Source: https://www.chanrobles.com/usa/us_supremecourt/141/18/case.php
Timestamp: 2020-04-09 04:05:33
Document Index: 335566176

Matched Legal Cases: ['§ 5', '§ 4', '§ 3', '§ 4', '§ 550', '§ 297']

A statute of a state, imposing a tax on the capital stock of all corporations engaged in the transportation of freight or passengers within the state, under which a corporation of another state, engaged in running railroad cars into, through, and out of the state, and having at all times a large number of such cars within the state, is taxed by taking as the basis of assessment such proportion of its capital stock as the number of miles of chanrobles.com-red
This was an action brought by the State of Pennsylvania against Pullman's Palace Car Company, a corporation of Illinois, in the Court of Common Pleas of the County of Dauphin in the State of Pennsylvania, to recover the amount of a tax settled by the auditor general and approved by the treasurer of that state for the years 1870 to 1880, inclusive, on the defendant's capital stock, taking as the basis of assessment such proportion of its capital stock as the number of miles of railroad over which cars were run by the defendant in Pennsylvania bore to he whole number of miles in this and other states over which its cars were run. All these taxes were levied under successive statutes of Pennsylvania imposing taxes on capital stock of corporations incorporated by the laws of Pennsylvania or of any other state, and doing business in Pennsylvania, computed on a certain percentage of dividends made or declared. The taxes for 1870-1874 were levied under the statute of May 1, 1868, No. 69, § 5, which applied to corporations of every kind, with certain exceptions not material to this case, and fixed the amount of the tax at half a mill on every one percent of dividend. Penn.Laws 1868, p. 109. The taxes for 1875-1877 were levied under the statute of April 24, 1874, No. 31, § 4, which applied to all corporations in any way engaged in the transportation of freight or passengers, and fixed the tax at ninetenths of a mill on every one percent of dividend. Penn.Laws 1874, p. 70. The taxes for 1878-1880 were levied under the statutes of March 20, 1877, No. 5, § 3, and of June 7, 1879, No. 122, § 4, applicable to all corporations except building associations, banks, savings institutions, and foreign insurance companies, and fixing the tax at half a mill on each one percent of dividend of six percent or more on the par value of the capital stock, and, when the dividend was less, at three mills on a valuation of the capital stock. Penn.Laws 1877, p. 8; Penn.Laws 1879, p. 114. chanrobles.com-red
Upon this writ of error, whether this tax was in accordance with the law of Pennsylvania is a question on which the decision of the highest court of the state is conclusive. The only question of which this Court has jurisdiction is whether the tax was in violation of the clause of the Constitution of the United States granting to Congress the power to regulate chanrobles.com-red
commerce among the several states. The plaintiff in error contends that its cars could be taxed only in the State of Illinois, in which it was incorporated and had its principal place of business. No general principles of law are better settled or more fundamental than that the legislative power of every state extends to all property within its borders, and that only so far as the comity of that state allows can such property be affected by the law of any other state. The old rule, expressed in the maxim mobilia sequuntur personam, by which personal property was regarded as subject to the law of the owner's domicile, grew up in the Middle Ages, when movable property consisted chiefly of gold and jewels, which could be easily carried by the owner from place to place or secreted in spots known only to himself. In modern times, since the great increase in amount and variety of personal property not immediately connected with the person of the owner, that rule has yielded more and more to the lex situs -- the law of the place where the property is kept and used. 72 U. S. 7 Wall. 139; Hervey v. Rhode Island Locomotive Works, 93 U. S. 664; Harkness v. Russell, 118 U. S. 663, 118 U. S. 679; Walworth v. Harris,@ 129 U. S. 355; Story on Conflict of Laws, § 550; Whart on Conflict of Laws, §§ 297-311. As observed by Mr. Justice Story in his commentaries just cited:
For the purposes of taxation, as has been repeatedly affirmed by this Court, personal property may be separated from its owner, and he may be taxed on its account at the place where it is, although not the place of his own domicile, and even if he is not a citizen or a resident of the state which imposes the tax. 74 U. S. 77; 82 U. S. 323-324, 82 U. S. 328; 85 U. S. 29; 86 U. S. 499; State Railroad Tax Cases, 92 U. S. 575, 92 U. S. 607-608; Brown v. Houston, 114 U. S. 622; Coe v. Errol, 116 U. S. 517, 116 U. S. 524; Marye v. Baltimore & Ohio Railroad, 127 U. S. 117, 127 U. S. 123. It is equally well settled that there is nothing in the Constitution or laws of the United States which prevents a state from taxing personal property employed in interstate or foreign commerce like other personal property within its jurisdiction. 