same undeniable and unlimited power over all persons and things within its territorial limits, as any foreign nation, where the jurisdiction is not surrendered or restrained by the constitution of the United States. That, by virtue of this, it is not only the right, but the bounden and solemn duty of a state, to advance the safety, happiness and prosperity of its people, and to provide for the general welfare, by any and every act of legislation which it may deem conducive to those ends, where the power over the particular subject, or the manner of its exercise is not surrendered or restrained in the manner just stated. That all those powers which relate to merely municipal legislation, or what may, perhaps, more properly be called internal police, are not thus surrendered or restrained; and that, consequently, in relation to these, the authority of the state is complete, unqualified and exclusive. We are aware that it is at all times difficult to define any subject with proper precision and accuracy; if this be so in general, it is emphatically so in relation to a subject so diversified and multifarious as the one which we are now considering. If we were to attempt it, we should say that every law came within this description which concerned the welfare of the whole people of a state, or any individual within it, whether it related to their rights, or their duties; whether it respected them as men, or as citizens of the state; whether in their public or private relations; whether it related to the rights of persons or property of the whole people of a state, or of any individual within it; and whose operation was within the territorial limits of the state, and upon the persons and things within its jurisdiction." 11 Municipal sovereignty is sometimes regarded as synonymous with the "police power," which is defined by Chief Justice. Taney as follows: "But what are the police powers of a state? They are nothing more nor less than the powers of government inherent in every sovereignty to the extent of its dominions. And whether a state passes a quarantine law, or a law to punish offenses, or to establish courts of justice, or requiring certain instruments to be recorded, or to regulate commerce within its own limits, in every case it exercises the same power; that is to say, the power of sovereignty, the power to govern men and things 11 New York v. Miln, 11 Pet. 102 (9:648). within the limits of its dominion. It is by virtue of this power that it legislates." 12 In a great case, Chief Justice Marshall, drawing the line between interstate commerce, which is subject to the regulation of congress, and internal or domestic commerce, and over which congress can exercise no control, said: "The genius and character of the whole government seems to be, that its action is to be applied to all the external concerns of the nation, and those internal concerns which affect the states generally; but not to those which are completely within a particular state, which do not affect other states, and with which it is not necessary to interfere, for the purpose of executing some of the general powers of the government. The completely internal commerce of a state, then, may be considered as reserved for the state itself." And he stated that inspection laws, while having a remote and considerable influence on interstate commerce, "form a portion of that immense mass of legislation which embraces everything within the territory of a state not surrendered to the general government; all which can be most advantageously exercised by the states themselves. Inspection laws, quarantine laws, health laws of every description, as well as laws for regulating the internal commerce of a state, and those which respect turnpikes, roads, ferries, are component parts of this mass." 13 The state, in the exercise of its municipal sovereignty, may create, establish, maintain and regulate all those civil institutions which are essential to the preservation of good government, and the security, education and welfare of the people, and may modify and change them, as circumstances require.14 13 § 182. Same Same State's power of taxation. The imposition, modification, and removal of taxes, and the exemption of property from such burdens, are an ordinary exercise of the power of state sovereignty. The taxing power of a state is one of its attributes of sovereignty; it exists independently of the constitution of the United States, and underived from that instrument; it may be exercised to an unlimited extent upon all 12 License Cases, 5 How. 583 (12:291, 292). 13 Gibbons v. Ogden, 9 Wheat. 203 (6:72). 14 Dartmouth College v. Woodward, 4 Wheat. 627, 629 (4:657). 15 Gilman v. Sheboygan, 2 Black, 510, 518 (17:305). property, trades, business and avocations existing or carried on within the territorial boundaries of the state, except so far as it has been surrendered to the federal government, either expressly or by necessary implication. Before the adoption of the constitution of the United States, each of the states possessed unlimited power to tax, either directly or indirectly, all persons and property within their jurisdiction, alike by tax on polls, or duties on internal production, manufacture or use, except so far as such taxation was inconsistent with certain treaties that had been made; and the constitution contains no express restriction of this power, other than a prohibition to lay any imposts or duties on imports or exports, except what may be absolutely necessary for executing the states' inspection laws. The state's power of taxation is concurrent with the taxing power