Case Name: Commonwealth versus Gloucester Ferry Company
Court: Supreme Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1881-10-17
Citations: 98 Pa. 105
Docket Number: 
Parties: Commonwealth versus Gloucester Ferry Company.
Judges: 
Reporter: Pennsylvania State Reports
Volume: 98
Pages: 105–127

Head Matter:
Commonwealth versus Gloucester Ferry Company.
1. The capital stock of a foreign corporation doing business within this Commonwealth is, by virtue of the Acts of May 1st 1868 (Pamph. L. 108) and June 7th 1879 (Pamph. L. 112), liable to taxation.
2. A ferry company incorporated by.the state of New Jersey to operate ferry-boats plying to and fro across the river Delaware, between the New Jersey and Pennsylvania shores, which company holds its corporate meet ings in New Jersey, owns real estate in said state, has its boats registered there, and owns no property in Pennsylvania save the lease of a slip or wharf at which its boats touch, but only for a sufficient time to permit the reception and disembarking of passengers and freight, is a foreign corporation doing business in this state, within the meaning of said acts, and its capital stock is therefore liable to taxation.
Green, J., dissents.
• May 20th 1881. Before Sharswood, C. J"., Mercur, Gordon, Paxson, Trunkey, Sterrett and Green, JJ.
Error to the Court of Common Pleas of Dcmplvm County: Of May Term 1881, No. 162.
This was an appeal by the Gloucester Ferry Company, from an account stated by the auditor-general and state treasurer, against said company, for taxes on its capital stock, based upon the appraised value thereof for the years from I860 to 1879 inclusive, finding the amount of $2,593.96 to be due to the Commonwealth, with interest thereon from July 7th 1880. The tax was claimed under the provisions of the 4th section of the revenue act of June 7th 1879 (Pamph. L. 112).
The following case stated was submitted to the court by the agreement of the parties :—
The “ Gloucester Ferry Company” was duly incorporated by act of the General Assembly of the state of New Jersey, approved 9th March 1865 (Prout charter), with a capital stock of $50,000, divided into shares of $50 each, to erect a steamboat ferry from some point in the town of” Gloucester, in the township of Union, in the county of Camden, state of New Jersey, to such place or places in the city of Philadelphia as should best secure the public convenience and interest of said corporation, and for that purpose, with power to purchase or lease real estate, erect wharves, piers, slips, buildings, and all other necessary appendages, and to build steam-boats, vessels and ferry-boats, and with further power to make contracts with other corporations and with individuals for transporting or carrying any kind of goods, merchandise, freight, or passengers.
By the said charter it is provided that the president and directors might, from time to time, make such dividends of the net profits of their business as they might deem prudent. Stockholders’ meetings were directed to be held in the said county of Camden, and notice of the said meetings is directed to be published in one or more newspapers printed in the county of Camden. The company has never had any charter from the state of Pennsylvania.
Since the year 1865 the said corporation has maintained a ferry between said town of Gloucester and city of Philadelphia, across the river Delaware, leasing or owning steam ferry-boats for such purposes. At each of said places, it has rented, until recently, a slip or dock. -Within a year it has purchased the real estate in the county of Camden needed for its purposes. It still continues to lease that used by it in the city of Philadelphia.
It has never transacted any other business saving that of ferrying passengers and freight across said river between said town and city.
It has never owned any real or personal property located in the city of Philadelphia.
Its property consists exclusively of real estate as aforesaid in the county of Camden, certain steamboats, engaged in said ferriage, and a lease of a wharf, slip or dock in the city of Philadelphia. It has never consisted of anything additional. The boats now owned by it are registered at the said port of Camden, and it has never owned any boats registered in any port of the state of Pennsylvania. No boats used by it have ever been allowed to remain in any portion of the last-named state saving so long as has been necessary to receive and load passengers and freight thus ferried, or to be ferried.
The auditor-general and state treasurer stated an account against said company, on the 7th July 1880, of taxes on its capital stock, based upon the appraised value thereof, for the years from 1865 to 1879, both inclusive, finding the amount of $2,593.96 to be due to the Commonwealth.
The present case is an appeal, duly entered from said ac. count stated.
