NATIONAL BANK OF BALTDIORE V. MAYOR, ETC., OF BALTIMORE. 239

will be presumed to be the owner, notwithstanding the circumstance thatthe court has judicial notice that he is not the owner, but that the govern-ment is. This rule has been maintained from motives of public poliey, andto secure the quiet enjoyment of possessions which are intrusions upon theUnited States alone. But it would be carrying a presumption against thefact to an absurdity to say that one in possession, who has not acquired thefee from the government,-the true owner,-is entitled to a decree, the prac-tical effect of which is to prohibit a third person from obtaining title by pur-chase, or by appropriate proceedings under statutes of the United States.The respective claims of conflicting claimants may be asserted in the appro-priate tribunals established by the government for that purpose. A decreehere in favor of plaintiff would have no effect by way of inducement to theofficers of the land department of the United States to issue the patent toplaintiff; and, if we had the power, it would be an illy-advised employmentof equity jurisdiction to prevent the defendant from proceeding with his ap-plication, 01', worse still, to decide in advance that he had no right on whichto base his application." Brandt v. Wheaton, 52 Cal. 433.

In the case at bar the real controversy between the parties mani-festly concerns possessory rights, and therefore complainants' reme-dy, whatever it may be, must rest upon the theory that defendantsare wrongfully in possession, and on this theory complainants' remedyis an action at law, not a bill in equity. In addition to the cases al-ready cited, see Lacassagne v. Chapuis, 144 U. S. 119, 12 Sup. Ct. 659.For the reasons and upon the authorities above indicated and

cited, I am of opinion that the bill now before me does not state aease for equitable relief.Numerous other questions have been discussed by the parties in

their respective briefs, but the conelusion just announced makes itunnecessary for me to pass upon any of them now. Injunction re-fused, and restraining order vacated.

(February 14, 1899.)

Since the filing of my opinion herein, February 6, 1899, anothercase-the one cited below-has been brought to my attention, whichis directly in point, and supports the conelusions readled by me insaid opinion. The decision was rendered by Judge McKenna, thenon the circuit bench, now justice of the supreme court, and holds, quot-ing from the syllabus, as follows:"In federal courts sitting in states where the local statutes have dispensed

with possession by complainant as a prerequisite to maintaining the suit, abill in equity to quiet title to land is demurrable which fails to allege af-firmatively either that plaintiff is in possession, 01' that both complainant anddefendant are out of possession." Railroad Co. v. Goodrieh, 57 Fed. 879.

NATIONAL BAXI{ OF BALTIMORE v. ),1AYOR, ETC., OF BALTUWREet al.

(CirCUit Court, D. Maryland. )'1arch 10, 1899.)

NATIONAL BANKS-TAXATION-·DJSCRJMINATION.The fact that evidences of debt and shares of stock in foreign corpora-

tions, owned bJ' residents of Maryland, cannot be taxed for county andcity purposes at a greater rate than 30 cents per $100 of actual marketvalue, as provided by Act Md. 189ti, c. 143, § 201, does not constitute an

240 92 FEDERAL REPORTER•

. illegal discrimination against national banks. the shares of which mightbe taxed at a higher rate" within Rev. St,§ 5219, prohibiting the taxationof national banks at a greater rate than is assessed on other moneyedcapital in the hands of individual citizens of a state, in the absence ofproof that the securities taxed at a less rate belong'ed to a class of in-vestments which directly compete with the business of national banks.

Bernard Carter, Willis & Homer, and George R. Gaither, for com-plainant.John V. L. Findlay and Leon E. Greenbaum, for defendants.

