The tax imposed by the statutes of Massachusetts, (Pub.Stat. c.
13, §§ 40, 42), requiring every telegraph company owning a line of
telegraph within the state to pay to the state treasurer "a tax
upon its corporate franchise at a valuation thereof equal to the
aggregate value of the shares in its capital stock," deducting such
portion of that valuation as is proportional to the length of its
lines without the state, and deducting also an amount equal to the
value of its real estate and machinery subject to local taxation
within the state, is in effect a tax upon the corporation on
account of property owned and used by it within the state, and is
constitutional and valid as applied to a telegraph company
incorporated by another state, and which has accepted the rights
conferred by Congress by § 5263 of the Revised Statutes.
Western Union Telegraph Co. v. Attorney General of
Massachusetts, 125 U. S. 530
Upon rendering a decree for the plaintiff in a suit in equity
brought in behalf of a state, pursuant to statute, to recover the
amount of a tax with interest thereon at the rate of twelve percent
until paid, a sum tendered and paid into court by the defendant for
part of that amount and interest thereon at that rate is to be
applied to the payment of both principal and interest of the sum so
admitted to be due; interest at the rate of twelve percent is to be
computed on the rest of the principal until the date of the decree,
and from that date interest on the lawful amount of the decree is
to be competed at the ordinary rate of six percent only,
notwithstanding the final disposition of the case is delayed by
Page 141 U. S. 41
The case is stated in the opinion.
MR. JUSTICE GRAY delivered the opinion of the Court.
Three informations in equity were filed in the Supreme Judicial
Court of Massachusetts by the Attorney General at the relation of
the Treasurer of the commonwealth against the Western union
Telegraph Company, a corporation of New York, under § 54 of chapter
13 of the Public Statutes of Massachusetts, for the recovery of
taxes assessed to the defendant for the years, 1886, 1887, and 1888
under other sections of that chapter, and interest thereon at the
rate of twelve percent a year until paid, and for an injunction
against the defendant's prosecution of its business until payment
of such taxes and interest.
Upon petition of the defendant alleging that the matter in
dispute arose under the Constitution and laws of the United States,
the three suits were removed into the circuit court of the United
States, and were there heard upon pleadings and proofs, and decrees
entered for the amounts of the taxes and interest, deducting
certain sums paid into court by the defendant and granting no
injunction. Both parties appealed to this Court.
These cases cannot be distinguished from that of Western
Union Telegraph Co. v. Massachusetts, 125 U.
, in which the validity of similar taxes was
upheld in a judgment delivered by Mr. Justice Miller with no
The Constitution of Massachusetts, c. 1, § 1, art. 4, empowers
"to impose and levy proportional and reasonable assessments,
rates, and taxes upon all the inhabitants of, and persons resident
and estates lying within, the said commonwealth, and also to impose
and levy reasonable duties and excises upon any produce, goods,
Page 141 U. S. 42
and commodities whatsoever, brought into, produced,
manufactured, or being within the same."
1 Charters and Constitutions 961.
The statutes pursuant to which the taxes now in question were
assessed and sought to be collected are set forth in full in 125
U.S. 125 U. S.
