Opinion of the court.

and indorser in favor of any one who takes it in bad faith; that is, with knowledge that it has been filled up without authority or in fraud.*

It is highly probable that the court below intended that its instructions should be taken with this limitation; but it was too general in its terms, and was, we think, calculated to mislead the jury.

The seventh instruction directed the jury in substance to find for the plaintiff if satisfied that the bill was signed in blank and delivered to Kirby to be sent to McMahon. It asserted that McMahon had the right in the case supposed to fill up the bill with any amount due him and make the drawers and indorsers liable on the bill to himself.

It is doubtless true that, subject to the limitations just stated, the delivery of a signature in blank is in general an authority to the holder to fill it up as he thinks proper. This rule, in its application to negotiable instruments, was very clearly stated by Mr. Justice Clifford in The Bank of Pittsburgh v. Neal,† as follows: "Where a party to a negotiable instrument intrusts it to the custody of another, with blanks not filled up, whether it be for the purpose to accommodate the person to whom it was intrusted, or to be used for his own benefit, such negotiable instrument carries on its face an implied authority to fill up the blanks and perfect the instrument; and as between such party and innocent third parties the person to whom it was so intrusted must be deemed the agent of the party who committed such instrument to his custody—or in other words, it is the act of the principal, and he is bound by it."

But the instruction before us went much further. It asserted the right of a drawee to fill up a blank bill and hold the drawers and indorsers, and this without any other authority than such as is implied in the fact that the bill was sent to him by the last indorser with the consent of the other indorser and of the drawers.

* 3 Kent's Com. 119; 10 Smedes & Marshall, 590.

† 22 Howard, 107.

Opinion of the court.

Now it is quite clear that this fact implies no such authority. The only inference to be drawn from the circumstance that the bill was sent to McMahon in blank is that it was sent to him for acceptance. The structure of the paper excludes any other hypothesis. If, having received the bill in blank, he had accepted it and negotiated it to a third person, without notice of facts impeaching its validity between the antecedent parties, those parties would have been bound to the holder. But he, as drawee, could not transfer the bill to anybody without previous acceptance, and still less could he treat it as an obligation to himself.

We think there was error in these instructions as well as in the fifth.

The judgment of the District Court must, therefore, be reversed and the cause remanded for new trial in

CONFORMITY WITH THIS OPINION.

NOTE. Another case, No. 52 of the Term, between the same parties, and where the questions were the same, was disposed of in the same way.

The CHIEF JUSTICE delivered the opinion of the court. In this case, also, there is a motion to dismiss the writ of error; but, on looking into the record, we find that the writ was duly sued out and served, bond given, citation issued and served, and the record, with a copy of the citation and of the writ of error, brought up and filed in this court at the next term. There is no ground for the motion, and it is denied.

Upon the merits the case is the same with that just decided. The suit below was upon three bills of exchange, each for $1000; but otherwise blank as to signatures and indorsements, which were the same as upon the bill in the other case. The bills were sent by Kirby to McMahon, and were by him filled up in precisely the same manner as the other bill.

The charges of the court were substantially the same as in the other case, and the judgment is reversed for the same errors, and the cause

REMANDED FOR A NEW TRIAL.

Argument against the tax.

BRADLEY V. THE PEOPLE.

A tax on the capital of a bank is not the same thing as a tax upon the shares of which the capital is composed. And where a State imposes on the State banks a tax on their capital (the shares in the hands of the shareholders being exempt from tax), it cannot lay a tax on the shares of banks, organized under the act of June 3d, 1864, to provide a national currency. Van Allen v. The Assessors (3 Wallace, 573), affirmed.

Tuis was a writ of error to the Supreme Court of Illinois. The case came before that court on an appeal from a decision of the Board of Supervisors of the County of Peoria, by which they had refused to assess a state and county tax on the shares of Bradley and IIowell in the First and Second National Banks of Peoria. The appeal was taken by the auditor of public accounts, in behalf of the State.

