commerce. The Post Roads Act could never have been intended to confer upon a foreign corporation the authority to enter another State and to erect poles and lines therein, without being obligated to pay its fair proportion of State taxes necessary to its support, nor to exempt it from obedience to its laws within the limitations above specified. These principles have been constantly asserted.12 And whether the property of a telegraph company, having a situs in a State, be tangible or intangible, such property is not exempt from taxation even though the company has accepted the provisions of the Post Roads Act.13 "It is not and cannot be doubted," declares Mr. Justice Gray, "that each State of the Union may tax all property, real and personal, within its borders, belonging to persons or corporations, although employed in interstate or foreign commerce, provided the rights and powers of the National Goxernment are not interfered with.14 So it is also 12 Leloup v. Port of Mobile, 127 U. S. 640, 8 Sup. Ct. 1380, 21 Am. & Eng. Corp. Cas. 26, 12 Inter. Com. Rep. 134, 2 Am. Elec. Cas. 79, per Mr. Justice Bradley; Western Un. Teleg. Co. v. AttorneyGeneral of Mass., 125 U. S. 530, 31 L. Ed. 790, 8 Sup. Ct. 961, 21 Am. & Eng. Corp. Cas. 13, 2 Am. Elec. Cas. 57, per Mr. Justice Miller; Crutcher v. Kentucky, 141 U. S. 47, 11 Sup. Ct. 851; Dobbins v. Erie Co., 16 Pet. (U. S.) 435; Brown v. Maryland, 12 Wheat. (U. S.) 419, per Mr. Chief Justice Marshall; Western Un. Teleg. Co. v. Alabama, 132 U. S. 472, 10 Sup. Ct. 161; State Tonnage Tax Cases, 12 Wall. (U. S.) 212; Western Un. Teleg. Co. V. Commonwealth of Pennsylvania, 128 U. S. 39, 9 Sup. Ct. 6, 25 Am. & Eng. Corp. Cas. 577, 2 Am. Elec. Cas. 88, revg. S. C., 110 Penn. St. 405, 1 Am. Elec. Cas. 756; Osborne v. Florida, 164 U. S. 650, 17 Sup. Ct. 214; Postal Teleg. Cable Co. v. Adams, 71 Miss. 555, 42 Am. St. Rep. 478, 4 Am. 13 Western Union Teleg. Co. v. City of Omaha (Neb. 1905), 103 N. W. 84; State ex rel. Gottlieb v. Western Union Teleg. Co., 165 Mo. 502, 65 S. W. 775, 8 Am. Elec. Cas. 390, aff'd, Western Union Teleg. Co. v. State, Gottlieb, 190 U. S. 412, 47 L. Ed. 1116, 23 Sup. Ct. 730. No State or municipal corporation can assess upon a telegraph company which has accepted the provisions of the Post Roads Act, a general license tax, although the property of such company may be taxed as all other property is taxed. Postal Teleg. Cable Co. v. City of Richmond, 99 Va. 102. 14 Western Un. Teleg. Co. v. Tag. gart, 163 U. S. 1, 41 L. Ed. 49, - declared that "it is enough for the State that it finds within its borders property which is of a certain value. What has caused that value is immaterial it is protected by State laws; and the rule of all property taxation is the rule of value, and by that rule property engaged in interstate commerce is ⚫ controlled the same as property engaged in commerce within the State. Neither is this an attempt to do by indirection what cannot be done directly, that is, to cast a burden upon interstate commerce. It comes rather within that large class of State action, like certain police restraints, which, while indirectly affecting, cannot be considered as a regulation of interstate commerce or a direct burden upon its free exercise." 15 Again, it will not be assumed that a State taxation statute was intended to operate outside the State limits, or otherwise than upon property within its territorial lines, nor need such intent with relation to the scope of its territorial operation be expressly, in terms, declared in every section of a tax act. If it is intended to reach outside property by such statute, the language expressing such intention must be clear such intent cannot arise by implication. 16 But an 16 Sup. Ct. 1054, 6 Am. Elec. Cas. 621, 622. See also Sanford v. Poe, 37 U. S. App. 378, 16 U. S. C. C. A. 305, 69 Fed. 546, 1 Ohio Dec. Fed. 50, 2 Am. & Eng. Corp. Cas. (N. S.) 167; Reinhart v. McDonald, 76 Fed. 403; Gloucester Ferry Co. v. Pennsylvania, 114 U. S. 196, 206, 5 Sup. Ct. 826; Linehan Ry. Transfer Co. v. Pendergrass, 36 U. S. App. 48, 16 U. S. C. C. A. 585, 70 Fed. 1; Postal Teleg. Cable Co. v. Adams, 155 U. S. 688, 39 L. Ed. 311, 5 Am. Elec. Cas. 636, 71 Miss. 555, 42 Am. St. Rep. 478, 4 Am. Elec. Cas. 606, 15 Sup. Ct. 268, 360; Pullman Palace Car Co. v. Pennsylvania, 141 U. S. 18, 3 Inter. Com. Rep. 595, 35 L. Ed. 613, 11 Sup. Ct. 876; Pullman's Palace Car Co. v. Hayward, 141 U. S. 36, 35 L. Ed. 621, 11 Sup. Ct. 883; Wells, Fargo & Co's Express v. Crawford County, 63 Ark. 576, 40 S. W. 710, 37 L. R. A. 371. But see Norfolk, etc., R. Co. v. Pennsylvania, 136 U. S. 114, 10 Sup. Ct. 958. 