85 U. S. 232; Telegraph Co. v. Texas, 105 U. S. 460, 105 U. S. 464; Gloucester Ferry Co. v. Pennsylvania, 114 U. S. 196, 114 U. S. 206, 114 U. S. 211; Western Union Telegraph Co. v. Attorney General of Massachusetts, 125 U. S. 530, 125 U. S. 549; Marye v. Baltimore & Ohio Railroad, 127 U. S. 117, 127 U. S. 124; Leloup v. Mobile, 127 U. S. 640, 127 U. S. 649. Ships or vessels, indeed, engaged in interstate or foreign commerce upon the high seas or other waters which are a common highway, and having their home port at which they are registered under the laws of the United States at the domicile of their owners, in one state, are not subject to taxation in another state at whose ports they incidentally and temporarily touch for the purpose of delivering or receiving passengers or freight. But that is because they are not in any proper sense abiding within its limits, and have no continuous presence or actual situs within its jurisdiction, and therefore can be taxed only at their legal situs -- their home port, and the domicile of their owners. Hays v. Pacific Mail Steamship Co., 17 How. 596; St. Louis v. Ferry Co., 11 Wall. 423; Morgan v. Parham, 16 Wall. 471; Wiggins Ferry Co. v. East St. Louis, 107 U. S. 365; Gloucester Ferry Co. v. Pennsylvania,@ 114 U. S. 196. Between ships and vessels having their situs fixed by act of Congress and their course over navigable waters and touching land only incidentally and temporarily, and cars or vehicles of any kind, having no situs so fixed and traversing the land only, the distinction is obvious. As has been said by this Court:
@ 88 U. S. 470.
The cars of this company within the State of Pennsylvania are employed in interstate commerce, but their being so employed does not exempt them from taxation by the state, and the state has not taxed them because of their being so employed, but because of their being within its territory and chanrobles.com-red
The validity of this mode of apportioning such a tax is sustained by several decisions of this Court in cases which came up from the circuit courts of the United States, and in which, therefore, the jurisdiction of this Court extended to the determination of the whose case, and was not limited, as upon writs of error to the state courts, to questions under the Constitution and laws of the United States. chanrobles.com-red
MR. JUSTICE BRADLEY, with whom concurred MR. JUSTICE FIELD and MR. JUSTICE HARLAN, dissenting. chanrobles.com-red
I dissent from the judgment of the Court in this case, and will state briefly my reasons. I concede that all property, personal as well as real, within a state and belonging there may be taxed by the state. Of that there can be no doubt. But where property does not belong in the state, another question arises. It is the question of the jurisdiction of the state over the property. It is stated in the opinion of the Court as a fundamental proposition on which the opinion really turns that all personal as well as real property within a state is subject to the laws thereof. I conceive that that proposition is not maintainable as a general and absolute proposition. Among independent nations, it is true, persons and property within the territory of a nation are subject to its laws, and it is responsible to other nations for any injustice it may do to the persons or property of such other nations. This is a rule of international law. But the states of this government are not independent nations. There is such a thing as a Constitution of the United States, and there is such a thing as a government of the United States, and there are many things, and many persons, and many articles of property that a state cannot lay the weight of its finger upon because it would be contrary to the Constitution of the United States. Certainly property merely carried through a state cannot be taxed by the state. Such a tax would be a duty, which a state cannot impose. If a drove of cattle is driven through Pennsylvania from Illinois to New York for the purpose of being sold in New York, while in Pennsylvania, it may be subject to the police regulations of the state, but it is not subject to taxation there. It is not generally subject to the laws of the state, as other property is. So if a train of cars starts at Cincinnati for New York, and passes through Pennsylvania, it may be subject to the police regulations of that state while within it, but it would be repugnant to the Constitution of the United States to tax it. We have decided this very question in the case of State Freight Tax, 15 Wall. 232. The point was directly raised and decided that property on its passage through a state in the course of interstate commerce cannot be taxed by the state, because taxation is incidentally regulation, chanrobles.com-red
