Louisiana. The situs of the vessel was held to be at the home port, in New York, where its owner was liable to be taxed for its value. The circumstance that the steamer might not actually have been taxed in New York during the years for which the taxes in controversy were levied was held to be unimportant. The court said (page 478): Jurisdiction of California, was held illegal. | Mobile, in that state, and New Orleans, in This court, by Mr. Justice Nelson, declared that the vessels were not properly abiding within the limits of California, so as to become incorporated with the other personal property of that state; that their situs was at the home port, where the vessels belonged, and where the owners were liable to be taxed for the capital invested and where the tax had been paid. In St. Louis v. Wiggins Ferry Co., 11 Wall. 423, the validity of a tax assessed by the city of St. Louis upon the boats of a ferry company, an Illinois corporation, as property within the city of St. Louis, was considered. This court held that Illinois was the home port of the boats, that they were beyond the jurisdiction of the authorities by which the taxes were assessed, and that the validity of the taxes could not be maintained. It was observed (page 430): "Where there is jurisdiction neither as to person nor property, the imposition of a tax would be ultra vires and void. If the legislature of a state should enact that the citizens or property of another state or country should be taxed in the same manner as the persons and property within its own limits, and subject to its authority, or in any manner whatsoever, such a law would be as much a nullity as if in conflict with the most explicit constitutional inhibition. Jurisdiction is as necessary to valid legislative as to valid judicial action." In State Tax on Foreign-Held Bonds, 15 Wall. 300, a tax laid by the state of Pennsylvania on the interest paid by the railroad company on its bonds was held to be a tax upon the bonds, the property not of the debtor company but of its creditors, and that so far as such bonds were held by nonresidents of the state, they were property beyond its jurisdiction. It was declared that no adjudication should be necessary to establish so obvious a proposition as that property lying beyond the jurisdiction of a state is not a subject upon which the taxing power can be legitimately exercised, and that "the power of taxation, however vast in its character and searching in its extent, is necessarily limited to subjects within the jurisdiction of the state." Of the act there under consideration, the court said (page 321): "It is only one of many cases where, under the name of taxation, an oppressive exaction is made without constitutional warrant, amounting to little less than an arbitrary seizure of private property. It is, in fact, a forced contribution levied upon property held in other states, where it is subjected or may be subjected to taxation upon an estimate of its full value." In Morgan v. Parham, 16 Wall. 471, it was adjudged, upon the authority of the Hays Case, supra, that the state of Alabama could not lawfully tax a vessel registered in New York, but employed in commerce between "Whether the steamer Frances was actually taxed in New York during the years 1866 and 1867 is not shown by the case. It is not important. She was liable to taxation there. That state alone had dominion over her for that purpose." In Delaware Railroad Tax, 18 Wall. 206, this court, in considering an objection interposed to a taxing act, that it imposed taxes upon property beyond the jurisdiction of the state, observed (page 229): "If such be the fact, the tax to that extent is invalid, for the power of taxation of every state is necessarily confined to subjects within its jurisdiction." In Gloucester Ferry Co. v. State of Pennsylvania, 114 U. S. 196, at pages 206-209, 5 Sup. Ct. 826, 829-831, Mr. Justice Field reviews the cases just cited. The Gloucester Ferry Company was a New Jersey corporation, and operated a ferry between Gloucester, N. J., and Philadelphia. The state of Pennsylvania laid a tax on the appraised value of the capital stock of the ferry company, which owned no property in Pennsylvania except the lease of a slip or dock, where its ferryboats put up in plying across the river between the two states. In this court it was sought in argument to support the tax in question by advancing the theory of "a homogeneous unit." The counsel said (page 201): "The tax is upon the capital stock of the corporation, 'not in separate parcels, as representing distinct properties, but as a homogeneous unit, partaking of the nature of personalty,' and taxable where its corporate functions are exercised or its business done. The franchise itself may constitute the material part of all its property, since not only its wharves and slips, but also its boats, might be leased, and in that case the tax would be measured by the value of the franchise, represented by the extent of its exercise within the state, and not by its tangible property situated there. The extent of its property* subject to the taxing power is immaterial. Its franchise would be worthless without the leasehold interest owned by it in the city of Philadelphia. The value of its franchise depends upon the leasehold, and it will, therefore, not do to say that it has no property within the jurisdiction of the taxing power. It does not seem necessary to inquire further as to an ownership of property within the jurisdiction of Pennsyl vania." But this court, speaking through Mr. Jus ୫୫୪ 234 tice