MOHRIS, District Judge. This is a bill in equity praying an in-junction to restrain the tax collector of the city of Baltimore fromcollecting from the complainant, the National Bank of Baltimore, asthe city tax on the shares of its stock owned by residents of Baltimore,any sum in excess of 30 cents on the $100 of the market value, asascertained by the state tax commissioner, which amount the com-plainant offers to pay. The tax demanded by the city collector is forthe year 1897, and is at the rate fixed by the mayor and city councilof Baltimore as the rate required for its general municipal purposes,viz. at the rate of $2 in every $100 of the assessed value of the sharesbelonging to residents of the city. This tax is assessed and demand-ed, in respect of shares of complainant's stock, by virtue of a portionof section 2 of chapter 120 of the Laws of Maryland of 1896, by whichit is enacted:"That all shares or interest In any joint stock company and all shares ot

stock in any bank incorporated under the laws of Maryland, and all sharesof stock in any national bank located in Maryland, and all shares of anycorporation incorporated under the laws of Maryland are to be valued andassessed for the purpose of state, county and municipal taxation to the ownerthereof in the county or city in this state in which said owners may re-spectively reside and the taxable value of such shares is to be ascertainedand determined and taxes thereon levied and collected as is now or may behereafter provided by law."

It is not complained that there is any discrimination either in thevaluation or taxation' of the shares of the complainant, or of any ofthe national banks located in Maryland, as compared with state banks,or as compared with other corporations of any kind incorporatedunder the laws of Maryland; but the complainant's contention is thatthere is a discrimination between the rate of tax imposed upon na-tional bank shares, as compared with the rate of tax 0]1 bonds, certif-icates of indebtedness, and evidences of debt, in whatsoever form,and upon all shares of stock in foreign companies owned by residentsof Maryland, as to which class of property section 201 of chapter 143of the act of 1896 provides that they shall be assessed and valued tothe owners thereof at their actual market value, and that upon thatvaluation there shall be paid the regular rate of taxation for statepurposes, but for county or city taxation there shall 1;>e paid only atthe rate of 30 cents on each $100, and no more. The contention atthe complainant is that the bonds, certificates of indebtedness, andevidences of debt which are thus taxed at 30 cents on the $100 arethe securities in which it deals, and in which it invests its capital, andthat there are private bankers and other citizens of Maryland who

NATIONAL BANK OF BALTIMORE V. MAYOR, ETC., OF BALTIMORE. 241

have moneyed capital which they employ in the same general businessas national banks, and who are taxed only on the securities in whichtheir capital is invested; and that so far as their capital is investedin. evidences of debt, which, under section 201, are taxed only at 30cents on the $100, there results a discrimination, because the sharesof the capital stock of the national banks are taxed for the year 1897,in the city of Baltimore, at the rate of $2 on each $100 of their marketvalue.The act of congress which allows taxation of national bank shares

is section 5219 of the Revised Statutes:"Sec. 5219. Nothing hereIn shall prevent all the shares in any association

from being included in the valuation of the personal property of the owneror holder of such shares, in assessing taxes imposed by authority of the statewithin which the association is located; but the legislature of each statemay determine and direct the manner and place of taxing all the shares ofnational banking associations located within the state, subject only to tworestrictions, that the taxation shall not be at a greater rate than is assessedupon other moneyed capital in the hands of individual citizens of such state,and that the sllares of any national banking association owned by non-resi-dents of any state shall be taxed In the city or town wllere the bank islocated, and not elsewhere. Nothing herein shall be construed to exemptthe real property of associatlons from either state, county, or municipal taxes,to the same extent, according to its value, as other real property is taxed."

There is no contention that the Maryland act of 1896 contains anyintentional discrimination against national banks, or was enacted inany spirit of hostility towards them; but it is contended that theworking of the law is such that, as evidences of debt are taxed at aless rate than the shares of national bank stock, persons who are notincorporated, and therefore have no fixed and declared capital, aretaxed only on the evidences of debt which they own at the time ofassessment, and therefore escape at a less rate than the capital ofnational banks. It is not denied by the complainant that the greatcompetitors of the banks in loaning money and dealing in evidencesof debt are the trust companies, and similar corporations, which, ifincorporated in Maryland, all pay the full rate on the value of theirshares; but it is alleged that the capital of private and unincorporatecbankers is moneyed capital sufficient in amount, in the city of Balti·more, to result in a material discrimination. The burden of support-ing this contention is upon the complainant, and requires it to show,not only that the moneyed capital so competing with the capital rep-resented by the shares of the national banks is a sum sufficient to con·stitute a discrimination material in its amonnt, but also that it isa discrimination which it is reasonably certain could be avoided by adifferent tax law. If the clause of section 2 of chapter 120 of theMaryland act of 1896 imposing the full rate of tax on the shares ofall corporations had contained the words, "and all moneyed capital ofunincorporated citizens of Maryland used by them in the same generalbusiness as that carried on by national banks in Maryland," and thetax collectors made a bona fide effort to enforce that clause of thelaw, there could be no ground for this bilI of complaint. If a bankerwith $200 of his capital buys $10,000 worth of bonds, and carries themwith the aid of loans from banks or trust companies. it is the ot

