A statute of a state, imposing a tax on the capital stock of all
corporations engaged in the transportation of freight or passengers
within the state, under which a corporation of another state,
engaged in running railroad cars into, through, and out of the
state, and having at all times a large number of such cars within
the state, is taxed by taking as the basis of assessment such
proportion of its capital stock as the number of miles of
Page 141 U. S. 19
railroad over which its cars are run within the state bears to
the whole number of miles in this and other states over which its
cars are run, does not, as applied to such a corporation, violate
the clause of the Constitution of the United States granting to
Congress the power to regulate commerce among the several
states.
This was an action brought by the State of Pennsylvania against
Pullman's Palace Car Company, a corporation of Illinois, in the
Court of Common Pleas of the County of Dauphin in the State of
Pennsylvania, to recover the amount of a tax settled by the auditor
general and approved by the treasurer of that state for the years
1870 to 1880, inclusive, on the defendant's capital stock, taking
as the basis of assessment such proportion of its capital stock as
the number of miles of railroad over which cars were run by the
defendant in Pennsylvania bore to he whole number of miles in this
and other states over which its cars were run. All these taxes were
levied under successive statutes of Pennsylvania imposing taxes on
capital stock of corporations incorporated by the laws of
Pennsylvania or of any other state, and doing business in
Pennsylvania, computed on a certain percentage of dividends made or
declared. The taxes for 1870-1874 were levied under the statute of
May 1, 1868, No. 69, § 5, which applied to corporations of every
kind, with certain exceptions not material to this case, and fixed
the amount of the tax at half a mill on every one percent of
dividend. Penn.Laws 1868, p. 109. The taxes for 1875-1877 were
levied under the statute of April 24, 1874, No. 31, § 4, which
applied to all corporations in any way engaged in the
transportation of freight or passengers, and fixed the tax at
ninetenths of a mill on every one percent of dividend. Penn.Laws
1874, p. 70. The taxes for 1878-1880 were levied under the statutes
of March 20, 1877, No. 5, § 3, and of June 7, 1879, No. 122, § 4,
applicable to all corporations except building associations, banks,
savings institutions, and foreign insurance companies, and fixing
the tax at half a mill on each one percent of dividend of six
percent or more on the par value of the capital stock, and, when
the dividend was less, at three mills on a valuation of the capital
stock. Penn.Laws 1877, p. 8; Penn.Laws 1879, p. 114.
Page 141 U. S. 20
A trial by jury was waived and the case submitted to the
decision of the court, which found the following facts:
"The defendant is a corporation of the State of Illinois having
its principal office in Chicago. Its business was, during all the
time for which tax is charged, to furnish sleeping coaches and
parlor and dining room cars to the various railroad companies, with
which it contracted on the following terms: the defendant furnished
the coaches and cars, and the railroad companies attached and made
them part of their trains, no charge being made by either party
against the other. The railroad companies collected the usual fare
from passengers who traveled in their coaches and cars, and the
defendant collected a separate charge for the use of the seats,
sleeping berths, and other conveniences. Business has been carried
on continuously by the defendant in this way in Pennsylvania since
February 17, 1870, and it has had about one hundred coaches and
cars engaged in this way in the state during that time. The cars
used in this state have, during all the time for which tax is
charged, been running into, through, and out of this state."
Upon these facts, the court held
"that the proportion of the capital stock of the defendant
invested and used in Pennsylvania is taxable under these acts, and
that the amount of the tax may be properly ascertained by taking as
a basis the proportion which the number of miles operated by the
defendant in this state bears to the whole number of miles operated
by it, without regard to the question whether any particular car or
cars were used,"
and therefore gave judgment for the state. That judgment was
affirmed upon writ of error by the supreme court of the state for
reasons stated in its opinion as follows:
"We think it very clear that the plaintiff in error is engaged
in carrying on such a business within this commonwealth as to
subject it to the statutes imposing taxation. While the tax on the
capital stock of a company is a tax on its property and assets, yet
the capital stock of a company and its property and assets are not
identical. The coaches of the company are its property. They are
operated within this state. They are daily passing from one end of
the state to the other. They are used in performing the functions
for
Page 141 U. S. 21
which the corporation was created. The fact that they also are
operated in other states cannot wholly exempt them from taxation
here. It reduces the value of the property in this state justly
subject to taxation here. This was recognized in the court below,
and we think the proportion was fixed according to a just and
equitable rule."
107 Penn.St. 156, 160.
Pullman's Palace Car Company sued out a writ of error from this
Court and filed six assignments of error, the substance of which
was summed up in the brief of its counsel as follows:
"The court erred in holding that any part of the capital stock
of the Pullman Company was subject to taxation by the State of
Pennsylvania by reason of its running any of its cars into, out of,
or through the State of Pennsylvania in the course of their
employment in the interstate transportation of railway
passengers."
