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necessary to transcribe at length, directs that no assessment shall be made of the capital of a national or other bank, whose capital is represented by shares; but that the shares shall be assessed to the stockholders, and that "all property owned by the bank, * * which is taxable under section 1 of this act, shall be assessed directly to the bank, * ** * and the pro rata of such direct property taxes and of all exempt property proportioned to each share of capital stock shall be deducted from the amount of taxes assessed to that share under this section." The contention is that, under the terms of this law, all the exempt property of the bank should be deducted from the evolution of the shares, and that if this be done, as the United States and state bonds are exempt property they should be counted out, and the shares assessed at the difference only. The question hence arises, what is the meaning of of the words, "all exempt property," found in the statute? Two things are quite clear: (1) That the power of the state to tax the shares, though the capital be invested in United States bonds, is formally recognized by federal jurisprudence; and (2) that the legislative intent was to tax such shares, though the capital was thus invested. It cannot be that the language used means all property exempt by federal and state provision, for the plain reason that, if it thus meant, the whole capital of the bank could be invested in such exempt property, and the consequence would be that the bank would have no cash on hand where with to transact its hourly financial operations, and that the shares, which the federal law and jurisprudence allow to be taxed and which the state intended to tax, would escape all taxation whatever, however much their value might exceed that of the capital invested. This would be wiping out the statute entirely. The conclusion is therefore unavoidable that the words mean all exempt property which do not form part of the capital of a bank represented by shares, and that it is a matter of no significance whether the capital was or not invested, or how it was invested, as the assessment complained of is neither of the bonds nor of the capital, but simply of the shares by which that capital is represented.

It is nevertheless insisted that the state bonds in which part of the capital has been invested are exempt from taxation by state authority, and that the amount invested in them should be deducted from the assessment of the shares, which was of 50 per cent. of their admitted market value, say $100,000. Granting that state bonds are as much exempt as United States bonds, when not constituting in whole or in part the capital of a banking institution represented by shares, it is evident that when they constitute to any extent such capital, the shares which represent the capital may be assessed at their market value without any deduction from the assessment of the value of such bonds. Hence it follows that neither the United States bonds nor the state bonds, in which the capital of the bank was invested, had to be deducted from the assessment put upon the shares. For these reasons and those assigned by Mr. Justice POCHE it is ordered that the judgment appealed from be affirmed, with costs.

FENNER, J., absent during the argument at Shreveport, takes no part.

POCHE, J., (concurring.) The bank and the intervening shareholders seek to reduce the assessment of the 2,000 shares of paid-up stock from $100,000 to $25,768.75. The par value of each share is $100, and the rate of assessment was 50 per cent. of such face value. The complaint is that the taxable value of the shares should have been determined by deducting from the aggregate par value of the 2,000 shares the amount shown to have been invested by the bank at the date of listing, in securities exempt from taxation according to existing laws, and consisting of United States bonds amounting to $146,593.75, and of Louisiana state bonds, amounting to $27,637.50, footing up together $174,231.25, alleged to be exempt from taxation, and as such to be

deducted from $200,000,-thus leaving as the taxable value of the shares the sum of $25,768.75. They are appellants from a judgment which maintained the assessment at $100,000. The prominent fact in the case, and which must be borne in mind throughout the whole discussion, is that there is no question of assessing the capital stock or any other property of the bank as a corporation, (which owns no taxable property whatever,) but the purpose of the assessing authorities is merely to reach the taxable property of the individual shareholders, as represented by investments in shares of stock of the bank. For the purposes of this case, it is immaterial to consider in what kind of securities the capital stock of the bank is invested, even though it be shown that it is actually invested in United States bonds, instead of being represented by mortgage notes, call loans, or other values usually characterizing banking operations. Practically this proposition is not contested by plaintiff's counsel, who say in their brief: "It is conceded that shares in banks, whether state or national, are liable to taxation by the state, although the capital of the bank may be entirely invested in United States bonds." The doctrine is too well settled by the jurisprudence of the country to be questioned at this day. Van Allen v. Assessors, 3 Wall. 573; People v. Commissioners, 4 Wall. 244; Bank v. Com., 9 Wall. 353; Rev. St. U. S. § 5219. It is therefore conceded as the law that the value of the shares in this bank is liable to taxation by the state, and the only issue in the case is as to the mode of ascertaining their taxable value.

