Source: http://supreme.nolo.com/us/155/688/case.html
Timestamp: 2019-04-24 06:22:03+00:00

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While a state cannot exclude from its limits a corporation enraged in interstate or foreign commerce or a corporation in the employment of the general government by the imposition of unreasonable conditions, it may subject it to a property taxation incidentally affecting its occupation in the same way that business of individuals or other corporations is affected by common governmental burdens.
The tax imposed by the laws of Mississippi (Code of 1880, c.10, § 585; Sess.Laws 1888, c. 3), when enforced against a telegraph company organized under the laws of another state and engaged in interstate commerce in Mississippi, being graduated according to the amount and value of the company's property measured by miles, and being in lieu of taxes directly levied on the property, is a tax which it is within the power of the state to impose, and the exercise of that power, as expounded by the highest judicial tribunal of the state, does not amount to a regulation of interstate commerce, or put an unconstitutional restraint thereon.
the government of the United States between its various offices, not only from points within the State of Mississippi to points without the State of Mississippi, but also for such government officers from points wholly within the State of Mississippi to other points also wholly within the State of Mississippi, and that all of the roads upon which the lines of said company were constructed were post roads of the United States.
Plaintiff demurred to the special pleas. The case came on to be heard upon these demurrers, and the circuit court sustained defendant's demurrer to the second count, and plaintiff's demurrer to defendant's pleas to the first count, with leave to defendant to plead over. This defendant declined to do, and judgment was thereupon entered against the company for the amount of the so-called "privilege taxes" for the years 1890 and 1891, with interest and costs. From this judgment an appeal was taken to the Supreme Court of Mississippi, and the judgment affirmed. The opinion of that court will be found reported in advance of the official series in 14 S. 36. A writ of error was then allowed to this Court.
receipts derived therefrom, or on the occupation or business of carrying it on, a tax is levied by a state on interstate commerce, such taxation amounts to a regulation of such commerce, and cannot be sustained. But property in a state belonging to a corporation, whether foreign or domestic, engaged in foreign or interstate commerce, may be taxed, or a tax may be imposed on the corporation on account of its property within a state, and may take the form of a tax for the privilege of exercising its franchises within the state if the ascertainment of the amount is made dependent in fact on the value of its property situated within the state (the exaction therefore not being susceptible of exceeding the sum which might be leviable directly thereon), and if payment be not made a condition precedent to the right to carry on the business, but its enforcement left to the ordinary means devised for the collection of taxes. The corporation is thus made to bear its proper proportion of the burdens of the government under whose protection it conducts its operations, while interstate commerce is not in itself subjected to restraint or impediment.
As pointed out by MR. JUSTICE FIELD in Horn Silver Mining Company v. New York, 143 U. S. 305, the right of a state to tax the franchise or privilege of being a corporation as personal property his been repeatedly recognized by this Court, and this whether the corporation be domestic or a foreign corporation doing business by its permission within the state. But a state cannot exclude from its limits a corporation engaged in interstate or foreign commerce, or a corporation in the employment of the general government, either directly in terms or indirectly by the imposition of inadmissible conditions. Nevertheless the state may subject it to such property taxation as only incidentally affects its occupation, as all business, whether of individuals or corporations, is affected by common governmental burdens. Ashley v. Ryan, 153 U. S. 436, and cases cited.
or operating an instrumentality of interstate or international commerce, or for the carrying on of such commerce, but the value of property results from the use to which it is put, and varies with the profitableness of that use, and by whatever name the exaction may be called, if it amounts to no more than the ordinary tax upon property, or a just equivalent therefor, ascertained by reference thereto, it is not open to attack as inconsistent with the Constitution. Cleveland, Cincinnati &c. Railway v. Backus, 154 U. S. 439, 154 U. S. 445.
"where the particular arrangement of taxation provided by legislative wisdom may be accounted for on the assumption of compounding or commuting for a just equivalent, according to the determination of the legislature, in the general scheme of taxation, it will not be condemned by the courts as violative of the [state] Constitution."
Vicksburg Bank v. Worrell, 67 Miss. 47. In that case, privilege taxes imposed on banks of deposit or discount, which varied with the amount of capital stock or assets and were declared to the "in lieu of all other taxes, state, county, or municipal, upon the shares and assets of said banks," came under review, and it was decided that the privilege tax, to be effectual as a release from liability for all other taxes, must be measured by the capital stock and entire assets or wealth of the bank, and that real estate bought with funds of the bank was exempt from the ordinary ad valorem taxes, but was part of the assets of the bank to be considered in fixing the basis of its privilege tax.
the record, as shown by the second count of the declaration and its exhibits, whereby the appellant seems to be burdened in this way with a tax much less than that which would be produced if its property had been subjected to a single ad valorem tax."
This exposition of the statute brings it within the rule where ad valorem taxes are compounded or commuted for a just equivalent, determined by reference to the amount and value of the property. Being thus brought within the rule, the tax becomes substantially a mere tax on property, and not one imposed on the privilege of doing interstate business. The substance, and not the shadow, determines the validity of the exercise of the power.
The act, in prescribing the ascertainment of the charge as to telegraph companies operating less than one thousand miles of wire, was directed to reach a reasonable commutation of the amount which the company would be compelled to pay if the taxation were ad valorem. The taxation was neither arbitrary nor discriminating, nor, so far as we are advised, was payment made a condition precedent to doing business, but collection was enforceable by suit, and the remedies pertaining thereto, and not otherwise. Code Mississippi 1880, §§ 585, 587-589, 594.
We concur with the view of the act thus expressed by the supreme court of the state, and, accepting it as correct, it is obvious that the case does not fall within the line of decisions in which state laws have been held inoperative because in conflict with, or amounting to the exercise of, or the assertion of control over, a power vested exclusively in the United States. In those decisions, the interference with the commercial power was found to be direct, and not the mere incidental effect of the requirement of the usual proportional contribution to public maintenance.
Co., 141 U. S. 40; Maine v. Grand Trunk Railway, 142 U. S. 217.
capital so employed by it therein. 125 U.S. 125 U. S. 547. The tax, though nominally upon the shares of the capital stock of the company, is in effect a tax upon that organization on account of property owned and used by it in the State of Massachusetts, and the proportion of the length of its lines in that state to their entire length throughout the whole country is made the basis for ascertaining the value of that property. Such a tax is not forbidden by the acceptance on the part of the telegraph company of the rights conferred by § 5263 of the Revised Statutes, or by the commerce clause of the Constitution. 125 U.S. 125 U. S. 552. The statute of Massachusetts is intended to govern the taxation of all corporations doing business within its territory, whether organized under its own laws or under those of some other state, and the rule adopted to ascertain the amount of the value of the capital engaged in that business within its boundaries, on which the tax should be assessed, is not an unfair or unjust one, and the details of the method by which this was determined have not exceeded the fair range of legislative discretion. 125 U.S. 125 U. S. 553."
In the case before us, the tax was graduated according to the amount and value of the property measured by miles, and was in lieu of taxes levied directly on the property. In marking the distinction between the power over commerce and municipal power, literal adherence to particular nomenclature should not be allowed to control construction in arriving at the true intention and effect of state legislation. We are of opinion that it was within the power of the state to levy a charge upon this company in the form of a franchise tax, but arrived at with reference to the value of its property within the state and in lieu of all other taxes, and that the exercise of that power by this statute, as expounded by the highest judicial tribunal of the state in the language we have quoted, did not amount to a regulation of interstate commerce or put an unconstitutional restraint thereon.

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 § 5263