corporations, which corporations were to have a lien upon the stock and a right of personal action against the non-resident stockholders to recover from them the amounts so paid. This law had, however, been construed by the Maryland courts, and this construction was accepted by the United States Supreme Court, to be, in reality, not a tax upon the stock as property, but a reasonable regulation upon the right to acquire the stock of the corporations which the State had created.26

§ 532. Incorporeal Hereditaments, Franchises, Etc.

All incorporeal hereditaments, such, for example, as corporate franchises, may be taxed only in the State from whose law they are derived and where, consequently, they have their legal situs."

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27

26 After referring to earlier decisions relating to the taxation of stock of national banks, the court say: 'In substance the contention is that the conceded principle has no application to taxation by a State of shares of stock in a corporation created by it, because, by the Constitution of the United States, the States are limited as to taxation to persons and things within their jurisdiction, and may not, therefore, impose upon a nonresident, by reason of his property within the State, a personal obligation to pay a tax. By the operation, therefore, of the Constitution of the United States, it is argued the States are restrained from affixing, as a condition to the ownership of stock in their domestic corporations by nonresidents, a personal liability for taxes upon such stock, since the right of the nonresident to own property in the respective States is protected by the Constitution of the United States, and may not be impaired by subjecting such ownership to a personal liability for taxation. But the contention takes for granted the very issue involved. The principle upheld by the rulings of this court to which we have referred, concerning the taxation by the States of stock in national banks, is that the sovereignty which creates a corporation has the incidental right to impose reasonable regulations concerning the ownership of stock therein, and that a regulation establishing the situs of stock for the purpose of taxation, and compelling the corporation to pay the tax on behalf of the shareholder, is not unreasonable regulation. Applying this principle, it follows that a regulation of that character, prescribed by a State, in creating a corporation, is not an exercise of the taxing power of the State over persons and things not subject to its jurisdiction. And we think, moreover, that the authority so possessed by the State carries with it the power to endow the corporation with a right of recovery against the stockholder for the tax which it may have paid on his behalf. Certainly, the exercise of such a power is no broader than the wellrecognized right of a State to affix to the holding of stock in a domestic corporation a liability on a nonresident as well as a resident stockholder in personam, in favor of the ordinary creditors of the corporation."

27 As to federal taxation of state granted franchises, see Section 57.

.

This doctrine is clearly stated in Louisville & Jeffersonville Ferry Co. v. Kentucky.28 In this case it was held that a Kentucky corporation operating a ferry across the Ohio river was deprived of its property without due process of law by the action. of the State in including, for purposes of taxation, in the valuation of its franchise derived from Kentucky, the value of a franchise derived from Indiana for a ferry from the Indiana to the Kentucky shore. The court say: "Beyond all question, the ferry franchise derived from Indiana is an incorporeal hereditament derived from and having its legal situs in that State. It is not within the jurisdiction of Kentucky. The taxation of that franchise or incorporeal hereditament by Kentucky is, in our opinion, a deprivation by that State of the property of the ferry company without due process of law as much so as if the State taxed the real estate owned by that company in Indiana.” The court go on to say that they are not called upon to decide and that they express no opinion as to the validity of a law making it a condition of the ferry company's continuing to exercise its corporate powers that it should pay a tax for its property having a situs in another State. It would seem, however, that such a condition would be valid, each State having the right to make such conditions as it may see fit to the existence of a company as a domestic corporation, or to entrance a foreign corporation to do business within the State. Thus, as will later appear, while a State may not tax the franchise of a foreign corporation as such, it may levy a license tax upon its right to do business within the State and may determine the amount of that tax by the value of its property, including the value of its corporate franchise. What would seem, however, to be a recent departure from this principle is discussed in Section 74 of this treatise.

§ 533. Taxation of Tangible Personal Property.

The right of the State to tax all real property situated within its borders,20 has never been questioned. Its inability to tax real

28 188 U. S. 385; 23 Sup. Ct. Rep. 463; 47 L. ed. 513.

29 Excepting, of course, property owned by the United States or by foreign governments.

property beyond its borders is equally uncontested. In these respects tangible personal property is grouped with real property. The legal principle mobilia sequuntur personam operates to permit the taxation of intangible personal property by a State in which its owner is domiciled even though the instruments evidencing its existence and ownership be in another State; and, conversely, it permits the State where these instruments are situated to tax them although their owner be domiciled in another State.

That tangible personal property may be taxed by the State within which it is situated has not been seriously questioned.30

That tangible personal property situated in one State may not be taxed by another State, even though its owner be domiciled therein, is definitely stated in Union Refrigerator Transit Co. v. Kentucky, 31 decided in 1905. In this case was presented the question whether a corporation organized under the laws of Kentucky might be assessed upon its rolling stock permanently located in other States and employed there in the prosecution of its business. The court, in its opinion, say: "The argument against the taxability of land within the jurisdiction of another State applies with equal cogency to tangible personal property beyond the jurisdiction. It is not only beyond the sovereignty of the taxing State, but does not and cannot receive protection under its laws. True, a resident owner may receive an income from such property, but the same may be said of real estate within a foreign jurisdiction. Whatever be the rights of the State with respect to the taxation of such income, it is clearly beyond its power to tax the land from which the income is derived."

Continuing the court point out that the doctrine as to intangible personalty has no application.