Field, completely answered the argument, as follows (page 205, 114 U. S., and page 829, 5 Sup. Ct.): pend, to wit, the inhibition resulting from the provision of the constitution of the United States conferring on congress power to "If by reason of landing or receiving pas-regulate interstate commerce. sengers and freight at wharves or other places in a state, they can be taxed by the state on their capital stock, on the ground that they are thereby doing business within her limits, the taxes which may be imposed may embarrass, impede, and even destroy such commerce with the citizens of the state. If such a tax can be levied at all, its amount will rest in the discretion of the state. It is idle to say that the interests of the state would prevent oppressive taxation. Those engaged in foreign and interstate commerce are not bound to trust to its moderation in that respect. They require security." Of the Gloucester Ferry Case, it was observed by this court in Philadelphia & Southern S. S. Co. v. Pennsylvania, 122 U. S. 344, 7 Sup. Ct. 1124, that "it is hardly necessary to add that the tax on the capital stock of the New Jersey company, in that case, was decided to be unconstitutional, because, as the corporation was a foreign one, the tax could only be construed as a tax for the privilege or franchise of carrying on its business, and that business was interstate commerce." In New York, L. E. & W. R. Co. v. Commonwealth of Pennsylvania, 153 U. S. 646, 14 Sup. Ct. 952, this court denied the power of the state of Pennsylvania to require a foreign railroad company doing business within its borders to deduct therefrom, when paying interest upon its obligations in New York, the amount of a tax assessed by the state upon the bonds and moneyed capital owned by the residents of Pennsylvania. The money in the hands of the company in New York was held to be property beyond the jurisdiction of Pennsylvania. The court said (page 646, 153 U. S., and page 958, 14 Sup. Ct.) that "no principle is better settled than that the power of a state, even its power of taxation, in respect to property, is limited to such as is within its jurisdiction." This inherent want of power in every government to transcend its jurisdiction is subject, as already stated, to an additional limitation as to the several states of the Union, resulting from those provisions of the constitution of the United States which, in so far as they restrict the power of the states, necessarily create limitations to which they are all subject, and from which they cannot depart without a violation of the constitution. It will not be necessary to allude to every special restriction on the power of the states resulting from the constitution, but it will suffice for my present purpose to refer to one only, the necessary existence of which has often been recognized to have been one of the most cogent motives leading to the adoption of the constitution, and upon the enforcement of which it has often been declared the perpetuity of our institutions de Under the interstate commerce clause of the constitution, as held by this court, speaking through Mr. Justice Bradley, in Leloup v. Port of Mobile, 127 U. S. 648, 8 Sup. Ct. 1384, "no state has the right to lay a tax on interstate commerce in any form, whether by way of duties laid on the transportation of the subjects of that commerce, or on the receipts derived from that transportation, or on the occupation or business of carrying it on, and the reason is that such taxation is a burden on that commerce, and amounts to a regulation of it, which belongs solely to congress." The following cases were referred to as supporting the proposition thus enunciated: Case of State Freight Tax, 15 Wall. 232; Pensacola Tel. Co. v. W. U. Tel. Co., 96 U. S. 1; Mobile v. Kimball, 102 U. S. 691; W. U. Tel. Co. v. Texas, 105 U. S. 460; Moran v. New Orleans, 112 U. S. 69, 5 Sup. Ct. 38; Gloucester Ferry Co. v. State of Pennsylvania, 114 U. S. 196, 5 Sup. Ct. 826; Brown v. Houston, 114 U. S. 622, 5 Sup. Ct. 1091; Walling v. People of Michigan, 116 U. S. 446, 6 Sup. Ct. 454; Pickard v. Car Co., 117 U. S. 34, 6 Sup. Ct. 635; Wa-, bash, St. L. & P. Ry. Co. v. People of Ilinois, 118 U. S. 557, 7 Sup. Ct. 4; Robbins v. Taxing Dist., 120 U. S. 489, 7 Sup. Ct. 592; Philadelphia & Southern S. S. Co. v. Pennsylvania, 122 U. S. 336, 7 Sup. Ct. 1118; Telegraph Co. v. Pendleton, 122 U. S. 347, 7 Sup. Ct. 1126; Ratterman v. Telegraph Co., 127 U. S. 411, 8 Sup. Ct. 1127. The following cases, since decided, enforce the same principle: Asher v. Texas, 128 U. S. 129, 9 Sup. Ct. 1; Stoutenburgh v. Hennick, 129 U. S. 141, 9 Sup. Ct. 256; Lyng v. Michigan, 135 U. S. 161, 10 Sup. Ct. 725; McCall v. California, 136 U. S. 104, 10 Sup. Ct. 881; and Crutcher v. Kentucky, 141 U. S. 47, 11 Sup. Ct. 851. These authorities were reviewed by this court in Brennan v. City of Titusville, 153 U. S. 289, 14 Sup. Ct. 829, where, speaking through Mr. Justice Brewer, it was held that a municipal corporation could not lawfully tax a nonresident manufacturer of goods for the privilege of endeavoring to sell his goods by means of an agent sent into the state to solicit orders therefor. This court there said (page 303, 153 U. S., and page 833, 14 Sup. Ct.): "This tax is a direct charge and burden upon the business, and, if a state may lawfully exact it, it may increase the amount of this exaction until all interstate commerce in this mode ceases to be possible; and, notwithstanding the fact that the regulation of interstate commerce is committed by the constitution to the