Quaere whether § 12 of the Act of Legislative Assembly
of Porto Rico of March 8, 1906, providing that an injunction may
issue to prevent collection of illegal tolls, applies to the
District Court of the United States for Porto Rico.
Even though the bill might not be sustained because complainant
has an adequate remedy or because the court has not power to issue
an injunction, the court prefers, in this case, to rest its
decision on the fact that the bill should be dismissed upon the
merits.
Under § 13 of the Foraker Act of April 12, 1900, 31 Stat. 77,
c.191, and the Act of July 1, 1902, 32 Stat. 731, c. 1383, the
Territory of Porto Rico has jurisdiction for taxing purposes over
the harbors and navigable waters surrounding Porto Rico.
The purpose of the Foraker Act was to give local self-government
to Porto Rico, conferring an autonomy similar to that of the states
and territories, reserving to the United States rights to the
harbor areas and navigable waters for the purpose of exercising the
usual national control and jurisdiction over commerce and
navigation.
While the United States can reserve control over such places as
it sees fit within a territory to which it gives autonomy, it does
not reserve any such places unless it is so expressed in the
act.
Property which has acquired a situs within the jurisdiction of
the Territory of Porto Rico is not exempt from taxation by the
territory simply because it is exclusively used by the owner for
carrying out a contract with the government.
Where jurisdiction to tax property exists, the validity of the
tax cannot be determined by an inquiry as to the extent to which
the property may be benefited.
In this case, there is nothing in the record to show that the
property taxed had not acquired a situs in Porto Rico or that takes
it out of the rule that tangible personal property is subject to
taxation by the state or territory in which it is, no matter where
the domicile of the owner may be.
5 P.R. 142 reversed.
Page 224 U. S. 363
The facts, which involve the power of Porto Rico to tax
machinery and vessels in the harbor of San Juan engaged in work in
pursuance of a contract with the United States, are stated in the
opinion.
MR. JUSTICE McKENNA delivered the opinion of the Court.
The question in the case is the power of Porto Rico to tax
certain machinery and boats which, at the time of the levy of the
taxes, were in the harbor of San Juan, engaged in dredging work, in
pursuance of a contract of the Standard Dredging Company with the
United States government.
The dredging company filed a bill to enjoin the appellant,
Treasurer of Porto Rico, from enforcing the tax. Appellant demurred
to the bill for insufficiency and want of equity, which was
overruled. He declined to answer, and the injunction which had been
granted was made perpetual. This appeal was then taken.
The material allegations of the bill are as follows:
The dredging company is a Delaware corporation, with its
principal office and place of business at the City of Wilmington,
State of Delaware. Gromer is Treasurer of Porto Rico. That,
theretofore, and prior to April 1, 1908, the dredging
Page 224 U. S. 364
company entered into a contract with the United States
government to dredge certain portions of the harbor of San Juan and
the channel leading from the ocean to the harbor area. Prior to
that date, for use in connection with its operations under the
contract, it brought to the harbor one dredge, one tugboat, two
scows for dumping material to be removed, one coal scow, and one
launch. The boats and machinery are its property and have been
constantly used by it in the performance of its contract, and were
not used in connection with any other business or operations, and
were at all times within the harbor where the operations under the
contract were carried on. The dredging company has neither
conducted nor carried on any other business in Porto Rico or the
waters adjacent thereto except its operations under the
contract.
Gromer, as Treasurer of Porto Rico, pretending to act under the
revenue laws of Porto Rico, assumed to assess and levy on the said
property as of the value of $75,000 a tax of $1,200, for the fiscal
year 1908-09, and he and his agents
"have levied an embargo on part of said property . . . and are
threatening to foreclose the same and to sell the property for the
purpose of enforcing the collection of the said alleged tax."
The tax is illegal, and its enforcement will be illegal by
virtue of the laws of the United States and of Porto Rico, and
especially by virtue of the acts and proclamations of Congress and
of the President of the United States, creating reservations in and
about the island of Porto Rico. The insular government of Porto
Rico is not authorized to levy or collect any tax in connection
with property the situs of which is within the reservation or
within any navigable waters of harbor areas of the island of Porto
Rico. The property of the company has not been brought within the
jurisdiction of the insular government, nor is it subject to
taxation while being employed in the performance
Page 224 U. S. 365
of the contract with the United States and within the harbor
area.
