New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1905-05-30
FRANCHISE TAX VALID.
CORPORATIONS MUST PAY.
United States Supreme Court
Upholds Nesc- York Lac.

washington, May 29.-The validity of the spe-
cial franchise tax law of 1899 of the State Of
>,eu-York under which the franchises of many
nublic utilities subjected to ad valorem
taxes. was sustained by the Supreme Court OF
che United States. Justice Brewer delivered the
nnnion to-day.
He said that the decision of the Court Of APP
meals settled that there was nothing in the law
~ proceedings in the case in conflict with the
rons1itution of New-York. He added that it
-ras not contended by the plaintiff in error that
there was any constitutional objection to the
,axatfon Of franchises The right to subject
them 10 a share in the burden OF supporting
che government is conceded he said.
Taking up the contentious in the case, he said
che main one was that this tax legislation i'm
paired the obligation Of contracts, and added:
Il must be borne in mind that presumptively
a. property within the territorial limits OF the
Stafe is subject TO its taxing power.
1t would not be dopbted that If a grant OF
specific. tangible property like a tract OF land
and the payment therefor was gross sum. no
3n1plcatiOn CT an exemption from taxation would
arise Whether the amount was large or small,
greater OF less, IL the payment was distinctly
The consideration Of the grant, that which was
granted would pass into the bulk OF haleilal
property. and. like all such property be sup1ect
10 taxation. Nor would this result be altered DY
the fact that the payment was TO he mace an
nuaIy instead OF by single sum IN gross. -
II was real estate il would be equivalent TO the
conveyance Of the tract subject TO ground rent
and the grantee taking the title WOulu hoid II
liable to taxation upon its value. If this be true
g. reference to grant Of tangible property II
IS equally true with respect to a grant Of fran
chise. for franchise. though intangible, is none
the less property, and Oftentimes property OF
great value. Indeed growing out OF the condl.
lions Of modern business; large proportlo I OF
available property is 10 be found in intangible
things like franchises.
Regarding the contention that when the pub
80 grants a privilege on condition Of the pay
rnent OF an annual sum, the contract implies
that the public shall exact no larger amount for
that privilege. and that TO impose tax is sim
plv increasing the price which the grantee is
called upon to pay for the privilege, Justice
Brewer said:
we are not disposed to undervalue the force
of these situations. but il would be giving them
undue significance to hold that they are potent
10 displace the power Of the state TO suDJect
20 the burdens Of taxation property within its
limits The word tax is not infrequently used
n general sense as denotng a burden or
charge and not in strict legal sense OF
-harge or burden imposed by the State for the
purpose Of revenue for its support
The language quoted from Section 46 indi-
cates the desire Of the legislature to deal equita
DIV with the corporations holding these fran
,hises. Surely the manifestation of this desire
"a be construed into reputation of power.
These charges are not called taxes but are
spoken Of i'm the nature Of taxes, and the
legislature recognizing the equitable force OF the
claim based thereon, provided that corporations
be given credit for sums thus payable. We are
d opinion that contract right of the reIator
was impaired by the legislation in question
The opinion overruIed the point that the tax
laW denies 70 the reiator the equal protection Of
the law and due process under the Fourteenth
Amendment 10 the Constitution of the United
States 1t closed with the statement:
The court finds no error in the decision of the
Supreme Court Of New-York and it is therefore
affirmed.