If the court be of the opinion, under the within statement of facts, that the company is liable to the Commonwealth for a tax upon its capital, then judgment shall be entered in favor of the Commonwealth against said company for the amount of said statement, viz.: $2,593.96, with interest, costs, and commission of attorney-general from 7th July 1880; but, if it be of the opinion that the said company is not liable to pay a tax on said capital stock, then judgment is to be entered in favor of the said company.
Either party is to be allowed an appeal or writ of error.
The court, after argument, entered judgment on the case stated, in favor of the Gloucester Ferry Company, Pearson, P. J., filing the following opinion:—
This case came into court by appeal from the decision of the auditor-general and state treasurer, who had charged the defendant with a state tax, with the interest thereon, commencing on the 9th day of March I860, and ending on the termination of the year 1879, amounting to $2,593.96. The defendant denies owing anything.
A case has been stated for the opinion of the court, which presents substantially the following state of facts: On the 9th of March, 1865, the defendant was incorporated as a company to ferry freight and passengers across the Delaware river, from the town of Gloucester, in the state of New Jersey, to the city of Philadelphia, in the state of Pennsylvania, with a capital of $50,000, divided into shares of $50 each. All of the stock was held, and the stockholders resided, in the state of New Jersey. The steam ferry-boats were all registered there under the laws of the United States; lay there at all times except when engaged in navigation; the company had its wharf there, as also its business office, and there its officers and men resided. It had no other connection with Pennsylvania except a wharf or slip rented in the city, where it landed and received its freight and passengers.
The ferry and its company was never in any manner'recognized by the laws of Pennsylvania, nor by its state officers, until the year 1880, when it was for the first time taxed. Have we any law imposing a tax on this company? if so, for how much ?
It is conceded by the attorney-general on the argument that there was none prior to that on the 1st day of May 1868, the 4th section of which, it is contended, enabled the officers to impose a tax under these words: “That the capital stock of all companies whatever, incorporated by or under any law of this Commonwealth, or incorporated by any other state and lawfully doing business in this Commonwealth, shall be subject to pay a tax into the treasury of the Commonwealth annually, at the rate of one half mill for each one per cent, of dividend made or declared by such company; and in case of no dividend being made or declared by such company, then three mills upon a valuation of the capital stock of the same, made in accordance with the 2d section of this act.” That valuation was to be made under oath by the officers of the company, and if the state officers were dissatisfied with the valuation, then to be made by themselves. Was this New Jersey corporation doing' business in this state according to the meaning and intention of that statute ? Was it subject to a taxation on the whole value of its capital stock as 'imposed? If not on the whole, on what part ? Was the defendant exempt from taxation on the ground of trade and commerce between the states ?
It may be conceded that this New Jersey corporation was doing some business in this state. Its boats stopped at a wharf or slip daily, in landing its freight and passengers. For the most part passengers stopped on and off at that point. The company had no office and owned no land. Did the legislature intend by such a transaction of business that this company should be taxed on its whole capital stock, or even on the half of it? For, if it can be taxed on the half, it can on the whole. If the Northwestern Railroad, with a capital of forty millions, incorporated under the laws of Illinois or Wisconsin, should occasionally land a car-load of grain in Pennsylvania, our officers could lawfully tax it at the rate of three mills on its whole capital stock,' although there was not a dollar of its stock held in this state, nor any of its stockholders residing here, or any office or warehouse opened within our borders. With quite as much plausibility could the whole stock of the Erie Railway be taxed in Pennsylvania, because that road passed through twenty-six miles of our territory, or the wdiole stock of the Lake Shore and New York Central, including the Lake Shore road from the city of New York to Chicago, be taxed because the road ran through the triangle. Such a system of taxation was never practiced in Pennsylvania. We tax in proportion to the capital employed or ground used in our state, not in proportion to the whole capital stock. Some appraisement is always made, and regard had to the use made of the occupancy. Rut it is urged that one-half of the river ferried over belongs to Pennsylvania. The river is one of the great highways of nature, and no state has a right to the water. Any state, or the nation at large, has an equal right of navigation. No one can claim an exclusive right. Vessels from Maryland or Virginia have an equal right to sail on its waters with Pennsylvania or Jersey, even to the margin of low water. We are referred by the attorney-general to the case of the Trenton, Delaware, Bridge Company, reported in 9 Am. Law Register, (O. S.) 298, to show that this company can be taxed to the value of one-half of its capital. We are unable to see the slightest analogy between the cases. That company was incorporated by both states; the bridge was authorized by both; it was a permanent and solid structure, erected equally over the so.il of each, and although the most of the stock may have been held, in New Jersey, that was unimportant. The structure was on the territory of each, and this state would have the same right to tax that part within her borders that she would. a tract of land improved by New Jersey capital. The mere right of navigation over public waters is different from building permanent structures by authority of our laws. New Jersey neither asked nor was required to ask for leave to navigate the river, nor had it any neeessity to ask for leave to land its passengers. 'It liad that right by the comity of nations and the navigation laws, and our state could not prohibit it.
