by express statute or by judicial decision. The impropriety of it is strikingly expressed in the California statute. "Shares of stock in corporations possess no intrinsic value over and above the actual value of the property of the corporation which they stand for and represent; and the assessment and taxation of such shares, and also all the corporate property, would be double taxation. Therefore all property belonging to corporations save and except the property of national banking associations not assessable by Federal statute, shall be assessed and taxed. But no assessment shall be made of shares of stock in any corporation, save and except in national banking associations, whose property, other than real estate, is exempt from assessment by Federal statute." And in several States it is not permitted to tax both the capital stock and the shares. 10 In many States it is expressly provided by statute that "the owner or holder of stock in an incorporated company liable to taxation on its capital, shall not be taxed as an individual for such stock." 11 This, of course, applies only to the stock of such corporations as are assessed upon their property within the State. And such a discrimination in taxation between stockholders in corporations which have and in those which have not been taxed on their property is a reasonable discrimination, and not unconstitutional.12

Cal. 1899, ch. 80, amending Pol. Code, § 3608. The same provision is found in Ariz. Rev. Stat. § 3837.

10 Burke v. Badlam, 57 Cal. 594; State v. Hannibal & S. J. R. R., 37 Mo. 265; St. Louis M. L. Ins. Co. v. Charles, 47 Mo. 462; Cheshire County Tel. Co. v. State, 63 N. H. 167; Com. v. Fall Brook Co., 156 Pa. 488, 26 Atl. 107; Gillespie v. Gaston, 67 Tex. 599.

11 N. Y. 1896, ch. 908, § 4, cl. 16. See to the same effect, Conn. Stat. §3834, 1901, ch. 165, § 8; Fla. 1895, ch. 4322, § 1; Hawaii Laws, § 830; Ida. Rev. Stat. § 1401; Ill. Rev. Stat. ch. 120, § 3; Ia. Code of 1897, § 1319; Ky. 1902, ch. 128, Art. III, § 12; N. H. Stat. c. 55, § 7; Nev. Comp. L. §§ 1082, 1084; Oh. 1902, p. 539; Ore. Misc. L. § 2750; R. I. Gen. L. ch. 45, § 10; S. Car. Civ. Code of 1902, § 266, cl. 19; Va. Const. § 170; Wash. Code, § 1676; W. Va. Code, ch. 29, § 51; Wis. Rev. Stat. § 1038, cl. 9; Wyo. Rev. Stat. § 1774; Ont. Rev. Stat. ch. 224, § 7.

12 Kidd v. Alabama, 188 U. S. 730, 47 L. ed. 669.

§ 733. Exemptions whether applicable.

For the reason that the tax on the shares of stock is not a tax upon the property of the corporation, an exemption of the corporation from taxation,13 or an exemption of property held by the corporation from taxation, 14 will not extend to taxation of the shares of stock; 15 and conversely an exemption of the shares from taxation will not exempt the property of the corporation. 16

§ 734. Stock taxable at owner's domicil.

Shares of stock not exempted from taxation are legally taxable at the domicil of the owner as part of his wealth, whether the corporation is domestic 17 or foreign, 18 and whether or not the certificates are actually within the jurisdiction.19 Nor does it affect the right to tax the stock that it may have been taxed already in the State of charter. 20

§ 735. Taxation of stock in foreign corporation.

Stock in a foreign corporation is taxable if there are no special provisions otherwise in the statutes.21 The exemption

13 State v. Bank of Commerce, 95 Tenn. 221, 31 S. W. 993.

14 Home Assur. Co. v. Assessors, 42 La. Ann. 1131, 8 So. 481; Belo v. Comrs., 82 N. C. 415, 33 A. R. 688; State v. Hernando Ins. Co., 97 Tenn. 85, 36 S. W. 721; Jennings v. Com., 98 Va. 80, 34 S. E. 981; and see the cases of national banks.

15 Contra, however, in Maryland; State v. Wilson, 52 Md. 638; and an exemption from taxation of shares of capital stock of a railroad exempts all its property; Baltimore v. Baltimore & O. R. R., 6 Gill (Md.), 288, 48 A. D. 531. To the same effect, Whitney v. Madison, 23 Ind. 331.

16 Shelby County v. U. P. Bank, 161 U. S. 149, 40 L. ed. 650.

17 Henkle v. Keota, 68 Ia. 334, 27 N. W. 250.

18 San Francisco v. Flood, 64 Cal. 504; Greenleaf v. Board of Review, 184 Ill. 226, 56 N. E. 295, 75 A. S. R. 168; Bacon v. Comrs., 126 Mich. 22, 85 N. W. 307, 60 L. R. A. 321. Contra, Varner v. Calhoun, 48 Ala. 178. 131 Cal. 34, 63 Pac. 145.