It is alleged that the company is without any remedy at law, and
an injunction is therefore prayed.
In support of his demurrer, appellant contends that the dredging
company had an adequate remedy at law, and that § 12 of the Act of
the Legislative Assembly of Porto Rico, approved March 8, 1906,
which provides that an
"injunction may be issued to prevent the illegal levying of any
tax, duty, or toll, or for the illegal collection thereof, or
against any proceeding to enforce such collection . . ."
does not apply to the District Court of the United States for
Porto Rico. We, however, pass the contention, as we prefer to rest
our decision on the merits.
The bill of the dredging company, and its contentions here, are
based on two propositions: (1) the property was not within the
jurisdiction of Porto Rico, but was within the harbor area reserved
by the United States; (2) the property was being used "within the
harbor area" in the performance of a contract with the United
States, and therefore not subject to taxation for insular
purposes.
To sustain the first proposition, § 13 of the Foraker Act (April
12, 1900, 31 Stat. 80, c. 191) is relied on, and the Act of
Congress of July 1, 1902 (32 Stat. 731, c. 1383).
Section 13 reads as follows:
"That all property which may have been acquired in Porto Rico by
the United States under the cession of Spain, in said treaty of
peace in any public bridges, roadhouses, water powers, highways,
unnavigable streams and the beds thereof, subterranean waters,
mines or minerals under the surface of private lands, and all
property which at the time of the cession, belonged under the laws
of Spain then in force to the various harbor works boards of Porto
Rico, and of the harbor shores, docks, slips, and reclaimed lands,
but not including harbor areas or
Page 224 U. S. 366
navigable waters, is hereby placed under the control of
the government established by this act, to be administered for the
benefit of the people of Porto Rico, and the legislative assembly
hereby created shall have authority, subject to the limitations
imposed upon all its acts, to legislate with respect to all such
matters, as it may deem advisable."
(Italics ours.)
Under the Act of Congress of July 1, 1902, a division of the
public properties of Porto Rico was made under which the President
of the United States was authorized to reserve certain public
properties for the use of the federal government. The properties
not reserved were granted to the government of Porto Rico, to be
held or disposed of for the use and benefit of the people of the
island. The reservations included lands and buildings for army and
navy and other federal governmental purposes. The exception of
harbors and navigable streams was as follows:
"And all the public lands and buildings, not including harbor
areas and navigable streams and bodies of water, and the submerged
lands underlying the same, owned by the United States in said
island, and not so reserved,"
etc.
Considering these provisions alone, it is, we think, manifest
that they only provide for proprietary reservations and
dispositions, and not for limitations upon the exercise of
government. This conclusion is confirmed by § 1 of the Foraker act,
which provides that the provisions of the act
"shall apply to the island of Porto Rico and to the adjacent
islands and waters of the islands lying east of the seventy-fourth
meridian of longitude west of Greenwich, which were ceded to the
United States by the government of Spain by treaty entered into on
the tenth day of December, eighteen hundred and ninety-eight eight,
and the name Porto Rico, as used in this Act, shall be held to
include not only the island of that name, but all the adjacent
islands, as aforesaid."
As early as 1901, the control by the government of the
Page 224 U. S. 367
United States over Porto Rican waters came up for consideration
and was referred by the Secretary of War to the Attorney General
for determination. The elements in the question were the River and
Harbor Act of 1899 (March 3, 1899, 30 Stat. 1121, c. 425) and the
Act of April 12, 1900, "temporarily to provide revenues and a civil
government for Porto Rico, and for other purposes." 31 Stat. 77,
80. Section 14 of the latter act provided, with certain exceptions,
that the statutory laws of the United States not locally
inapplicable should have the same force and effect in Porto Rico as
in the United States. Section 13 provided that certain harbor
property which at the time of the cession, belonged, under the laws
of Spain, to the various harbor works boards of Porto Rico, "but
not including harbor areas or navigable waters," should be "placed
under the control of the government established by this act, and to
be administered for the benefit of the people of Porto Rico." The
legislative assembly created by the act was given authority "to
legislate with respect to all such matters" as it might deem
advisable, and this authority was extended to all matters of a
legislative character not locally inapplicable. It was further
provided that all laws should be referred to Congress, which
reserved the power to annul the same.
