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Opinion of the Court

in error, it is legally impossible that it should result in ascertaining the true cash value of the property of the plaintiff in error within the State of Indiana, and therefore such assessinent upon the plaintiff in error (which is a Federal agency and engaged in interstate commerce), is in violation of the commerce clause of the Constitution and of the Fourteenth Amendment thereto.

Mr. Alpheus H. Snow, Mr. Willard Brown and Mr. Charles W. Wells filed a brief for plaintiff in error.

Mr. William A. Ketcham, Attorney General of the State of Indiana, (with whom was Mr. Alonzo Greene Smith on the brief,) and Mr. Attorney General for defendants in error.

MR. JUSTICE GRAY, after stating the case, delivered the opinion of the court.

It is not and cannot be doubted that each State of the Union may tax all property, real and personal, within its borders, belonging to persons or corporations, although employed in interstate or foreign commerce, provided the rights and powers of the National Government are not interfered with. Delaware Railroad Tax case, 18 Wall. 206, 232; Telegraph Co. v. Texas, 105 U. S. 460, 464; Western Union Tel. Co. v. Massachusetts, 125 U. S. 530; Marye v. Baltimore & Ohio Railroad, 127 U. S. 117, 123, 124; Leloup v. Mobile, 127 U. S. 640, 649; Pullman's Co. v. Pennsylvania, 141 U. S. 18; Cleveland &c. Railway v. Backus, 154 U. S. 439, 445.

The principal grounds upon which the plaintiff contends that the statute of Indiana of March 6, 1893, c. 171, is unconstitutional, and the valuation and assessment of the plaintiff's property under it invalid, are that they necessarily included a taxation of franchises granted to the plaintiff by the United States, as well as of the plaintiff's property outside of the State of Indiana, neither of which was subject to taxation in that State; and also, by taking the market value of shares of the plaintiff's stock, in fixing the valuation of the entire prop

Opinion of the Court.

erty of the plaintiff, and by apportioning that valuation according to the proportion thereof within the State of Indiana, of all the plaintiff's telegraph lines everywhere, adopted an arbitrary rule, and imposed an unlawful burden upon interstate commerce.

But in each of these respects the case presented by this record appears to us to be governed by previous decisions of this court. The argument for the plaintiffs in error, in effect, if not in express words, invites the court to modify or to overrule those decisions. It becomes important, therefore, to state somewhat fully the scope and extent of those decisions, the reasons on which they proceeded, and the provisions of the statutes thereby construed.

The statutes of Massachusetts, the constitutionality of which was attacked by the present plaintiff, and upheld by this court, in the two cases of Western Union Tel. Co. v. Massachusetts, 125 U. S. 530, and 141 U. S. 40, were undistinguishable in any material respect from the statute of Indiana now before us, and may, as suggested at the bar, have been the model upon which this statute was framed.

The material provisions of those statutes of Massachusetts were as follows: Every corporation, chartered or organized in Massachusetts or elsewhere, and owning a telegraph line in Massachusetts, was required to return annually to the tax commissioner of the State a statement of the amount of its capital stock, the par value and market value of its shares, the locality and value of its real estate and machinery subject to local taxation within the State, the whole length of its lines, and the length of so much of its lines as was within the State. The tax commissioner was required to ascertain the true market value of its shares, and to estimate the fair cash valuation of all the shares constituting its capital stock; and the corporation was required to pay annually "a tax upon its corporate franchise at a valuation thereof equal to the aggregate value of the shares in its capital stocks," as so determined by the tax commissioner; deducting, however, from that valuation, such proportion thereof as was proportional to the length of that part of its line lying without the State, and also an

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amount equal to the value, as determined by the tax commissioner, of its real estate and machinery within the State and subject to local taxation therein. Mass. Pub. Stat. c. 13, $$ 38-40, 42.

