The Birmingham age-herald., 1910-02-22
Supreme Court Rev3r.es De- cisiOn of EIab. ma Court
OPINION BY JUSTICE DAY
Day Says that Foreign Corpora tions Should He Treated Like
 Domestic Corporations.
Fly wATTERsoN sTEALy.

Washington. February 2f.--(Special.) ) The United States supreme court to- day handed down decision reversing the supreme court of the state of Ala bama in the franchise tax cases The opinion is by divided count, six of the members voting to reverse the Ala bama court, while the chief justice. Justice McKenna and Justice Holmes dissented. These cases are three in number the Southern railway vs. S. E. Greene, probate judge of Jefferson county being the principal case, the other two being decided similarly.
 In brief. the United States supreme court holds that the franchise tax aimed at foreign corporations" is a denial of the equal protection of the laws and is therefore unconstitutional |.
 Under the act~of March ', 1907 the interstate railroads were ordered to pay an annual franchise tax to the amountfof $25 of the first s1Oo, 5 per cent Sfon the next $500 and one-tenth of ,fone per cent on all the remaining amount of capital employed.
 F In handing down the opinion of the court Justice Day said 1t seemed that the question to be decided is whether a. corporation is liable to new and ad- ditional franchise tax for the privilege of doing business within the state, which tax is not imposed upon do- nestle corporations doing business of the same character. That a corpora ton is a person within the meaning of the fourteenth amendment the court thinks no longer open to discussion.
 We have here," says Justice Day. "a foreign corporation within a state in compliance with the laws of the state which has lawfully acquired a large amount of permanent and valuabls 3 property herein and which is taxed by discriminating method not en- ployed as to domestic corporations of the same kind, carrying on precisely similar business.
 As we have alrsads 1s1ieated, the discussion of the question herein in- volved has largely been anticipated in the recent cases from Kansas, involv- ing the right to tax the Western Union Telegraph company and the Pullman company. Those cases are the latest declaration of this court upon the sub Ject, and in one aspect of them really involve the determination of the case at bar. In the Western Union Tele- graph case 1t was held that a state could not impose a tax upon an inter- state commerce corporation as a con dition of it's right to do domestic bus mess within the state, which tax in- cluded within it's scope the entire cap- ital of the corporation, without as well as within the borders of the state. The Kansas tax was sought to be sus- tained as legal exaction for the priv ilege of doing domestic business with : in the state. It was held invalid be- cause It violated a right secured by the constitution of the United States, giving to Congress the exclusive power to regulate Interstate commerce and be- cause 1t violated the due process clause of the federal constitution in under taking to make the payment of a tax upon property beyond the borders of the state condition of doing domestic business within the state. In that case the fourteenth amendment was direct ly applied in the due process fea- tul III tlllS case we nave an aDDll- cation of the same amendment, as- serting the equal protection of tn e laws.
 We. therefore, reach the conclusion that the corporation plaintiff under the conditions which we have detailed is within the meaning of the fourteenth amendment, person within the juris diction of the state of Alabama and entitled to be protected against any efnf fftf Nf A t,f4 .t.s- of the equal protection of the laws.
 Ut remains to consider the argument made on behalf of the state of Ala bama that the statute is Justified as an exercise of the rights of classifi- cation of the subject of taxation which has been held to be entirely consistent with equal protection of the laws guar anteed by the fourteenth amendment It is argued that the imposition of special taxes upon foreign corpora tions for the privilege of doing busi- ness within the state is sufficient to justify such different taxation, because the tax imposed is different, in that the one imposed on the domestic cor poration Is for the privilege of be- ing a corporation, whereas the one oil the foreign corporation is for the priv ilege of such corporation to do bus mess within the state. While reason-
 
 out doing violence to the equal protec- tions of the laws, such classification must be based upon some real and substan ntial distinction, bearing a req soma ble and Just relation to the things in respect to which such classificatior Is imposed; and classification cannot be arbitrarily made without any sub stantial basis Arbitrary selection, it has been said, cannot be justified by calling if cla Ss 6ca tion
 Ut is averred in the complaint, and must be taken as admitted, that therc are other corporations of a domestic character in Alabama carrying on tn e railroad business in precisely the same way as the plaintiff. It would be a fanciful distinction to say that there Is any real difference in the burden imposed because the one is taxed for the privilege of a foreign corporation to do business in the state and others for the right to be a corporation The fact Is that both corporations do the same business in character and kind, and under the statute in question a foreign corporal tion may be taxed many thousands of dollars for the privilege of doing, within the state exactly the same business as the domestic corpora ton Is permitted to do by a tax upon It's privilege. amounting to only few hundred dollars. We hcld therefore that to tax the. foreign corporation for carrying on business under the cir cumstances shown. by different and much more onerous rule than Is used Ill