Posadas v. National City Bank

497 489

Syllabus.

under a so-called health-insurance policy. Cravens v.

Robbins, 8 Tenn. App. 435, 437.

Affirmed.

No. 114. Argued December 11, 12, 1936.-Decided January 6, 1936.

1. Capital and deposit taxes levied by the Philippine Government,

in addition to the taxes permitted by R. S., § 5219, upon branches of a national bank lawfully established in the Philippine Islands under § 25 of the Federal Reserve Act, as amended, are invalid.

2. The Philippine Islands are a "dependency of the United States,"

within the meaning of § 25 of the Federal Reserve Act, originally and as amended by the Act of September 7, 1916. Pp. 500, 502.

3. Section 26 of the Organic Act of August 29, 1916, which provides:

"That the laws now in force in the Philippines shall continue in force and effect, except as altered, amended, or -modified herein, until altered, amended, or repealed by the legislative authority herein provided or by Act of Congress of the United States," is to be taken distributively, i. e., as conferring power on the local legis- lature to deal only with local laws, and not to alter, amend, or repeal any Act of Congress. P. 501.

4. The declaration of §§ 6 and 31 of the Philippine Organic Act of

August 29, 1916, continuing in force laws applicable to the Philip- pines which were not amended or repealed by that Act or in conflict with any of its provisions, applies to § 25 of the Federal Reserve Act of 1916. P. 501.

5. The Act of September 7, 1916, which amended § 25 of the Federal

Reserve Act "to read as follows," repeating the words of the original section and adding a provision authorizing national banks to invest in the stock of certain other banks, did not repeal and immediately reenact the old provisions but left them continuously in force and speaking from the time of their first enactment. P. 502.

6. Section 5 of the Philippine Organic Act of August 29, 1916, which

declares that the statutory laws of the United States "hereafter 33682 -36-

32 

Opinion of the Court.

enacted" shall not apply to the Islands except when they specifically so provide or it is so provided in that Act, does not apply to those provisions of § 25 of the Federal Reserve Act of 1913 which were into and retained by the Act of September 7, 1916. copied Pp. 501, 505.

7. Where there are two Acts on the same subject, effect should be

given to both, if possible. P. 503.

8. Repeals by implication are not favored and will not be adjudged

unless the legislative intention to repeal is clear. P. 503.

9. The mere fact that a later statute covers the whole subject of

an earlier one and embraces new provisions does not demonstrate the old. A an intention completely to substitute the new for repeal will be implied only so far as the later enactment is in conflict with the earlier, or so far as it is plainly intended as a substitute for the earlier. United States v. Tynen, 11 Wall. 88.

Affirmed.

CERTIORARI * to review a judgment ordering the Col- lector to refund to the Bank a sum of money which the Bank had paid to him, under protest, as taxes, and had sued to recover. The judgment of the Court of First Instance, directing recovery of only a part of the taxes, was reversed by the one here unaer review.

Mr. William Cattron Rigby for petitioner.

Mr. Carl A. Mead, with whom Mr. Harry TV. Forbes was on the brief, for respondent.

MR. JUSTICE SUTHERLAND delivered the opinion of the Court.

The National City Bank of New York is organized un- der the National-Banking Act, as amended from time to time since its enactment. In 1930 the bank, after comply- ing with the requirements of § 25 of the Federal Reserve Act of December 23, 1913, c. 6, 38 Stat. 251, 273, as amended September 7, 1916, c. 461, 39 Stat. 752, 755,

See Table of Cases Reported in this volume.

POSADAS v. NATIONAL CITY BANK. 499 497

Opinion of the Court.

infra, established branches at Manila and Cebu in the Philippine Islands. A tax was levied by and paid to the Philippine Government on the net income of these branches for the first six months of the year 1931 (R. S. § 5219),' about which there is no controversy. The Phil- ippine Government, however, in addition, levied capital and deposit taxes not permitted by § 5219, and, these hav- ing been paid by the bank under protest, this action was brought in the Court of First Instance of Manila to re- cover the amount. That court gave judgment in favor of the bank for only a part of the additional taxes; but the Philippine Supreme Court, upon appeal, reversed the judgment in so far as it was against the bank, and ordered a refund of the entire amount.