The River and Harbor Act of 1899 (30 Stat. 1151, c. 425),
prohibited unauthorized obstructions to navigation in any of the
waters of the United States, and provided for control by the
Secretary of War of wharves and similar structures in ports and
other waters of the United States.
The Attorney General expressed the opinion that, under these
statutes, the coastal waters, harbors, and other navigable waters
of the island were water of the United States, and that a license
granted by the Secretary of War to build a wharf in the harbor,
given before the ratification of the treaty with Spain, was valid,
and that the
Page 224 U. S. 368
power under the license to rebuild the wharf, which had been
destroyed by fire, continued as against the control of the
Executive Council of Porto Rico. Commenting on the provisions of
the River and Harbor Act and the acts in regard to Porto Rico, it
was said that Congress, since the ratification of the treaty with
Spain, has nowhere indicated that Porto Rican waters are not to be
regarded as waters of the United States, nor directed that the
authority of the Secretary of War, under the River and Harbor Act
of 1899, shall not extend to the Porto Rican waters.
"On the contrary, Congress has used language in the Porto Rican
Act, as, for instance, in § 13, which clearly contemplates national
jurisdiction over those waters as waters of the United States."
23 Op.Atty.Gen. 551. In other words, the jurisdiction of the
United States over those waters was the jurisdiction that the
United States had over all other navigable waters, an exercise of
which the River and Harbor Act was an example.
This is made clear by a subsequent opinion, in which it was
declared
"that Congress committed to local control, subject to the
expressed limitation upon the local legislative power, the
administration of certain public property and utilities, including
'harbor shores, docks, slips, and reclaimed lands,' but excluding
'harbor areas or navigable waters.'"
And, speaking of §§ 12 and 13 of the Porto Rican Act of April
12, 1900, it was said that the "obvious implication" from them
is
"that the general government retains title to, possession of,
and control over certain other public property, of which
fortifications and their appurtenances are specified, and also
reserves for its own administration the usual national powers over
lights, buoys, and other matters affecting navigation or 'works
undertaken by the United States.' And it was said, further:"
"From all this it is certain that the ordinary national control
of the marine belt affects the coastal
Page 224 U. S. 369
waters of Porto Rico as well as those of any state or any other
territory of the United States."
But, as to the "harbor margins," it was said that
"the government of the United States, by reason of these grants
. . . to . . . Porto Rico, is now in the same position with
reference to the island government, as well as to private owners,
as it would be in a similar case affecting a State of the United
States."
23 Op.Atty.Gen. 564.
From this principle it was concluded that the United States
could not appropriate the islands of Culebra for a naval base, they
being within the limits described in § 1 of the Act of April 12,
1900. And § 1 of that act is identical with § 1 of the Foraker Act,
and its provisions for "harbor areas and navigable waters" are the
same as in the Foraker Act. The views of the Attorney General
therefore are expressly applicable, for the language of the Act of
April 12, 1900, which determined them, was repeated in the Foraker
Act, which we are now called upon to consider.
The distinction made between local control of property and the
exercise of government is a substantial one, and is illustrated in
cases.
Shively v. Bowlby, 152 U.
S. 30;
Thomas v. Gay, 169 U.
S. 264;
Ft. Leavenworth R. Co. v. Lowe,
114 U. S. 525,
114 U. S. 542;
Western Union Telegraph Co. v. Chiles, 214
U. S. 278;
Reynolds v. People, 1 Colo. 181;
Scott v. United States, 1 Wyo. 40;
Territory v.
Burgess, 8 Mont. 57.
We have seen that, by § 1 of the Foraker Act, all of its
provisions are made applicable to a certain defined area, and that
the name Porto Rico "shall be held to include not only the island
of that name, but all adjacent islands and waters, of the islands."
The governmental powers conferred upon Porto Rico must be
coextensive with that area, subject to the reservation that all
laws passed shall not be in conflict with the laws of the United
States, and the power of enacting such laws is conferred upon the
legislative assembly. There is precaution against abuse.
Page 224 U. S. 370
They must be reported to Congress, which has the power to annul
them.
The purpose of the act is to give local self-government,
conferring an autonomy similar to that of the states and
territories, reserving to the United States rights to the harbor
areas and navigable waters for the purpose of exercising the usual
national control and jurisdiction over commerce and navigation.