and a state cannot regulate interstate commerce. The same doctrine was recognized in Coe v. Errol, 116 U. S. 517. And surely a state cannot interfere with the officers of the United States in the performance of their duties, whether acting under the judicial, military, postal, or revenue departments. They are entirely free from state control. So a citizen of the United States, or any other person, in the performance of any duty or in the exercise of any privilege under the Constitution or laws of the United States is absolutely free from state control in relation to such matters. So that the general proposition that all persons and personal property within a state are subject to the laws of the state, unless materially modified, cannot be true. But when personal property is permanently located within a state for the purpose of ordinary use or sale, then indeed it is subject to the laws of the state and to the burdens of taxation, as well when owned by persons residing out of the state as when owned by persons residing in the state. It has then acquired a situs in the state where it is found. A man residing in New York may own a store, a factory, or a mine in Alabama stocked with goods, utensils, or materials for sale or use in that state. There is no question that the situs of personal property so situated is in the state where it is found, and that it may be subjected to double taxation -- in the state of the owner's residence, as a part of the general mass of his estate, and in the state of its situs. Although this is a consequence which often bears hardly on the owner, yet it is too firmly sanctioned by the law to be disturbed, and no remedy seems to exist but a sense of equity and justice in the legislatures of the several states. The rule would undoubtedly be more just if it made the property taxable, like lands and real estate, only in the place where it is permanently situated. Personal as well as real property may have a situs of its own, independent of the owner's residence, even when employed in interstate or foreign commerce. An office or warehouse connected with a steamship line or with a continental railway may be provided with furniture and all the apparatus chanrobles.com-red
Reference is made in the opinion of the Court to the case of Railroad Company v. Maryland, 21 Wall. 456, in which it was said that commerce on land between the different states is strikingly dissimilar in many respects from commerce on water, but that was said in reference to the highways of transportation in the two cases, and the difference of control which the state has in one case from that which it can possibly have in the other. A railroad is laid on the soil of the state by virtue of authority granted by the state, and constantly subject to the police jurisdiction of the state, while the sea and navigable rivers are highways created by nature, and not subject to state control. The question in that case chanrobles.com-red
In the opinion of the Court it, is suggested that if all the states should adopt as equitable a rule of proportioning the chanrobles.com-red
The case of Western Union Telegraph Co. v. Massachusetts, 125 U. S. 530, is entirely different from the present. In that case, there was no question as to the situs of the property taxed. It was situated within the state, consisting of poles, and wires, and offices, and a general plant for telegraphic purposes. The property belonged in Massachusetts, and was consequently taxable there. There was a phase of that case which led some of the justices of the Court to doubt as to the proper decision to be made. The difficulty was this: the tax was, in terms, made upon a certain proportional part of the capital stock of the company. That proportion was regulated by the number of miles of telegraph within chanrobles.com-red
the state as compared with the number of miles of telegraph belonging to the company in the whole country. It was objected that the property of the company situated in Massachusetts had no necessary relation to the said proportion of the capital stock, because the aggregate value of the stock might depend on property, franchises, and amount of business outside of Massachusetts, largely out of proportion to the miles of telegraph lines outside of that state. But the difficulty of getting at the true value of the property within the state, and of adopting any other rule for ascertaining it, as well as the failure of the company to show that the rule adopted produced any unfair results, finally induced an acquiescence in the decision, but expressly on the ground that, though the tax was nominally on the shares of the capital stock of the company, it was in effect a tax upon the property owned and used by it in Massachusetts; the proportional length of the lines in that state to their entire length throughout the whole country being merely used as the basis for ascertaining the value of that property. The same difficulty as to the method of determining value exists in the present case which existed in that, but the more serious difficulty lies in the question of the situs of the property and the consequent jurisdiction of the State of Pennsylvania to tax it. It is not fast property. It does not consist of real estate. It does not attach itself to the land. It is movable, and engaged in interstate commerce, not in Pennsylvania alone, but in that and other states, and the question is, how can such property be taxed by a state to which it does not belong? It is indirectly but virtually taxing the passengers, many of them carried from New York to Chicago, or from Chicago to New York, and most of them from one state to another. It is clearly a burden on interstate commerce. The opinion of the Court is based on the idea that the cars are taxable in Pennsylvania because a certain number continuously abide there. But how can they be said to abide there when they only stop at Philadelphia and other stations to take on passengers? And it is all the same whether they cross the state entirely, or run into or out of other states with a terminus in Pennsylvania. chanrobles.com-red