While technically municipal bonds deposited with the insurance
commissioner under the laws of Ohio regulating the right of foreign
companies to do business within the state are investments in bonds,
they are also a part of the capital stock of the company invested
in Ohio and required to be so invested for the security of domestic
policyholders, and for the purposes of taxation to be considered as
part of the capital stock of the company and included within the
statutory definition of personal property required to be returned
by foreign and domestic corporations for taxation.
While no tax can be levied without express authority of law,
statutes are to receive a reasonable construction with a view to
carrying out their purpose and intent, and
The collection by distraint of goods to satisfy taxes lawfully
levied is one of the most ancient methods known to the law, and, in
this case, the law of Ohio authorizing it does not violate the
constitutional right of a foreign insurance company and deprive it
of its property without due process of law.
There is nothing in the exemption of government bonds from
taxation which prevents them from being seized for taxes due upon
unexempt property.
The laws of the Ohio, as construed by the Supreme Court of that
state, have conferred the right to tax bonds deposited by a foreign
insurance company with the insurance,commissioner under the laws
regulating the right to do business in the state.
Where municipal bonds so deposited are withdrawn before the
return day and government bonds substituted therefor, as provided
by law, the company is not liable for taxation on the bonds so
withdrawn.
Where there is no personal liability for taxes, the defense can
be set up in an action at law, and there is no necessity to resort
to equity to enjoin prosecution of suits therefor. It will be
presumed that, if the claim of the party taxed is right, no
personal judgment will be entered.
These cases are cross-appeals from a decree rendered in the
circuit court upon bill and demurrer. The Scottish Union
Page 196 U. S. 612
and National Insurance Company, a corporation of Great Britain,
filed its bill to enjoin the defendants, Willis G. Bowland,
Treasurer, and L. Ewing Jones, Auditor, of Franklin County, Ohio;
Arthur I. Vorys, Superintendent of Insurance, and William S.
McKinnon, Treasurer, of the State of Ohio, from the collection of
taxes levied on certain bonds deposited by the complainant under
the laws of Ohio regulating the right of foreign insurance
companies to do business in that state. It appears from the
averments of the bill that the bonds were deposited under section
3660 of the Revised Statutes of Ohio, as amended in 1894. 91 Ohio
Laws 40. They were municipal bonds of the County of Lucas and State
of Ohio. Fifty thousand dollars thereof was deposited on September
14, 1894, and $50,000 on November 7, 1894. The bonds were
registered in the name of the Superintendent of Insurance, in trust
for the benefit and security of the policyholders of the insurance
company residing in Ohio, and were delivered by him to the state
treasurer for safekeeping, and remained in the office of the
Treasurer of the state at Columbus, Franklin County, Ohio, until
withdrawn on April 2, 1903, when United States bonds were
substituted therefor.
The insurance company is transacting the business of insurance
in Ohio, but it avers that its home office is in the City of
Edinburgh, Scotland, and its chief office and managing agency for
this country is at Hartford, Connecticut, from which office it
conducts its business in Ohio.
Acting under the Ohio statute, section 2781
a (94 Ohio
Laws, 62), the auditor of Franklin County, by notice served on one
of the local agents of the Scottish Union & National Insurance
Company, notified it to appear and show cause why the said bonds
should not be taxed against it on the duplicate of Franklin County,
Ohio, and taxes collected thereon for the years 1895 to 1900,
inclusive. The auditor entered upon the tax duplicate taxes against
the insurance company for $2,700 each for the years 1895 to 1897,
inclusive, and $2,750 each for the years 1898 to 1900, inclusive,
and five percent
Page 196 U. S. 613
penalty thereon. On November 15, 1900, the Treasurer of Franklin
County brought a civil action against the company for taxes so
assessed. This action, at the time of the filing of the bill, was
still pending in the Court of Common Pleas of Franklin County,
Ohio.
