375; so that the real question is simply what the statute means. The statute makes the carrier who permits 'any employé' to remain on duty in violation of its terms, liable to a penalty 'for each and every violation.' The implication of these words cannot be made much plainer by argument. But it may be observed as was said by the Government that as towards the public every overworked man presents a distinct danger, and as towards the employés each case of course is distinct. United States v. St. Louis Southwestern Ry. Co., 184 Fed. Rep. 28; People v. Spencer, 201 N. Y. 105, 111.

One of the delays was while the engine was sent off for water and repairs. In the meantime the men were waiting, doing nothing. It is argued that they were not on duty during this period and that if it be deducted, they were not kept more than sixteen hours. But they were under orders, liable to be called upon at any moment, and not at liberty to go away. They were none the less on duty when inactive. Their duty was to stand and wait. United States v. Chicago, M. & P. S. Ry. Co., 197 Fed. Rep. 624, 628; United States v. Denver & R. G. R. Co., 197 Fed. Rep. 629.

It is urged that in one case the delay was the result of a cause, a defective injector, that was not known to the carrier, and could not have been foreseen when the employés left a terminal, and that therefore by the proviso in §3 the act does not apply. But the question was raised only by a request to direct a verdict for the defendant and the trouble might have been found to be due to the scarcity and bad quality of the water, which was well known. See Gleeson v. Virginia Midland Ry. Co., 140 U. S. 435. The Majestic, 166 U. S. 375, 386.

The statute provides for a penalty not to exceed five hundred dollars. It is argued that the amount of the penalty was for the jury, the proceeding being a civil suit. But the penalty is a deterrent not compensation. The

amount is not measured by the harm to the employés but by the fault of the carrier, and being punitive, rightly was determined by the judge. United States v. Atlantic Coast Line R. Co., 173 Fed. Rep. 764, 771. Atchison, Topeka & Santa Fe Ry. Co. v. United States, 178 Fed. Rep. 12, 15. Judgment affirmed.

CLEMENT NATIONAL BANK, v. STATE OF

VERMONT.

ERROR TO THE SUPREME COURT OF THE STATE OF VERMONT.

No. 29. Argued April 28, 29, 1913.-Decided November 10, 1913.

A tax upon deposits in a national bank to be paid by the depositors held in this case not to be a tax upon the franchise of the bank. An interpretation by the state court of a state statute is controlling on this court; and this court determines whether the statute as so delimited conflicts with Federal law.

The National Bank Act does not withdraw credits of depositors in national banks from the taxing power of the State.

Under its broad powers of classification for taxation, a State may classify depositors in national banks so long as the tax is not essentially inimical to such banks in frustrating the purpose of the legislation or impairing their efficiency as Federal agencies.

The object of § 5219, Rev. Stat., is to prevent hostile discrimination against national banks; and a state tax to be in conflict therewith must constitute such a discrimination.

A provision in a statute permitting a bank to stipulate with the State to pay the taxes on deposits and thereby relieve its depositors from making returns does not place the bank under duress.

This court finds no basis for the charge of injurious discrimination against national banks in § 815 of Chapter 37 of the Public Statutes of Vermont.

While a national bank can only transact such business as the Federal statutes permit, it may, under its incidental powers, make reasonable business agreements in regard to its deposits including the payment

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Argument for Plaintiff in Error.

of state taxes thereon pursuant to the laws of the State in which it is located. Such an agreement is not ultra vires.

A State may provide for garnishment or trustee process to collect a valid tax and may constitute a bank its agent to collect the tax from its depositors.

A state tax on interest-bearing deposits in national banks does not deny equal protection of the law on account of exemptions which it is within the power of the State to allow or on account of the exemption of non-interest-bearing accounts. The classification is reasonable.

A state tax of a specified per cent. on deposits in national banks paid by the bank under agreement with the State pursuant to statute and which is otherwise valid, does not amount to denial of due process of law because the depositor had no notice in advance of the assessment, where, as in this case, the tax was recoverable by suit in which the depositor would have full opportunity to resist any illegal demand. A lawful state tax on deposits in bank is imposed in the exercise of a power subject to which deposits are made, and does not impair the contract obligation of the bank to the depositors by requiring the bank to act as agent in collecting it. North Missouri R. R. Co. v. Maguire, 20 Wall. 46.

84 Vermont, 167, affirmed.

THE facts, which involve the legality of a statute of Vermont imposing a tax on deposits in national banks, are stated in the opinion.

Mr. Marvelle C. Webber and Mr. Maxwell Evarts for plaintiff in error:

The Vermont statute constitutes an unlawful interference with national banks as Federal instrumentalities. The tax the bank is required to pay is in effect and reality and by design a tax upon its franchises as a national bank, being based upon the average of deposits of the class created.