The United States could have reserved government control and
exercised it as it does in instances, by the consent of the states,
over certain places in the states devoted to the governmental
service of the United States. We do not think, as we have said,
that the United States has done so, and that it has not is the view
of the executive department of the government, as expressed through
the Attorney General. The War Department entertained the same view
as to military reservations in Porto Rico, and also as to such
reservations in the Philippine Islands.
Section 12 of the Philippine Act placed all property rights
acquired from Spain under the control of the island government for
the benefit of its inhabitants, except
"such land or other property as shall be designated by the
President of the United States for military and other reservations
of the government of the United States."
The extent of the power thus reserved was referred for
consideration by the Secretary of War to the Attorney General, and
in an opinion written by Solicitor General Hoyt, and approved by
Attorney General Moody, it was held that the provisions granted and
reserved property, but did not confer governmental jurisdiction. It
was said in the course of the opinion, after referring to the
provisions of the Philippine Act which directed that all laws
passed by the Philippine government should be reported to Congress,
and the reservation by Congress of the power to annul the same (a
similar provision is in the Porto Rico
Page 224 U. S. 371
Act), that
"the relation of Congress to all territorial legislation is
similar [certain organic acts of the states being cited], and thus
it may be said that the exercise of local jurisdiction for ordinary
municipal purposes over a reservation in a territory is valid until
and unless disapproved by Congress."
26 Op.Atty.Gen. 91, 97.
There is an allegation in the bill that the property was not
"subject to any lien or burden of taxation while being employed
in the performance of its said contract with the United States of
America and within the said harbor area."
It is not clear what is meant by the allegation. So far as it
means that the property is an instrument of the national
government, and not subject therefore to local taxation, the
contention cannot prevail.
Baltimore Shipbuilding & Dry
Dock Co. v. Baltimore, 195 U. S. 375,
195 U. S. 382.
Indeed, the contention is a very broad one, and would seem to be
independent of the situation of the property, and, if true at all,
would apply to property employed in the service of the United
States, wherever situated, and no matter to what extent employed.
Appellant discusses it somewhat. We shall consider it in the aspect
presented by appellee. Counsel say that
"the basic and underlying principle which must control in the
determination of the case is as to the extent of the control or
jurisdiction of the insular government over the harbor of San Juan,
and in this connection, as to whether or not property situated
entirely within the harbor area, engaged in operations connected
with the lands underlying such harbor area, could receive any
benefit from the expenditure from moneys raised by the insular
government from taxation."
There is a confusing mixture of elements. If Porto Rico had
jurisdiction over the harbor area, it had jurisdiction to tax
property which was situated in the harbor, no matter how engaged,
and, being so situated, the validity of the tax upon it cannot be
determined by an inquiry of
Page 224 U. S. 372
the extent it may be benefited.
Thomas v. Gay,
162 U. S. 264;
Wagoner v. Evans, 170 U. S. 588.
It, however, may be said that the property was only temporarily
in the waters of Porto Rico, and that its situs was at the domicil
of the dredging company.
The fact is not alleged, and no other fact which removed the
property from the application of the rule that tangible personal
property is subject to taxation by the state in which it is, no
matter where the domicil of the owner may be.
Old Dominion
Steamship Co. v. Virginia, 198 U. S. 299,
198 U. S.
305.
The allegation is that, prior to the first of April, 1908, the
property was brought to and within the harbor of San Juan. The date
is that of the assessment and levy of the tax, but whence the
property had been brought, or how long it had been in the harbor
before the levy of the tax, is not averred, nor was it necessary
for the purpose of the cause of action alleged. There is not an
intimation that the property had its situs for taxation elsewhere.
The claims of exemption from the tax, and the only claims of
exemption, were: (1) that Porto Rico, by virtue of the laws of the
United States and of Porto Rico, and especially by virtue of those
acts and proclamations of Congress and of the President of the
United States creating reservations in and about the island of
Porto Rico, was "not authorized to levy or collect any tax in
connection with property the status [situs?] of which" was "within
such reservation, or within any navigable waters or harbor areas of
the said island of Porto Rico;" (2) that the property was not
subject to taxation "while being employed in the performance of"
the dredging company's "contract with the United States of America
and within the said harbor area."
