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tional rights like others are matters of degree. To illustrate: Under the police power, in its strict sense, a certain limit might be set to the height of buildings without compensation; but to make that limit five feet would require compensation and a taking by eminent domain. So it well might be that a form of assessment that would be valid for paving would not be valid for the more serious expenses involved in the taking of land. Such a distinction was relied on in French v. Barber Asphalt Paving Co. (181 U. S. 324; 21 Sup. Ct. Rep. 625; 45 L. ed. 879) to reconcile the decision in that case with Norwood v. Baker (172 U. S. 269; 19 Sup. Ct. Rep. 187; 43 L. ed. 443).”

But it is evident that the court itself felt that a position was being taken which could not be clearly harmonized with earlier cases, for the opinion continues:

“And yet it is evident that the act of Congress under consideration is very like earlier acts that have been sustained. That passed upon in Wight v. Davidson, it is true, dealt with a special tract, and so required the hypothesis of a legislative determination as to the amount of benefit conferred. But the real ground of the decision is shown by the citation of Bauman v. Ross (167 U. S.

17 Sup. Ct. Rep. 966; 42 L. ed. 270), when the same principle was sustained in a general law. It is true again that in Bauman v. Ross the land benefited was to be ascertained by the jury instead of being limited by the statute to a square; but it was none the less possible that the sum charged might exceed the gain. As only half the cost was charged in that case it may be that, on the practical distinction to which we have adverted in connection with Louisville & N. R. Co. v. Barber Asphalt Paving Co. the danger of such an excess was so little that it might be neglected, but the decision was not put on that ground.

“ In view of the decisions to which we have referred it would be unfortunate if the present act should be declared unconstitutional after it has stood so long. We think that without a violent construction of the statute it may be read in such a way as not to raise the difficult question with which we have been concerned. It is true that the jury is to apportion an amount equal to the


amount of the damage ascertained, but it is to apportion it'according as each lot or part of lot of land in such square may be benefited by the opening, etc.' Very likely it was thought in general, having regard to the shortness of the alleys, the benefits would be greater than the cost. But the words quoted permit, if they do not require, the interpretation that in any event the apportionment is to be limited to the benefit, and if it is so limited all serious doubt as to the validity of the statute disappears.”

$ 529. Summary.

Summarizing the result, or rather the tendency of the cases reviewed, it would appear that the Supreme Court has drawn away from the doctrine stated in its earlier cases that a special assessment will be upheld if apportioned according to a rule which, in its general operation, distributes the burden of the tax in proportion to the benefits received, even though such assessments may, as to particular pieces of property, be in substantial excess of the benefits received. In place of this doctrine the court, though with considerable falterings, has declared that “when the chance of the cost exceeding the benefit grows large, and the amount of the not improbable excess is great” the assessment will not be sustained. Except in such extreme cases, however, the legislative determination as to the propriety of the assessment and of the mode of its apportionment will be held controlling.

$ 530. Property Taxed Must Be Within the Jurisdiction of the

State. By reason of the due process clause of the Fourteenth Amend ment, and as a result from the fact that no State may give extraterritorial force to its laws, the States of the Union are constitutionally disqualified from levying taxes upon property without their several territorial jurisdictions. This principle, simple and absolute in itself, often becomes, however, difficult of application because of the difficulty in determining, in certain cases, when a given piece of property may be legally considered within the jurisdiction of the State attempting to tax it. illustrated in the sections which follow.


This difficulty is

$ 531. Personal Liability of the Property Owners.

The right to tax depending upon the actual or constructive presence within the jurisdiction of the property taxed, and the tax thus operating in rem rather than in personam against the owner, it follows that, strictly speaking, the owner, not domiciled in the State, cannot be made personally liable for the tax.23 Thus in Dewey v. City of Des Moines, 24 decided in 1899, was held void a state statute authorizing special assessments for local improrements and attempting to make non-resident lot owners personally liable for such assessments, the court saying: “ The principle which renders void a statute providing for the personal liability of a non-resident to pay a tax of this nature is the same which prevents a State from taking jurisdiction through its courts by virtue of a statute, over a non-resident not served with process within the State, to enforce a mere personal liability, and where no property of the non-resident has been seized or brought under the control of the court.

A judgment, without personal service against a non-resident, is only good so far as it affects the property which is taken or brought under the control of the court or other tribunal in an ordinary action to enforce a personal liability, and no jurisdiction is thereby acquired over the person of a non-resident further than respects the property so taken. This is as true in the case of an assessment against a non-resident of such a nature as this one as in the case of a more formal judgment."

