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this is very different from measuring the good will by the capital when the facts appear as they do in this case. The difference is not a mere difference in valuation, it is a difference in principle, and in our opinion the principle adopted by the board was wrong. It involved an attempt to tax property beyond the jurisdiction of the state, and to throw an unconstitutional burden on commerce among the states."

To the same effect was the decision of the Circuit Court of Appeals, construing the Kentucky statute.17 Lurton, Circuit Judge, said: 18

"The bonds and stocks thus conveyed to a trust company constituted an investment of surplus earnings which were not used in carrying on the express business of the company, and, as an outside investment, had a special situs in New York, where they were actually held. Not being a part of the distributable unit of taxation, and. the bonds issued against them not being general obligations of the company, neither the bonds nor the securities upon which they were issued should be estimated in the valuation of the company's intangible property.'

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§ 507. The rule now established.

The present state of the law, then, appears to be this: Wherever a business enterprise exists, in which property situated in several States is used, and the business is carried on in several States, the whole value of the business includes or may include more than the aggregate of the separate articles of property used in it; and this excess may properly be referred not to any one State, but to all the States in which the business is done. But that part of the value which may be divided among the States is that part only which is equally applicable to all. Fixed tangible property, being referable only to the State in which it is situated, should be deducted from the whole value of the business before dividing the excess; though 17 Coulter v. Weir, 127 Fed. 897.

18 At p. 911.

tangible property which is used throughout the business may be divided with the excess. In the same way if good will is greater in one State than in another, it should be subtracted and separately taxed. The balance, the corporate excess, may properly be divided among the States in proportion to the amount of business done or capital invested in each.

§ 508. Franchise tax.

The taxation of the corporate franchise by the State which granted it can be restrained only by some provision of the State constitution. This franchise, so taxed, is "the right or privilege given by the State to two or more persons of being a corporation, that is, of doing business in a corporate capacity, and not the privilege or franchise which, when incorporated, the company may exercise. The right or privilege to be a corporation, or to do business as such a body, is one generally deemed of value to the corporators, or it would not be sought in such numbers as at present. It is a right or privilege by which several individuals may unite themselves under a common name, and act as a single person, with a succession of members, without dissolution or suspension of business, and with a limited individual liability. The granting of such right or privilege rests entirely in the discretion of the state, and, of course, when granted, may be accompanied with such conditions as its legislature may judge most befitting to its interests and policy. It may require, as a condition of the grant of the franchise, and also of its continued exercise, that the corporation pay a specific sum to the state each year or month, or a specific portion of its gross receipts, or of the profits of its business, or a sum to be ascertained in any convenient mode which it may prescribe. The validity of the tax can in no way be dependent upon the mode which the state may deem fit to adopt in fixing the amount for any year which it will exact for the franchise. No constitutional objection lies in the way of a legislative body prescribing any mode of measurement to determine the amount it will charge for the privileges

it bestows. It may well seek in this way to increase its revenue to the extent to which it has been cut off by exemption of other property from taxation. As its revenues to meet its expenses are lessened in one direction, it may look to any other property as sources of revenue which is not exempted from taxation. Its action in this matter is not the subject of judicial inquiry in a federal tribunal. As was said in Delaware Railroad Tax Case: 19 The state may impose taxes upon the corporation as an entity existing under its laws, as well as upon the capital stock of the corporation, or its separate corporate property; and the manner in which its value shall be assessed, and the rate of taxation, however arbitrary or capricious, are mere matters of legislative discretion. It is not for us to suggest in any case that a more equitable mode of assessment or rate of taxation might be adopted than the one prescribed by the legislature of the state. Our only concern is with the validity of the tax. All else lies beyond the domain of our jurisdiction.' It is true, as said by this court in California v. Railroad Co.20 that the taxation of a corporate franchise has no limitation but the discretion of the taxing power; and its value is not measured like that of property, but may be fixed at any sum that the legislature may choose. It may be arbitrarily laid, without any valuation put upon the franchise. If any hardship or oppression is created by the amount exacted, the remedy must be sought by appeal to the legislature of the state. It cannot be furnished by the federal tribunals. The tax in the present case would not be affected if the nature of the property in which the whole capital stock is invested were changed, and put into real property or bonds of New York, or of the other states. From the very nature of the tax, being laid upon a franchise given by the state, and revocable at pleasure, it cannot be affected in any way by the character of the property in which its capital stock is invested. The power of the state over its corporate 19 18 Wall. 206, 231, 21 L. ed. 888.

20 127 U. S. 1, 41, 32 L. ed. 150.