-534, note, and the material provisions of them are
By § 38
"Every corporation chartered by the commonwealth or organized
under the general laws for purposes of business or profit, having a
capital stock divided into shares"
(with certain exceptions) shall annually return to the tax
commissioner a list of its shareholders and the number of shares
belonging to each, the amount of its capital stock, the par value
and market value of the shares, and the locality and value of its
real estate and machinery subject to local taxation within the
commonwealth, and "railroad and telegraph companies shall return
the whole length of their lines, and the length of so much of their
lines as is without the commonwealth." By § 39, the tax
commissioner shall ascertain the true market value of the shares of
each corporation and estimate the fair cash valuation of all the
shares constituting its capital stock, and shall also ascertain and
determine the value of its real estate and machinery subject to
local taxation, and of the deductions provided in § 40. By §
"Every corporation embraced in the provisions of section
thirty-eight shall annually pay a tax upon its corporate franchise
at a valuation thereof equal to the aggregate value of the shares
in its capital stock as determined in the preceding section, after
making the deductions provided for in this section at a rate
determined by an apportionment of the whole amount of money to be
raised by taxation upon property in the commonwealth during the
same current year, . . . upon the aggregate valuation of all the
cities and towns for the preceding year. . . . From the valuation
ascertained and determined as aforesaid there shall be deducted:
first, in case of railroad and telegraph companies whose lines
extend beyond the limits of the commonwealth, such portion of the
Page 141 U. S. 43
valuation of their capital stock, ascertained as aforesaid, as
is proportional to the length of that part of their line lying
without the commonwealth, and also an amount equal to the value, as
determined by the tax commissioner, of their real estate and
machinery located and subject to local taxation within the
commonwealth; second, in case of other corporations, included in
section thirty-eight of this chapter, an amount equal to the value,
as determined by the tax commissioner, of their real estate and
machinery subject to local taxation, wherever situated."
By § 42
"Every corporation or association chartered or organized
elsewhere which owns, or controls and uses, under lease or
otherwise, a line of telegraph within this commonwealth"
shall make all the returns prescribed by § 38 excepting the list
of shareholders, "and shall annually pay a tax at the same rate,
and to be ascertained and determined in the same manner," as is
provided in § 40.
By § 54, taxes assessed under §§ 40 and 42 may be recovered,
"with interest at the rate of twelve percent per annum until the
same are paid," by action in the name of the treasurer of the
commonwealth, or by information at his relation in the Supreme
It is to be remembered that by the tax act of Massachusetts,
"taxes on real estate shall be assessed in the city or town where
the estate lies," and
"all machinery employed in any branch of manufacture shall be
assessed where such machinery is situated or employed; and, in
assessing the stockholders for their shares in any manufacturing
corporation there shall first be deducted from the value thereof
the value of the machinery and real estate belonging to such
Mass.Pub.Stat. c. 11, §§ 13, 20. Although it is hard to see how
telegraph companies can have "machinery employed in any branch of
manufactures" unless they make their own machines, yet railroad
corporations, which are coupled with telegraph companies in the
statutes in question, as well as other corporations embraced in
those statutes, might have such machinery.
The effect of the statutes complained of is that every
Page 141 U. S. 44
company, whether incorporated in Massachusetts or elsewhere,
owning a line of telegraph in Massachusetts is to be there taxed on
such proportion only of the whole value of its capital stock as the
length of its line in Massachusetts bears to the whole length of
its lines everywhere, and to prevent its whole tax in Massachusetts
from amounting, in any event, to more than that, it is provided
that from the taxable portion of the value of its capital so
ascertained shall be deducted the value of any property owned by it
in Massachusetts which is subject to local taxation in the cities
and towns. Such being the real state of the case, all the
objections to the validity of the tax are met and disposed of by
the decision of this Court in the former case between these
In that case, as in this, the telegraph company, while admitting
that its property in the State of Massachusetts was subject to
taxation there like other property, argued that by reason of its
having accepted the provisions of the Act of July 24, 1866, c. 230,
14 St. 221, now embodied in §§ 5263-5269 of the Revised Statutes,
and having thus acquired under § 5263
"the right to construct, maintain, and operate lines of
telegraph through and over any portion of the public domain of the
United States, over and along any of the railways or post roads of
the United States, and over, under, or across the navigable streams
or waters of the United States,"
it had a franchise from the United States which could not be
taxed by any state through which its lines ran; that the statutes
of Massachusetts in terms and effect undertook to tax the
franchises of the corporation, and that the tax was
unconstitutional and void both as interfering with interstate
commerce and as being unequal and excessive.