These allegations are, as we have already seen, the basis of the
contentions made and argued by the company. It is true that, after
discussing them, counsel "invite
Page 224 U. S. 373
the attention of the Court" to "certain other considerations"
expressed in the opinion of the court below. To analyze or
summarize the opinion would extend our discussion unduly. Elements
that are really independent are mingled somewhat, making it
difficult to assign the exact strength given to them respectively,
but we think the basis of the decision was, as it is of the
contentions discussed by counsel for the company, that the property
was not subject to the taxing power of Porto Rico because of its
situation within the harbor area and because the title to such area
had been reserved to the national government -- an untenable
position, as we have seen.
Decree reversed, with directions to sustain the demurrer and
dismiss the bill.
MR. JUSTICE DAY, with whom concurred MR. JUSTICE HUGHES and MR.
JUSTICE LAMAR, dissenting:
We are unable to concur in the judgment just pronounced. The
reversal of the judgment below is, in our view, inconsistent with
decisions heretofore made in this Court concerning the power of
taxation.
We agree with the decision of the court that the Territory of
Porto Rico has jurisdiction for taxing purposes over the harbor and
waters in question, and that the use of the property for government
purposes does not exempt it from taxation, and therefore do not
dissent from anything that is said in the opinion of the Court upon
those subjects. Our objection to the judgment of reversal is that,
as we see it, there is a ground of decision in the court below,
ample to sustain its decree, which does not turn upon the
determination of the controversy as to the political jurisdiction
over these waters. In our opinion, the property of the dredging
company had not acquired a taxable situs within the jurisdiction of
the Territory of Porto Rico.
Page 224 U. S. 374
The case was heard upon demurrer, and we must therefore take the
allegations of the bill, well pleaded, to be true. From them it
appears that, prior to the first day of April, 1908, complainant
company, a corporation of the State of Delaware, having its
principal office and place of business at Wilmington in that state,
entered into a contract with the United States to perform certain
services in connection with the dredging of portions of the harbor
of San Juan, Porto Rico, and the channel leading from the ocean to
the harbor. The bill alleges:
"That, by virtue of the requirements of the said contract, your
orator did, prior to the said first day of April, 1908, bring to
and within the said harbor area of the said harbor of San Juan
certain boats and machinery, to be used by it in connection with
its operations under the said contract, to-wit, one dredge, one
tugboat, two scows for dumping material to be removed, one coal
scow, and one launch. That the said machinery and boats so brought
by the said complainant and used in connection with its operations
under said contract in the said harbor area of the harbor of San
Juan were and are the property of the said complainant company, and
since the same were so brought to the said harbor area, the same
have been constantly used by the said complainant, and engaged in
its operations in carrying out its said contract with the said the
United States, and the same have not been used in connection with
any other business or operations whatsoever, and the same have at
all times been entirely within the said harbor areas where the said
operations under said contract were so being carried on. And your
orator further states that it has not conducted or carried on any
business in Porto Rico or in the waters adjacent thereto except the
said operations under the said contract with the United States
aforesaid."
It is further alleged that, on the first day of April, 1908, the
taxing officer of Porto Rico undertook to levy a tax
Page 224 U. S. 375
of $1,200 upon a valuation of the property at $75,000, under the
laws of the territory, as of that date.
The case was submitted upon briefs without argument. In the
brief of the Attorney General as well as that of the appellee, the
question principally argued concerns the jurisdiction of the
Territory of Porto Rico over the harbor and waters of the bay. In
the brief of the Attorney General, argument is made and cases are
cited to sustain the claim that the situs of the property for the
purposes of taxation was within the jurisdiction of the territory.
In the brief submitted by the appellee, reference is made to the
opinion of the court for additional reasons for supporting the
decree, which reasons are not adverted to at length in the brief.
In the opinion of the court, the allegations of the bill are
treated, as might rightly be done, as raising the question of
taxable situs of this property, and, among other things, the judge
says (p. 146):
"It has, we think, been settled by numerous recent decisions of
the Supreme Court of the United States that the old rule of
personal property following the domicil of the owner has been so
varied and departed from as that it does not mean very much at the
present time; the real question to be decided in every such case
being whether the personal property -- be the same rolling stock,
machinery, merchandise, or even floating property, such as
steamships, boats, or dredges -- has been brought within the taxing
jurisdiction of the government attempting to levy the tax. In other
words, it must always be determined that the situs of the property
is within the taxing jurisdiction.