In a case where the state undertakes to tax, it must show jurisdiction over the person or the property. Here it has none over either. How can it tax the stock ? It has no jurisdiction over it, as it is nowise held in this state. The legislature might impose a tax on wharfs, ships, &c., but it probably never has, and if it might so do, or has so done, this tax has not been so imposed. It would be by valuation, or by the trip, and it is held that it may charge for the use of wharfs, &c., a reasonable sum, hut not by the tonnage of the vessel: 20 Wallace 577, 582. And ships may be taxed to the owner, like other property, at his residence: 9 Otto, 283-4. These vessels are all registered at their port in New Jersey, where the owners and masters reside, and it is clearly settled that they cannot be taxed by reason of going into, landing or trading in any other port in the United States; therefore where a vessel was registered in New York it could not be taxed for trading in Mobile, or any of the ports of California or Oregon: Hays v. Steamship Company, 17 Howard 596; 23 New York 227. It would interfere with the commerce of the states if the vessel could be taxed at every port where it landed : 16 Wallace 475. The property is there for a temporary purpose, and does not become incorporated with that of the state: Idem. 476. And touching at a port, and trading there, did not render the vessel liable to be taxed there: Idem. 478-9. Congress has the power to regulate the commerce of the country, and the states cannot impose a tax on it otherwise or greater than that imposed by congress, nor can the effect be changed by changing the name, or taxing the occuS/tion of the master. Per Grier , J., in the Passenger Cases, 7 oward 458. The state cannot tax the landing of passengers: Idem. Onr state can neither tax nor prohibit this New Jersey corporation from landing its passengers in this state, for if we can tax we can prohibit, as was declared by Chief Justice Marshall in several of the early cases, and the principle is fully recognized in Crandall v. State of Nevada, 6 Wallace 35. The state cannot change the effect by taxing the bill of lading instead of the registered vessel, or its freight: Almy v. State of California, 24 Howard, 169. All taxation must relate and be limited to persons, property or business within the state, all must apply to one or the other: 15 Wallace 300. In the present case our state cannot lawfully impose this tax; it is not on the person or property, all of which is situated in New Jersey ; nor can it on the business, for that is protected for the benefit of trade, there being none other conducted than the landing and receiving of passengers. This is part of the com merce of the country. The passengers are secured in going and coining by the federal constitution, nor can these principles be evaded by attempting to impose the tax on the stock of the company ; it is a mere change of name and cannot change the effect. We are, therefore, clearly of opinion that the whole of this tax is illegal and assessed without authority, and even if our statute would bear the construction put on it by the state officers it would be in violation of the laws and Constitution of. the United States.
Here our opinion might end, but as there is a reviewing court we will notice some erroneous items. There is no law authorizing the assessments of 1865, ’66 and ’67, and we are not aware of any authorizing six mills on the stock for 1875,1876 and 1877. When the officers came down to 1871, they appraised one-half of the stock at $32,000. The same for 1875-6-7 and 8, and for 1879 at $50,000. Nothing has been shown, or even suggested, to authorize these chatrges, but as this is a case stated, we may be going beyond our power in suggesting all of this doubling over.
The court gives judgment in favor of the defendant on the stated case.