19 Stanford v. San Francisco,

20 Dwight v. Boston, 12 All. (Mass.) 316, 90 A. D. 149; Dyer v. Osborne, 11 R. I. 321, 23 A. R. 460.

21 Ogden v. St. Joseph, 90 Mo. 522, 3 S. W. 25; Md. Gen. L. Art. 81, § 2: S. Dak. Code, §§ 2134, 2142.

of stock in a corporation taxed on its property within the State usually applies to stock in foreign corporations so taxed. In a few States there are special provisions. Thus in New Hampshire "stock in corporations located out of the State, owned by persons living in the State, except where either the stock or the property represented by it is taxed in the towns or States where the corporations are located" is taxable; 22 and in Vermont "shares of stock in a corporation situated in another State, when all the stock of such corporation is taxed in such State to the holders, whether residing within or without such State, or when the corporation is taxed in such State for all its stock" are exempt.23 So in New Jersey while under an earlier form of statute shares of stock in foreign corporations were taxable,24 under the present statute they are exempt.25 And in Connecticut the statute is similarly interpreted. "We think the Legislature intended to have shares of stock in foreign corporations held by owners resident here, taxed only in the exceptional cases where they are not in fact taxed elsewhere . . . and the fair presumption in any given case is that such shares are in fact taxed elsewhere." 26 In Delaware the Constitution provides that "shares of the capital stock of corporations created under the laws of this State, when owned by persons or corporations without this State, shall not be subject to taxation by any law now existing or hereafter to be made." 27

In Ohio the following rather elaborate provision is in force: "No person shall be required to list for taxation any share or shares of the capital stock of any corporation, whether domestic or foreign, the property of which is taxed in the name

22 N. H. Pub. Stat. ch. 55, § 7, as amended.

23 Vt. Stat. § 362, ch. 3.

24 State v. Danser, 23 N. J. L. 552; Newark City Bank v. Assessor, 30 N. J. L. 13.

25 Smith v. Ramsey, 54 N. J. L. 546, 24 Atl. 445; De Baun v. Smith, 55 N. J. L. 110, 25 Atl. 277.

26 Torrance, J., in Lockwood v. Weston, 61 Conn. 211, 218, 23 Atl. 9.

27 Del. Const. Art. 9, § 6.

of such company in Ohio, nor shall any person be required to list for taxation any share or shares of the capital stock of any corporation, whether domestic or foreign, if satisfactory proof, when demanded, is furnished to the taxation authorities by the holder of such share or shares that two-thirds or more of the property of such corporation is taxed in Ohio and the remainder is taxed in some State or States of the United States; provided, however, that this shall not apply to shares in any foreign corporation unless it shall, whether otherwise required by law to do so or not, pay annually for the privilege of exercising its franchise in Ohio, upon its entire authorized capital stock, the same percentage as is required by law on the subscribed or issued capital stock of domestic corporations." 28

This provision does not exempt from taxation the shares of a foreign corporation unless all the corporate property is taxed in Ohio. There is no apportionment under the act.20

§ 736. Stock taxable at domicil of corporation.

Many States tax the shareholders upon their shares at the place where the corporation is situated. This is the commonest method of taxing the shares of national banks and other banking companies; and it is a common method of taxing shareholders in other corporations, especially foreign shareholders. This method of taxation has been held illegal in a few cases, on the ground that there is no property of the shareholders there to tax.30 But in other cases it has been held that the shareholders are there taxable because they own property there. Thus in the Supreme Court of the United States, Waite, C. J., said: 31 "A share of bank stock may be

28 Oh. 1902, p. 539.

29 Lee v. Sturges, 46 Oh. St. 153.

30 San Francisco v. Mackey, 22 Fed. 602; Railroad v. Commrs., 91 N. C. 454; Union Bank v. State, 9 Yerg. (Tenn.) 490.

31 Tappan v. Merchants' Nat. Bank, 19 Wall. 490, 503, 22 L. ed. 189. In Jermain v. R. R., 91 N. Y. 483, 492, Earl, J., expressed the same idea: "A share of stock represents the interest which the shareholder has in the capital and set earnings of the corporation."

in itself intangible, but it represents that which is tangible. It represents money or property invested in the capital stock. of the bank. That capital is employed in business by the bank, and the business is very likely carried on at a place other than the residence of some of the shareholders. The shareholder is protected in his person by the government at the place where he resides; but his property in this stock is protected at the place where the bank transacts his business. If he were a partner in a private bank doing business at the same place, he might be taxed there on account of his interest in the partnership. It is not easy to see why, upon the same principle, he may not be taxed there on account of his stock in an incorporated bank. His business is there as much in the one case as in the other. He requires for it the protection of the government there, and it seems reasonable that he should be compelled to contribute there to the expenses of maintaining the government." So in Vermont, Taft, J., said: 32 "The owner of stock is not merely the owner of a right to dividends, but he is the owner of a proportionate share of the property of the corporation." The same doctrine has been held in New York of the Transfer Tax, which applies to "stock within the State." 33 Gray, J., thus explained the difference between bonds and stock: 34

"The attitude of a holder of shares of capital stock is quite. other than that of a holder of bonds towards the corporation which issued them. While the bondholders are simply creditors, whose concern with the corporation is limited to the fulfilment of its particular obligation, the shareholders are persons who are interested in the operation of the corporate property and franchises, and their shares actually represent undivided interests in the corporate enterprise. . . . That right as a chose in action must necessarily follow the share

32 St. Albans v. Car Co., 57 Vt. 68.

33 Matter of Bronson, 150 N. Y. 1, 44 N. E. 707, 55 A. S. R. 632, 34 L. R. A. 238; In re Cushing's Estate, 40 Misc. 505, 82 N. Y. Supp. 795

34 Matter of Bronson, supra.