See Old Dominion Steamship
Co. v. Virginia, 198 U. S. 299, and the many
cases cited. Also
Ayer & Lord Tie Co. v. Kentucky,
202 U. S.
409, and cases cited, and
Metropolitan Life
Insurance Company v. New Orleans, 205 U. S.
395, and citations."
After consideration of the subject, the court reached the
conclusion, not only that the local government of Porto
Page 224 U. S. 376
Rico had no jurisdiction over the harbor and waters where this
work was done, but that the property had no taxable situs in Porto
Rico.
See pp. 154 and 155, Vol. V, Porto Rico Federal
Reporter.
It is well settled that property outside of the jurisdiction of
a state cannot be taxed within the due process clause of the
Fourteenth Amendment.
Louisville &c. Ferry Co. v.
Kentucky, 188 U. S. 385;
Delaware, L. &c. R. Co. v. Pennsylvania, 198 U.
S. 341;
Union Refrigerator Transit Co. v.
Kentucky, 199 U. S. 194.
As a general rule, in the absence of a situs elsewhere, the
domicil, of the owner is the place where personalty is taxable. As
was said in
Tappan v. Merchants' National
Bank, 19 Wall. 490, by Mr. Chief Justice Waite,
speaking for the Court:
"Personal property, in the absence of any law to the contrary,
follows the person of the owner, and has its situs at his domicil.
But, for the purposes of taxation, it may be separated from him,
and he may be taxed on its account at the place where it is
actually located. These are familiar principles, and have been
often acted upon in this Court."
To the same effect,
See St. Louis v. Wiggins Ferry
Co., 11 Wall. 423;
Bristol v. Washington
County, 177 U. S. 133;
Ayer & Lord Tie Co. v. Kentucky, 202 U.
S. 409.
In
Buck v. Beach, 206 U. S. 392,
this Court, while recognizing the rule of taxable situs of personal
property as distinguished from the domicil of the owner, held that
notes temporarily within a state, although in the possession of an
agent of the owner, and there held for collection, were not within
the taxing power where the owner lived elsewhere.
It requires a showing that the property sought to be taxed is
incorporated in or commingled with the property of the taxing
authority before it can become liable to taxation in any other
jurisdiction than that of the domicil
Page 224 U. S. 377
of the owner.
Commonwealth v. American Dredging Co.,
122 Pa. 386 (
see infra).
The decisions in this Court indicate that personal property of a
tangible character, to become taxable, must have acquired a situs
of a permanent nature within the jurisdiction of the authority
seeking to levy the tax. The use of the term "permanent" in this
connection may not mean the continued and unchangeable location of
the property at a given place, but certainly does intend to include
the idea of location which is not of a temporary or fleeting
character.
As was said by this Court in
Morgan v.
Parham, 16 Wall. 471, in declaring that a vessel
engaged in interstate commerce was not subject to taxation in the
City of Mobile, Alabama, although it was physically within the
limits of the city in the course of navigation:
"It is the opinion of the Court that the State of Alabama had no
jurisdiction over this vessel for the purpose of taxation, for the
reason that it had not become incorporated into the personal
property of that state, but was there temporarily only."
In
Old Dominion Steamship Co. v. Virginia, 198 U.
S. 299, it was held that certain vessels engaged in
interstate commerce and registered outside of the State of Virginia
were taxable in that state, it appearing that they were
continuously used in navigating the waters of that state. Of that
case, this Court said in
Southern Pacific Co. v. Kentucky,
222 U. S. 63,
222 U. S.
72:
"The case of
Old Dominion Steamship Co. v. Virginia
affords an instance of where the domicil of the owner as a taxing
situs was held to have been lost and a new taxing situs acquired by
reason of a permanent location within another jurisdiction. But, in
that case, the judgment was rested upon the fact that the vessels
had for years been continuously and exclusively engaged in the
navigation of the Virginia waters, which state had
Page 224 U. S. 378
thereby acquired jurisdiction for imposing a tax as upon
property which had become incorporated into the tangible property
within her territory."
