it is obnoxious to a constitutional provision requiring equality in taxation or prohibiting double taxation.21 $4590. Existence. In view of the fact that the doctrine that the property of a corporation belongs in law to the corporation as an entity separate and distinct from its members is a mere fiction of the law, that the beneficial interest is in the stockholders, and that the shares of the capital stock in their hands merely represent such beneficial interest, the position that it is not double taxation to impose one tax upon the property of a corporation, or upon its capital stock, and another tax upon the shares of the capital stock in the hands. of the individual stockholders has been vigorously attacked. Some courts have held that it is double taxation.22 Other courts, including 21 United States Elec. Power & Light Co. v. State, 79 Md. 63, 28 Atl. 768, quoted with approval in William Wilkens Co. v. Baltimore, 103 Md. 293, 7 Ann. Cas. 1192, 63 Atl. 562. "The best-devised system of taxation based upon the values of property must of necessity produce unequal results so long as the attempt is made to tax all property, including real estate, personal chattels, and moneys and credits. One person will be taxed upon the real estate bought upon credit, and another upon the obligation which he holds for the purchase money; and this must necessarily be so or there would be but little taxation upon credits, because for the most part they are either the representative of money or property of some kind held by another.' Cook v. Burlington, 59 Iowa 251, 44 Am. Rep. 679, 13 N. W. 113. In the absence of an express constitutional prohibition, there is no necessary nor inherent objection to taxing the same property twice to different persons, at least, when there is some estate or right in each of such persons. Bank of California, National Ass'n v. Roberts, 173 Cal. 398, 160 Pac. 225. Maine. Stevens v. Dexfield & M. Missouri. Ogden v. St. Joseph, 90 New Hampshire. Cheshire County New Jersey. Smith v. Ramsey, 54 It is double taxation in the case of 22 United States. City & County of a bank as well as in the case of any 1 the Supreme Court of the United States, have taken a different view, and have held that the shares of the capital stock of a corporation in the hands of the stockholders, though representing their interest in the property of the corporation, are, for the purposes of taxation, distinct from the property of the corporation, and from its capital stock in its hands, and that to tax both-the former to the corporation, and the latter to the stockholders-is not double taxation.23 other corporation. Inhabitants of East Livermore v. Livermore Falls Trust & Banking Co., 103 Me. 418, 15 L. R. A. (N. S.) 952, 13 Ann. Cas. 631, 69 Atl. 306. "It is unquestionably true that the property of a corporation does not belong to the shareholders; they are not the legal owners, but they have an equitable or beneficial interest therein. It is held and managed for their use and benefit, and under their control and direction. It is not a mere metaphysical subtlety to say that the corporate property is represented by the shares of stock. It is substantially true, for a tax assessed on the property of the corporation is in reality imposed upon the shareholders, and is paid by them indirectly." Per Bartol, C. J., in Frederick County Com'rs v. Farmers' & Mechanics' Nat. Bank, 48 Md. 117, 120. "The same reasoning is not applicable, in the strict legal aspect of the case, to a foreign corporation, and that because taxes paid in another state are no taxes at all as far as this state is concerned; but the essential equity of the case is the same. Trenton v. Standard Fire Ins. Co., 76 N. J. L. 79, 68 Atl. 1111. "While it may be conceded that the property of the stockholder in his shares is so legally distinguishable from that of the corporate entity in its specific assets that the legislature might tax both without defiance of an definite constitutional inhibition yet, broadly viewed, the value of the stock in the hands of the shareholders includes the net value of all the property which the corporation owns; not only tangible property, but also the franchise and any good will from which results probability of profits." First Nat. Bank of City of Superior v. Douglas County, 124 Wis. 15, 4 Ann. Cas. 34, 102 N. W. 315. Shelby County v. Bank, 161 U. S. 23 United States. Union & Planters' 149, 40 L. Ed. 650; Bank of Commerce v. Tennessee, 161 U. S. 134, 40 L. Ed. 645; New Orleans v. Houston, 119 U. S. 265, 277, 30 L. Ed. 411; Sturges v. Carter, 114 U. S. 511, 521, 29 L. Ed. 240; Farrington v. Tennessee, 95 U. S. 679, 24 L. Ed. 558; Van Allen v. Assessors, 3 Wall. 573, 18 L. Ed. 229. Illinois. Greenleaf v. Board Review Morgan Co., 184 Ill. 226, 75 Am. St. Rep. 168, 56 N. E. 295; Danville Banking & Trust Co. v. Parks, 88 Ill. 170; Porter v. Rockford, R. I. & St. L. R. Co., 76 Ill. 561. Iowa. Judy v. Beckwith, 137 Iowa 24, 15 L. R. A. (N. S.) 142, 15 Ann. Cas. 890, 114 N. W. 565. North Carolina. Board Com'rs Durham Co. v. Blackwell Durham Tobacco Co., 116 N. C. 441, 21 S. E. 423; Belo v. Forsyth County Com'rs, 82 N. C. 415, 33 Am. Rep. 688. Ohio. Bradley v. Bauder, 36 Ohio St. 28, 38 Am. Rep. 547. Tennessee. State v. Bank of Commerce, 95 Tenn. 221, 31 S. W. 993; Memphis v. Home Ins. Co., 91 Tenn. 558, 19 S. W. 1042; Street R. Co. v. Morrow, 87 Tenn. 406, 2 L. R. A. 853, "The capital stock of a corporation and the shares into which such stock may be divided and held by individual shareholders," says the Federal Supreme Court, "are two distinct pieces of property. The capital stock and the shares of stock in the hands of the shareholders may both be taxed, and it is not double taxation." 24 It has been 11 S. W. 348; Memphis v. Ensley, 6 Baxt. 553, 32 Am. Rep. 532. Virginia. Com. v. Charlottesville Perpetual Building & Loan Co., 90 Va. 790, 44 Am. St. Rep. 950, 20 S. E. 364; State Bank of Virginia v. Richmond, 79 Va. 113. “The argument is, that the capital of the corporation is invested in property which is taxed in the name of the corporation, and that the shares in the capital stock, when owned by individuals, only represent proportions in the ownership of such property and hence to tax the shares is another mode of taxing the property of the corporation, and that a tax upon both, 'although the tax is imposed by another state, violates the rule or principle of equality established by the Constitution. This argument, how ever plausible it seems, has never met with favor from the courts." Bradley v. Bauder, 36 Ohio St. 28, 38 Am. Rep. 547. Corporate stock is a liability of the corporation and not an asset. Southern Gum Co. v. Laylin, 66 Ohio St. 578, 64 N. E. 564. In a Virginia case it was held that a statute taxing the "capital including money, credits, or other thing invested," and "the value of all capital of incorporated joint stock companies not otherwise taxed,” authorized the taxation of both the capital stock of corporations not otherwise taxed and the shares of stock in such companies held by resident and nonresident holders. Com. v. Charlottesville Perpetual Building & Loan Co., 90 Va. 790, 44 Am. St. Rep. 950, 20 S. E. 364. A statute requiring bank stock to be assessed in the names of the holders at its actual market value is not objectionable as imposing double taxation, although the capital of the bank is largely invested in real estate, which is also taxed. Jefferson County Sav. Bank v. Hewitt, 112 Ala. 546, 20 So. 926. 24 Bank of Commerce v. Tennessee, 161 U. S. 134, 40 L. Ed. 645. See also Farrington v. Tennessee, 95 U. S. 679, 687, 24 L. Ed. 558; New York v. Commissioners of Taxes & Assessments City & County of New York, 71 U. S. 244, 18 L. Ed. 344; Churchill v. Utica, 3 Wall. (U. S.) 573, 18 L. Ed. 229; William Wilkens Co. v. Baltimore, 103 Md. 293, 7 Ann. Cas. 1192, 63 Atl. 562. The assessment of the personal property permanently located in the state belonging to a foreign corporation is not obnoxious to a provision of the state constitution prohibiting double taxation, or requiring equality in taxation, although the shares of stock belonging to and held by residents of the state have also been assessed and the taxes thereon paid. William Wilkens Co. v. Baltimore, 103 Md. 293, 7 Ann. Cas. 1192, 63 Atl. 562. The Iowa Supreme Court has sustained a municipal tax on locallyowned shares of stock in a domestic bridge company notwithstanding the taxation of the interstate bridge, the only tangible property of the company, by the other and different domestic municipality into which the bridge extends. Cook v. Burlington, 59 Iowa 251, 44 Am. Rep. 679, 13 N. W. 113. held to be double taxation, however, to tax the deposits in a savings bank both to the bank and to the depositors, 25 and to impose a tax upon all the tangible property of a corporation, and also impose a tax upon its capital stock.26 But it is not double taxation to impose a tax upon the property or the capital stock or shares of stock of a corporation, and also upon its franchises; 27 nor upon the tangible Memberships in an incorporated chamber of commerce and the property of such corporation may both be taxed without there being any double taxation. Rogers v. Hennepin County, 240 U. S. 184, 60 L. Ed. 594, aff'g 124 Minn. 539, 145 N. W. 112. 25 Robinson v. Dover, 59 N. H. 521; Berry v. Windham, 59 N. H. 288, 47 Am. Rep. 202. Compare, however, Yuba v. Adams, 7 Cal. 35. And see Knox v. Shawnee, 20 Kan. 596. 