Source: https://supreme.justia.com/cases/federal/us/198/341/
Timestamp: 2019-04-24 11:59:18+00:00

Document:
The Supreme Court of Pennsylvania bases its decision in this case on the authority of Commonwealth v. Pennsylvania Coal Co., 197 Pa. 551, which it regards as controlling upon the question involved. the right to include the value of the coal in question in the valuation of the capital stock of the company is based upon the construction given by the Supreme Court of Pennsylvania to the Pennsylvania statute of 1891, and this Court is concluded by that construction. People v. Weaver, 100 U. S. 539, 100 U. S. 541.
intended for transportation to another state for sale. It was held that the tax was proper so long, and so long only, as such transportation had not yet actually commenced. After that, the state had no right to tax it. In the case at bar, the coal had been transported to and was actually resting in another state for sale when the appraisement was made, and, under the foregoing cases, it was then intermingled with property in the foreign state where it rested, and was at that time liable to taxation therein. The right of the foreign state to tax under such circumstances was again upheld in Pittsburg & Southern Coal Co. v. Bates, 156 U. S. 577, where the coal was taxed while awaiting sale in such state. See Kelley v. Rhoads, 188 U. S. 1; Diamond Match Co. v. Ontonagon, 188 U. S. 82. We must therefore take it as plain, under the foregoing decisions, that this coal, at the time of the appraisement of the value of the capital stock for taxation by Pennsylvania, had become intermingled with the mass of property in the other states to which portions of it had respectively been sent, and that it was a proper subject for taxation for both state and local purposes in such states. Where the proceeds of the sale might go when the coal was sold, whether into the treasury of the company at its offices in New York City, or indirectly to the state of its incorporation, is not important. The coal had not been sold when the appraisement of the value of the capital stock was made, and at that time it was outside the jurisdiction of the State of Pennsylvania. A tax on that coal, eo nomine or specifically, could not then be laid by that state, as counsel concede.
value of the capital stock of a corporation is a tax on the property in which that capital is invested, and in consequence no tax can thus be levied which includes property that is otherwise exempt. Bank of Commerce v. New York City, 2 Black 620; Bank Tax Case, 2 Wall. 200; Pullman's Car Co. v. Pennsylvania, 141 U. S. 18, 141 U. S. 25; Fargo v. Hart, 193 U. S. 490, 193 U. S. 498-499.
The cases of the taxation upon the value of the capital stock of the banks, or on a valuation equal to the amount of their capital stock paid in or secured to be paid in, as reported in 2 Black and 2 Wall., supra, involved the question of the taxation of United States bonds and other securities of the United States in which the capital of the banks was invested, which were exempt from taxation; but the holding of the Court was that those bonds and securities were in fact taxed by a tax upon the value of the capital of the bank, which was invested in such bonds and securities. Of course, the distinction between the capital stock of a corporation, and the shares into which it may be divided and held by individual shareholders is borne in mind and recognized, and nothing herein affects that distinction. The question here is simply as to the value of the capital stock with reference to the assessment and taxation upon the corporation itself which issues it, and has nothing to do with the individual shareholder. Van Allen v. Assessors, 3 Wall. 573; Bank of Commerce v. Tennessee, 161 U. S. 134, 161 U. S. 146.
The asserted transitory nature of this property does not seem to us to be material. At the time of the appraisement, it had been transported beyond the jurisdiction of the state, never to return in kind, but was intended to be sold in the foreign state. Such property is entirely unlike the property involved in Commonwealth v. American Dredging Co., 122 Pa. 386. That property consisted of vessels, or scows, or tugs, only temporarily out of the State of Pennsylvania for the purpose of engaging in business, and liable to return to the state at any time, and was without any actual situs beyond the jurisdiction of the state itself. However temporary the stay of the coal might be in the particular foreign states where it was resting at the time of the appraisement, it was definitely and forever beyond the jurisdiction of Pennsylvania. And it was within the jurisdiction of the foreign states for purposes of taxation, and in truth it was there taxed. We regard this tax as, in substance and fact, though not in form, a tax specifically levied upon the property of the corporation, and part of that property is outside and beyond the jurisdiction of the state which thus assumes to tax it. This is not a question as between direct or indirect taxation such as arises under the federal Constitution when Congress lays and collects taxes by virtue of the power given it by that instrument. No question of uniformity or apportionment of taxes arises here. The question now discussed is simply whether, under this statute of the state, property of the corporation is, in substance and effect, taxed while it is beyond the jurisdiction of the state, and is never to return. When the federal Constitution says no tax or duty shall be laid on articles exported from any state, such articles cannot be taxed, directly or indirectly, and a tax on foreign bills of lading is void because it, in effect, is a tax on exports. Fairbank v. United States, 181 U. S. 283, 181 U. S. 289.

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