1. This Court can afford the citizen of a state no relief from
the enforcement of her laws prescribing the mode and subjects of
taxation if they neither trench upon federal authority nor violate
any right recognized, or secured by the Constitution of the United
States.
2. The Constitution does not prohibit a state from taxing her
resident citizens for debts held by them against a nonresident,
evidenced by his bonds, payment whereof is secured by his deeds of
trust or mortgages upon real estate situate in another state.
3. For the purposes of taxation, a debt has its situs at the
residence of the creditor, and may be there taxed.
Charles W. Kirtland, a citizen of Connecticut, instituted this
action for the purpose of restraining the enforcement of certain
tax warrants levied upon his real estate in the town in which he
resided, in satisfaction of certain state taxes, assessed against
him for the years 1869 and 1870. The assessment was by reason of
his ownership, during those years, of certain bonds executed in
Chicago and made payable to him, his executors, administrators, or
assigns in that city, at such place as he or they should by writing
appoint, and, in default of such appointment, at the Manufacturers'
National Bank of Chicago. Each bond declared that
"it is made under, and is, in all respects, to be construed by
the laws of Illinois, and is given for an actual loan of money,
made at the City of Chicago, by the said Charles W. Kirtland to the
said Edwin A. Cummins, on the day of the date hereof."
They were secured by
Page 100 U. S. 492
deeds of trust, executed by the obligor to one Perkins, of that
city, upon real estate there situated, the trustee having power by
the terms of the deed to sell and convey the property and apply the
proceeds in payment of the loan in case of default on the part of
the obligor to perform the stipulations of the bond.
The statute of Connecticut under which the assessment was made
declares, among other things, that personal property in that state
"or elsewhere" should be deemed, for purposes of taxation, to
include all moneys, credits, choses in action, bonds, notes, stocks
(except United States stocks), chattels, or effects, or any
interest thereon, and that such personal property or interest
thereon, being the property of any person resident in the state,
should be valued and assessed at its just and true value in the tax
list of the town where the owner resides. The statute expressly
exempts from its operation money or property actually invested in
the business of merchandizing or manufacturing, when located out of
the state. Conn. Revision of 1866, p. 709, tit. 64, c. 1, sect.
8.
The court below held that the assessments complained of were in
conformity to the state law, and that the law itself did not
infringe any constitutional right of the plaintiff.
This writ of error is prosecuted by Kirtland upon the ground,
among others, that the statute of Connecticut thus interpreted and
sustained is repugnant to the Constitution of the United
States.
Page 100 U. S. 496
MR. JUSTICE HARLAN, after stating the case, delivered the
opinion of the Court.
We will not follow the interesting argument of counsel by
Page 100 U. S. 497
entering upon an extended discussion of the principles upon
which the power of taxation rests under our system of
constitutional government. Nor is it at all necessary that we
should now attempt to state all limitations which exist upon the
exercise of that power, whether they arise from the essential
principles of free government or from express constitutional
provisions. We restrict our remarks to a single question, the
precise import of which will appear from the preceding statement of
the more important facts of this case.
In
McCulloch v. State of
Maryland, 4 Wheat. 428, this Court considered very
fully the nature and extent of the original right of taxation which
remained with the states after the adoption of the federal
Constitution. It was there said
"that the power of taxing the people and their property is
essential to the very existence of government, and may be
legitimately exercised on the objects to which it is applicable to
the utmost extent to which the government may choose to carry
it."
Tracing the right of taxation to the source from which it was
derived, the Court further said:
"It is obvious that it is an incident of sovereignty, and is
coextensive with that to which it is an incident. All subjects over
which the sovereign power of a state extends are objects of
taxation, but those over which it does not extend are, upon the
soundest principles, exempt from taxation."
"This vital power," said this Court in
Providence Bank v.
Billings, 4 Pet. 563,
"may be abused, but the Constitution of the United States was
not intended to furnish the corrective for every abuse of power
which may be committed by the state governments. The interest,
wisdom, and justice of the representative body and its relations
with its constituents furnish the only security, when there is no
express contract, against unjust and excessive taxation as well as
against unwise legislation."
