Court Opinion

ID: 6836836
Source: CourtListenerOpinion
Date Created: 2022-07-23 20:07:07.70167+00
Date Added: 2024-06-11T16:04:43.729836
License: Public Domain

BOURQUIN, District Judge.
I dissent. Although the majority makes out a case of reasonableness in respect to the amount of the tax, it is believed the impost contravenes a principle which may be found threading the maze of Supreme Court opinions with a fair degree of consistency, perhaps greater consistency than any other.
Therein settled and clear principles are few. The court itself has said that they are of “difficult” formulation, and that “every ease must be decided upon its own facts” — a comforting refuge, if not alibi, in times of legal stress. And that principle is that “a state cannot tax property belonging to a foreign corporation and neither located nor used *133within the confines of the state.” International, etc., Co. v. Mass., 246 U. S. 141, 38 S. Ct. 292, 62 L. Ed. 624, Ann. Cas. 1918C, 617; Union, etc., Co. v. Wright, 249 U. S. 282, 39 S. Ct. 276, 63 L. Ed. 602; Alpha, etc., Co. v. Mass., 268 U. S. 218, 45 S. Ct. 477, 69 L. Ed. 916, 44 A. L. R. 1219.
In application of said principle, the court has decided that as the property represented by capital stock in excess of that used in the state, is property outside the state, such excess is not taxable by the state. Air-Way, etc., Co. v. Day, 266 U. S. 82, 45 S. Ct. 12, 69 L. Ed. 169. That is the case at bar. The tax is within the ban of the due process clause of the Constitution, and when levied upon a corporation engaged in interstate commerce, within that of the commerce clause as well. Moreover, the tax also upon authorized, but unissued, stock is unequal and contrary to the Fourteenth Amendment. AirWay Case, supra.
It is true that in Roberts, etc., Co. v. Emmerson, 271 U. S. 50, 46 S. Ct. 375, 70 L. Ed. 827, 45 A. L. R. 1495, it is said that a state may tax a domestic corporation upon its unissued stock. But in that case the corporation was the creature of the state, all its property was within the state, all its stock was issued, and it was not engaged in interstate commerce, a radically different case from this at bat, invoking very different principles. Its general expressions, more or less dicta, must he read in the light of its peculiar facts, and not taken as modifying’ the Air-Way Case. It is equally true that in Baltic, etc., Co. v. Mass., 231 U. S. 68, 34 S. Ct. 15, 58 L. Ed. 127, a tax on the authorized capital stock of a foreign corporation, far in excess of property within the state, was upheld; for that (1). the tax was subject to a statutory limit of $2,000; (2) the amount was small when contrasted with that in Western, etc., Co. v. Kan., 216 U. S. 1, 30 S. Ct. 190, 54 L. Ed. 355; and (3) it was “not void because imposed upon property beyond the state’s jurisdiction.” At least the second and third of these x'easons, however, are overruled in Alpha, etc., Co. v. Mass., supra, and the first, if not overruled, has no legitimate justification. It is an excuse rather than a reason.
For in that ease, as in this at bar, the limit avails nothing to the corporation, is not attained; despite it, the tax is as great as if was no limit, and none the less is a tax upon property beyond the state’s confines. And in principle and by implication the Alpha Case overrules said first reason.
It is noted that considerable water has run under the bridge since the Baltic Case, and the latter is little more than a relic of a period of spirit and tendencies quite differ» ent from to-day’s, that spirit and tendencies to which all courts are more or less responsive.
The motion to dismiss ought to be denied, and the injunction granted.'