On December 4, 1903, another notice was served upon the company,
through its local agent, and the auditor entered taxes against such
company for the years 1901, 1902, and 1903 -- in all, the sum of
$8,935.50. On April 2, 1904, the Treasurer of Franklin County
procured a warrant of distraint, and upon such warrant demanded of
the Superintendent of Insurance and the state treasurer the United
States bonds so substituted on April 2, 1903, for such municipal
bonds, for the purpose of seizing and selling the same to satisfy
the taxes which had been assessed against the company with respect
to the municipal bonds for the years 1895 to 1900, inclusive. It is
averred that to permit the collection of these taxes by suit for
personal judgment or distraint will be violative of complainant's
treaty rights as a subject of Great Britain, and will be taking
complainant's property without due process of law, in violation of
the Fourteenth Amendment to the Constitution of the United
States.
The prayer of the bill is that the defendant the Treasurer of
Franklin County be restrained from collecting or attempting to
collect any of the taxes against the complainant personally; that
the said treasurer be restrained from collecting or attempting to
collect said taxes or any portion of them by distraint against
either such bonds of the United States so deposited or any personal
property of complainant which may now or hereafter be situated in
the County of Franklin or in the State of Ohio; that the defendants
the Superintendent of Insurance and Treasurer of the State of Ohio
be enjoined from delivering or attempting to deliver said United
States bonds or any part thereof to the said county treasurer, and
for such other relief as equity and good conscience may
require.
The respondents having interposed demurrers to the bill,
Page 196 U. S. 614
the court held that the municipal bonds on deposit in Ohio were
subject to taxation under the laws of the state; that there was no
personal liability of the complainant on account of said taxes, and
therefore a civil action to recover the taxes should be enjoined;
that, for the year 1903 the collection of taxes could not be
enforced, as the United States bonds were substituted before the
time for returning property for that year; that the bonds might be
seized by distraint to satisfy the taxes levied upon the municipal
securities for the years they were on deposit, and the court
therefore refused to enjoin the execution of the distress warrant
except for the taxes and penalty for the year 1903, and rendered a
decree enjoining the collection of the taxes by civil action.
Both parties appealed, the company from so much of the decree as
permitted distraint of the United States securities for the
collection of taxes levied with respect to the municipal bonds, the
treasurer and auditor of Franklin County from so much of the decree
as denies the right of the state to prosecute a civil action
against the company to recover the taxes aforesaid, and from so
much thereof as restrained the officials from attempting to collect
the taxes assessed against the municipal bonds for the year
1903.
Page 196 U. S. 619
MR. JUSTICE DAY, after making the foregoing statement, delivered
the opinion of the Court.
These cases may be considered together, as they are appeals from
a single decree, and involve the right to assess and collect taxes
upon the municipal bonds deposited by the insurance company under
the laws of Ohio.
A considerable part of the opinion of the court below and the
discussion in the briefs of counsel goes to the question of the
Page 196 U. S. 620
power of the state to tax bonds, held as these were, within its
jurisdiction. At the oral argument, however, the learned counsel
representing the insurance company conceded that there was
legislative power to impose the taxes in question. A reference to
the decisions of this Court makes it perfectly plain that such
taxation is within the power of the state.
New Orleans v.
Stemple, 175 U. S. 309;
Bristol v. Washington County, 177 U.
S. 133;
Blackstone v. Miller, 188 U.
S. 189;
State Assessors v. Comptoir National
D'Escompte, 191 U. S. 388,
191 U. S. 403;
Carstairs v. Cochran, 193 U. S. 10.
The contention for the company is that, conceding the power of
the state, it has never been exercised in the only way to make it
effectual, which is by statutory enactment, and that the policy and
statutes of Ohio have never authorized taxation of bonds deposited
under the conditions shown in this case.
The question, therefore, is have the statutes of Ohio, read in
the light of the construction placed upon them by the supreme court
of the state, conferred the right to tax these municipal bonds?
Before entering upon a consideration of the statutes, we may say
in general terms that we agree with the learned counsel for the
insurance company that the scheme of taxation of personal property
in Ohio involves the requirement that it shall be returned or
listed by some person or corporation whose duty it is by law to
return or list such property. Provision is not made for assessing
or taxing personal property by proceedings
in rem, but,
before a recovery for taxes can be justified either by action or
distraint, it must appear that it was required to be returned for
the purpose of taxation under some law of the state.