The contention, therefore, hinges upon the proper construction of section 28 of act 98 of 1886, which is the law directing the manner of assessing shares in banks. The statute first provides that no assessment shall be made of the capital stock of any bank, when the same is represented by shares, but that the actual shares shall be assessed to the shareholders, imposing the duty on the bank to pay the taxes thus assessed, with the right of collecting the same from the shareholders. It then contains the following direction: "All property owned by the bank, company, firm, association, or corporation, which is taxable under section 1 of this act, shall be assessed directly to the bank, company, firm, association, or corporation, and the pro rata of such direct property taxes, and of all exempt property, proportionate to each share of capital stock, shall be deducted from the amount of taxes assessed to that share under this section." The crucial point in the case is to ascertain the precise meaning of the language which requires the deduction of all exempt property. Plaintiff's contention is that the legislature intended to include therein bonds of the United States and of this state. This is the error which has given rise to the whole controversy. It must be noted that nothing in that section or in the entire act indicates the slightest intention to subject either of those securities to taxation, or even to provide for their exemption. The law-maker knew full well that both subjects were beyond his reach. He knew that, under the paramount law of the bank, United States bonds were not taxable, and that under the decision of this court in State v. Board, 35 La. Ann. 651, state bonds were entitled to the same immunity. What, then, did he mean to refer to? The question is answered by the first section of the act, which levies a tax on "the assessed valuation of all property situated within the state of Louisiana, except such as is expressly exempted from taxation by the constitution. Turning to article 207 of the constitution, which is the law of exemptions, it appears that these securities are not therein enumerated, hence it follows that they are not in terms or expressly exempted from taxation by the constitution. It is therefore clear that they were not within the contemplation of the law-giver in the section under discussion as an element of deduction from the par value of shares in banks. To allow the deduction directed in the section was a pure gratuity on the part of the state. The legis lature had the undoubted power to simply assess the shares in banks without reference to the property which might be owned by the banks, and which was

actually assessed in their names, or which might be assessed under the constitution. The deduction ordered in the section was an act of fairness, intended to lighten the burden of the shareholders. It cannot be strained beyond the limits traced by the law itself.

Nothing in the law, as thus construed, can be tortured into an implied intention or indirect mode on the part of the legislature to tax the bonds in which the capital stock of the bank may be invested. By the very terms of the statute the capital itself is not taxed, hence the securities which may represent it in the vault of the bank are not taxed either. It is in proof that the bank itself is not assessed for any property whatever. The true meaning of the statute, as applied to this case, is to determine the taxable value of the shares, by deducting such parts of the capital stock of the bank as may be invested in property which is exempt from taxation by the state constitution. The record shows that the bank owns no such property, hence no deduction was due or could be claimed. Therefore the valuation of said shares at 50 per cent. of their face value was not in contravention of law. I therefore concur in the decree.

BERMUDEZ, C. J., and WATKINS and MCENERY, JJ., concur in this opin

ion.

ON APPLICATION FOR REHEARING.

FENNER, J. The question involved in this case is so narrow that the various briefs, filed by able counsel of different banking institutions interested in the result, have accomplished nothing but the presentation of the same views in different form and order. Recognizing the magnitude of the interests involved, we have given the whole subject an attentive consideration. We do not see how we would reach a different conclusion from that announced in our original opinion without attributing to the legislature an intention to do that which, under the constitution, it has no power to do. Reduced to its last analysis, the contention is that a large part of the value of the shares of stock belonging to the individual shareholders of the bank is exempt from taxation; for, though the question assumes the form of a question of assessment, it would be a self-evident quibble to say that there can be any difference between an exemption from assessment and an exemption from taxation. We read in the constitution the unequivocal mandates: (1) That "all property shall be taxed in proportion to its value, to be ascertained as directed by law;" (2) that "the following property shall be exempt, and no other."