Section 25 of the Federal Reserve Act of 1913, supra, reproduced in the margin so far as it is pertinent here,'

'See. 5219, Revised Statutes (12 U. S. C. [1934 ed.] § 548), pro- "SEc.

vides that the legislature of each state may "(1) tax said shares, or (2) include dividends derived therefrom in the taxable income of an owner or holder thereof, or (3) tax such associations on their net income, or (4) according to or measured by their net in- come, . . ." provided certain specified conditions are complied with.

and surplus of $1,000,000 or more may file application with the Federal Reserve Board, upon such conditions and under such regu- lations as may be prescribed by the said board, for the purpose of securing authority to establish branches in foreign countries or de- pendencies of the United States for the furtherance of the foreign commerce of the United States, and to act, if required to do so, as fiscal ageits of the United States. Such application shall specify, in addition to the name and capital of the banking association filing it, the place or places where the banking operations proposed are to be carried on, and the amount of capital set aside for the conduct of its foreign business. The Federal Reserve Board shall have power to approve or to reject such application its judgment, the amount of capital proposed to be set aside for the conduct of foreign business is inadequate, or if for other reasons the granting of such application is deemed inexpedient."

if, in

Opinion of the Court.

to later legislation,

authorizes the establishment of branches of national- banking associations "in foreign countries or dependencies of the United States." It cannot be doubted that, viewing the this section without regard branches here in question were lawfully established; for, as will appear at a later point in this opinion, the Philip- pine Islands are included by the words "dependencies of In that view of the matter, the addi- the United States." tional taxes imposed by the Philippine Government are invalid under Domenech v. National City Bank, 294 U. S.

199, 204; Talbott v. Silver Bow County, 139 U. S. 438; and, were it not for the asserted effect of legislation sub- sequent to the passage of the Federal Reserve Act in 1913, which we shall examine in a moment, this case would be disposed of, without further detail, upon the authority of those cases.

In the Domenech case we held that the national-banking laws extended to Puerto Rico; that a tax on a branch of a national bank is a tax on the bank; and that Puerto Rico, being a dependency of the United States, could not, except as permitted by R. S. § 5219, tax a national bank, since it is an agency of the United States. The Talbott case involved the power of a terri- tory to impose a tax upon a national bank. This court held, in the first place, that the same power of taxation in respect of national banks exists in the territories as in the states; and, in the second place, that this:power of taxa- tion in the territories was limited by the provisions of § 5219 although in terms that section refers only to the states. 294 U. S. 204. We find nothing in the original Organic Act or in any of the early statutes relating to the Philippines referred to by petitioner which takes those islands out of the controlling rule of the Domenech case that "a dependency may not tax its sovereign "; and we come to the only remaining point which we deem it neces- sary to discuss.

POSADAS v. NATIONAL CITY BANK. 501 497

Opinion of the Court.

Petitioner contends that subsequent legislation has the effect of repealing and abrogating § 25 of the 1913 act, permitting the establishment of national bank branches, in so far as the Philippine Islands are concerned. This later legislation consists of certain provisions in the Or- ganic Act for the Philippine Islands of August 29, 1916,

c. 416, 39 Stat. 545, and the act of September 7, 1916,

supra, amending designated sections of the original Fed- eral Reserve Act.

We examine these statutory provisions in their 'hrono- logical order. By § 25 of the 1913 act, as we have seen, national banks were authorized to establish branches in the Philippine Islands. The Organic Act of 1916 pro-

"'Sec. 5. That the statutory laws of the United States hereafter enacted shall not apply to the Philippine Islands, except when they specifically so provide, or it is so provided in this Act.

"Sec. 6. That the laws now in force in the Philippines shall continue in force and effect, except as altered, amended, or modified herein, until altered, amended, or repealed by the legislative authority herein provided or by Act of Congress of the United States."

(Section 6 obviously is to be taken distributively-that is to say., as conferring power on the local legislature to deal only witb local laws.

It, of course, confers no power on the local legislature to alter, amend or repeal an act of Congress.)

"See. 31. That all laws or parts of laws applicable to the Philippines not in conflict with any of the provisions of this Act are hereby continued in force and effect."