of the federal government, and in case of a tax upon the same subject by both governments, the claim of the United States as the supreme authority must be preferred; but with this qualification, the state's power is absolute. The extent to which the power shall be exercised, the subjects upon which it shall be exercised, and the mode in which it shall be exercised, are all equally within the discretion of the legislatures to which the states commit the power; and that discretion is restrained only by the will of the people as expressed in the state constitutions, or through elections, and by the condition that it must not be so exercised or used as to directly burden or embarrass the operations of the national government, or hinder the exercise of any powers with which it is vested by the constitution.16 § 183. Same Same-Taxation of property employed in interstate commerce.-While the state may not, in the exercise of its taxing power, impose, directly, any burdens upon interstate commerce, yet this principle does not prevent the imposition of state taxes upon property employed in interstate commerce. Mr. Justice Brewer, stating the doctrine upon this subject, with its limitations, laid down the following propositions as having been fully established by the adjudications of the supreme court, and no longer open to discussion, namely: (1) The constitution of the United States having given to congress the power to regulate commerce, not only with foreign. 16 Union Pacific Railroad Co. v. Peniston, 18 Wall. 5, 50 (21:787); M'Culloch v. Maryland, 4 Wheat. 316, 437 (4:579). nations, but among the several states, that power is necessarily exclusive whenever the subjects of it are national in their character, or admit only of one uniform system or plan; (2) no state can compel a party, individual, or corporation, to pay for the privilege of engaging in interstate commerce; (3) this immunity does not prevent a state from imposing ordinary property taxes upon property having a situs within its territory, and employed in interstate commerce; (4) the franchise of a corporation, although that franchise is the business of interstate commerce, is, as a part of its property, subject to state taxation, providing, at least, the franchise is not derived from the United States; and (5) no corporation, even though engaged in interstate commerce, can appropriate to its own use property, public or private, without liability to charge therefor.17 § 184. Same-Same-Taxation of intangible property.While no state can, in the exercise of the taxing power, interfere with the commercial power of the United States, yet it is not and cannot be doubted that each state of the union may tax all property, real and personal, belonging to persons or corporations, and having a legal situs within its limits, although such property be employed in interstate or foreign commerce; 18 and this power of taxation extends not only to tangible property, but also to intangible property.19 17 Atlantic & Pacific Telegraph Co. v. City of Philadelphia, 190 U. S. 160-169 (47:995), citing a long list of decided cases in support of each of the above propositions. 18 Western Union Telegraph Co. v. Taggart, 163 U. S. 1, 30 (41:49), and authorities there cited. 19 Adams Express Co. v. Ohio State Auditor, 166 U. S. 185, 225 (41:965); Adams Express Co. v. Kentucky, 166 U. S. 171, 185 (41:960). "In the complex civilization of today, a large portion of the wealth of the community consists in intangible property, and there is nothing in the nature of things, or in the limitations of the federal constitution, which restrains a § 185. Same Same Same.-There is nothing in the federal constitution which restrains a state from taxing the franchise of a corporation at a different and higher rate than the taxation of tangible property in the state.20 § 186. Same-Same-Power of state to fix situs of stock of corporations for purposes of taxation.-It is within the competency and power of the state to fix, for the purposes of taxation, the situs of the shares of stock of domestic coporations, whether held by residents or non-residents, at the principal office of the corporation in the state, and to assess them there to the owners, giving notice of the assessment to the corporation, and to require the corporation to pay for and on account of the owners the taxes assessed upon the shares, and to compel such payment without reference to the dividends, giving to the corporation a lien upon the shares of stock for the taxes so paid, and entitling it, when it pays the taxes, to proceed by personal action against the owner of the shares to recover the amount paid. In such scheme of taxation, the corporation is made the agent of the stockholders to receive notice of the assessment, and to represent them in proceedings for the correction of the assessment; and the scheme is due process of law.2 § 187. Same Same Power of state to tax personal property without regard to domicile of owner.-Every state has the 21 corporation it carries with it that franchise to be. But the franchise to be is only one of the franchises of a corporation. The franchise to do is an independent franchise, or rather a combination of franchises, embracing all things which the corporation is given power to do, and this power to do is as much a thing of value and a part of the intangible property of the corporation as the franchise to be." Mr. Justice Brewer in Adams Express Co. v. Ohio State Auditor, 166 U. S. 125, 225 (41:965). 20 Coulter v. Louisville & Nashville Railroad Co., 196 U. S. 599 (49:615). 21 Corry v. Baltimore, 196 U. S. 466 (49:556). |