United States, the state is enabled to say that it shall not be carried on in this way, and to that extent to regulate it." *236 The question then arises, does the tax imposed by the state of Ohio upon express companies violate either of the two elementary propositions to which I have just referred? Under the law of Ohio express companies are taxed in three forms: First, their real estate is assessed, for state, county, and municipal purposes, in the same manner as is real estate within the state belonging to other companies and persons; second, such companies are also taxed upon their gross receipts derived from business done within the state (91 Ohio Laws, 237); and, third, they are additionally assessed by a state board (90 Ohio Laws, 330, as amended by 91 Ohio Laws, 220). It is the assessment resulting from the last of these provisions which is involved in the cases now under consideration. *In compliance with the law the companies returned to the state board a statement for the year 1893, showing-First, the amount of capital stock, and its par and market value; second, a detailed account of the entire real and personal property of the companies, and its assessed value; and, third, their entire gross receipts during the taxing year for business done within the state of Ohio. For the years 1894 and 1895 the statements, under the requirements of the amendatory statute of May 10, 1894 (91 Ohio Laws, 220), exhibited-First, the number of shares of capital stock, and its par and market value; second, a detailed statement of the real estate owned in Ohio, and its assessed value; third, a full and correct inventory of the personal property, including moneys and credits owned in Ohio, and the value thereof; fourth, the total value of the real and personal property owned and situate outside of Ohio; fifth, the entire gross receipts of the company, from whatever source derived, of business wherever done for the taxing year; and, sixth, the gross receipts of each company in Ohio, from whatever source derived. It is proper here to notice that, while the gross receipts in Ohio of express companies was required to be stated, there was no direction that mention should be made of the sum of the payments properly chargeable against such gross receipts, to wit, disbursements to railroad companies or individuals for transportation facilities, wages of its army of employés, care and maintenance of its horses, and other operating expenses. Although the assessment on the real estate and on the gross receipts may be relevant to some aspects of the controversy now examined, I eliminate them from consideration, as the direct issue here presented concerns the taxation asserted to be only upon the personal property. The value of the personal property within the state of Ohio returned by the express companies was averred in each bill, and was conceded by the demurrer to have been correct. The valuation thus returned, and It thus appears that for the year 1893 property possessing an actual value of but $106,698.74 was assessed as being worth $1,257,909.53; in 1894 property valued at $89,230.60 was assessed at $1,471,059; and for 1895 property worth but $93,933 was assessed at $1,520,734.10,- -a total valuation during three years of property worth only $289,862.34 at $4,249,702.63. In addition to this enormous taxation, the real estate and the gross receipts of the companies have also been taxed for all state, county, and municipal purposes. It cannot, I submit, be asserted with reason that the nearly $4,000,000 of excess on the assessment of the tangible property laid by the state board resulted from assessing only the actual intrinsic value of such property, since to so contend would be not only beyond all reason, but would also be destructive of the admission by the demurrer that the companies possessed no other personal property within the state of Ohio but that returned by them, and that its actual and intrinsic value was correctly set forth. The assessment, therefore, must necessarily have taken into consideration some other property, or some element of value other than the real intrinsic worth of the property assessed. 'The fact of the vast excess of the valuation over and above the admitted value of the property is not, however, the only mode by which it is conclusively demonstrated that the assessment resulted from the consideration and estimate by the state board of sources of value extrinsic to the property assessed. One of the assessments in controversy was made under the Ohio law of April 27, 1893, and the others under the law of May 10, 1894, and, although there is some difference between the two statutes, they both, as I have already said, substantially require express companies to make return of their real and personal property within the state, the value thereof, the number of shares of their capital stock, their market value, and a statement of the gross receipts for business done within the state of Ohio during the taxing year, from whatever source derived. Considering the obligation *237 $238 *239 thus imposed to report the total value of the stock of the companies and all their gross earnings, as also the total routes over which their agents traveled, etc., and putting these things in connection with the extraordinary amount by which the valuation exceeds the actual value of the property assessed, it leaves no reasonable doubt that the sources of reported value, which were entirely outside of the territory and beyond the jurisdiction of the state of Ohio, were by some process of calculation added to the