By §§ 6 and 31 it is clear that § 25 of the' Federal Re- serve Act of 1913, not being in conflict with any provi- sion of the Organic Act of 1916, was continued in full force and effect.

Opinion of the Court.

September 7, 1916, nine days after the passage of the new Organic Act, the act to amend the Federal Reserve Act, supra, was passed.

It, first, is to be observed in re- spect of this amending act that it does not purport to enact a substitute for the Federal Reserve Act, or to re- peal and re-enact any portion, but only to amend certain specified sections thereof. The old act contains thirty sec- tions. The act of September 7, 1916, amends §§ 11, 13, subsection (e) of § 14, the second paragraph of § 16, §§ 24 and 25, and § 5202 of the Revised Statutes. The intro- ductory words as to § 25 are-" That section twenty-five be, and is hereby, amended to read as follows." The original section is then copied, the only change or addi- tion, so far as the question here is concerned, being the insertion of the words "or insular possessions" after the word "dependencies." No reason appears from anything called to our attention, and we are not ourselves aware of any reason, for the addition of these words, since the com- prehensive term "dependencies" would seem to include all insular possessions which we then had. But in any event, the Philippine Islands constituted a dependency, for they were not possessions merely, but possessions held by right of cession from Spain and over which the United States undoubtedly had supreme power of legislation and gov- ernment. See United States v. The Nancy, 3 Wash. C. C.

281, 286 et seq. Compare 34 Op. Atty. Gen. 287, 291.

The only substantial change made in the old § 25 is the addition of a provision authorizing a national-banking as- sociation to invest in the stock of other banks and corpo- rations chartered or incorporated under the laws of the United States or of any state engaged in international or foreign banking, or banking in dependencies or insular pos- sessions of the United States; and it is fairly plain that this addition constituted the sole reason for amending the section.

POSADAS v. NATIONAL CITY BANK. 503 497

Opinion of the Court.

The amending act just described contains no words of -repeal; and if it effected a repeal of § 25 of the 1913 act, it did so by implication only. The cardinal rule is that repeals by implication are not favored. Where there are two acts upon the same subject, effect should be given to both if possible. There are two well-settled categories of repeals by implication-(l) where provisions in the two acts are in irreconcilable conflict, the later act to the extent of the conflict constitutes an implied repeal of the earlier one; and (2) if the later act covers the whole sub- ject of the earlier one and is clearly intended as a substi- tute, it will operate similarly as a repeal of the earlier act.

But, in either case, the intention of the legislature to repeal must be clear and manifest; otherwise, at least 'as a general thing, the later act is to be construed as a con- tinuation of, and not a substitute for, the first act and will continue to speak, so far as the two acts are the same, from the time of the first enactment.

The law on the subject as we have just stated it finds abundant support in the decisions of this court, as well as in those of lower federal and state courts.

It will be enough to direct attention to a few of these decisions out of a very large number.

In United States v. Tynen, 11 Wall. 88, 92, Mr. Justice Field, speaking for the court, after stating the general rule, said that if two acts "are repugnant in any of their provisions, the latter act, with- out any repealing clause, operates to the extent of the repugnancy as a repeal of the first; and even where two acts are not in express terms repugnant, yet if the latter act covers the whole subject of the first, and embraces new provisons, plainly showing that it was intended as a sub- stitute for the first act, it will operate as a repeal of that act."

It was not meant by this statement to say, as a casual reading of it might suggest, that the mere fact that the latter act covers the whole subject and embraces new

Opinion of the Court.

provisions demonstrates an intention completely to sub- stitute the latter act for the first. This is made apparent by the decision in Henderson's Tobacco, at the same term, 11 Wall. 652, 657, where, in an opinion delivered by Mr.

Justice Strong, it is said, "But it must be observed that the doctrine [of the Tynen case] asserts no more than that the former statute is impliedly repealed, so far as the provisions of the subsequent statute are repugnant to it, or so far as the latter statute, making new provisions, is plainly intended as a substitute for it. Where the powers or directions under several acts are such as may well sub- sist together, an implication of repeal cannot be allowed."