.

242 92 FEDERAL REPORTER.

moneyed capital that comes into competition with the moneyed capi-tal represented by the shares of a national bank, and not the $10,000,of bonds; or if a banker buys commercial paper, and with his indorse-ment rediscounts with a bank, it is not his moneyed capital, but thebank's capital, or its deposits, which he is using. So it may be truethat the private bankers of a city are doing a large volume of business,:and at the same time it may be true that the moneyed capital of theirown which they are using is insignificant. There is in the testimonyno evidence of the amount of capital employed by these private bank-ers of Maryland in their business. A witness for the complainant.states that, in his judgment, it would, in the aggregate, exceed$10,000,000; but this is confessedly only a guess, based largely uponthe rating given to the banking firms of Baltimore city by the reportsof the mercantile agencies. These reports, as is well known, arebased upon approximations of the whole wealth of all the partners ofthe firm, as in law all their property is at the risk of their business.'The bankers themselves who were examined by the complainant werenot interrogated as to the capital invested in the banking businesscarried on by them. One testified that his firm returned to the taxassessors the capital used in their business, and paid the full tax rateupon it; and the tax collector testified that other banking firms didthe same. One of the bankers examined by the complainant statedthat his firm returned to the assessor the stocks and bonds in whichtheir money was invested at the date of the return; that much of itwas the stock of domestic corporations, on which the corporation hadpaid the full tax, so that it was not subject to ta..'{ in their hands, and,as to the bonds, they paid the 30-cent rate; that the stocks and bondsoften amounted to many times their capital, because, as they did hard-ly any discount business, they invested their deposits in stocks andbonds; that the only way in which they competed with banks was byoffering interest to depositors, so as to attract deposits, which theythen invested in stocks and bonds; that, if the securities in which theyinvested their deposits were taxed at the $2 rate, there would be noth-ing left for them, but that at the 30-cent rate bankers who held secnri-ties did return them to the assessor. It is to be remembered thatbanks do not return their depoeits at all, which aggregate often twotmd three times the amount of the capital; so that as to deposits, so far:a8 they are represented by 30-cent securities, on which the tax is paidby private bankers, the banks have the advantage. The proof fails toilhow to my mind that the capital used by private bankers is of suchamount that, if returned for taxation, it would relieve the banks fromtlny material disadvantage, or that under any law any considerableamount would ever be placed upon the tax lists. The tax collectortestified that after examining several bankers, and taking their affi-.(]avits,he was satisfied that they were paying on their capital at theregular city rate, and ceased further investigation, because he was·satisfied that their assessments were correct.There are two ways in which the banks can be injured by dis-

crimination in taxation: One is that, if otber moneyed capital es-capes taxation, the rate imposed upon all the assessed capital isgreater; and the other is that if other moneyed capital used in busi-