In
St. Louis v. The Ferry
Company, 11 Wall. 423, and in
State Tax
on Foreign-held Bonds, 15 Wall. 300, the language
of the Court was equally emphatic.
In the last-named case, we said that
"unless restrained by provisions of the federal Constitution,
the power of the state as to the mode, form, and extent of taxation
is unlimited
Page 100 U. S. 498
where the subjects to which it applies are within her
jurisdiction."
We perceive no reason to modify the principles announced in
these cases or to question their soundness. They are fundamental
and vital in the relations which, under the Constitution, exist
between the United States and the several states. Upon their strict
observance depends in no small degree the harmonious and successful
working of our complex system of government, federal and state. It
may therefore be regarded as the established doctrine of this Court
that so long as the state, by its laws, prescribing the mode and
subjects of taxation, does not entrench upon the legitimate
authority of the Union or violate any right recognized, or secured
by the Constitution of the United States, this Court, as between
the state and its citizen, can afford him no relief against state
taxation, however unjust, oppressive, or onerous.
Plainly, therefore, our only duty is to inquire whether the
Constitution prohibits a state from taxing in the hands of one of
its resident citizens a debt held by him upon a resident of another
state and evidenced by the bond of the debtor, secured by deed of
trust or mortgage upon real estate situated in the state in which
the debtor resides.
The question does not seem to us to be very difficult of
solution. The creditor, it is conceded, is a permanent resident
within the jurisdiction of the state imposing the tax. The debt is
property in his hands constituting a portion of his wealth, from
which he is under the highest obligation, in common with his fellow
citizens of the same state, to contribute for the support of the
government whose protection he enjoys.
That debt, although a species of intangible property, may, for
purposes of taxation if not for all others, be regarded as situated
at the domicile of the creditor. It is nonetheless property because
its amount and maturity are set forth in a bond. That bond,
wherever actually held or deposited, is only evidence of the debt,
and if destroyed, the debt -- the right to demand payment of the
money loaned, with the stipulated interest -- remains. Nor is the
debt, for the purposes of taxation, affected by the fact that it is
secured by mortgage
Page 100 U. S. 499
upon real estate situated in Illinois. The mortgage is but a
security for the debt, and, as held in
State Tax on
Foreign-held Bonds, supra, the right of the creditor
"to proceed against the property mortgaged, upon a given
contingency, to enforce by its sale the payment of his demand . . .
has no locality independent of the party in whom it resides. It may
undoubtedly be taxed by the state when held by a resident
therein,"
&c. Cooley on Taxation, 15, 63, 134, 270. The debt, then,
having its situs at the creditor's residence, both he and it are,
for the purposes of taxation, within the jurisdiction of the state.
It is consequently for the state to determine, consistently with
its own fundamental law, whether such property owned by one of its
residents shall contribute, by way of taxation, to maintain its
government. Its discretion in that regard cannot be supervised or
controlled by any department of the federal government, for the
reason, too obvious to require argument in its support, that such
taxation violates no provision of the federal Constitution.
Manifestly it does not, as is supposed by counsel, interfere in any
true sense with the exercise by Congress of the power to regulate
commerce among the several states.
Nathan v.
Louisiana, 8 How. 73; Cooley on Taxation 62. Nor
does it, as is further supposed, abridge the privileges or
immunities of citizens of the United States, or deprive the citizen
of life, liberty, or property without due process of law or violate
the constitutional guaranty that the citizens of each state shall
be entitled to all privileges of citizens in the several
states.
Whether the State of Connecticut shall measure the contribution
which persons resident within its jurisdiction shall make by way of
taxes in return for the protection it affords them, by the value of
the credits, choses in action, bonds, or stocks which they may own
(other than such as are exempted or protected from taxation under
the Constitution and laws of the United States), is a matter which
concerns only the people of that state, with which the federal
government cannot rightly interfere.
Judgment affirmed.