But this Court, in answering that argument and upholding the
validity of the tax, affirmed the following propositions:
The franchise of the company to be a corporation and to carry on
the business of telegraphing was derived not from the act of
Congress, but from the laws of the State of New York under which it
was organized, and it never could have been intended by the
Congress of the United States, in conferring upon a corporation of
one state the authority to enter
Page 141 U. S. 45
the Territory of any other state and to erect its poles and
lines therein, to establish the proposition that such a company
owed no obedience to the laws of the state into which it thus
entered, and was under no obligation to pay its fair proportion of
the taxes necessary to the support of the government of that state.
125 U.S. 125 U. S.
By whatever name the tax may be called, as described in the laws
of Massachusetts it is essentially an excise upon the capital of
the corporation, and those laws attempt to ascertain the just
amount which any corporation engaged in business within its limits
shall pay as a contribution to the support of its government upon
the amount and value of the capital so employed by it therein. 125
U.S. 125 U. S.
The tax, though nominally upon the shares of the capital stock
of the company, is in effect a tax upon that organization on
account of property owned and used by it in the State of
Massachusetts, and the proportion of the length of its lines in
that state to their entire length throughout the whole country is
made the basis for ascertaining the value of that property. Such a
tax is not forbidden by the acceptance on the part of the telegraph
company of the rights conferred by § 5263 of the Revised Statutes
or by the commerce clause of the Constitution. 125 U.S.
125 U. S.
The statute of Massachusetts is intended to govern the taxation
of all corporations doing business within its territory, whether
organized under its own laws or under those of some other state,
and the rule adopted to ascertain the amount of the value of the
capital engaged in that business within its boundaries on which the
tax should be assessed is not an unfair or unjust one, and the
details of the method by which this was determined have not
exceeded the fair range of legislative discretion. 125 U.S.
125 U. S.
That decision was cited by the court in Ratterman v. Western
Union Telegraph Co., 127 U. S. 411
127 U. S.
-427, and in Leloup v. Mobile, 127 U.
, 127 U. S. 649
The other questions argued relate to the amounts for which
decrees were entered. In each case, the defendant admitted its
liability to pay a tax on the actual value, as stated in its
Page 141 U. S. 46
answer, of its real and personal property within the state, and
tendered and paid into court the sum so admitted to be due, with
interest thereon at the rate of twelve percent and costs. The sum
so paid in was greater than like interest then accrued on the whole
amount of the tax assessed and sued for. The court added to the
whole amount of the tax sued for interest thereon at the rate of
twelve percent to the date of the payment into court, deducted from
the sum so ascertained the sum paid in, and entered a decree for
the balance, with interest thereon at the rate of twelve percent
from the date of such payment to the date of the decree, and
thereafter until payment of interest on the amount of the decree at
the rate of six percent, that being the usual rate of interest in
It is contended in behalf of the state that the tender and
payment into court could have no effect in a suit of this kind to
recover a tax, with interest thereon at the rate of twelve percent
in the nature of a penalty, and that such interest must be computed
at that rate not merely to the time of the decree below, but to the
time of payment, or at least to the time of the final decree in
this Court. On the other hand it is contended that the sum paid
into court should have been applied, according to the evident
intention of the defendant in paying it, to both principal and
interest of the sum admitted to be due, instead of applying it to
interest on the whole claim sued for, and thereby increasing the
sum on which to compute subsequent interest.
We are of opinion that in this matter, the defendant is right.
In equity, at least, the defendant was entitled to the benefit of
the sum paid into court. That sum should have been applied to that
part of the principal sum and interest which was admitted to be
due. After the payment into court, as before, interest at the rate
of twelve percent was to be computed on the rest of the principal.
The penal rate of twelve percent interest ran only until the amount
to be recovered was judicially ascertained. Since the date of the
decree below, interest is to be computed on the lawful amount of
the decree at the rate of six percent only.
Page 141 U. S. 47
In each of the three cases, therefore, the entry must be:
Decree reversed and case remanded with directions to enter a
decree for the amount of the tax found due by the circuit court,
but applying the sum paid into court and computing interest on the
balance, in accordance with the opinion of this Court, the costs in
this Court to be equally divided between the parties.
MR. JUSTICE FIELD and MR. JUSTICE HARLAN dissented.