728 HARVARD LAW REVIEW state within which the association is located." Plaintiff, a national bank, held stock in another national bank and was taxed as owner thereof. Taxes were also assessed against the shareholders of the plaintiff based on a valuation which included the stock ownership as an asset of the association. Plaintiff, on behalf of its shareholders, seeks to recover from the state a part of the taxes so levied upon them corresponding to assets of the value of this stock. Held, that such sum be refunded. Pitney, Brandeis, and Clarke, JJ., dissenting. Bank of California, National Association v. Richardson, U. S. Sup. Ct. Off., October Term, 1918, No. 262, As instrumentalities of the federal government, national banks are exempt from state taxation, except as permitted by Congress. M'Culloch v. Maryland, 4 Wheat. (U. S.) 316; City of Pittsburg v. First National Bank, 55 Pa. St. 45. And section 5219 does not permit a state to tax such a bank upon its capital or upon its property, but only upon the shares as personal property of the holder. Owensboro National Bank v. Owensboro, 173 U. S. 664, 19 Sup. Ct. Rep. 537. An exception in this section authorizes taxation of realty. Second National Bank V. Caldwell, 13 Fed. 429; see M'Culloch v. Maryland, supra, 436. Also it is settled that a bank may be taxed as owner of stock in another national bank. Bank of Redemption v. Boston, 125 U. S. 60. Now the principal case holds that when the association pays such a tax, a corresponding deduction must be made in assessing its shareholders. This result can be reached only on the ground that the statute treated the bank and the shareholders as one, for purposes of state taxation. The proposition is fundamental, however, that a corporation is an entity distinct from its members, for taxation as in other respects. See i Cooley, Taxation, 3 ed., 687. Accordingly the Supreme Court has repeatedly held that a tax on a corporation or its property is not the legal equivalent of a tax on the stockholders, but that the two are distinct and different subjects-matter of taxation. See Owensboro National Bank v. Owensboro, supra, 677-81; T. R. Powell, "Indirect Encroachment on Federal Authority by the Taxing Powers of the States," 31 Harv. L. Rev. 321, 339- 44. Thus stockholders of a state bank can be taxed without deduction ifor its ownership of tax-exempt United States securities. Cleveland Trust Co. v. Lander, 184 U. S. in, 22 Sup. Ct. Rep. 394. And under section 5219 stock- holders of a national bank can be taxed, although its capital was wholly in- vested in such securities. Van Allen v. The Assessors, 3 Wall. (U. S.) 573. Moreover, where the realty of a bank has been directly taxed, the state is not required to make deduction in assessing the stockholders. Commercial Bank v. Chambers, 182 U. S. 556, 21 Sup. Ct. Rep. 863; St. Louis National Bank v. Papin, 21 Fed. Cas. No. 12,239; People's National Bank v. Marye, 107 Fed. 570, 579- It is difficult to see why the same principle should not apply to assets in the form of stock in another national bank. . Bankruptcy — Preferences — Transfer Pursuant to Prior Agree- ment Liquidating the Damages. — The bankrupt had contracted to cut timber for a lumber company on the latter's lands, the funds by which the operations were to be carried on being furnished also by the lumber company. It was provided, in a clause which was construed to be an agreed ascertaiimient of damages, that in case of a default a nearby sawmill with its logging equip- ment belonging to the bankrupt should forthwith become the property of the lumber company. The agreement was entered into more than four months before bankruptcy proceedings were instituted, but the transfer of the property took place within the period. The trustee in bankruptcy sought to avoid as a preference the transfer of that part of the equipment which was composed of personalty. Held, that no preference was effected. Stennick v. Jones, 252 Fed. 345 (Circ. Ct. App.). The court asserted that the company had a right to act not as a general