intrinsic value of the property within the state, thereby assessing not only the property within the state, but a proportion, also, of all the property situated without its territorial boundaries. The fact that it was by this method that the sum of the personal property liable for taxation was fixed by the board results clearly and unmistakably from the opinion of the supreme court of the state of Ohio in State v. Jones, 51 Ohio St. 492, 37 N. E. 945, in which case the court sustained the validity of the taxes here questioned. The supreme court of Ohio therein declared that the state board, whose duty it was to assess express companies, was "not required to fix the value of such property upon the principle that the value of the entire property of the company shall be deemed the same as the value of its entire capital stock, thus making the respective values equivalents of each other. But, taking the market value of the entire capital stock as a datum, the board is only to be guided thereby in ascertaining the true value in money of the company's property in this state. The statute does not bind the board to find the value of the entire property of the company equal to that of the entire capital stock." Although the requirement, in so many words, to assess property outside the state, is thus said not to be found in the statute, yet that it in substance so provides is acknowledged, for, adds the Ohio court, "the property of a corporation may be regarded in the aggregate as a unit, an entirety, as a plant designed for a specific object, and its value may be estimated, not in parts, but taken as a whole. If the market value-perhaps the closest approximation to the true value in money-of the corporate property as a whole were inquired into, the market value of the capital stock would become a controlling factor in fixing the value of the property. The market value of the capital stock, it is urged, has no necessary relation to the value of the tangible property of the corporation. But such is the well-understood relation between the two that not only is the value of the capital stock an essential factor in fixing the market value of the corporate plant, but the corporate capital or property has a reflex action on the value of the capital stock. If, by 1 The italics here and elsewhere in this quotation are mine. reason of the good will of the concern, or the skill, experience, and energy with which its business is conducted, the market value of the capital stock is largely increased, whereby the value of the tangible property of the corporation, considered as an entire plant, acquires a greater market value than it otherwise would have had, it cannot properly be said not to be its true value in money, within the meaning of the constitution, because good will and other elements indirectly entered into its value. We discov. er no satisfactory reason why the same rule should not apply to the valuation of corporate property,-why the selling value of the capital stock, as affected by the good will of the business, should be excluded from the consideration of the board of appraisers) and assessors under the Nichols law,* char-** ged with the valuation of corporate property in this state, especially as the capital stock, when paid up, practically represents at least an equal value of the corporate property." Now, this language is susceptible only of one meaning; that is, that in assessing the actual intrinsic value of tangible property of express companies in the state of Ohio it was the duty of the assessing board to add to such value a proportionate estimate of the capital stock, so as thereby to assess, not only the tangible property within the state, but also, along with such property, part of the entire capital stock of the corporation, without reference to its domicile, and equally without reference to the situation of the property and assets owned by the company from which alone its capital stock derives value. In other words, although actual property situated in states other than Ohio may not be assessed in that state, yet that it may take all the value of the property in other states, and add such portion thereof as it sees fit to the assessment in Ohio, and that this process of taxation of property in other. states, in violation of the constitution, becomes legal, provided, only, it is called "taxation of property within the state." I submit that great principles of government rest upon solid foundations of truth and justice, and are not to be set at naught and evaded by the mere confusion of words. In considering a question of taxation in Postal Tel. Cable Co. v. Adams, 155 U. S. 688, 15 Sup. Ct. 268, 360, to which case I shall hereafter refer, this court said (page 698, 155 U. S., and page 270, 15 Sup. Ct.): "The substance, and not the shadow, determines the validity of the exercise of the power." It seems to me that, to maintain the tax levied by the state of Ohio, this ruling must be reversed, and the doctrine be announced that the shadow is of more consequence than the substance. Such result would appear to inevitably flow from the holding referred to, now affirmed by the court. Nothing, I submit, can be plainer than the fact that the value of the capital stock of a corporation represents all its property, franchises, good. will, indeed, everything owned by it wherever situated. I reiterate, therefore, that the rule which recognizes that, for the purpose of assessing tangible property in one state, you may take its full worth, and then add to the value of such property a proportion of the total