Opinion
Hirsch & Smith, A. S. Clay, D. F. McClatchey, Edgar B. Dunlap, William C. Fitts, and Claud E. Hamilton, Jr., all of Atlanta, Ga., for plaintiffs.
J. C. Savage, C. S. Winn, Bond Almand, and J. C. Murphy, all of Atlanta, Ga., for defendants.
UNDERWOOD, District Judge.
The above case came on for hearing upon motion to dismiss and was heard both orally and on briefs.
This is a suit in equity to enjoin the collection of taxes, assessed by the City of Atlanta, from the Fulton National Bank, as Agent for the Reconstruction Finance Corporation, upon shares standing in the name of the Reconstruction Finance Corporation but in reality owned by the United States of America.
The taxes in question were assessed for the year 1936 and at a time when, under the authority of Baltimore National Bank v. State Tax Commission of Maryland, 297 U.S. 209, 58 S.Ct. 417, 80 L.Ed. 586, such taxes were valid.
However, after said assessment was made and executions issued thereon, but before payment, Congress amended the previous law permitting the taxation of such shares by the Act of March 20, 1936, 12 U.S.C.A. § 51d, which withdrew such privilege to tax. The Amending Act provided that: 'Notwithstanding any other provision of law or any privilege or consent to tax expressly or impliedly granted thereby, the shares of preferred stock of national banking associations, and the shares of preferred stock, capital notes, and debentures of State banks and trust companies, acquired before or after March 20, 1936 by Reconstruction Finance Corporation, and the dividends or interest derived therefrom by the Reconstruction Finance Corporation, shall not, so long as Reconstruction Finance Corporation shall continue to own the same, be subject to any taxation by the United States, by any Territory, dependency, or possession thereof, or the District of Columbia, or by any State, county, municipality, or local taxing authority, whether imposed, levied, or assessed on, before or after March 20, 1936, and whether for a past, present, or future taxing period.'
From the foregoing statement of facts, the question is seen to be whether or not Congress had the constitutional right to withdraw the privilege which the City of Atlanta previously had of taxing the stocks in question, after the amount of taxes assessed thereon had become, under the State Law, a lien upon the shares of stock.
In my opinion, it is clear that the privilege to tax such stock standing in the name of Reconstruction Finance Corporation, a purely governmental agency, resulted from mere oversight on the part of Congress and that it was never the intention of Congress to permit the taxation of such shares when so owned; that this oversight was corrected as soon as possible after the Supreme Court decision, supra, by the passage of the Act of March 20, 1936, which expressly, and without ambiguity, undertakes to annul such privilege with respect to present, future and past assessments.
The privilege permitted by the law before amendment was a pure gratuity. The municipality gave nothing and the United States received nothing in exchange for such privilege. There was no consideration moving from one to the other. Such exemption was a mere bounty, valuable as long as the United States chose to concede it, but subject to be withdrawn at any time the Government saw fit.
No vested right resulted from the fact that, under the State Law, the tax lien may have attached prior to the Act amending the law.
For these reasons, I think the petition sets out a good cause of action and that the motion to dismiss is not good and the same is hereby overruled.