1. The question whether the Missouri law laying on corporations
an annual franchise tax of a percentage of their capital stock and
surplus employed in the state (Laws 1917, pp. 237-242) lacks
Page 256 U. S. 227
due process in not providing a hearing of right before the
commission that assesses the tax is presumably open in the suit
provided for collecting the tax, and therefore cannot be relied on
in a suit in the district court to restrain collection brought by a
corporation which had a hearing and whose valuations were accepted
by the commission in making the assessment. P. 256 U. S.
2. Its own figures having been so accepted, the corporation
cannot complain that it was taxed disproportionately as compared
with other railroads, the commission not having acted fraudulently.
P. 256 U. S.
3. The Missouri law, as this Court understands it to have been
construed by the supreme court of the state, subjects foreign
corporations with stock having no stated par value to the tax; it
therefore does not discriminate against domestic corporations whose
stock has a stated par value. P. 256 U. S.
4. The tax does not contravene the Commerce Clause, even if the
value of the franchise taxed is derived partly from the fact that
the corporation does interstate business. P. 256 U. S.
5. Federal control of its railroad during the tax year did not
exonerate the plaintiff railroad company from the tax. P.
256 U. S.
6. The act does not violate the constitution of Missouri by
imposing double taxation. P. 256 U. S.
7. The "surplus" is the excess in value of the assets in the
state (where the corporation employs part of its "capital stock" in
business elsewhere) over the capital stock employed in the state.
P. 256 U. S.
8. While, in respect of such corporations, the statute, in one
clause, describes the tax as measured by the capital stock employed
in the state, other connected clauses show the intention to include
the surplus so employed as well. P. 256 U. S.
Appeal from a decree of the district court sustaining a
franchise tax imposed on a Missouri railroad corporation, which
sought to enjoin its collection. The facts are given in the
Page 256 U. S. 228
MR. JUSTICE HOLMES delivered the opinion of the Court.
This is a bill to restrain the collection of a franchise tax
imposed by the statutes of Missouri upon domestic corporations.
Laws of 1917, pp. 237-242. *
The plaintiff, a
corporation of Missouri, filed with the state Tax Commission
Page 256 U. S. 229
a report, as required by law, showing the value of its assets
within the state to be $122,826,652, and the amount of its stock
employed within the state $21,625,830. The state Tax Commission
accepted these figures and, following the statute, levied a tax
measured by 3/40 of one percent of the capital stock employed
within the state, and also the same tax in respect of the excess in
value of the assets within the state over that of such stock,
treating that as the "surplus" which the statute takes as the
measure along with the stock. The result, of course, was a tax of
3/40 of one percent upon $122,826,852, equal to $92,119.99. The
plaintiff contests the constitutionality of the act under the
Fourteenth Amendment and the Commerce Clause (Art. I, § 8), and
under a supposed prohibition of double taxation in the Constitution
of Missouri. It also contends that, if the act was valid, it was
misconstrued in the ascertainment of the surplus over the value of
the capital stock in the state. A preliminary injunction was denied
by three judges sitting in the district court, and the plaintiff
The objection most insisted upon in this Court was that the
statute made no provision for a hearing, and that, although the
plaintiff applied to the Tax Commission for a hearing and had one,
the statute was bad because it did not provide one in terms.
Central of Georgia Ry. Co. v. Wright, 207 U.
, 207 U. S. 138
The mode of collecting the tax is by a suit where, of course, the
present plaintiff would be heard, but it is said that the judgment
of the Commission can be attacked only for want of jurisdiction and
fraud. We cannot suppose, however, that any question of law
apparent on the face of the record would not be open. The
constitutional objection mainly relied upon necessarily would be.
And as in this case the Commission accepted the plaintiff's figures
and the contest is wholly upon matters of law, we see nothing of
Page 256 U. S. 230
the plaintiff can complain in this respect. There is, to be
sure, one charge involving matter of fact dehors
record. It is alleged that the plaintiff was taxed
disproportionately as compared with other railroads. But the
plaintiff was taxed upon its own figures in accordance with the
statute, and could not complain of that. If it had made out a case
of fraud against the Commission, we presume that the state courts
would have been open to it, as well as the district court of the
United States. But nothing of that kind was proved. Sunday Lake
Iron Co. v. Wakefield, 247 U. S. 350
247 U. S.
The next objection to the tax has assumed greater importance
than any other because it induced the same judges who sat in this
case to change their opinion and issue a temporary injunction in a
suit like this brought by the Southwestern Bell Telephone Company.