(Italics are in the original.) These two cases, with others, are briefly reviewed by this Court in Red Rock v. Henry, 106 U. S. 596, 601, by Mr. Justice Woods, and the court's

"The result of the authorities cited is that when an affirmative statute contains no expression of a purpose to repeal a prior law, it does not repeal it unless the two acts are in irreconcilable conflict, or unless the later stat- ute covers the whole ground occupied by the earlier and is clearly intended as a substitute for it, and the intention of the legislature to repeal must be clear and manifest."

The implication of which the cases speak must be a nec- essary implication. Wood v. United States, 16 Pet. 342, It is not sufficient, as was said by Mr. Justice 362-363.

Story in that case, "to establish that subsequent laws cover some or even all of the cases provided for by [the prior act]; for they may be merely affirmative, or cumu- lative, or auxiliary." The question whether a statute is repealed by a later one containing no repealing clause, on the ground of repugnancy or substitution, is a question of legislative intent to be ascertained by the application of the accepted rules for ascertaining that intention.

United States v. Claflin, 97 U. S. 546, 551; Eastern Ex- tension Tel. Co. v. United States, 231 U. S. 326, 332.

POSADAS v. NATIONAL CITY BANK. 505 497

Opinion of the Court.

And, even in the face of a repealing clause, circumstances may justify the conclusion that a later act repeating pro- visions of an earlier one is a continuation, rather than an abrogation and reenactment, of the earlier act. Bear Lake Irrigation Co. v. Garland, 164 U. S. 1, 11-13.

Petitioner relies on Murdock v. Memphis, 20 Wall. 590, 617; but it is sufficient to say that the rule which we have quoted from Red Rock v. Henry, supra, was formu- lated with that case in mind, since it is specifically men- tioned.

In some of the states, the principle has been embodied in statutes to the general effect that provisions of a prior statute, so far as they are reproduced in a later one, are to be construed as a continuation of such provisions and not ds a new enactment. See Barrows v. People's Gas- light & Coke Co., 75 Fed. 794, 795. But such statutes are only declaratory of the rule of the common law. Dallmann

v. Dallmann, 159 Wis. 480, 485-486; 149 N. W. 137; Julien

v. Model B., L. & I. Assn., 116 Wis. 79, 89-90; 92 N. W.

561. See, also, Ely and others v. Holton, 15 N. Y. 595,

598, 599; Moore v. Mausert, 49 N. Y. 332, 335; Longlois

v. Longlois, 48 Ind. 60, 63-64; People v. N. Y., C. & St.

Applying the rule established by the foregoing and other authorities, we see nothing in the terms of the Fed- eral Reserve amending act, in the provisions of the new Organic Act, or in the history of Philippine legislation, which justifies the conclusion that by the amendment of 1916 Congress intended to repeal the old § 25 of the Fed- eral Reserve Act. The amendment is made in a well- approved form-a form which, indeed, many of the states compel by constitutional provision-namely, by repeat- ing the language of the original section with the addi- tions to which we have heretofore called attention. Un- less the contrary plainly appear, the employment of such form of amendment is simply to serve the causes of con-

Syllabus. "

venience and certainty. That is to say, by carrying the full text forward, the task of searching out and bringing together the various fragments which go to make up the * completed whole, after specific eliminations or additions is rendered unnecessary; and possible by amendment, doubt as to the precise terms of the law as amended is avoided. Or, as Chief Judge Denio said in Ely and others

v. Holton, supra-

"In short, we attribute no effect to the plan of dove- tailing the amendment into the original section, except the one above suggested, of preserving a harmonious text, so that when future editions shall be published the scat- tered members shall easily adjust themselves to each other."

It follows that such parts of the original § 25 as were copied into the amended section were not thereby re- pealed and immediately reiinacted, but continued, unin- terruptedly, to be the law after the amendment precisely as they were before. Section 5 of the Organic Act of 1916, supra, which in terms relates only to laws thereafter en- acted, must be put aside as not applicable.

Judgment affirmed.

No. 115. Argued December 12, 13, 1935.-Decided January 6, 1936.

1. By grant of the Executive Council of Puerto Rico a limited part-

nership was entitled (among other privileges) to dam the outlet of a lake and use the impounded water in the irrigation of its own land, subject to the condition, imposed to protect private lands, public roads and the public health from the injurious effects of overflows, that the lake should not be raised above a level prescribed. Held a grant of quasi-public nature, within the mean-