The proceedings under which the taxes for the years included in
this case were charged against the insurance company by the Auditor
of Franklin County are under a statute (Revised Statutes of Ohio,
section 2781
a) having for its purpose the correction of
returns by those whose duty it was to return
Page 196 U. S. 621
property for taxation, and making correction of returns so as to
include property which should have been returned, but had been
omitted, by some person charged by law with that duty.
Was it the duty of the insurance company or anyone acting for it
to return these municipal bonds for taxation? They were required to
be deposited under section 3660, Rev.Stat. of Ohio, as amended,
which reads as follows:
"SEC. 3660. [
Certain companies must make deposit.] A
company incorporated by or organized under the laws of a foreign
government shall deposit with the Superintendent of Insurance, for
the benefit and security of its policyholders residing in this
state, a sum not less than one hundred thousand dollars in stocks
or bonds of the United States, or the State of Ohio, or any
municipality or county thereof, which shall not be received by the
superintendent at a rate above their par value; the stocks and
securities so deposited may be exchanged from time to time for
other like securities; so long as the company so depositing
continues solvent and complies with the laws of this state, it
shall be permitted by the superintendent to collect the interest or
dividends on such deposits, and for the purpose of this chapter the
capital of any foreign company doing fire insurance business in
this state shall be deemed to be the aggregate value of its
deposits with the insurance or other departments of this state and
of the other states of the United States, for the benefit of
policyholders in this state, or in the United States, and its
assets and investments in the United States, certified according to
the provisions of this chapter; but such assets and investments
must be held within the United States and invested in and held by
trustees, who must be citizens of the United States, appointed by
the board of directors of the company, and approved by the
insurance commissioner of the state where invested, for the benefit
of the policyholders and creditors in the United States, and the
trustees so chosen may take, hold, and convey real and personal
property for the purpose of the trust, subject
Page 196 U. S. 622
to the same restrictions as companies of this state."
91 v. 40; 70 v. 147, section 21; (S. & S. 212).
This section is part of the chapter of the Ohio statutes
regulating insurance companies other than life. In the same chapter
may be found other sections regulating the manner of doing business
in Ohio by insurance companies, and in section 3637 we find a
provision as to how the capital of domestic insurance companies
shall be invested, and such companies are required to invest their
capital in certain United States, state, county, and municipal
bonds, etc. These domestic companies are in like manner required to
deposit such securities with the commissioner for the benefit of
their policyholders (Ohio Rev.Stat. §§ 3593, 3595), and without
such deposit are not authorized to do business within the state. As
a condition of doing business in Ohio, companies organized under
the laws of foreign governments are, by section 3660, required to
invest a portion of their capital in the stock or bonds of the
United States or of the State of Ohio, or some municipality or
county thereof, and make deposit of such bonds with the
Superintendent of Insurance for the benefit of local policyholders.
Subsequent provisions of the section further show that this deposit
is to be regarded as a part of the capital of such foreign
insurance company, which may be considered in determining the
aggregate capital of the company required by law. The companies are
permitted to collect the interest or dividends on the securities.
These deposits constitute a fund primarily for the benefit of such
policyholders, and after their claims are satisfied may be turned
over to an assignee or devoted to other purposes.
Falkenbach v.
Patterson, 43 Ohio St. 359;
State v. Matthews, 64
Ohio St. 419.
This statute therefore provides for the manner of investment of
a portion of the capital stock of a foreign insurance company
within the State of Ohio for the protection of the policyholders
within the state. It is more than a mere "investment in bonds." It
is also a part of the capital stock required to be deposited as a
condition of doing business
Page 196 U. S. 623
within the state, and devoted to the benefit of local
stockholders.
The authority to enact laws for the imposition of taxes is found
in the constitution of the state, Article 12, section 2, which
provides:
"Laws shall be passed, taxing by a uniform rule all moneys,
credits, investments in bonds, stocks, joint stock companies, or
otherwise, and also all real and personal property, according to
its true value in money."