We will consider it, although it hardly is open on the bill. It now
has been decided by the Supreme Court of Missouri that corporations
with stock having no stated par value can be admitted to do
business in the state, State ex rel. Standard Tank Co. v.
282 Mo. 261, and that decision was taken to mean
that all such corporations fall within a provision imposing a tax
of only twenty-five dollars upon foreign corporations without a
capital stock. On that ground, it was held that the Southwestern
Bell Telephone Company was denied the equal protection of the laws.
We hesitate to differ from judges presumably familiar with local
conditions, but we cannot read the careful discussion by the
Missouri court as having the meaning supposed. It is true that it
adverts to the "lump annual tax" imposed upon foreign corporations
without a capital stock while arguing that the policy and laws of
Missouri do not forbid their entering the state. But, at a later
page, it quotes with approval a Kansas case to show not only that
the absence of a stated value for the stock would create no
Page 256 U. S. 231
in determining whether a corporation should be admitted, but
also that it would create equally little difficulty in applying the
tax imposed upon corporations with stock having a stated par. Until
the supreme court of the state decides otherwise, we shall assume
that the supposed inequality of treatment does not exist.
There is no contravention of the Commerce Clause. It is said
that the value of the franchise taxed is derived partly from the
fact that the corporation does interstate business, but that does
not invalidate the tax. St. Louis & East St. Louis Electric
Ry. Co. v. Missouri, post, 256 U. S. 314
St. Louis Southwestern Ry. Co. v. Arkansas, 235 U.
, 235 U. S. 365
Of course, the fact that the plaintiff's road was under federal
control during the year in question does not exonerate it. It was
profiting by its franchises, although in a different way. Act of
March 21, 1918, c. 25, §§ 1, 15. 40 Stat. 451, 458.
Nothing more needs to be said concerning the relation of the Act
to the Constitution of the United States. As to the Constitution of
Missouri, we see no reason to believe that it has been violated,
and perceive no indication of such an opinion in the judgments of
the supreme court of the state. That court, on the contrary, seems
to regard the Act as valid. State ex rel. Marquette Hotel
Investment Co. v. State Tax Commission,
282 Mo. 213. This case
also sanctions the construction adopted by the Commission and the
court below for the word "surplus" in the statute, and shows that
the amount of the tax was right. It is urged that where, as here,
only a part of the corporation's capital is employed within the
state, the tax is measured by that part of the capital alone, and
no part of the surplus is taken into account. The words are, "such
corporation shall pay an annual franchise tax equal to
three-fortieths of one percent of its capital stock employed in
this state." But these words follow the words laying the normal tax
measured by stock and surplus,
Page 256 U. S. 232
and the sentence quoted continues,
"and, for the purposes of this act, such corporation shall be
deemed to have employed in this state that proportion of its entire
outstanding capital stock and surplus that its property and assets
in this state bear to all its property and assets wherever
We cannot much doubt that the tax was intended to be measured by
the proportion of stock and surplus in the state, and that the
omission of reference to surplus in the clause first quoted is a
misprision or abbreviation that does not conceal the purpose to be
gathered from the previous and following words. We think it
unnecessary to go into further details.
"Section 1. Every corporation organized under the laws of this
state shall, in addition to all other fees and taxes now required
or paid, pay an annual franchise tax to the state of Missouri equal
to three-fortieths of one percent of the par value of its
outstanding capital stock and surplus, or if such corporation
employs a part of its capital stock in business in another state or
country, then such corporation shall pay an annual franchise tax
equal to three-fortieths of one percent of its capital stock
employed in this state, and for the purposes of this act, such
corporation shall be deemed to have employed in this state that
proportion of its entire outstanding capital stock and surplus that
its property and assets in this state bears to all its property and
assets wherever located. Every corporation, not organized under the
law of this state, and engaged in business in this state, shall pay
an annual franchise tax to the state of Missouri equal to
three-fortieths of one percent of the par value of its capital
stock and surplus employed in business in this state, and, for the
purposes of this act, such corporation shall be deemed to have
employed in this state that proportion of its entire capital stock
and surplus that its property and assets in this state bears to all
its property and assets wherever located: provided,
this act shall not apply to corporations not organized for profit,
nor to express companies, which pay an annual tax on their gross
receipts in this state, and insurance companies, which pay an
annual tax on their gross premium receipts in this state."