The title of the statute, while not absolutely controlling, indicates the purpose to tax the bank. Gray on Taxing Power, p. 42, § 55, n. 49; Holy Trinity Church v. United States, 143 U. S. 457; United States v. Fisher, 2 Cr. 358,

Argument for Plaintiff in Error.

231 U.S.

386; United States v. Palmer, 3 Wheat. 610, 631; Machen, Federal Corp. Tax Law of 1909, p. 5 of introduction, n. 1.

The deposits become the property of the bank, not of the depositor, while the depositor becomes a creditor of the bank to the amount of the deposit. Bank v. Millard, 10 Wall. 152; Scammon v. Kimball, 92 U. S. 362, 369; 1 Morse on Banking, § 289; State v. Franklin Co. Sav. Bank, 74 Vermont, 246; Manhattan Co. v. Blake, 148 U. S. 412, 424.

They are assessable to the depositor only and as debts owing by the bank. People v. Nat'l Bank &c., 123 California, 53; County of Yuba v. Adams, 7 California, 35.

The phraseology of the statute discloses the real pur pose to tax the bank itself.

The stipulation and the return formulated by the state officials show that in actual operation of the statute it was construed as a tax on the bank itself.

The statute, being an attempt to tax national banks, is absolutely void. Davis v. Elmira Savings Bank, 161 U. S. 275, 283; Bank v. New York, 121 U. S. 138; Bank v. Dearing, 91 U. S. 29; McCullough v. Maryland, 4 Wheat. 316; Osborn v. Bank, 9 Wheat. 738; Howley v. Hurd, 72 Vermont, 122; Owensboro Bk. v. Owensboro, 173 U. S. 664.

The sum the bank is called upon to pay is based on the average of the deposits for the period. This measures the amount to be paid by the bank. Such taxes are privilege or franchise taxes on the privilege of doing business, Gray on Taxing Power, pp. 43-44, § 56; Socy. for Sav. v. Coite, 6 Wall. 594; Provid. Inst. v. Massachusetts, 6 Wall. 611; Commonwealth v. People's Bank, 5 Allen, 428; State v. Bradford Sav. Bank, 71 Vermont, 234, 238; Commonwealth v. Lancaster Sav. Bank, 123 Massachusetts, 493; Jones v. Winthrop Sav. Bank, 66 Maine, 242.

The Supreme Court of the State of Vermont has held

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Argument for Plaintiff in Error.

that a tax based upon the average amount of deposits in savings banks is a franchise tax. State v. Bradford Bank, 71 Vermont, 234; State v. Franklin Bank, 74 Vermont, 246. See also New Orleans v. Houston, 119 U. S. 265.

The facts show that the tax is on the business of the bank. It is also on the bank itself because it cannot recoup the amount paid from the depositor. Gray on Taxing Power, § 801a; Cooley on Taxation, 3d ed., vol. 1, p. 717, n. 1; Farmers Bank v. Hoffman, 93 Iowa, 119; New Orleans v. Houston, 119 U. S. 265; Boston v. Beal, 51 Fed. Rep. 306; Stapylton v. Thaggard, 91 Fed. Rep. 93; Aberdeen Bank v. Chehalis County, 166 U. S. 440.

The statute by design and in effect is a duress, as it compels the banks to execute the stipulation or to lose their depositors. 15 Cyc. 249. There is really no choice. Swift v. United States, 111 U. S. 22; Maxwell v. Griswold, 10 How. 241; Robertson v. Frank Brothers, 132 U. S. 17; Atchison, Topeka &c. Ry. Co. v. O'Connor, 223 U. S. 280; Gaar, Scott & Co. v. Shannon, 223 U. S. 468, 471.

The statute interferes with existing contracts between the bank and its depositors and impairs their obligation. The act of the bank is ultra vires and not enforceable. McCormick v. Bank, 165 U. S. 538, quoted in Bowen v. Needles National Bank, 94 Fed. Rep. 925, 930; Metropolitan Stock Exchange v. National Bank, 76 Vermont, 303; First National Bank v. National Exchange Bank, 92 U. S. 122; Concord First National Bank v. Hawkins, 174 U. S. 364; Central Transportation Co. v. Pullman Car Co., 139 U. S. 24; 6 Century Digest, col. 1655-1662; 21 Am. & Eng. Ency. (2d ed.) 376 (9) and cases cited; Commercial National Bank v. Pirie, 82 Fed. Rep. 799, 801802; Norton v. Bank, 61 N. H. 589.

As to the effect of stipulations somewhat analogous to the one in question, see Home Ins. Co. v. Morse, 20 Wall. 445; Baron v. Burnside, 121 U. S. 186.

To enforce a stipulation on the part of the defendant