The Commonwealth took this writ of error, and filed the following specifications of error.
The court erred in deciding as follows
1. “ The ferry and its company was never in any mhnner recognized by the laws of Pennsylvania, nor by its State officers, until the year 1880, when it was for the first time taxed.” -
2. “ The company had no office, and owned no land ” (in this state).
3. “ How can it ” (the state) “ tax the stock % It has no jurisdiction over it, as it is in nowise held in this state.” '
1. “ Our state can neither tax nor prohibit this New Jersey corporation from landing its passengers in this state, for if we can tax we can prohibit, as was declared by Ch. J. Marshall in several of the early cases, and the principle is fully recognized in Crandall v. State of Nevada, 6 Wallace 35.”
5. “ In the present case our state cannot lawfully impose this tax, it is not on the person, or property, all of which is situated in New Jersey, nor can it on its business, for that is protected for the benefit of trade, there being none other conducted than the landing and receiving of passengers. This is part of the commerce of the country. The passengers are secured in going and coming by the federal Constitution, nor can these principles be evaded by attempting to impose the tax on the stock of the company, it is a mere change of name and cannot change the effect. We are therefore clearly of opinion that the whole of this tax is illegal and assessed without authority, and even if our statute would bear the construction put on it by the state officers, it would be in violation of the laws and Con-, stitution of the United States.”
6. “ The court gives judgment in favor of the defendant on the stated case.”
Henry W. Palmer, Attorney-General (Lyman D. Gilbert, Deputy Attorney-General, with him), for the, Commonwealth.
This is a tax upon the capital stock of a. corporation. It is not a tax upon the specific property of a corporation in which its capital may be invested. It is not an attempt to tax the ferry-boats of this company, nor is it an effort to tax a corporation in proportion to the number of ferry-boats it owns. The tax is not imposed either directly or indirectly upon them; it is not measured in amount by their numbers; it is the same ■whether the company owms few or many of them, and is unaffected by the frequency of their use. It therefore clashes with none of the following decisions which form part of the judicial argument against its validity : Cannon v. New Orleans, 20 Wallace 577, 582; Transportation Co. v. Wheeling, 9 Otto 273, 283, 284 ; Morgan v. Parham, 16 Wallace 471, 475, 476, 477; Hays v. Steamship Co., 17 Howard 596 ; Hoyt v. Commissioners, 23 N. Y. 227. It is not a tax “ on account of every passenger brought from a foreign country into the state;” it is not measured by the number of passengers or in any way affected by them, and therefore does not contravene the doctrine of The Passenger Cases, 7 Howard 283 : It is not a tax imposed upon “every bill of lading given” from within to points without the state, and is therefore not affected by the decision of Almy v. California, 24 Howard 169. It 38 not a tax on this company “ for every passenger carried out of the state” by it, and therefore does not come within the ruling of Crandall v. Nevada, 6 Wallace 35.
These decisions have no application to the tax upon capital stock. This character of tax is one of the oldest forms of corporate taxation. It is found in all our laws which raise revenue from corporations; and is expressly authorized in the 4th section of the Act of Assembly of 7th June 1879, which is a copy of earlier acts.
This section, by its express terms, taxes the capital stock not merely of corporations of domestic creation, but of all those “ incorporated by any other state . . . and doing business in this Commonwealth.”
That this company does business within this Commonwealth in the sense intended by the act appears from the following reasons: The bed and channel of the Delaware river ad medium aquae filwm, belong respectively to the states of New Jersey and Pennsylvania : Bennett v. Boggs, 1 Baldw. 12. The Delaware being a navigable coterminous stream between New Jersey and Pennsylvania, the title of each to the bed extended from their respective shores to the middle of the river, according to the well-established principle of universal law: Vattel § 266. It follows therefore as a geographical fact that as each ferriage of persons and property is made across the entire stream, this company is “doing business in this Commonwealth” and is within the class of corporations intended to be taxed by our laws.
But it is not merely within our taxing intention, it is plainly within our taxing power. It is a foreign corporation, and it is sufficient to say that never, since the decision of Augusta v. Earle, 13 Peters 519, has the power been deuied to a state to exclude such a corporation from • its limits, or to prescribe at pleasure the cpnditions of its entrance. The section referred to declared that the consideration upon which it can transact business within our borders is the payment of certain taxes, and as long as it continues its business it must comply with this condition.