In
Ayer & Lord Tie Co. v. Kentucky, supra, this
Court had occasion to consider the taxation of vessels plying
between the ports of different states, and it was held that, where
a vessel has acquired an actual situs in a state other than that
which is the domicil of the owner, it may be taxed, because it is
within the jurisdiction of the taxing authority, and, after
reviewing the previous cases in this Court, MR. JUSTICE WHITE,
speaking for the Court, said (p.
202 U. S.
423):
"But, if enrollment at that place was within the statutes, it is
wholly immaterial, since the previous decisions to which we have
referred decisively establish that enrollment is irrelevant to the
question of taxation, because the power of taxation of vessels
depends either upon the actual domicil of the owner or the
permanent situs of the property within the taxing
jurisdiction."
As was said in one of the latest of this Court's deliverances
upon the subject (
Metropolitan Life Ins. Co. v. New
Orleans, 205 U. S. 395),
"but personal property may be taxed in its permanent abiding place,
although the domicil of the owner is elsewhere."
And in the latest deliverance of this Court upon the subject
(
Southern Pacific Co. v. Kentucky, supra), decided at this
term, the principle is again stated and applied, that tangible
personal property, unless it has acquired an actual situs
elsewhere, is taxable at the domicil of the owner.
In all the cases to which our attention has been called, decided
in this Court, the idea of permanency in the abiding place is
emphasized as essential to taxable situs -- that is, the property
sought to be taxed must become "commingled" with the property of
the state (
Old Dominion Steamship Co. v. Virginia, supra),
or "intermingled" with
Page 224 U. S. 379
the general property of the state (
Delaware, L. &c. R.
Co. v. Pennsylvania, supra), or "permanently located" there
(
Union Refrigerator Transit Co. v. Kentucky, 199 U.
S. 194), or "incorporated in" the local property
(
Southern Pacific Co. v. Kentucky, supra). All these
expressions indicate the idea of a permanent situs of the
property.
The question then comes to this: when the Porto Rico
authorities, on the first of April, 1908, undertook to levy this
tax upon the dredging outfit, had it acquired a situs in that
jurisdiction for the purpose of taxation? Answering this question,
we must bear in mind that there is no showing that the property was
permanently located in San Juan harbor in the sense we have
indicated, but that, on the contrary, it appears it was brought
into Porto Rico for the purpose of carrying out a government
contract upon which the owner of the property had entered at the
time of the attempted taxation; that it was not used in connection
with any other business or operation whatsoever, but had been
continuously and entirely engaged in carrying out the contract for
which it was taken to Porto Rico, and that the owner of the
property had not engaged in any operations in Porto Rico or the
waters thereof, except only those under the contract with the
United States.
Tangible personal property is taxable at the owner's domicil,
except where it is shown to have an actual situs elsewhere, and, as
we have seen, actual situs is not gained when the property comes
only temporarily within the taxing jurisdiction. Applying this
test, we are of the opinion that this dredging outfit had not
become incorporated into the personal property of the Territory of
Porto Rico, as manifestly it was there temporarily only. In our
judgment, this situation falls far short of a location in Porto
Rico sufficient to subject it to the taxing power of that
territory.
The cases relied upon and cited in the brief of the Attorney
Page 224 U. S. 380
General of Porto Rico (
National Dredging Co. v. State,
99 Ala. 462, and
North Western Lumber Co. v. Chehalis
County, 25 Wash. 95), are entirely different in their
facts.
In the Alabama case, the dredging outfit was held presumably to
be in Mobile Bay for the purpose of carrying out a series of
contracts in the line of the dredging company's business. The court
says (p. 465):
"Indeed, as appears from this record, other property of the same
kind which had previously been used by residents of Alabama in the
prosecution of this work was purchased by the appellant company,
and, being incorporated with that involved here, has all along been
used like it in dredging the channel of Mobile Bay, and one scow so
used was built in the City of Mobile, and has never been, we
assume, outside of the state."
And the court further says (p. 466):
"In other words, taking into consideration the business of the
corporation, the amount and continuing character of the work to be
done in Mobile Bay, the preparations made by the company for doing
so much thereof as is authorized under one annual appropriation, it
may be that this property will be for years engaged upon this work,
as a part of that now being used by the company of like kind with
this had been used thereon for a year or years prior to 1891. On
this state of the case -- or even leaving out of view the
considerations last adverted to -- it is clear, we think, that this
property is not merely temporarily within Alabama, but that, to the
contrary, its presence here is for such an indefinite period as
involves the idea of permanency, in the sense in which that term is
used with respect to the situs of property for the purposes of
taxation."