In the first of the Massachusetts cases, Mr. Justice Miller, delivering the opinion of the court, said that "the main ground, on which the telegraph company resisted the payment of the tax alleged to be due," was that it was a violation of the rights conferred upon the company by the provisions (which had been accepted by the company) of the act of Congress of July 24, 1866, c. 230, reënacted in section 5263 of the Revised Statutes, by which it was enacted that any telegraph company organized under the laws of any State, should "have the right to construct, maintain and operate lines of telegraph through and over any portion of the public domain of the United States, over and along any of the military or post roads of the United States," "and over, under or across the navigable streams or waters of the United States." 14 Stat. 221; Rev. Stat. § 5263. The argument then made by counsel and the decision of the court upon this point are shown by the following passages in the opinion:

"The argument is very much pressed, that it is a tax upon the franchise of the company, which franchise, being derived from the United States by virtue of the statute above recited, cannot be taxed by a State; and counsel for appellant occasionally speak of the tax authorized by the law of Massachusetts upon this as well as all other corporations doing business within its territory, whether organized under its laws or not, as a tax upon their franchises. But by whatever name it may be called, as described in the laws of Massachusetts, it is essentially an excise upon the capital of the corporation. The laws of that Commonwealth attempt to ascertain the just amount which any corporation engaged in business within its limits shall pay as a contribution to the support of its government upon the amount and value of the capital so employed by it therein." 125 U. S. 546, 547.

"While the State could not interfere, by any specific statute, to prevent a corporation from placing its lines along these post

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roads, or stop the use of them after they were placed there, nevertheless the company, receiving the benefit of the laws of the State for the protection of its property and its rights, is liable to be taxed upon its real or personal property as any other person would be. It never could have been intended by the Congress of the United States, in conferring upon a corporation of one State the authority to enter the territory of any other State, and erect its poles and lines therein, to establish the proposition that such a company owed no obedience to the laws of the State into which it thus entered, and was under no obligation to pay its fair proportion of the taxes necessary to its support." 125 U. S. 548.

"The tax in the present case, though nominally upon the shares of the capital stock of the company, is in effect a tax upon that organization on account of property owned and used by it in the State of Massachusetts; and the proportion of the length of its lines in that State to their entire length throughout the whole country is made the basis for ascertaining the value of that property. We do not think that such a tax is forbidden by the acceptance on the part of the telegraph company of the rights conferred by section 5263 of the Revised Statutes, or by the commerce clause of the Constitution." 125 U. S. 552. See also Reagan v. Mercantile Trust Co., 154 U. S. 413, 416, 417; Central Pacific Railroad v. California, 162 U. S. 91, 123.

It was further argued in that case, that the tax was excessive and invalid, because, in ascertaining the whole valuation of the stock, no deduction was made on account of the value of real estate and machinery situated, and subject to local taxation, outside of the State of Massachusetts; although it appeared that the company owned lands and buildings outside of the State, the cost of which was more than $3,000,000, and upon which it had been assessed and had paid taxes of more than $48,000. 125 U. S. 542, 544, 552.

The court, notwithstanding, declared that it did not feel called upon to defend all the items and rules by which the authorities of the State arrived at the taxable value on which its ratio of percentage of taxation should be assessed, or to


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hold the tax void because the court might have adopted a different system had it been called upon to accomplish the same result; and decided that the rule adopted to ascertain the amount of the value of the capital engaged in business within the boundaries of the State, on which the tax should be assessed, was not an unfair or an unjust one, and that the details of the method by which this was determined did not exceed the fair range of legislative discretion. 125 U. S. 553. The same views were affirmed in the second case between the same parties. 141 U. S. 44, 45.

Those decisions clearly establish that a statute of a State, requiring a telegraph company to pay a tax upon its property within the State, valued at such a proportion of the whole value of its capital stock as the length of its lines within the State bears to the length of all its lines everywhere, deducting a sum equal to the value of its real estate and machinery subject to local taxation within the State, is constitutional and valid, notwithstanding that nothing is in terms directed to be deducted from the valuation, either for the value of its franchises from the United States, or for the value of its real estate and machinery situated and taxed in other States; unless there is something more showing than the system of taxation adopted is oppressive and unconstitutional.

We are then brought to a consideration of the statutes of Indiana, as construed by the Supreme Court of the State and by this court.

The statute of Indiana of March 6, 1891, c. 91, repealed previous laws, and established a comprehensive and complete system of taxation. By § 3, all property within the jurisdiction of the State, not expressly exempted, was declared to be subject to taxation; and by subsequent sections the property of all corporations owning or operating railroads within the State was classified for the purposes of taxation as follows:

By § 78, the "right of way, including the superstructure, main, side or second track, and turnouts, turntables, telegraph poles, wires, instruments and other appurtenances, and the stations and improvements of the railroad company on such right of way" (excepting machinery, fixtures and stationary

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