•This is not a tax upon the shares of stock in the hands of individual holders, but upon the capital stock of the corporation itself. There is a wide difference between these kinds of taxation: McKeen v. Northampton County, 13 Wright 519; Lycoming County v. Gamble, 11 Wright 106.
The capital' stock of a corporation is not merely different from the shares of stock into which it is divided, but it is also' different from the property in which it is invested. When a foreign corporation enters this Commonwealth under statutory permission, it comes not merely as an entity, with a power to sue, and to have the ordinary corporate privileges, but as a legal being with right to exist for certain purposes, and it brings with it the things which are necessary for .those purposes, and among them its capital stock. This corporation, therefore, comes into our jurisdiction'with its capital stock, for that is part of its organic faculty, and when it is here, its property is here with it.
Jurisdiction of the Gloucester Ferry Company is jurisdiction of its capital stock, for it does not slough that at the state line. When it does business within our limits, it transacts it here with the same powers and attributes it possesses in New Jersey. To deny this proposition is to assert that a foreign corporation for profit, with a capital stock, may transact business in this state without any capital stock whatever.
The court below laid stress upon the fact that the Gloucester Ferry Company is engaged in commerce, and it argued therefore that it ought not to be taxed, because that would be taxing commerce itself, contrary to the inhibition of the federal Constitution. We concede the fact that its business is to transport persons and property, but we deny the judicial inference from these corporate transactions. The rule thus laid down Avould prevent us from taxing any inter-state railroad, and that we have this right clearly appears from the following decisions : State Tax on Gross Receipts, 15 Wallace 284; Erie Railway Co. v. Pennsylvania, 21 Wallace 492; Delaware Railroad Tax, 18 Wallace 206; Railroad v. Commonwealth, 16 P. F. Smith 73. The tax now in dispute is not laid upon the passengers or cargo, or upon their right to be transported, but is upon the company itself, and- has therefore the sanction of the federal courts for its collection.
The position we contend for merely asks that when a corporation comes within the state for purposes of business, it comes here as a subject of taxation. The contrary doctrine would allow a foreign corporation to transport people and freight over our territory by means of wagons, or by any device which does not require a permanent attachment to the soil, with entire freedom from liability to taxation.
John G. Johnson, for the defendant in error.
1. The Gloucester Ferry Company did not “ do business in this Commonwealth,” whilst it merely navigated one of the navigable rivers of the United States, although the title to the soil of one-half of the bed of said river was in this Commonwealth. In stopping at the boundary line of the state, and there landing its passengers, it did not engage in any business “in” the same. In St. Louis v. Ferry Company, 11 Wallace é30, it Avas held: “ The ferry boats of a corporation incorporated in one state, and carrying passengers forward and back across a river to a city situated in another state, are not taxable under a law taxing boats ‘ within the city,’ in a case where the relation of the boats to the city Avas simply that of contact, as one of. the termini of their voyage.”
2. The said company is not Avithin the taxing 'intent of the Act of 1879. The object was to tax capital employed here by foreign corporations doing business within the state. The legislature had a right to deny altogether, or to grant conditionally to such corporations, the privilege of doing such business. The latter alternative Avas adopted. The idea, however, was to tax only the capital employed in the business permitted to be carried on, as is apparent where the employment of ’capital “in the name of any other company,” &c., is struck at. The tax is regulated by the valuation of the capital.
8. It is not within the power of the legislature of this commonwealth to tax the defendant in error under the circumstances set forth in the case stated. The right to tax must rest upon protection of persons or property. In this case, no such protection has been afforded. This state has no legal right to stop such ferriage. The right of navigating the navigable rivers of the United States belongs to all its'citizens. Whilst a state may refuse to permit a foreign corporation to do business within its borders, when it can only be done through its comity, it is powerless to prevent the citizens of any other state (and corporations may be such) from doing what is lawful for them to do by reason of their citizenship. As was said in Crandall v. Nevada, 6 Wall. 35, “a tax imposed by a state for entering its territory or harbors, is inconsistent with the rights which belong to citizens of other states as members of the Union.” The citizens of New Jersey have a right to be transported to Pennsjdvania across the river Delaware, and it is not competent for the legislature of the latter state to prevent them, by forbidding the masters of the vessels conveying them to land, or by imposing a prohibitory tax as a condition precedent.