Bank shares are property. They are subject to taxation, and, in this statute, the legislature has affirmatively exercised the power of taxing them. It is not disputed that the value of these shares, as ascertained by the law, exceeds the value at which they have been assessed. It is simply claimed that a portion of this value is exempted from assessment, and consequently from taxation. The claim is that, after ascertaining the value of the shares, the value of the United States and state bonds held by the bank is to be deducted from that valuation, and that the shares are to be taxed, not according to their value, but according to a fraction of their value as thus reduced.

The question naturally arises, whence would the legislature derive the power thus to disobey the constitutional mandate that "property shall be taxed according to its value," and to exempt this large part of the "ascertained value" of these shares from taxation? If anything can be settled by juris-prudence, it is settled in this state that the legislature is absolutely stripped of power to exempt any property or value from taxation, and that when such exemption is claimed it can be supported only by some provision found in the paramount law. State v. Board, 35 La. Ann. 654; Manufacturing Co. v. New Orleans, 31 La. Ann. 443; City v. Insurance Co., 28 La. Ann. 756; City v. Association, Id. 512; City v. Railroad Co., Id. 498; Moore v. Beel

man, 27 La. Ann. 276; City of New Orleans v. Bank, Id. 646; City of New Orleans v. Bank, Id. 648. The dilemma is perfect. Either the exemption claimed is made by the paramount law, or the legislature has no power to make it.

We are thus brought to the necessary inquiry whether those provisions of the laws of the United States or of the constitution of the state, which exempt bonds of the United States and of the state from taxation, require or authorize the exemption of any part of the value of shares of stock in banks holding such securities. So far as the laws of the United States are concerned the supreme court of the United States has distinctly and repeatedly answered the foregoing inquiry in the negative, and has held that shares in banks, whether state or national, are liable to taxation by the state at their value, without regard to the fact that the capital of such bank is invested in bonds of the United States. Van Allen v. Assessors, 3 Wall. 573; People v. Commissioners, 4 Wall. 244; and several other cases, which are cited and reviewed in Bank v. New York, 121 U. S. 145, 7 Sup. Ct. Rep. 826. These decisions are based upon the legal distinctions which exist between shares of stock in a bank and the capital of the bank, both in their respective characters as property, and also in their ownership. The court said: "The tax on the shares is not a tax on the capital of the bank. The corporation is the legal owner of all the property of the bank, real and personal. *The interest of the shareholder is a distinct, independent interest or property held by the shareholder like any other property that may belong to him, and of course is subject to like taxation. " State bonds fall under the control of the same principles. It would be impossible to formulate any theory under which an exemption would attach to the shares because the capital of the bank was invested in state bonds, which would not apply in case the investment was in United States bonds. It therefore clearly appears that the value of the shares now in controversy, which the plaintiff claims the legislature has exempted from assessment and taxation, is not exempted under the paramount law of either the state or the United States. If any additional reason were required to support those lucidly expressed in the original opinions, this would alone be sufficient.

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The principles applying to the exercise of the power of taxation over the capital, the capital stock, and the shares of corporations, are among the most intricate in that branch of jurisprudence. Authorities differ as to whether the whole capital and the shares can both be taxed. It is generally agreed that the taxing power may be exercised over either without touching the other, and that where a part of the property of the bank has been actually taxed in the hands of the bank, it may be deducted from the valuation of the shares when they are also taxed, on the principle of avoiding indirect duplicate taxation. But the right to avoid duplicate taxation by no means includes the right to grant duplicate exemptions. Exemptions are strictly construed, and are in this state the creatures of paramount law alone. When the legislature deals with an object of taxation, it can exempt no part of its ascertained value not exempted by paramount law, though it may abstain from taxing a value which it considers to have been already taxed in a different form.