Section 2731 provides, in language similar to that used in the
Constitution, for the taxation of all property, real and personal,
in the state, and all moneys, credits, investments in bonds, stock,
or otherwise, of persons residing in the state. This section is
found in the first chapter of Title 13, "Taxation," of the Ohio
Statutes, and is in part in the following language:
"SEC. 2731. All property, whether real or personal, in this
state, and whether belonging to individuals or corporations, and
all moneys, credits, investments in bonds, stocks, or otherwise, of
persons residing in this state, shall be subject to taxation,
except only such as may be expressly exempted therefrom, and such
property, moneys, credits, and investments shall be entered on the
list of taxable property as prescribed in this title."
The argument for the insurance company is that this preliminary
section, read with the other sections of the Ohio law upon the
subject, excludes "investment in bonds" from being embraced in a
general description of personal property, and limits their taxation
to persons residing in the state, or (under section 2730) where
they are held within the state for others by persons residing
therein.
Section 2730 of the same chapter is a section giving definitions
of terms used in the title. So far as it is pertinent in this
connection, that section is as follows:
"SEC. 2730. The terms 'investments in bonds' shall be held to
mean and include all moneys in bonds or certificates of
indebtedness, or other evidences of indebtedness,
Page 196 U. S. 624
of whatever kind, whether issued by incorporated or
unincorporated companies, towns, cities, villages, townships,
counties, states, or other incorporations, or by the United States,
held by persons residing in this state, whether for themselves or
others."
If these sections embraced all the statutory law of the state,
together, they tax investments in bonds held by residents, because
of jurisdiction over the person of the owner, and those held by
residents for other owners, and if such reside out of the state,
because of jurisdiction over the property held within the
state.
Section 2744 undertakes to make provision for the taxation of
corporations generally, and is as follows:
"SEC. 2744. [
Corporations generally; their returns.] --
The president, secretary, and principal accounting officer of every
canal or slackwater navigation company, turnpike company,
plank-road company, bridge company, insurance company, telegraph
company, or other joint stock company, except banking or other
corporations whose taxation is specifically provided for, for
whatever purpose they may have been created, whether incorporated
by any law of this state or not, shall list for taxation, verified
by the oath of the person so listing, all the personal property,
which shall be held to include all such real estate as is necessary
to the daily operations of the company, moneys and credits of such
company or corporation within the state at the actual value in
money, in manner following: in all cases, return shall be made to
the several auditors of the respective counties where such property
may be situated, together with a statement of the amount of said
property which is situated in each township, village, city, or ward
therein. The value of all movable property shall be added to the
stationary and fixed property and real estate, and apportioned to
such wards, cities, villages, or townships,
pro rata, in
proportion to the value of the real estate and fixed property in
said ward, city, village, or township, and all property so listed
shall be subject to and pay the same taxes as other property
Page 196 U. S. 625
listed in such ward, city, village, or township. It shall be the
duty of the accounting officer aforesaid to make return to the
auditor of state during the month of May of each year of the
aggregate amount of all property by him returned to the several
auditors of the respective counties in which the same may be
located. It shall be the duty of the auditor of each county, on or
before the first Monday of May annually to furnish the aforesaid
president, secretary, principal accounting officer, or agent the
necessary blanks for the purpose of making aforesaid returns; but
no neglect or failure on the part of the county auditor to furnish
such blanks shall excuse any such president, secretary, principal
accountant, or agent from making the returns within the time
specified herein. If the county auditor to whom returns are made is
of the opinion that false or incorrect valuations have been made,
or that the property of the corporation or association has not been
listed at its full value, or that it has not been listed in the
location where it properly belongs, or in cases where no return has
been made to the county auditor, he is hereby required to proceed
to have the same valued and assessed: provided, that nothing in
this section shall be so construed as to tax any stock or interest
in any joint stock company held by the state."
73 v. 139, § 16; (S. & C. 1446).
This section is broad in its terms, and requires the return of
the property, among others, of insurance companies, whether
incorporated by the laws of Ohio or not, and such companies are
required to list for taxation
"all the personal property, which shall be held to include all
such real estate as is necessary to the daily operations of the
company, moneys and credits of such company or corporation within
the state at its actual value in money."
The Supreme Court of Ohio has expressly held that this section
applies to foreign as well as domestic corporations.
Hubbard v.
Brush, 61 Ohio St. 252;
Lander v. Burke, 65 Ohio St.
532, 542.