15 Cleveland, C. C. & St. L. Ry. v. Backus, 154 U. S. 439, 446, 447, 14 Sup. Ct. 1122, per Mr. Justice Brewer; S. C., 133 Ind. 513, cited with approval in Western Un. Teleg. Co. v. Taggart, 163 U. S. 1, 41 L. Ed. 49, 16 Sup. Ct. 1054, 6 Am Elec. Cas. 621, 632, per Mr. Justice Gray; S. C., 141 Ind. 281, 5 Am. Elec. Cas. 646. That a State may tax traffic within the State, passing between different points therein, although in the course of its transportation it passes through another State. See Lehigh Valley R. Co. v. Pennsylvania, 145 U. S. 195, 12 Sup. Ct. 806. 16 Pittsburg, C., C. & St. L. Ry. Co. v. Backus, 154 U. S. 421, 428. interstate commerce corporation may be taxed by a State, on business commencing and terminating within that State, although it passes through another State in the course of transportation or transmission, for this is not interstate commerce.17 The question, however, in all these cases as to taxation, relates to the validity of the tax; to the question, what constitutes commerce among the several States; and what State legislative enactments violate the Federal Constitution on this subject. Upon these points the language of the courts has differed, and the decisions are far from being in perfect agreement. 18 14 Sup. Ct. 1114, per Mr. Justice Brewer, cited with approval in Western Un. Teleg. Co. v. Taggart, 163 U. S. 1, 41 L. Ed. 49, 16 Sup. Ct. 1054, 6 Am. Elec. Cas. 621, 629, per Mr. Justice Gray. V. 17 United States: Lehigh Valley R. Co. v. Pennsylvania, 145 U. S. 192, 12 Sup. Ct. 806; Wabash, etc., R. Co. v. Illinois, 118 U. S. 557, 7 Sup. Ct. 4, Illinois: Harman v. City of Chicago, 140 Ill. 374, 26 N. E. 697. Iowa: Campbell Chicago, etc., R. Co., 86 Iowa, 587, 17 L. R. A. 443, 53 N. W. 351. Missouri: Seawell v. Kansas City, etc. R. Co., 119 Mo. 224, 24 S. W. 1002. North Carolina: Leavell v. Western Un. Teleg. Co., 116 N. C. 211. 47 Am. St. Rep. 798, 24 S. E., 391; State v. Western Un. Teleg. Co.. 113 N. C. 213, 4 Am. Elec. Cas. 586. 18 S. E. 389. Virginia: See Western Teleg. Un. Co. v. Reynolds, 100 Va. 459, 41 S. E. 856, 93 Am. St. Rep. 971, considered in § 124a herein. 18 See Fargo v. Michigan, 121 U. S. 230, 7 Sup. Ct. 857, per Mr. Justice Miller; Postal Teleg. Cable Co. v. Adams, 71 Miss. 555, 42 Am. St. Rep. 478. 4 Am. Elec. Cas. 606, 607-609, 611, 14 So. 36, per Woods, J.; Matter of Taxation of Pennsyl vania Teleph. Co., 48 N. J. Eq. 91, 27 Am. Rep. 462, 3 Am. Elec. Cas. 9, 12, 20 Atl. 846, per Bird, V. C., and cases throughout this chapter. "It is often a difficult question whether a tax imposed by a State does in fact invade the dominion of the General Government, or interfere with its operations to such an extent or in such a manner as to render it unwarranted. It cannot be that a State tax which remotely affects the efficient exercise of a Federal power is for that reason alone inhibited by the Constitution. To hold that would be to deny to States all power to tax persons or property. Every tax levied by a State withdraws from the reach of Federal taxation a portion of the property from which it is taken, and to that extent diminishes the subject upon which Federal taxes may be laid. The States are, and they must ever be, coexistent with the National Government. Neither may destroy the other. Hence the Federal Constitution must receive a practical construction. Its limitations and implied prohibitions must not be extended so far as to destroy the necessary powers of the States, or prevent their efficient exercise." Railroad Co. v. Peniston, 18 Wall. Commerce Federal Constitution Taxation of fran § 85. chise. A State tax upon the franchise of a telegraph company covers all its intangible property, rather than its corporate franchises, as technically defined. 