26 Tennessee v. Whitworth, 117 U. S. 129, 29 L. Ed. 830; Town of New Haven v. City Bank, 31 Conn. 106; Whitney v. Madison, 23 Ind. 331; Frederick County Com'rs v. Farmers' & Mechanics' Nat. Bank, 48 Md. 117; Baltimore v. Baltimore & O. R. Co., 6 Gill (Md.) 288. See also Appeal of Fox, 112 Pa. St. 337, 4 Atl. 149; Com. v. Standard Oil Co., 101 Pa. St. 119. A tax on the capital stock of a bank, taken at its face value, and an additional tax on the bank's real estate is double taxation. Hempstead County v. Hempstead County Bank, 73 Ark. 515, 84 S. W. 715. See also McCornick & Co. v. Bassett, 49 Utah 444, 164 Pac. 852; Lewiston Water & Power Co. v. Asotin County, 24 Wash. 371, 64 Pac. 544. "A tax upon a railroad after its completion," said Chief Justice Waite, "is necessarily a tax upon its capital, because, practically, the capital and that into which it has been converted are the same. The railroad of the corporation may be worth more than its capital, but all its capital is in its railroad. Such being the case, the taxation of both railroad and capital would be, so far as the corporation is concerned, double taxation." Tennessee v. Whitworth, 117 U. S. 129, 135, 29 L. Ed. 830. 27 United States. Delaware Railroad Tax, 18 Wall. 206, 21 L. Ed. 888. California. Spring Valley Water Works v. Schottler, 62 Cal. 69. Kentucky. Henderson Bridge Co. v. Com., 90 Ky. 623, 29 L. R. A. 73, 31 S. W. 486. United States Elec. Power & Light Co. v. State, 79 Md. 63, 28 Atl. 768. Maryland. Massachusetts. Manufacturers' Ins. Co. v. Loud, 99 Mass. 146, 96 Am. Dec. 715. North Carolina. Wilmington, C. & A. R. Co. v. Brunswick County Com'rs, 72 N. C. 10. The imposition of an ad valorem tax upon property and a license or occupation tax upon the use thereof does not constitute double taxation. Jackson v. Neff, 64 Fla. 326, 60 So. 350. The limitation in the Ohio Constitution which prohibits double taxation of the property of corporations applies only to the taxation of property and not to the taxation of privileges or franchises (Southern Gum Co. v. Laylin, 66 Ohio St. 578, 64 N. E. 564), and hence a railroad company may be required to pay a privilege tax as well as a property tax without being subjected to double taxation. Ohio River R. Co. v. Dittey, 232 U. S. 576, 58 L. Ed. 737. An excise upon the privilege or franchise of existing and doing business as a corporation is not invalid as property of a corporation, and also upon the value of its capital stock after deducting the value of its tangible property; 28 nor upon bonds issued by a corporation and also upon its franchises.29 It is not double taxation to assess as separate items the roadbed of a railroad company, which is the foundation upon which the superstructure rests, the roadway, which is the right of way, and the rails in place, which constitute the superstructure.30 § 4591. Federal agencies and agents-M'Culloch v. Maryland. It was in the celebrated case of M'Culloch v. Maryland,31 that the Supreme Court of the United States, speaking through Chief Justice Marshall, declared that "the states have no power by taxation or otherwise, to retard, impede, burden, or in any manner control the operations of the constitutional laws enacted by Congress to carry into execution the powers vested in the general government," and, in keeping with this view, that the statute of the state of Maryland which imposed a tax on the operations of the Bank of the United States, a branch of which had been established in the city of Baltimore, was unconstitutional and void. And to the law on this subject as laid down in M'Culloch v. Maryland the Federal Supreme Court has ever since sedulously adhered. There must be no misapprehension, however, as to just what the law was that Chief Justice Marshall, in that case, laid down with such great lucidity and so much finality. He condemned without reservation, as being unconstitutional, a state tax on the operations of an agency employed by the federal government in the execution of its powers, but he made it plain that his decision as to a state's power to tax went no further than this. Said he: "This opinion does not deprive the states of double taxation because, in measuring its amount, property otherwise taxed is considered. A. J. Tower Co. v. Com., 223 Mass. 371, 111 N. E. 966. See also Simplex Elec. Heating Co. v. Com., 227 Mass. 225, 116 N. E. 501. A corporation may be required to pay a special excise tax in addition to a license tax without being subjected to double taxation. Baldwin Tool Works v. Blue, 240 Fed. 202. 28 Chicago, B. & Q. R. Co. v. Siders, 88 Ill. 320; Porter v. Rockford, R. I. & St. L. R. Co., 76 Ill. 561; Hyland v. Central Iron & Steel Co., 129 Ind. 68, 13 L. R. A. 515, 28 N. E. 308, dis tinguishing Hyland v. Brazil Block 29 Com. v. New York, L. E. & W. R. 30 San Francisco & N. P. R. Co. v. State Board of Equalization, 60 Cal. 12. 314 Wheat. (U. S.) 316, 4 L. Ed. 579, adhered to in Osborn v. Bank of United States, 9 Wheat. (U. S.) 738, 6 L. Ed. 204, as regarded an Ohio statute. |