The consideration that this will prevent banks from investing their capital in such public securities is surely one with which this court cannot deal; nor can we consider another suggestion, that those banks which have so invested their capital, under the belief based on the previous practice of taxing officers that such value would be safe from taxation levied even on the shares of stockholders, will suffer loss. The question presented to us for determination is whether the paramount law authorizes the exemption claimed. To determine what is the paramount law, and to construe and apply it, is the highest function assigned to this court. If we suffer ourselves to be controlled in such determination by the errors and mistakes of others, it would be a virtual abdication of this function. There can be no question that the tax from which

exemption is claimed is not a tax on the capital of the bank, but is a tax on the shares; because the statute expressly declares "that no assessment shall hereafter be made under that name as the capital stock of * * * any corporation, etc., whose capital stock is represented by shares, but the actual shares shall be assessed to the shareholders," etc. This is the assessment from which it is claimed that the exemption should be granted; and, finding that the paramount law does not require or authorize such exemption, we are bound to hold that the legislature had no power to make it. No stronger reason could exist for adhering to our former interpretation of the statute, that the legislature did not intend such exemption. Rehearing refused.

SMITH 0. ATLAS CORDAGE Co.

(Supreme Court of Louisiana. December 3, 1888.)

1. PARTIES-REAL PARTY IN INTEREST.

A suit brought by one in his individual name, but in reality for the benefit of non-residents, as owners of the claim sued on, must be viewed as instituted by the constituents themselves, who must be considered as the real plaintiffs in court. 2. SAME-AUTHORITY TO BRING SUIT.

The authority of the constituents to bring the suit implies the power to stand in judgment to resist any defense or claim which the defendant may set up, either against the original demand, or on any other ground, however disconnected from the principal demand.

3. SET-OFF AND COUNTER-CLAIM-RIGHT TO RECONVENE-CITATION.

In such a case, the defendant has a right to reconvene, and his demand must be noticed by the original plaintiffs without the necessity of a citation to them.

4. SAME JURISDICTION of Court.

The court before which the action was instituted had jurisdiction over the reconventional demand, the more so when it has been put at issue by the defendants therein by plea and proof.

5. PAYMENT TO AGENT-RELEASE OF CLAIM.

Payment of a debt to the authorized agent of the representative of a creditor company extinguishes the claim, and discharges the debtor.

(Syllabus by the Court.)

Appeal from civil district court, parish of Orleans.

H. C. Miller and T. J. Semmes, for appellant. James McConnell and A. & J. Villeré, for appellee.

BERMUDEZ, C. J. This suit is brought to recover the amount of overdue coupons of bonds issued by the defendant company for $1,350, with a prayer for the recognition of the mortgage consented to secure their payment. Defendant objected that the coupons were not the property of the ostensible plaintiff, but belonged to the firm of L. Waterbury & Co., of New York, against which it had a valid claim, largely in excess of the amount sued for, which they are seeking to avoid. In answer to interrogatories propounded to him, the apparent plaintiff admitted that he had no interest in the coupons which were the property of Waterbury & Co. After filing exceptions, which were never passed upon, and were considered as abandoned, the defendant company, relying on the answers to the interrogatories, and treating Waterbury & Co. as the real plaintiff in court, reconvened against them, claiming from them $24,408.80 as the rent of certain property, under a renewed lease, and insurance premiums thereon, the former for $22,500, the latter for $1,908.80, for a period extending from January 1, 1884, to July 1, 1885. A plea of payment was then filed to this demand. There was judgment for the nominal plaintiff, as agent of Waterbury & Co., for $1,350, with interest, and on the reconventional demand for $24,408.80, with interest, against Waterbury & Co., the costs being apportioned. Waterbury & Co. appeal.