MR. JUSTICE GRAY, after stating the facts as above, delivered
the opinion of the Court.
Upon this writ of error, whether this tax was in accordance with
the law of Pennsylvania is a question on which the decision of the
highest court of the state is conclusive. The only question of
which this Court has jurisdiction is whether the tax was in
violation of the clause of the Constitution of the United States
granting to Congress the power to regulate
Page 141 U. S. 22
commerce among the several states. The plaintiff in error
contends that its cars could be taxed only in the State of
Illinois, in which it was incorporated and had its principal place
of business. No general principles of law are better settled or
more fundamental than that the legislative power of every state
extends to all property within its borders, and that only so far as
the comity of that state allows can such property be affected by
the law of any other state. The old rule, expressed in the maxim
mobilia sequuntur personam, by which personal property was
regarded as subject to the law of the owner's domicile, grew up in
the Middle Ages, when movable property consisted chiefly of gold
and jewels, which could be easily carried by the owner from place
to place or secreted in spots known only to himself. In modern
times, since the great increase in amount and variety of personal
property not immediately connected with the person of the owner,
that rule has yielded more and more to the
lex situs --
the law of the place where the property is kept and used.
Green v. Van
Buskirk, 5 Wall. 307, and
74 U. S. 7 Wall.
139;
Hervey v. Rhode Island Locomotive Works, 93 U. S.
664;
Harkness v. Russell, 118 U.
S. 663,
118 U. S. 679;
Walworth v. Harris, 129 U. S. 355;
Story on Conflict of Laws, § 550; Whart on Conflict of Laws, §§
297-311. As observed by Mr. Justice Story in his commentaries just
cited:
"Although movables are for many purposes to be deemed to have no
situs except that of the domicile of the owner, yet, this being but
a legal fiction, it yields whenever it is necessary for the purpose
of justice that the actual situs of the thing should be examined. A
nation within whose territory any personal property is actually
situate has an entire dominion over it while therein in point of
sovereignty and jurisdiction, as it has over immovable property
situate there."
For the purposes of taxation, as has been repeatedly affirmed by
this Court, personal property may be separated from its owner, and
he may be taxed on its account at the place where it is, although
not the place of his own domicile, and even if he is not a citizen
or a resident of the state which imposes the tax.
Lane County
v. Oregon, 7 Wall. 71,
74 U. S. 77;
Railroad
Co.
Page 141 U. S. 23
v. Pennsylvania, 15 Wall. 300,
82 U. S.
323-324,
82 U. S. 328;
Railroad Co. v.
Peniston, 18 Wall. 5,
85 U. S. 29;
Tappan v. Merchants'
Bank, 19 Wall. 490,
86 U. S. 499;
State Railroad Tax Cases, 92 U. S.
575,
92 U. S.
607-608;
Brown v. Houston, 114 U.
S. 622;
Coe v. Errol, 116 U.
S. 517,
116 U. S. 524;
Marye v. Baltimore & Ohio Railroad, 127 U.
S. 117,
127 U. S. 123.
It is equally well settled that there is nothing in the
Constitution or laws of the United States which prevents a state
from taxing personal property employed in interstate or foreign
commerce like other personal property within its jurisdiction.
Delaware Railroad
Tax, 18 Wall. 206,
85 U. S. 232;
Telegraph Co. v. Texas, 105 U. S. 460,
105 U. S. 464;
Gloucester Ferry Co. v. Pennsylvania, 114 U.
S. 196,
114 U. S. 206,
114 U. S. 211;
Western Union Telegraph Co. v. Attorney General of
Massachusetts, 125 U. S. 530,
125 U. S. 549;
Marye v. Baltimore & Ohio Railroad, 127 U.
S. 117,
127 U. S. 124;
Leloup v. Mobile, 127 U. S. 640,
127 U. S. 649.
Ships or vessels, indeed, engaged in interstate or foreign commerce
upon the high seas or other waters which are a common highway, and
having their home port at which they are registered under the laws
of the United States at the domicile of their owners, in one state,
are not subject to taxation in another state at whose ports they
incidentally and temporarily touch for the purpose of delivering or
receiving passengers or freight. But that is because they are not
in any proper sense abiding within its limits, and have no
continuous presence or actual situs within its jurisdiction, and
therefore can be taxed only at their legal situs -- their home
port, and the domicile of their owners.
Hays v.
Pacific Mail Steamship Co., 17 How. 596;
St. Louis v. Ferry
Co., 11 Wall. 423;
Morgan v.