19 Although a corporation is granted certain rights, as to construction and operation, by act of Congress, said grant does not destroy or merge therein a State franchise so as to exempt such franchise from State taxation.20 But the franchise of a company incorporated by the United States cannot be taxed by a State, although its tangible property may be taxed.21 Again, where a telegraph company has accepted the benefits of the Post Roads Act,22 it cannot be taxed by a State upon this franchise derived from the National Government. It cannot be taxed upon its right to operate at all. An unlimited tax upon such franchise without regulation or condition, and without any necessary consideration of property values or recognized rules of assessment, differs from a State statute, which undertakes to provide a just and equitable mode by which the taxable property of a corporation shall be ascertained, according to reasonable and business methods of valuation and appraisement, based upon the amount and value of the capital employed or property owned and used in business of such a corporation within a State. In this case the telegraph company was not organized under the State wherein the tax was claimed, and did not derive its franchise therefrom, and the assessment upon which the taxation was based was the "franchise." No other taxes were involved. 23 (U. S.) 5, quoted with approval in Western Un. Teleg. Co. v. AttorneyGeneral of Mass., 125 U. S. 530, 8 Sup. Ct. 961, 31 L. Ed. 790, 21 Am. & Eng. Corp. Cas. 13, 2 Am. Elec. Cas. 57, 63, 8 Sup. Ct. 961, per Mr. Justice Miller. 19 Western Un. Teleg. Co. v. Norman, 77 Fed. 13, under Kentucky Stat. 1894, § 4077. See Adams Express Co. v. Kentucky, 166 U. S. 171, 17 Sup. Ct. 527. 20 Central Pacific R. Co. v. California, 162 U. S. 91, 16 Sup. Ct. 766, 40 L. Ed. 903; Southern Pacific R. Co. v. California, 162 U. S. 167, 16 Sup. Ct. 794, 40 L. Ed. 929. 21 California v. Pacific R. Co., 127 U. S. 1, 41, 8 Sup. Ct. 1073. Examine Cooley on Const. Lim. (6th ed.), pp. 590, 591. See 4 Thompson's Com. on Corp. (ed 1895, §§ 5556-5562, 6 id., §§ 8092, 81058108, 8120, 8122, 8123. 22 Act July 24, 1866, U. S. Stat. at Large, 1865-1867, pp. 221, 222; title 65, Rev. Stat. U. S., noted throughout this chapter herein. 23 San Francisco v. Western Un. Teleg. Co., 96 Cal. 140, 4 Am. Elec. "25 $86. Commerce - Federal Constitution · Taxation of franchise continued. It is said by Mr. Justice Brewer, that "it is a misconception, however, to suppose that the franchise or privilege granted by the Act of 1866 24 carries with it the unrestricted right to appropriate public property of a State. It is like any other franchise, to be exercised in subordination to public as to private rights.' So in other cases, the question of franchise, derived under the Post Roads Act, has been urged to defeat the collection of license or other taxes.26 So it is held, that a tax may be levied in the form of a franchise tax, though a privilege tax imposed in lieu of all other taxes. 27 It is said in this last case, that "the right of a State to tax the franchise or privilege of being a corporation, as personal property, has been repeatedly recognized by this court, and this whether the corporation be a domestic or foreign corporation. doing business by its permission within a State. But a State cannot exclude from its limits a corporation engaged in interstate or foreign commerce, or a corporation in the employment of the General Government, either directly in terms or indirectly by the imposition of inadmissible conditions. Nevertheless the State may subject it to such property taxation as only incidentally affects its occupation, as all business, whether of Cas. 594, 31 Pac. 10. See also 24 Post Roads Act. 23 St. Louis v. Western Un. Teleg. Co., 148 U. S. 92, 37 L. Ed. 380, 4 Am. Elec. Cas. 102, 109-111, 13 Sup. Ct. 485, per Mr. Justice Brew er, a case of license tax or rental. Cited in Postal Teleg. Cable Co. v. Mayor of Baltimore, 79 Md. 502, 24 L. R. A. 161, 5 Am. Elec. Cas. 37, 41, 29 Atl. 819, per Bryan, J. 26 See Postal Teleg. Cable Co. v. Charleston, 153 U. S. 692, 5 Am. Elec. Cas. 663, affg. 56 Fed. 419, 4 Am. Elec. Cas. 620, 14 Sup. Ct. 1094; Ratterman v. Western Un. Teleg. Co., 127 U. S. 411, 8 Sup. Ct. 1127, 21 Am. & Eng. Corp. Cas. 1, 2 Am. Elec. Cas. 68, 78; State of Maine v. Western Un. Teleg. Co., 73 Me. 518, 1 Am. Elec. Cas. 415, 422; City of Chester v. Western Un. Teleg. Co. (C. P., Del. Co., Penn., 1886), 3 Lancaster Law Rev. 164, 2 Am. Elec. Cas. 93. See chap. VIII, herein. |