State Board of Assessors v. Comptoir National D'Escompte

Background

A foreign banking firm (the Comptoir) did business in New Orleans through a local agent. Louisiana’s 1898 constitution and statutes defined property to include credits, obligations, and money, and required assessors to place taxable property on the tax rolls. The Comptoir advanced money to customers secured by collateral and took the customers’ checks as evidence of the debt instead of ordinary non-negotiable notes. A lower federal court had barred the state from assessing those particular credits by issuing an injunction.

Reasoning

The key question was whether those checks, held as evidence of loans and secured by collateral, were local credits taxable under Louisiana law. The Court relied on Louisiana decisions and earlier U.S. cases that allow a State to tax intangible credits when an agent holds them for collection, renewal, or reinvestment. The Court rejected the idea that a traditional rule tying personal property to the owner’s residence automatically prevented local taxation. Because the agent controlled the indebtedness and could use or reinvest the funds in New Orleans, the checks were treated as local, interest-bearing credits subject to state assessment. The Court reversed the lower court’s injunction.

Real world impact

The ruling means state assessors can put such agent-held loan credits on local tax rolls. Foreign banks doing business through local agents cannot avoid Louisiana taxation simply by taking customer checks instead of notes. The Court reversed the injunction and ordered the earlier suit dismissed, allowing tax assessments to proceed.