act of Dec. 24, 1872, ch. 13, 17 Stat. L. 402. See note under R. S. sec. 3414. The penalty imposed by the statute is only one penalty for all neglects or defaults prior to the commencement of the suit, and is "Nor not imposed for each and every refusal or |