capital stock, is a rule whereby it is announced that the sum of all the property, or an arbitrary part thereof, situated in other states, may be joined to the valuation of property in one state for the purpose of increasing the taxation within that state. What difference can there be between an actual assessment by Ohio of property situated in New York, Pennsylvania, Massachusetts, or in any of the other states of the Union, and the taking by Ohio of an aliquot part of the value of all the property situated in such other states, and adding it, for the purpose of assessment, to the value of property in Ohio? The recognition of this method breaks down both of the well-settled and elementary rules to which I have in the outset adverted. First, the rule which forbids one state to extend its power of taxation beyond its jurisdiction to property in another state. If the express companies are domiciled in New York, and have millions of property there situated and subject to taxation, all of which gives value to their capital stock, and hence enters into the sum of its worth, how can it be that to tax a proportion of the value of all that property is not taxing the property itself? This proportion of the capital stock, added to the inherent value of the property in the state of Ohio, is, therefore, an actual taxation by the state of Ohio of property situated in the state of New York. It seems to me that not only the illegality but the injustice of this taxation by the state of Ohio on these express companies, which is now upheld, is clear. Let me suppose that the bonds, stocks, other investments, and elements, which represent the capital of the companies, and therefore producing the resultant value of such capital stock, are situated in the states of New York, Pennsylvaria, and Massachusetts. These items, thus making up the value of the capital stock, being so situated in such states, are, of course, entirely and wholly, at their full value, assessable in those states. The attribution of an aliquot share of the value of the capital stock to the state of Ohio, and the consequent right of that state to tax such value, in no way deprives the states of New York, Pennsylvania, and Massachusetts of their right to assess the property within their borders for its full value. But, as attributing to the state of Ohio a proportion of such property gives that state the right to tax the proportion allotted, it follows, by an inevitable deduction, that the recognition of the right here claimed practically subjects the property in the states of New York, Pennsylvania, and Massachusetts to double taxation, unless those states voluntarily forego the inherent power of taxation vested in them to levy a tax upon all the property within their respective jurisdictions. Certainly the states of New York, Massachusetts, and Pennsylvania would, if they were independent sovereignties, removed from the jurisdiction of the constitution of the United States, be driven to protect, by retaliatory legislation, their citizens, as was the case between the states prior to the adoption of the constitution. But, having entered into the Union, these states are bereft of all such relief, and must thus look for the protection of their citizens to the remedies afforded by the constitution itself. The rule now announced allows Ohio to exercise an authority in violation of the constitution, and thereby strips, not only the citizens of the other states, but those states themselves, of all redress, by depriving them of the safeguards which it was the avowed purpose of the constitution to secure. Second, as to the interstate commerce clause. It is clear that the recognition of a right to take an aliquot proportion of the value of property in one state, and add it to the intrinsic value of property in another state, and there assess it, is, in substance, an absolute denial and overthrow of all the great principles announced from the beginning, and enforced by the many decisions of this court, on the subject of interstate commerce. This results from the fact that the necessary consequence of the ruling in this case is this: that a corporation-and there is no distinction, in principle, in the particular here considered, between a corporation and an individual-cannot go from one state into another state of the Union, for the purpose of there engaging in interstate commerce business, without subjecting itself to the certainty of having a proportion of all its property situated in the other states added to the sum of property, however small, which it may carry into the state to which it goes, for the purposes of taxation therein. Under this system, not only is an appalling penalty imposed for going from one state into another state, but the carrying on of interstate commerce itself becomes hampered and loaded with a burden threatening its absolute destruction. The contradiction involved in the proposition is well illustrated by the legislation and decisions of the state of Ohio. Thus, as I have said, in addition to the tax imposed on express companies, which is here considered, the law of the state of Ohio, besides assessing their real estate, also imposes a tax on the gross receipts of such companies for business done within the state. In order to save the tax here in question, the law by which this last tax is imposed is careful to provide that nothing in the imposition of the tax therein provided-that is, the tax on gross receipts-shall be construed as impairing the right to the tax on tangible property already provided for (the tax here in question |