See, for example, Coe v. Errol, 116 U. S. 517; 6 Sup. Ct. Rep. 475; 29 L. ed. 715; Brown v. Houston, 114 U. S. 622, 5 Sup. Ct. Rep. 1091, 29 L. ed. 257, and other cases discussed in § 332 relating to the taxation by the State of articles of interstate commerce.

21 199 U. S. 194; 26 Sup. Ct. Rep. 36; 50 L. ed. 150.

The arguments in favor of the taxation of intangible property at the domicile of the owner," the court say, "have no application to tangible property. The fact that such property is visible, easily found, and difficult to conceal, and the tax readily collectible, is so cogent an argument for its taxation at its situs, that of late there is a general concensus of opinion that it is taxable in the State where it is permanently located and employed, and where it receives its entire protection, irrespective of the domicile of the owner. We have, ourselves, held in a number of cases that such property, permanently located in a State other than that of its owner, is taxable there." 32

32 After citing earlier cases decided by itself, the Supreme Court continue: There are doubtless cases in the state reports announcing the principle that the ancient maxim mobilia sequuntur personam still applies to personal property, and that it may be taxed at the domicile of the owner; but upon examination they all, or nearly all, relate to intangible property, such as stocks, bonds, notes, and other choses in action. We are cited to none applying this principle to tangible personal property, and after a careful examination have not been able to find any wherein the question is fairly presented, unless it be that of Wheaton v. Mickel (67 N. J. L. 525, 42 Atl. 843) where a resident of New Jersey was taxed for certain coastwise and seagoing vessels located in Pennsylvania. It did not appear, however, that they were permanently located there. The case turned upon the construction of a state statute and the question of constitutionality was not raised. If there are any other cases holding that the maxim applies to tangible personal property, they are wholly exceptional, and were decided at a time when personal property was comparatively of small amount, and consisted principally of stocks in trade, horses, cattle, vehicles, and vessels engaged in navigation. But in view of the enormous increase of such property since the introduction of railways and the growth of manufactures, the tendency has been in recent years to treat it as having a situs of its own for the purpose of taxation, and correlatively to exempt it at the domicile of its owner." Finally, the court say that the question is, in fact, completely covered in the two recent cases of Louisville & Jeffersonville Ferry Co. v. Kentucky, 188 U. S. 385; 23 Sup. Ct. Rep. 463; 47 L. ed. 513, and Delaware, L. & W. R. Co. v. Pennsylvania, 198 U. S. 341; 25 Sup. Ct. Rep. 669; 49 L. ed. 1077.

The first of these two cases we have already considered. In the second it was held that including in the appraisement of the capital stock of a domestic corporation, for purposes of taxation, the value of coal mined by it within the State, but situated within other States there awaiting the sale was in excess of the State's taxing power. The supreme court of the State having held that the tax on the value of the capital stock was a tax on the property and assets of the corporation issuing the stock, and it having been repeatedly

§ 534. Taxation of Property Situated in Several Jurisdictions. The instrumentalities through which commerce is carried on between the States and with foreign countries may be taxed by the States as property to the extent that such instrumentalities are within the several territories of the States so taxing them. Thus buildings used for freight and passenger stations and for offices, roadbeds, rails, machine shops, etc., may be taxed by the States in which they are situated, so long as the tax is a general property tax and not one laid upon them specially, nor at a special rate because of their employment in interstate commerce. In determining, however, the value of these properties, the important principle has been laid down that in estimating the value of the property within the State, of a company doing business in several States, the entire property may be treated as a unit and its value in use as such determined, and the value of the part of the property in the particular State estimated as bearing the same proportion to the whole property as the amount of the business done held by the federal Supreme Court itself that a tax on the value of the capital stock of a corporation is a tax on the property in which that capital is invested, and in consequence that no tax can thus be levied which includes property that is otherwise exempt, the court held in the case at bar that the coal actually situated outside of Pennsylvania at the time of the assessment might not be included in the appraisement for purposes of taxation of the capital stock of the plaintiff domestic corporation. We regard," said the court, "this tax as, in substance and in fact, though not in form, a tax specifically levied upon the property of the corporation, and part of that property is outside and beyond the jurisdiction of the State which thus assumes to tax it."

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The doctrine declared in Union Refrigerator Transit Co. v. Kentucky (199 U. S. 194; 26 Sup. Ct. Rep. 36; 50 L. ed. 150) and the two prior cases upon which that case was rested,- Louisville & Jeffersonville Ferry Co. v. Kentucky (188 U. S. 385; 23 Sup. Ct. Rep. 463; 47 L. ed. 513) and D., L. & W. R. R. Co. v. Pennsylvania (198 U. S. 341; 25 Sup. Ct. Rep. 669; 49 L. ed. 1077) is a recent doctrine. Until these cases were decided the doctrine was generally held and acted upon in many of the States that all personal property, tangible as well as intangible, wherever situated, might be taxed at the domicile of the owner. In Coe v. Errol (116 U. S. 517; 6 Sup. Ct. Rep. 475; 29 L. ed. 715), decided in 1886, the court say, without qualification, "If the owner of personal property within a State resides in another State which taxes him for that property as part of his general estate attached to his person, this action of the latter State does not in the least affect the right of the State in which the property is situated to tax it also."