This section therefore requires of both foreign and domestic
Page 196 U. S. 626
insurance companies that they return the personal property
mentioned which is within the state. What is meant by "personal
property" in this connection? Referring to section 2730, we find it
provided that the terms "personal property," when used in the
title, shall be held to mean and include, among other things, the
capital stock, undivided profits, and all other means not forming a
part of the capital stock of every company.
In the case of domestic corporations, and assuming that this
statute applies, as has been held by the Supreme Court of Ohio,
with equal force to foreign corporations, this definition of
personal property must be held to include not only the paid-in
capital stock of the company, but as well the bonds or securities
in which it may be invested.
This question was before the Supreme Court of Ohio in
Jones
v. Davis, 35 Ohio St. 474.
In that case, the Act of May 11, 1878, was before the court. It
contained provisions similar to those of the Revised Statutes,
requiring personal property of every description, moneys and
credits, investments in bonds, stock, joint-stock companies, or
otherwise, to be listed in the name of the person who is the owner
thereof on the day preceding the second Monday of April in each
year.
Section 11 of that act made provisions similar to those found in
section 2744, requiring incorporated companies to list for taxation
all their personal property which, by the terms of the statute, was
made to include all such real estate as was necessary to the daily
operation of the company, and all its moneys and credits within the
state at their actual value in money. After citing
Bank
Tax Case, 2 Wall. 208, and
Farrington v.
Tennessee, 95 U. S. 686,
Judge Boynton, delivering the opinion of the court, said:
"For the purposes of taxation, the capital stock is represented
by whatever it is invested in. Personal property, by the express
wording of the statute, is made to include the capital stock of a
corporation, and the provision above referred
Page 196 U. S. 627
to requires all corporations doing business in this state,
except banking and others whose taxation is specifically provided
for, to list all their personal property, including in the return
thereof all such real estate as is necessary to the daily operation
of their business, together with their moneys and credits of every
description within the state. That the legislature intended by this
description of property to embrace the capital stock of the company
is too obvious to be misunderstood. No other meaning can be drawn
from the language employed, and no other construction is better
calculated to do justice."
In
Lee v. Sturges, 46 Ohio St. 153, 160, Judge Spear,
speaking for the court, said:
"It may be assumed that 'capital stock' and 'capital and
property' mean practically the same thing. Primarily, the"
"capital stock is the money paid in by the stockholders in
compliance with the terms of their subscriptions. It soon, however,
takes the form of real estate or personal property, or both,
including machinery, buildings, credits, rights in action, etc. So
that it may here be taken to mean personal property, and such real
estate as may be necessary to the daily operations of the company,
and its moneys and credits. The capital is thus represented by the
property in which it has been invested."
We think this language pertinent in the consideration of the
case before us. While technically the bonds deposited with the
insurance commissioner are investments in bonds, they are also a
part of the capital stock of the company invested in Ohio, and
required to be so invested for the security of domestic
policyholders, and, for the purposes of taxation, to be considered
a part of the capital stock of the company, and included within the
definition of "personal property," as given in section 2730.
This conclusion is reinforced by the decision in
Hubbard v.
Brush, 61 Ohio St. 252. In that case, the Supreme Court of
Ohio held that a foreign corporation transacting business in Ohio
was required to return its property within the state where
Page 196 U. S. 628
it was carrying on business, although the corporation was
organized under the laws of West Virginia.
The court admitted that the situs of intangible property is
ordinarily at the local residence of the corporation, within the
state where it was incorporated. Nevertheless, as the promissory
notes and book accounts and other evidence of indebtedness must be
presumed to have been in the company's office in this state, they
were taxable as personal property under section 2744.
In the course of the opinion Judge Bradbury said:
"Where foreign corporations voluntarily bring their property and
business into this state to avail themselves of advantages found
here, which they believe will enhance the probabilities that the
business they intend to pursue will be profitable, they should not
be heard to complain of laws which tax them as domestic
corporations are taxed by the state. We hold, therefore, that the
provisions of section 2744, which make it the duty of foreign
corporations to list for taxation in this state their choses in
action, where they are held within this state and grow out of the
business they conduct herein, is a valid exercise of the taxing
powers vested in the state."
