[Chap. XXIII. "The true inquiry would seem to be whether a corporation, organized as this is, and carrying on the business that this does, and in the manner shown, would not be considered, in common language, as engaged in some manufacturing process, or carrying on some manufacturing business, though granting all that is said by experts and others about electricity as a natural element or force. To say that electricity exists in a state of nature, and that a corporation engaged in the business that the relator is collects or gathers it, does not fully or accurately express the process by means of which it is enabled to sell and deliver something useful and valuable to its customers. If due weight is given to the fact that electricity, as now used and applied to the business of life, such as the lighting of streets and buildings, the propulsion of cars and machinery, and like operations, is essentially the product of the skill and labor of man, there is no difficulty in reaching the conclusion that a corporation engaged in the business of generating, storing, transmitting, and selling it is what was commonly known at the time of the passage of the corporation tax law in 1880,a 'manufacturing corporation.'" 34 "The distinction is not an obscure one. The mere appropriation or use of an article or thing which is furnished by nature is not a manufacturing operation. The liberation of natural gas from its hiding place in the earth, and its transportation through pipes to consumers, would not properly be called a manufacturing operation; but the production of illuminating gas, and its distribution to consumers by means similar to the operation which the relator carries on, constitutes manufacturing, and a corporation organized for that purpose is a manufacturing corporation.35 So, too, the collection, storage, preparation for market, and transportation of ice is not a manufacture, but the production of ice by artificial means is manufacture." 36 34 O'Brien, J., in P. v. Wemple, 129 N. Y. 543, 29 N. E. 808. 35 Gas-Light Co. v. Brooklyn, 89 N. Y. 409. 36 P. v. Knickerbocker Ice Co., 99 N. Y. 181, 1 N. E. 669. So though the generation of electricity is manufacture, merely furnishing it is not.37 579. Manufacture not merely incidental. That the corporation is itself to use its product in carrying out its contracts is not important,38 though the ordinary purpose of manufacturing is to sell the product. Indeed, if the sale of the product is the important thing, the manufacturing being merely incidental, the corporation may be a mercantile rather than a manufacturing one.30 Thus a printing business is ordinarily a manufacturing business, a publishing business mercantile. A corporation for the publication of a newspaper, and also to print the paper it publishes, is not a manufacturing business, while a corporation for job printing is a manufacturing corporation.40 37 Evanston E. I. Co. v. Kochersperger, 175 Ill. 26, 51 N. E. 719. 38 P. v. Morgan, 61 App. Div. 373, 70 N. Y. S. 516. 39 Press Printing Co. v. Assessors, 51 N. J. L. 275, 16 Atl. 173; P. v. Roberts, 155 N. Y. 1, 49 N. E. 248. 40 See C. v. Arrott S. P. M. Co., 145 Pa. 49, 22 Atl. 243. CHAPTER XXIV. TAXATION OF SPECIAL CORPORATIONS: BANKS. 581. Taxation of national banks. 584. Moneyed capital. § 581. Taxation of national banks. 585. Taxation of State banks. The taxation of national banks throughout the United States is governed by the following provisions: 1 "All stocks, bonds, treasury notes, and other obligations of the United States, shall be exempt from taxation by or under state or municipal or local authority." "Nothing herein shall prevent all the shares in any association from being included in the valuation of the personal property of the owner or holder of such shares, in assessing taxes imposed by authority of the state within which the association is located; but the legislature of each state may determine and direct the manner and place of taxing all the shares of national banking associations located within the state, subject only to the two restrictions, that the taxation shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such state, and that the shares of any national banking association owned by nonresidents of any state shall be taxed in the city or town where the bank is located, and not elsewhere. Nothing herein shall be construed to exempt the real property of associations from either state, county, or municipal taxes, to the same extent, according to its value, as other real property is taxed." 