The Supreme Court reversed this decision of the board, and held the shareholders liable to the tax. The ground of exemption relied on, both before the supervisors and the Supreme Court, was want of authority in the board, within the forty-first section of the National Bank Act of June, 1864, and particularly within the second proviso of that section, which declares that the tax imposed on the shares of any banking associations under that act "shall not exceed the rate imposed upon the shares in any of the banks organized under the authority of the States."

The act of the State, dated February 14th, 1857, and under which the tax was assessed, provides for taxing the capital stock of the banks, together with the surplus profits or reserved funds. No tax was imposed specifically on the shares held by the stockholder.

Messrs. Dexter and Walker, for the shareholders, plaintiffs in

error:

The State has adopted as its policy, in the case of its banks the policy of taxing the capital and property of the bank as an entirety to the corporation itself, and thereby of

Argument in favor of the tax.

relieving the shares in the hands of the holder. This may be not only the most simple, direct, and economical method, but also the more usual one of charging this kind of property with its proportionate burden for the support of the government.

But whether the better mode or not, it is the one and the only one prescribed or authorized by the legislature of the State, and if the property in question is to be taxed at all, it must be assessed to the corporation, as part of one entire and indivisible thing. The statute is, of course, in derogation. of the common law, and one by which the property of the citizen is taken and appropriated to the purpose of the gov ernment. The precise mode prescribed for the imposition of the tax must therefore be pursued.

The conclusion is then inevitable, that the shares of the capital stock of banks and banking associations in the State of Illinois, in the hands of the shareholder, are not subject to taxation, but are exempt therefrom.

Now Congress provides that on any tax imposed on shares of National banks in the hands of the helder, the rate of "such taxation shall not exceed the rate imposed upon the shares of any of the banks organized under the authority of the State where such association is located." And if on the shares of banks organized under the law of the State, there is no rate of taxation, it follows that no taxes whatever could be imposed on the shares in question.

Mr. Palmer, contra:

Neither the National government, the creator of the species of property now taxed, nor the shareholders can be interested in the methods which may be adopted by the State for the imposition of the tax.

The objects of the government and the rights of the shareholders are secure under any modes which only impose the same rate of taxation upon the shares in National banks, that is imposed upon the shares in any banks organized under the laws of the State.

The inquiry then is: Do the laws of Illinois impose or is

Reply against the tax.

it proposed under those laws to collect from the plaintiffs in error any greater rate of taxation than is imposed upon shareholders in State institutions?

It is said that this is a tax not upon shares, but upon capital. But what difference does it make whether the shares are taxed to the several shareholders or the capital stock, which is the aggregate of all the shares, taxed to the corporation? "The amount assessed by either mode is precisely the same. The shares represent the capital stock, and the capital stock represents the shares. If listed by the shareholder he would pay the tax directly, and if listed by the bank he would pay the same amount indirectly, as in that case the bank would apply, for that purpose, what would otherwise go to the shareholder as a portion of his dividend on his stock. It only accomplishes the same end in a different mode. It is, in this case, a tax on the shares of the capital stock and at the same rate."

The shares in the State banks are taxed, and at the same rate as the shares of the banks created by the National banking law; and in no event can the shares in the local banks be taxed at a different rate from the shares in the National banks under existing State legislation. Where all the shares in a National bank are taxed, it can only equal the value of its capital stock, and that is the measure of the amount required to be assessed on the stock of the State banks.

Reply: It is said that the entire capital, which includes all the shares, is taxed as a whole, and that this, so far as the rate is concerned, is equivalent to taxing the shares. But the answer to this is, that under well-known principles of law, the statute laying the tax is to be strictly construed. The mode of taxation designated must therefore be scrupulously adhered to, and for it there is and can be no substitute or equivalent.

Again, a tax levied upon the entire capital of a bank, which includes all the shares, is not the same thing or equivalent to a tax levied upon the shares in the hands of