In Corry v. Baltimore,25 decided in 1905, a law of Maryland was upheld which provided that stock in domestic corporations held by non-residents might be taxed, the tax to be paid by the

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23 So far as a tax operates upon persons, domiciliation in the State is the test. The terms "residents” and “inhabitants” when used in tax laws are, therefore, generally to be construed as referring to persons domiciled in the State.

24 173 U. S. 193; 19 Sup. Ct. Rep. 379; 43 L. ed. 665. 25 196 U. S. 466 ; 25 Sup. Ct. 297; 49 L. ed. 556.

corporations, which corporations were to have a lien upon the stock and a right of personal action against the non-resident stockholders to recover from them the amounts so paid. This law had, however, been construed by the Maryland courts, and this construction was accepted by the United States Supreme Court, to be, in reality, not a tax upon the stock as property, but a reasonable regulation upon the right to acquire the stock of the corporations which the State had created.26

$ 532. Incorporeal Hereditaments, Franchises, Etc.

All incorporeal hereditaments, such, for example, as corporate franchises, may be taxed only in the State from whose law they are derived and where, consequently, they have their legal situs.27

26 After referring to earlier decisions relating to the taxation of stoek of national banks, the court say: "In substance the contention is that the conceded principle has no application to taxation by a State of shares of stock in a corporation created by it, because, by the Constitution of the United States, the States are limited as to taxation to persons and things within their jurisdiction, and may not, therefore, impose upon a nonresident, by reason of his property within the State, a personal obligation to pay a tax. By the operation, therefore, of the Constitution of the United States, it is argued the States are restrained from affixing, as a condition to the ownership of stock in their domestic corporations by nonresidents, a personal liability for taxes upon such stock, since the right of the nonresident to own property in the respective States is protected by the Constitution of the United States, and may not be impaired by subjecting such ownership to a personal liability for taxation. But the contention takes for granted the very issue involved. The principle upheld by the rulings of this court to which we have referred, concerning the taxation by the States of stock in national banks, is that the sovereignty which creates a corporation has the incidental right to impose reasonable regulations concerning the ownership of stock therein, and that a regulation establishing the situs of stock for the purpose of taxation, and compelling the corporation to pay the tax on behalf of the shareholder, is not unreasonable regulation. Applying this principle, it follows that a regulation of that character, prescribed by a State, in creating a corporation, is not an exercise of the taxing power of the State over persons and things not subject to its jurisdiction. And we think, moreover, that the authority so possessed by the State carries with it the power to endow the corporation with a right of recovery against the stockholder for the tax which it may have paid on his 'behalf. Certainly, the exercise of such a power is no broader than the wellrecognized right of a State to affix to the holding of stock in a domestic corporation a liability on a nonresident as well as a resident stockholder in per. sonam, in favor of the ordinary creditors of the corporation.” 27 As to federal taxation of state granted franchises, see Section 57.


This doctrine is clearly stated in Louisville & Jeffersonville Ferry Co. v. Kentucky In this case it was held that a Kentucky corporation operating a ferry across the Ohio river was deprived of its property without due process of law by the action of the State in including, for purposes of taxation, in the valuation of its franchise derived from Kentucky, the value of a franchise derived from Indiana for a ferry from the Indiana to the Kentucky shore. The court say:

The court say: “ Beyond all question, the ferry franchise derived from Indiana is an incorporeal hereditament derived from and having its legal situs in that State. It is not within the jurisdiction of Kentucky. The taxation of that franchise or incorporeal hereditament by Kentucky is, in our opinion, a deprivation by that State of the property of the ferry company without due process of law

as much so as if the State taxed the real estate owned by that company in Indiana.”

The court go on to say that they are not called upon to decide and that they express no opinion as to the validity of a law making it a condition of the ferry company's continuing to exercise its corporate powers that it should pay a tax for its property having a situs in another State. It would seem, however, that such a condition would be valid, each State having the right to make such conditions as it may see fit to the existence of a company as a domestic corporation, or to entrance a foreign corpo ration to do business within the State. Thus, as will later appear, while a State may not tax the franchise of a foreign corporation as such, it may levy a license tax upon its right to do business within the State and may determine the amount of that tax by the value of its property, including the value of its corporate franchise. What would seem, however, to be a recent departure from this principle is discussed in Section 74 of this treatise.

$ 533. Taxation of Tangible Personal Property.

The right of the State to tax all real property situated within its borders,29 has never been questioned. Its inability to tax real

28 188 U. S. 385; 23 Sup. Ct. Rep. 463; 47 L. ed. 513.

29 Excepting, of course, property owned by the United States or by foreign governments.

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