1 U. S. Rev. Stat. §§ 3701, 5219. Before the passage of the latter section it was held, under the former section, that United States bonds owned and held by a bank must be deducted from the amount of its capital in making its returns for taxation; but afterwards it was held by the same court that the value of the bank shares might be fixed upon the whole capital stock, including the bank's investments in government bonds. So that the holding now is that shares in national banks and in incorporated State banks may be taxed at their true value in money, including in such value all government bonds owned and held by such bank.4 The power to tax national banks is derived wholly from this act of Congress, and must be exercised strictly in accordance with it. "The respective states would be wholly without power to levy any tax, either direct or indirect, upon the national banks, their property, assets, or franchises, were it not for the permissive legislation of congress. . . . This section, then, of the Revised Statutes is the measure of the power of a state to tax national banks, their property, or their franchises. By its unambiguous provisions the power is confined to a taxation of the shares of stock in the names of the shareholders and to an assessment of the real estate of the bank. Any state tax, therefore, which is in excess of, and not in conformity to, these requirements, is void." 5 § 582. Taxation of shares. It follows that the personal property of the bank cannot be taxed; the only taxation to which it may be subjected, in addition to that on its real estate, is the tax on the shares of stock. These shares must be taxed to the owner, not to the 2 Bank Tax Case, 2 Wall. 200, 17 L. ed. 793. 3 Van Allen v. Assessors, 3 Wall. 573, 18 L. ed. 229. People v. Comrs., 4 Wall. 244, 18 L. ed. 344; Bradley v. People, 4 Wall. 459, 18 L. ed. 433; Davenport Nat. Bank v. Board of Equalization, 64 Ia. 140, 19 N. W. 889; St. Louis B. & S. Assoc. v. Lightner, 47 Mo. 393. 5 White, J., in Owensboro Nat. Bank v. Owensboro, 173 U. S. 664, 43 L. ed. 850. • First Nat. Bank v. Province, 20 Mont. 374, 51 Pac. 821; Cleveland Trust Co. v. Lander, 62 Oh. St. 266, 56 N. E. 1036. bank; and shares in a national bank located in another State cannot be taxed in the hands of the owner.8 It is entirely within the power of a State in which the bank is situated to tax the shares where the bank is or where the owner lives; and the practice differs in different States. In several States resident owners are taxed on their shares where they reside, non-resident owners alone being taxed where the bank is located. On the other hand, the method commonly adopted is to tax all shareholders at the place where the bank is located.10 $583. Uniform taxation. 11 The earlier cases seem to have interpreted the section only as requiring that the rate of taxation should not be higher on national bank shares than on other moneyed capital; " but it was later held that the method of assessment and the exemptions must be uniform, 12 though subject to this requirement they are entirely within the control of the States. 13 The rules as established by these authorities have been summed up as follows: "1. That the words 'at a greater rate than is assessed upon 7 De Baum v. Smith, 55 N. J. L. 110, 25 Atl. 277; Smalley v. Burlington, 63 Vt. 443, 22 Atl. 611. 8 Springfield v. First Nat. Bank, 87 Mo. 441. • Provident Institution v. Boston, 101 Mass. 575, 3 A. R. 407; Springfield v. First Nat. Bank, 87 Mo. 441; Clapp v. Burlington, 42 Vt. 579, 1 A. R. 355; Md. 1902, ch. 468; R. I. Gen. L. ch. 45, § 15; Tenn. 1901, ch. 174, § 25. 10 Ind. Rev. Stat. of 1901, § 8470; Ind. 1903, ch. 29, § 30; Ia. Code, § 819; Kan. Gen. Stat. ch. 158, § 60; La. 1890, Act 106, § 27; N. Y. 1896, ch. 908, § 13; S. Car. Const. Art. 10, § 5; Utah Rev. Stat. § 2507; Va. Const. 1902, § 182; Wash. 1897, ch. 71, § 21; Wis. Rev. Stat. of 1898, § 1042. 11 People v. Comrs., 4 Wall. 244; 18 L. ed. 344; Frazer v. Siebern, 16 Oh. S. 615. 12 People v. Weaver, 100 U. S. 539, 25 L. ed. 705; Pelton v. Nat. Bank, 101 U. S. 143, 25 L. ed. 901; Cummings v. Nat. Bank, 101 U. S. 153, 25 L. ed. 903; Supervisors v. Stanley, 105 U. S. 305, 26 L. ed. 1044; Evansville Bank v. Britton, 105 U. S. 323, 26 L. ed. 1053; Cleveland Trust Co. v. Lander, 62 Oh. St. 266, 56 N. E. 1036. 13 Williams v. Supervisors, 122 U. S. 154, 30 L. ed. 1088. |