NATIONAL BANK OF BALTIMORE V. MAYOR, ETC., OF BALTIMORE. 243

nes!!!, which competes with theirs, escapes taxation, it can make aprofit, even if loaned out at a less rate than the banks can afford toloan. As to the first ground, the proof shows that when bonds, evi-dences of debt, and stocks in foreign corporations, under the law asit stood prior to 1896, were taxed at the full rate, there was only, inthe city of Baltimore, a little over $6,000,000 of such property on thetax lists for taxation, while under the present law, under the 30-centrate, there was assessed for taxation nearly $5U,000,000. The collec-tion of revenue by taxation is a practieal problem, and it would bevery unwise for courts to ignore praetical results in the search for atheoretital uniformity. It was beeause of the persistent eomplaint,prior to 1896, that there must be a large amount of securities whiehrhe assessors had failed to get upon the tax lists, and the patent faet-,:hat, if the tax on a 4 per eent. bond amounted to more than half theinterest, the capital it represented must, if ever actually taxed at thefull rate, be driven from the city, to some place where the law wasless exacting, that tIle legislature was led to the enactment of section201 of chapter 143 of the Laws of 18%. rphis law was the result ofyears of discussion, and of most serious poWical struggles, and of thefinal acceptance by the legislatme of the wise suggestions of men ofthe largest experience in business affairs and finance. It cannot hesaid, in the light of the experienee of prior years, that if the full taxwas imposed upon all bonds, certificates of indebtedness, or evidencesof debt, the basis of assessment would be nearly as great as it is now,or that the rate of taxation would be less. Moreover. the discrimina-tion forbidden by section 5219, as construed by the supreme court,does not have referenee to the rate of taxation upon the holders ofevidences of loans and securities, if these securities belong to a dassof investments which does not compete \vith the business of nationalbanks. First Nat. Bank of Aberdeen v. Chehalis Co., 166 U. S. 440-461, 17 Sup. Ct. 629. The bonds, eertificates of indebtedness, and evi-dences of debt, which, under section 201 of chapter 143 of the Laws of1896, are taxed at the 3D-cent rate, if issued by corporations ofland, represent the debts of corporations the owners of whose sharesare taxed the full rate upon the value of their shares, and so thefull rate is paid upon all the property of the corporation, and, if issuedby individuals, residents in Maryland, they represent the debts of per-sons who are taxable upon the full value of their real and personalproperty, without deduetion for their debts; and presumably the sameis true of corporations and individuals foreign to Maryland. So thatall that class of property consisting of evidences of debt might be ex-empt from taxation upon the ground of double taxation, and uponother grounds upon which it has been held that mere evidences of debtmay fairly be exempt. It is only moneyed capital, employed, by thepersons to whom it belongs, in the business of discounting commercialpaper, making loans on collateral security, buying and selling bills ofexchange, negotiating loans, and dealing in Eeeurities, and the likeoperations of the business of banking, which comes in competitionwith the moneyed capital invested in national banks. As was saidby Mr. Justice 1fatthews:"Corporations and Individuals carrying on these operations do come Into

competition with the national banks, and capita} in the hands of individuals

244 ' 92 FEDERAL REPORTER.

thus employed Is what 'Is Intended to be described by the act ofMercantile Bank v. City of New York, 121 U. S. 13S-15G, 7 Sup. Ct. 820.

The capital so employed is shown by the defendant to have been,with respect to some of the bankers in Baltimore city, assessed andtaxed at the full rate. That it is not so with all is not through adefect in the law, or intentional discrimination of the assessors orcollectors, but from the inherent difficulties of ascertaining it. Thefinal clause of section 2 of chapter 120 of the Laws of 1896, taxing "allother property of every kind, nature and description within thisstate," is held by the taxing officers to include the banking capitalof private bankers.In the very instructive arguments of the able counsel many points

on both sides of this controversy were elaborately and learnedly pre-sented, which it does not seem necessary should be now reviewed inthis opinion. The contention that the shares of foreign state banksand other foreign wrporations held by eitizens of Maryland is mon-eyed capital, which eomes in competition with national banks inMaryland, eannot be maintained, and it would be no illegal discl-imina-tion if the publie policy of the state was to levy no tax at all uponthem. Without attempting to extend this opinion to embrace allthe points raised in argument or by the pleadings, I hold that thedefendants' demurrer to the seventeenth paragraph of the bill mustbe sustained, and that the eomplainant is not entitled to the reliefasked by its bill.