In the Washington case, the property sought to be taxed was
certain tugboats, which were claimed to be exempt from taxation
because they were registered at a
Page 224 U. S. 381
port in another state. The evidence disclosed that these tugs
had been in use in the State of Washington from four to seven
years, and not elsewhere, and that the only absence of the tugs
from the harbors of that state was for the temporary purpose of
repairs, and further, that they were used for all those years
appurtenant to and as a part of the lumber plant and business of
the lumber company in the county and state where taxed. Under such
circumstances, the Supreme Court of Washington held that the tugs
were permanently in Washington, transacting a local business, and
had acquired a taxable situs within that state.
A statement of these cases readily distinguishes them from the
one at bar. In the case now before us, it was sought to tax the
dredging property upon its removal from the domicil of its owner
for the performance of a single contract and for the transaction of
no other business whatsoever, and presumably, as the court below
said, not to remain in the jurisdiction beyond the term of the
contract for which it was used. To tax property in this situation,
it seems to us, would be extending the doctrine of taxable situs
elsewhere than at the owner's domicil beyond any authority shown,
and certainly beyond the reason of the rule. If property thus
located could be taxed, the same principle would permit the taxing
of a dredging outfit upon the Great Lakes of the country,
frequently moving from port to port, in the performance of dredging
contracts, in every jurisdiction where it might temporarily be, as
well as at the domicil of the owner, where such property could
unquestionably be reached.
In
Commonwealth v. American Dredging Co. supra, where a
dredging outfit was specifically involved, the Supreme Court of
Pennsylvania held that so much of the capital stock of the
corporation as was invested in the State of New Jersey in a
dredging outfit, namely $92,000 in four dredges which were built
outside of the State of
Page 224 U. S. 382
Pennsylvania, three of which had never been within the limits of
that state, and the fourth of which had never been within its
limits until after the end of the year; $6,000 in a tug which was
built outside of the State of Pennsylvania, and was not within its
limits during the year, and $38,500 in eleven scows, built outside
of the State of Pennsylvania, and never within its limits, the
property all being employed for corporate purposes in the States of
New Jersey, Maryland, and Virginia, was nevertheless subject to
taxation in the State of Pennsylvania, which was the domicil of the
American Dredging Company, the owner of the property. In reaching
that conclusion, Mr. Justice Paxson, who spoke for the court,
said:
"It must be conceded that the property in question must be
liable to taxation in some jurisdiction. If it were permanently
located in another state, it would be liable to taxation there. But
the facts show that it is not permanently located out of the state.
From the nature of the business, it is in one place today and in
another tomorrow, and hence not taxable in the jurisdiction where
temporarily employed. It follows that, if not taxable here, it
escapes altogether. The rule as to vessels engaged in foreign or
interstate commerce is that their situs, for the purpose of
taxation, is their home port of registry, or the residence of their
owner, if unregistered.
Pullman's Palace Car Co. v.
Twombly, 29 F. 658;
Hays v. Pacific Mail S.S.
Co., 17 How. 596."
"These vessels, if they may be so called, were not registered.
Hence, their situs for taxation is the domicil of the owners. This
rule must prevail in the absence of anything to show that they are
so permanently located in another state as to be liable to taxation
under the laws of that state."
That case was commented on in the opinion of this Court in
Delaware, L. &c. R. Co. v. Pennsylvania, supra, in
which it was held that the capital stock of a corporation
Page 224 U. S. 383
represented by property in stocks of coal which had been sent
out of the state, and were deposited in other states for sale,
could not be taxed.
Of the
Dredging Company case, Mr. Justice Peckham,
speaking for this Court, said:
"Such property is entirely unlike the property involved in
Commonwealth v. American Dredging Co., 122 Pa. 386. That
property consisted of vessels, or scows, or tugs, only temporarily
out of the State of Pennsylvania for the purpose of engaging in
business, and liable to return to the state at any time, and was
without any actual situs beyond the jurisdiction of the state
itself."
We think, therefore, that the property in question was taxable
in Delaware at the domicil of the owner, and we agree with the
district court in its conclusion that it had not acquired a taxable
situs in Porto Rico.
For this reason, we dissent from the judgment of the Court.