U.S. Supreme Court Mitchell v. Board of Commissioners of Leavenworth County, 91 U.S. 206 (1875)
Mitchell v. Board of Commissioners of Leavenworth County, Kansas
91 U.S. 206
ERROR TO THE SUPREME COURT OF KANSAS
Where, for the purpose of evading the payment of a tax on his money on deposit, which the law of a state required to be listed for taxation March 1 in each year, a party withdrew it Feb. 28 from a bank where it was subject to his check, converted it into notes of the United States, and deposited them to his general credit March 3, and the state court passed a decree dismissing the bill in equity by him filed to restrain the collection of the tax thereon, held that the decree was correct, and that, although such notes were exempt from taxation by or under state or municipal authority, a court of equity would not use its extraordinary powers to promote such a scheme devised for the purpose of enabling a party to escape his proportionate share of the burdens of taxation.
This case presents the following facts:
Mitchell, the plaintiff, kept his account with a banking firm in Leavenworth. On the 28th February, 1870, he had a balance to his credit of $19,350 in current funds, for which he that day gave his check, payable to himself in United States notes. They were paid to him. He immediately enclosed them in a sealed package, and placed them for safe keeping in the vault of the bank. On the 3d March he withdrew his package, and deposited the notes to his credit. This was done for the sole purpose of escaping taxation upon his money on deposit.
Personal property in Kansas, which includes money on deposit, is listed for taxation as of March 1 in each year. Mitchell did not list any money on deposit. The taxing officers, in due time, on discovery of the facts, added $9,000 to his assessment on account of his money in bank. He asked the
proper authorities to strike off this added assessment. This was refused. A tax was thereupon in due form levied, and its collection threatened.
He then filed his bill in equity against the defendants, who are the proper authorities, to restrain the collection of this tax, alleging for cause, in substance, that as his bank balance had been converted into United States notes, and was held in that form on the day his property was to be listed, he could not be taxed on that account. The Supreme Court of Kansas, on appeal, dismissed the bill for the reason, as appears by the opinion -- which in this case is sent here as part of the record -- that "a court of justice, sitting as a court of equity, will not lend its aid for the accomplishment of any such purpose." Mitchell sued out a writ of error.
MR. CHIEF JUSTICE WAITE delivered the opinion of the Court.
We think the decision in this case was correct. United States notes are exempt from taxation by or under state or municipal authority, but a court of equity will not knowingly use its extraordinary powers to promote any such scheme as this plaintiff devised to escape his proportionate share of the burdens of taxation. His remedy, if he has any, is in a court of law.
The decree is affirmed.