Under section 2744, corporations, foreign and domestic, are
required to return all personal property for taxation, which, among
other things, the statute expressly declares shall include moneys
and credits of such company or corporation within the state. If the
construction contended for shall prevail, a corporation with
capital invested in bonds would escape taxation, while one holding
its investments in notes or certificates of deposit in bank will be
compelled to return them for taxation -- a condition of things so
manifestly unjust that we cannot hold it to have been within the
intent of the legislature in framing taxing laws unless the
statutes clearly admit of no other construction. The purpose of the
Ohio Constitution and statutes passed in pursuance thereof, as has
been frequently declared by the Supreme Court of Ohio, is to tax by
a uniform rule all property owned or held within the state.
Page 196 U. S. 629
A narrow construction which will defeat this purpose should not
be adopted.
The statutes, specifically mentioning "investments in bonds,"
were intended to reach and tax, and not to exempt, that class of
personal property. The purpose to tax all real and personal
property, declared in the statute, was further emphasized by
express mention of certain classes of property such as investments
in bonds, so that by no process of exclusion could such securities
escape the burdens imposed upon all property owned or held within
the state.
The sections taxing individuals holding such securities were not
intended to put limitations upon other sections of the law taxing
the property of corporations held within the state, and enjoying
the protection of its laws and affording a basis for credit in the
transacting of business. There is no reason why the law should tax
such securities in the hands of individual residents, whether owned
or held by them for others, and permit them to escape taxation when
they represent invested capital of incorporated companies sharing
the protecting of the government and equally bound, in morals at
least, to help bear the burdens of the state.
That such securities might justly be taxed was freely admitted
in the argument at bar, and the sole contention was that the lack
of statutory power to tax these securities is a
casus
omissus in legislation which the courts cannot supply.
It may be conceded that no tax can be levied without express
authority of law, but the statutes are to receive a reasonable
construction with a view to carrying out their purpose and
intent.
We have examined the decisions of the Supreme Court of Ohio
cited by counsel construing the statutes of the state, and believe
none of them to be inconsistent with the conclusions we have
reached, and those above cited, in our opinion, are direct
authority for the construction given. All the sections must be
construed together to attain the object and intent of the law.
Section 2731, standing alone, might limit the
Page 196 U. S. 630
right to tax investments in bonds to residents of the state. It
is certainly enlarged by section 2730 to include such investments
when held for others by residents within the state. Read with
sections 2734, 2735, 2744, and 2746, we think the purpose is
manifest to require the return and taxation of all personal
property, except the small exemptions allowed, within the
jurisdiction of the state.
But it is urged if section 2744 could otherwise be held to
require a return of these bonds by the insurance company, that the
company comes within the exception of the statute excluding banking
or other corporations whose taxation is specifically provided for
in other parts of the title. And it is argued that section 2745 of
the Revised Statutes of Ohio makes express provision for the
taxation of foreign insurance companies.
Examination of this section shows that it imposes a tax upon the
business of the company in Ohio, and is not a property but a
privilege tax. Insurance companies are required to return in each
county the amount of the gross premium receipts of its agency for
the previous calendar year, and, under certain regulations, the
company is taxed upon the amount of business done.
This section does not levy a tax upon property. There are
subsequent statutory provisions of a special character, upon which
the exception of section 2744 may operate, taxing the property of
railroad companies, banks, express, telegraph, and telephone
companies, etc., but there is no other provision imposing a
property tax upon foreign insurance companies within the state.
The requirement that these bonds should be deposited for the
security of the local policyholders brought a part of the capital
of such company into the State of Ohio, upon the strength of which
it transacts its business and obtains credit within the state.
Clearly such property is not intended to be taxed within the
provisions reaching the business done in the State of Ohio under
section 2745.
Page 196 U. S. 631
But it is said that there is no person within the state required
to return this property. We think it is the duty of the officers of
the insurance company, under section 2744, to return the property,
and that the place to return it is where the property is situated.
This is clearly required by the terms of this section, and section
2735, making provision for the place of listing personal property,
provides:
"And all other personal property, moneys, credits, and
investments, except as otherwise specially provided, shall be
listed in the township, city, or village in which the person to be
charged with taxes thereon may reside at the time of the listing
thereof, if such person reside within the county where the same are
listed, and if not, then in the township, city, or village where
the property is when listed."