?? 21

franchise, and the conditions upon which it shall be exercised, is as ample and plenary in the one case as in the other." This tax, when imposed upon a foreign corporation, is a privilege tax, such as will be considered in the next section; when imposed upon a domestic corporation, it is in the nature of a poll tax, and in imposing a poll tax the State which has jurisdiction of the person cannot be controlled. As the Supreme Court of the United States said:

"Whether the State of Connecticut shall measure the contribution which persons resident within its jurisdiction shall make by way of taxes, in return for the protection it affords them, by the value of the credits, choses in action, bonds or stocks which they may own (other than such as are exempted or protected from taxation under the Constitution and laws. of the United States) is a matter which concerns only the people of that State, and with which the Federal Government cannot rightly interfere." 22

This tax is not a property tax, even when it is measured by the amount of property of a corporation. Therefore, to levy such a tax in addition to a property tax is not double taxation; 23 and the tax is not subject to a constitutional requirement that taxes shall be uniform.24 For the same reason, in estimating the value of the property of the corporation in order to arrive at the proper basis for taxation it is not necessary to deduct non-taxable property, such as government bonds, 25 or patent rights, 26 or other non-taxable property.27

21 Field, J., in Home Ins. Co. v. New York, 134 U. S. 594, 33 L. ed. 1025. See Southern Gum Co. v. Laylin, 66 Oh. St. 578, 64 N. E. 564.

22 Harlan, J., in Kirtland v. Hotchkiss, 100 U. S. 491, 499, 25 L. ed. 558. 23 Western Assur. Co. v. Halliday, 127 Fed. 830; Southern Gum Co. v. Laylin, 66 Oh. St. 578, 64 N. E. 564.

24 Phoenix Carpet Co. v. State, 118 Ala. 143, 22 So. 627; Com. v. Hamilton Mfg. Co., 12 All. (Mass.) 298; Standard Underground Cable Co. v. Atty. Gen., 46 N. J. Eq. 270, 19 Atl. 733, 19 A. S. R. 394.

25 Home Ins. Co. v. New York, 134 U. S. 594, 33 L. ed. 1025, affirming

26 Marsden Co. v. Assessors, 61 N. J. L. 461, 39 Atl. 638. Contra, People v. Roberts, 159 N. Y. 70, 53 N. E. 685, 45 L. R. A. 126.

27 Honduras Commercial Co. v. Assessors, 54 N. J. L. 278, 23 Atl. 668.

§ 509. Privilege tax.

A State may as has been seen tax any privilege it grants. Such a tax, or rather license fee, is the payment exacted of a foreign corporation for the privilege of doing business within the State. Since a foreign corporation may be allowed to do business in a State upon conditions, the payment of a sum of money may be made a condition; and this may in form be the payment of a tax greater than or different from that paid by a domestic corporation. Such a tax is valid.28 It is not properly an exercise of the power to tax property, but is a license fee paid for the privilege of entering the State, and its validity is a necessary deduction from the right absolutely to exclude the foreign corporation. Upon a similar principle the exaction of a fee for filing a certificate of incorporation is not a tax; nor is a fee for filing an annual report.30

29

In most State constitutions or statutes there is a provision. that all taxes shall be uniform or equal. This does not prevent a discrimination against foreign corporations by way of exact

People v. Home Ins. Co., 92 N. Y. 328; Com. v. Hamilton Mfg. Co., 12 All. (Mass.) 298.

28 Ducat v. Chicago, 10 Wall. 410, 19 L. ed. 972; Liverpool Ins. Co. v. Mass., 10 Wall. 566, 19 L. ed. 1029; Pembina Mining Co. v. Pa., 125 U. S. 181, 31 L. ed. 650; Maine v. Grand Trunk Ry., 142 U. S. 217, 35 L. ed. 994; Horn Silver Mining Co. v. New York, 143 U. S. 305, 36 L. ed. 164; New York v. Roberts, 171 U. S. 658, 43 L. ed. 323; Manchester Fire Ins. Co. v. Herriott, 91 Fed. 711; Goldsmith v. Home Ins. Co., 62 Ga. 379; Ducat v. Chicago, 48 Ill. 172, 95 A. D. 529; W. U. Tel. Co. v. Lieb, 76 Ill. 172; Com. v. Milton, 12 B. Mon. (Ky.) 212, 54 A. D. 522; Phoenix Ins. Co. v. Com., 5 Bush (Ky.), 68, 96 A. D. 331; State v. Ins. Co. of North Amer., 115 Ind. 257; Blackmer v. Royal Ins. Co., 115 Ind. 291; State v. Lathrop, 10 La. Ann. 398; State v. Fosdick, 21 La. Ann. 434; State v. Hammond Packing Co., 110 La. 180, 34 So. 368; Atty.-Genl. v. Bay State Mining Co., 99 Mass. 148, 96 A. D. 717; Ex parte Cohn, 13 Nev. 424; Tatem v. Wright, 23 N. J. L. 429; People v. Fire Assoc. of Phila., 92 N. Y. 311, 44 A. R. 380; Fire Dept. v. Noble, 3 E. D. Smith (N. Y.), 440; W. U. Tel. Co. v. Mayer, 28 Oh. St. 521; Southern Gum Co. v. Laylin, 66 Oh. St. 578, 64 N. E. 564; Slaughter v. Com., 13 Gratt. (Va.) 767; Fire Dept. of Milwaukee v. Helfelstein, 16 Wis. 136.

29 Ashley v. Ryan, 153 U. S. 436, 38 L. ed. 773.

30 Southern Gum Co. v. Laylin, 66 Oh. St. 578, 64 N. E. 564.

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