APPEAL from a judgment of the Superior Court of the County of Yuma. Henry C. Kelly, Judge. Judgment affirmed.
Messrs. Phillips, Holzworth & Phillips (Mr. Richard W. Young, of Counsel), for Appellant.
Mr. Glenn Copple and Mr. A. J. Eddy, for Appellees.
[42 Ariz. 46] ROSS, C. J.
The question involved in this case is the validity of a tax laid upon eighty acres of farming land, located in Yuma county, for the year 1930. [42 Ariz. 47] The appellant, the Federal Land Bank of Berkeley, having a mortgage on said tract of land brought an action against the mortgagors to foreclose the mortgage and made S.W. Ellery, superintendent of banks and ex-officio reciever for the Farmers' Commercial State Bank, successor in interest to the mortgagors; the county of Yuma; and D. H. Inman, county treasurer and ex-officio tax collector of said county, defendants contending that the assessment and tax lien against the land were illegal and void and therefore inferior to its mortgage lien.
The trial court held the tax against the land was legal and superior to appellant's mortgage lien.
The mortgagee bank has appealed. Its contention is that this tract of land was the property of the Farmers' Commercial State Bank and that under sections 3069-3072 of the Revised Code of 1928 the only legal method by which it could be assessed was upon the shares of stock of the shareholders of said bank; that under said sections the capital or assets of the bank were not taxable and that such method of taxation of a solvent bank continued after it became insolvent and was taken over by the superintendent of banks for purposes of liquidation.
It is unquestionably true that as long as the Farmers' Commercial State Bank was a going concern, and actively engaged in the banking business, the method prescribed in sections 3069-3072, supra, was exclusive. The tax thereunder is against the shares of stock and not against the capital or assets of the bank. The obligation or duty of the bank to assist the tax authorities in the collection of the taxes is imposed, but the tax
itself remains a charge against the stock of the shareholder. Western Investment Banking Co. v. Murray, 6 Ariz. 215, 56 P. 728; Ward County v. Baird, 55 N.D. 670, 215 N.W. 163; Andrew, Superintendent of Banks, v. Munn, 205 Iowa 723, 218 N.W. 526; Hewitt v. Traders' Bank, 18 [42 Ariz. 48] Wash. 326, 51 P. 468; Walcott v. McCarroll, 88 Okl. 279, 213 P. 296. These cases were decided upon statutes providing for the taxation of banks similar to our statutes, and they all hold that the tax is upon the shares of stock of the shareholders and not upon the capital stock of the bank.
The law requires that all property be assessed at its full cash value. Section 3068, Rev. Code. In ascertaining this value when the taxpayer is a bank, the assessing authority may take into consideration the bank's surplus, reserve fund, undivided profits, par and market value of the shares of stock, together with any other trustworthy information. This method of ascertaining the value of a bank's property is unobjectionable when it is a going concern. The aggregate value of the shareholders' stock represents the value of the bank's capital or assets. However, this method cannot possibly be used when the bank becomes insolvent, for the shareholders' interest in its assets is the last to be considered. The assets are taken from the bank and given over to the receiver to be applied upon the bank's obligations to its creditors and depositors, and if anything is left it goes to the shareholders. The value of their stock is at best only nominal and in no way represents the full cash value of the insolvent's assets. These may be, and generally are, of considerable value and can be ascertained only by the rules applicable to property in general.
When a bank is closed because of its inability to meet its obligations, when it has not assets sufficient to take care of its creditors and depositors and for that reason is taken over by the superintendent of banks for liquidation, it may nominally remain a bank but it is not "engaged in the business of using money wherewith to make money for the owners of its shares" (section 3069, supra), and therefore is no [42 Ariz. 49] longer taxable as a bank. While a bank is a going concern, it is the owner of all its property, of whatever nature or kind. When it becomes insolvent and is taken over by the superintendent of banks, its property and business immediately vest exclusively and unconditionally in the superintendent of banks and his successors in office, subject to any liens theretofore attaching. Section 246, Rev. Code. In other words, the legal title to the property of the bank is cast upon the superintendent of banks and any transmission of title must pass through him; subject, of course, to the orders and directions of the court.
Section 3075, Revised Code, provides that every person owning or having charge of or under his control property in this state subject to taxation shall make out and deliver to the assessor, between the first Monday in January and the twentieth day of May in each year, a correct list of said property. And section 3074 provides that the property "of a person whose assets are in the hands of receiver" shall be listed "by such receiver" for taxation. Subdivision 3, section 3040, provides that "the word 'person' includes a corporation, company, partnership or association, or society as well as a natural person."
Here is a clear and distinct mandate to the receiver to list the property of an insolvent, and this mandate applies to receivers of banking corporations or associations as well as to all ...