These bonds were the property of the corporation, taxable under
the statutes, and at the time when they should have been listed,
were held in the City of Columbus, Franklin County, Ohio, and
should have been there returned.
It is further argued that to distrain the property of the
company for the collection of these taxes would be a violation of
the constitutional rights of the insurance company, and the taking
of its property without due process of law. Section 1095
provides:
"SEC. 1095. [
Overdue taxes may be collected by
distress.] -- When taxes are past due and unpaid, as stated in
the preceding section, the county treasurer or his deputy may
distrain sufficient goods and chattels belonging to the person or
persons charged with such taxes, if found within his county, to pay
the taxes so remaining due and the costs that have accrued, and
shall immediately proceed to advertise the same in three public
places in the township where such property was taken, stating the
time when and the place where such property will be sold, and if
the taxes and costs which have accrued thereon are not paid before
the day appointed for such sale, which shall be not less than ten
days after the taking of such property, such treasurer, or his
deputy, shall proceed to sell such property
Page 196 U. S. 632
at public vendue, or so much thereof as will be sufficient to
pay said taxes and the costs of such distress tress and sale."
29 v. 291, § 19; S. & C. 1586.
This section authorizes the distraint of goods to satisfy taxes
lawfully levied against property within the county and state. This
method of collecting taxes is one of the most ancient known to the
law, and has frequently received the sanction of the courts.
Murray's Lessee v. Hoboken
Land &c. Co., 18 How. 272,
59 U. S. 276;
Springer v. United States, 102 U.
S. 586; Cooley on Taxation 302;
Palmer v.
McMahon, 133 U. S. 660.
There is nothing in the exemption of government bonds from
taxation which prevents them from being seized for taxes due upon
unexempt property. We have held that the taxes were lawfully
assessed. The statute authorizing a distraint gave the right to
proceed against personal property within the jurisdiction of the
state. The taxes were lawful, and the property belonging to a
foreign corporation which could be seized within the authority of
the state might be taken under this statute, and we do not perceive
that any constitutional right of the company is violated by seizing
its property under such circumstances.
Bristol v. Washington
County, 177 U. S. 133;
Marye v. Baltimore & Ohio R. Co., 127 U.
S. 117.
As to the right to assess taxes for the year 1903, it appears
that these municipal bonds were withdrawn from the state some time
before the return day, which is the day preceding the second Monday
in April, and such withdrawal was in the exercise of a lawful right
of the company so to do, and other securities were substituted, as
provided by law. We do not think that the fact that it had bonds in
the state for a time which were taxable justified the imposition of
this tax where the nontaxable securities were substituted before
the return day.
As to the question of personal liability of the insurance
company to judgment in an action brought to recover the amount of
the taxes, we think the court should not have issued an injunction,
as was done, against the prosecution of civil suits
Page 196 U. S. 633
for this purpose. If there is no personal liability for these
taxes -- a point which we do not feel called upon to decide -- it
is perfectly clear that, if service could be had which would make a
personal judgment proper, the company could set up its defense by
answer in the action at law, and there is no necessity to resort to
a court of equity for relief. It will be presumed, if the claim of
the company is right, no personal judgment will be rendered against
it, and, if its theory of the controversy is correct, no such
judgment can be lawfully rendered. In such case, the authorities
are uniform that equity will not interfere by injunction, but leave
the party to his defense at law. Revised Statutes of United States,
§ 723;
Insurance Company v.
Bailey, 13 Wall. 616,
80 U. S. 623;
Grand Chute v.
Winegar, 15 Wall. 373;
Deweese v.
Reinhard, 165 U. S. 386.
Upon the whole case, we reach the conclusion that the circuit
court was right in sustaining the demurrer so far as the bill
averred the nontaxability of these bonds, or the right of the
treasurer to proceed by distraint, and in overruling the demurrer
as to the taxes for the year 1903, but, for the reasons stated,
erred in enjoining the prosecution of a civil action seeking a
personal judgment.
In this view, the decree below will be reversed and the
cause remanded for further proceedings in conformity to this
opinion.