UNITED STATES v. BEEBE et aI.(Circuit Court of Appeals, I,'ifth Circuit. February 21, 1800.)

No. (;39.JUDGMENTs-GnouNDs FOR SETTING ASIDE IN EQICITY-FnAtTD.

A court of equity will not set aside a judgment rendered by a court ofcompetent jurisdiction, on the ground of fraud, beeause of false state-ments made by the defendants to the court as to their financial condition.by whieh the eourt was induced to render, and the plaintiff to aecept.a judgment for less than the amount sued for or than was actually due.

Appeal from the Circuit Court of the United States for the MiddleDistrict of Alabama.This is an appeal from a decision of the cireuit court of the United Fltates

for the Middle district of Alabama, a demurrer to the bill of com-plainant. The bill was filed by the United States of America, by its attorneygeneral, against E]ugene Beebe and others, alleging that the said EugeneBeebe and Ferris Henshaw were sureties on the official bond of one FrancisWidmer, collector of internal revenue of the Second district of Alabama, inthe sum of $50,000, conditioned that said 'Vidmer should faithfully performthe duties of said office; that said Widmer did not faithfully perform saidduties,but failed to pay over to the United States the sum of $28,158.56,and that said sum is still due, with interest from January 6, 1874; that onthe 3dday of June, 1880, separate suits at law were commenced in the circuitcourt of the United States for the Middle distriet of Alabama against saidEugene Beebe and against 'Villiam T. Hatchett, administrator of the estateof said ]1'e1'1'is Henshaw, for the recovery of the sums for which said Widmer,as collector, was in default; that said suits were continued until February6, 1885, when judgments were severally entered against said defendants for$100 each and costs, and said Beebe, on the'lst day of July, 1886, paid intothe treasury of the United States the sum of $109.85, the amount of the judg-

UNITED STATES V. BEEBE. 245

nwnt and eost8, lJut that the judgment against said Hatchett, as administra-tor, is due and unpaid. The lJill then proceeds as follows: "That said judg-llLPnts were entered under the following circumstanees: That said defend-ants eame into court, and stated and represented in open court, and theycaused to be stated and represented for them, that said Beebe and said Fer-ris Henshaw were poor men, and that 'said Beebe and the estate of said}1'erris Henshaw were without property out of which the said judgments couldbe paid and collected. 'That no part of said judgments could be collectedby due process of law. That nothing could be made out of them, or either ofthem, or their estates, by execution, but that, if the court would allow a juryand verdict to be entered against them for one hundred dollars, they, andeach of them, would pay said judgments and costs. That no evidence or proofwas or had been introduced in said causes, or either of them, and indebted-ness of said Beebe and Henshaw to the United States then being twenty-eightthousand one hundred and tifty-€ight dollars and fifty-six cents ($28,158.56),and interest, or other large sum, and the statements and representationsaforesaid only were before the said circuit court at the time of the entry ofsaid judgments, and no hearing or upon the law 01' the factsim-olved in said cases was ever had in said court; whereupon the court re-marked that, unless the district attorney of the United States objected, thecauses might be disposed of as suggested aforesaid. Said district attorneydid not object, and said judgments for one hundred dollars and costs wereentered in each of said causes. That said statements and representations,made all aforesaid, by and on behalf of. and for, said Beebe and said FerrisHenshaw, and the estate of said Ferris Henshlnv, were wholly untrue, andwere made to deeeive said court and rnited States attorney, and for the pur-pose, and with the intent, to defraud the United States. That said courtand United States attorney had no authority in law to accept said statementsand representations, which were not made under oath, nor in the course ofany judicial proceeding, and were not, and were not supported nor verified by,evidence or proofs;' and that said aets of said eourt and United States attor-ney amounted, in law and in fact, to, and was, ami was intended to be, a

naked eompromise of the e1aim and demand of the United Statesagainst said Eugene Beebe and FerTis Henshaw, ami the estate of said FerrislIcnshaw, which said court and United States attomey had no authority, butwere inhibited by law. to make, entertain, and eonsummate. That said eourtwas without juris<liction and power to determine said causes in the manneraforesaid; and that said alleged judgments for one hundred dollars and costsare null and void ab initio. and of no effect, and be vacated and heldfor naught in this court of equity."