The cases cited in which the Supreme Court of the United States sustained taxes upon the capital stock of railroad companies, imposed by the states which had incorporated them, or permitted them to lay their tracks, are not in point. The right to construct a railroad must be obtained from the state in which it is to be located, and which may prescribe conditions. Besides this, in all of said cases, the tax was, in substance, upon the capital actually employed within the taxing state. In Hays v. S. S. Co., supra, and in other similar cases, it was held that it was not competent for any state, under a law taxing all property within its limits, to impose a tax upon ships stopping there in the course of trade. In several, if not all, of those cases, the ships belonged to a corporation. If any state possesses a power to prevent the landing of vessels, why may it not compel, as a condition of such landing, the duty of paying a tax upon the vessel so landing ? If it is illegal to do this, can it be less so to tax the whole capital of the corporation as a condition of such right ?
October 17th 1881.

Opinion:
Mr. Justice Gordon
delivered the opinion of the court,
In this case a single question is presented for our consideration. Did the defendant do business within the state of Pennsylvania during the period for which the tax in controversy was imposed ? If it did, then it came within the provisions of the acts of May 1st 1868 and June 7th 1879, and was subject to the tax therein prescribed.
In the discussion of this case, it must not be forgotten that a corporation has no natural rights ; that it is but a legal entity, an artificial person, and that its rights spring either from legislative enactment or from comity. Within the state of its creation it has no powers but those conferred upon it by the legislative act which called it into being, and whether it shall or shall not perform any of its functions in a foreign state depends wholly upon the will of such state, expressed either by statute or implied under that general law known as international comity : Bank of Augusta v. Earle, 13 Peters 519.
Prom this view of the case, it becomes obvious, that the legislature may not only tax foreign corporations doing business in this state, but, if it so chooses, as was done by our Act of March 1810, in regard to foreign insurance companies, altogether prohibit the transaction of such business. It follows, that there has been a good deal of learning wasted in this case in the endeavor to assimilate the rights of this corporation to those of individual citizens, when, in fact, they are entirely dissimilar, and based on principles totally different.
Returning, then, to the only question in this case, the inquiry is, did this ferry company do business in the state of Pennsylvania? But this question may be readily solved by the answei which must necessarily be given to another question; that is, where were its principal, or, for that matter, only points, of operation ? The answer is, at Gloucester and Philadelphia. Its whole income was derived from the transportation of freight and passengers from its wharf at Gloucester to its wharf at Philadelphia, and from its wharf in Philadelphia to its wharf in Gloucester. At each of these points it had a place, that is, a wharf, where its main business, namely, its receipt of freight and passengers, was transacted, and, for that business, it was just as much dependent upon the one place as upon the other. Again, a wharf, or landing-place, was necessary at each end of its route ; the one it occupied at Gloucester was owned in fee, and the one in Philadelphia it held under a lease, but as it could hold by purchase, in New Jersey, only by virtue of the power derived from the statutory will of the legislature of that state, so it could hold by lease in Philadelphia only by the implied consent of the legislature of this Commonwealth. It thus appears that the defendant was dependent, equally, not only for its' business, but its power to do that business, upon both, states, and might, therefoi-e, be taxed by both.
We may here state that, with the court below, we cannot • understand by what authority ths assessments for the years 1865, '66 and '67 were made; nevertheless, as the case stated provides for no modification, in this respect, of the action of the taxing officers or of the judgment which may be entered against the defendant, we do not feel ourselves justified in making such an , attempt, and this the more so since we have been furnished with no data by which a modification or correction can be made.
The judgment of the court below is now reversed,'and it is ordered that judgment on the case stated be entered for the Commonwealth, and against the defendant, in the sum of $2,593.96, with interest from July 7th 1880, attorney-general's commissions, and costs.