'V. S. Reese, Jr., for the 'Gnited States."V. A. Gunter, for appellees Henshaw Heirs:.H. C. Tompkins, for appellees Montgomery Light Co., l\fontgomery

I,and & Improvement Co., Southern Cotton Oil Co., Abbie F. Rice,and W. R. "ValleI'.Before McCORMICK, Circuit Judge, and SWAYKE and P.AR

L.AXGE, District Judges.

AYNE, District Judge (after stating the facts as above). It ise\'ident that this is a suit to vacate, annul, and set aside the judg-ment of a court, regularly entered, in a matter of which it had juris-diction, with all the parties before it, on the ground that the said de-fendants Beebe and Henshaw stated to the court that "they werepoor men, and were without property; that nothing could be madeout of them by execution; and that these statements were whollyuntrue, and were made to deceive the court and United States at-torney, and with the intent to defraud the United States." In U. S. v.Throckmorton, 98 U. S. 61, }Ir. Justice Miller announced the estab-

246 92 FEDERAL REPORTER.

lished doctrine on this sUbject to be "that the acts for which a comtof equity will, on account of fraud, 'set aside or annul a judgment or'decree between the same parties, rendered by a court of competentjurisdiction, have relation to frauds extrinsic or collateral to thematter tried by the first court, and not to a fraud in the matter onwhich the decree was rendered." It is difficult to see upon whattheory the judgment in this case can be set aside. The alleged false'statements in the suits brought by the United States on the bond inquestion were not such as to deceive a person of ordinary care. Theycould not have deceived the district attorney, who represented thegovernment, either as to the amount due on the bond or as to theproperty owned by the defendants. They did not in any way preventthe government from showing its cause of action, and taking judg-ment for the full amount due, if it saw fit to do so. Then, in about 15,months after the entry of said judgment, the governnwdsatisfaction of the same by the officers of the treasury department,accepting the $100, with interest, from Beebe. We think the factsof this case bring it under the well-known rule announced in U. S. v.,Throckmorton, supra, and the cases following it, and that the judg-ment below should be affirmed. .

FARMERS' LOAN & TRUST CO. v. STUTTGART & A. R. R. CO.(BARSTOW'S EX'RS, Interveners).

(Circuit Court, E. D. Arkansas, W. D. February 21, 1899.)

1. RAILROADS-IKSOLVENCY AND RIWEIVERSHIP-PHEFERRED LIENS FOIt MATE-IUALS.A guarantor of a debt contracted by a railroad company for rails,

who pays the debt, has no greater claim in equity to a lien on the roadsuperior to a prior mortgage than the seller of the rails would have if'unpaid.

2. SAME-MATEUIALS USED IN CONSTRUCTION OF ROAD.There is no principle of equity recognized and applied in the foreclosure

of railroad mortgages which entitles a debt contracted for materials usedin the original construction of a railroad, which has been preViouslymortgaged, to preference over the mortgage as a lien on the road.

8. SAME.A purchaser of notes executed by one railroad company cannot estab-

lish a lien therefor on the property of another, superior to that of a prior'mortgage, merely because the maker used the proceeds in the con-struction of the second road.

4. SAME-TAXES ADVANCED BY AGENT.One who, at the request of a railroad company, as its agent, pays

taxes due on its property, is entitled to a lien thereon for the amountadvanced superior to that of a mortgage. ,

This is a hearing on interventions by the executors of Amos C.Barstow, deceased, in a foreclosure suit against the Stuttgart &AI'kansas River Railroad Company, claiming preferential liens on the"property of the defendant, or the proceeds of its sale.J. l\f. & J. G. Taylor, for complainant and interveners.P. O. Dooley, for defendant.John McClure, for receiver.