Parham, 16 Wall. 471;
Wiggins Ferry Co. v. East
St. Louis, 107 U. S. 365;
Gloucester Ferry Co. v. Pennsylvania, 114 U.
S. 196. Between ships and vessels having their situs
fixed by act of Congress and their course over navigable waters and
touching land only incidentally and temporarily, and cars or
vehicles of any kind, having no situs so fixed and traversing the
land only, the distinction is obvious. As has been said by this
Court:
"Commerce on land between the different
Page 141 U. S. 24
states is so strikingly dissimilar in many respects from
commerce on water that it is often difficult to regard them in the
same aspect in reference to the respective constitutional powers
and duties of the state and federal governments. No doubt commerce
by water was principally in the minds of those who framed and
adopted the Constitution, although both its language and spirit
embrace commerce by land as well. Maritime transportation requires
no artificial roadway. Nature has prepared to hand that portion of
the instrumentality employed. The navigable waters of the earth are
recognized public highways of trade and intercourse. No franchise
is needed to enable the navigator to use them. Again, the vehicles
of commerce by water being instruments of intercommunication with
other nations, the regulation of them is assumed by the national
legislature. So that state interference with transportation by
water, and especially by sea, is at once clearly marked and
distinctly discernible. But it is different with transportation by
land."
Railroad Co. v.
Maryland, 21 Wall. 456,
88 U. S.
470.
In
Gloucester Ferry Co. v. Pennsylvania, on which the
plaintiff in error much relies, the New Jersey corporation taxed by
the State of Pennsylvania under one of the statutes now in question
had no property in Pennsylvania except a lease of a wharf at which
its steamboats touched to land and receive passengers and freight
carried across the Delaware River, and the difference in the facts
of that case and of this and in the rules applicable was clearly
indicated in the opinion of the Court as follows:
"It is true that the property of corporations engaged in foreign
or interstate commerce, as well as the property of corporations
engaged in other business, is subject to taxation, provided always
it be within the jurisdiction of the state."
114 U.S.
114 U. S.
206.
"While it is conceded that the property in a state belonging to
a foreign corporation engaged in foreign or interstate commerce may
be taxed equally with like property of a domestic corporation
engaged in that business, we are clear that a tax or other burden
imposed on the property of either corporation because it is used to
carry on that commerce, or upon the transportation
Page 141 U. S. 25
of persons or property, or for the navigation of the public
waters over which the transportation is made, is invalid and void
as an interference with and an obstruction of the power of Congress
in the regulation of such commerce."
114 U.S.
114 U. S. 211.
Much reliance is also placed by the plaintiff in error upon the
cases in which this Court has decided that citizens or corporations
of one state cannot be taxed by another state for a license or
privilege to carry on interstate or foreign commerce within its
limits. But in each of those cases, the tax was not upon the
property employed in the business, but upon the right to carry on
the business at all, and was therefore held to impose a direct
burden upon the commerce itself.
Moran v. New Orleans,
112 U. S. 69,
112 U. S. 74;
Pickard v. Pullman's Southern Car Co., 117 U. S.
34,
117 U. S. 43;
Robbins v. Shelby Taxing District, 120 U.
S. 489,
120 U. S. 497;
Leloup v. Mobile, 127 U. S. 640,
127 U. S. 644.
For the same reason, a tax upon the gross receipts derived from the
transportation of passengers and goods between one state and other
states or foreign nations has been held to be invalid.
Fargo v.
Michigan, 121 U. S. 230;
Philadelphia & Southern Steamship Co. v. Pennsylvania,
122 U. S. 326.
The tax now in question is not a license tax or a privilege tax;
it is not a tax on business or occupation; it is not a tax on or
because of the transportation of the right of transit of persons or
property through the state to other states or countries. The tax is
imposed equally on corporations doing business within the state,
whether domestic or foreign and whether engaged in interstate
commerce or not. The tax on the capital of the corporation on
account of its property within the state is, in substance and
effect, a tax on that property.
Gloucester Ferry Co. v.
Pennsylvania, 114 U. S. 196,
114 U. S. 209;
Western Union Telegraph Co. v. Attorney General of
Massachusetts, 125 U. S. 530,
125 U. S. 552.
This is not only admitted, but insisted on, by the plaintiff in
error.
The cars of this company within the State of Pennsylvania are
employed in interstate commerce, but their being so employed does
not exempt them from taxation by the state, and the state has not
taxed them because of their being so employed, but because of their
being within its territory and
Page 141 U. S. 26
jurisdiction. The cars were continuously and permanently
employed in going to and fro upon certain routes of travel. If they
had never passed beyond the limits of Pennsylvania, it could not be
doubted that the state could tax them, like other property within
its borders, notwithstanding they were employed in interstate
commerce. The fact that, instead of stopping at the state boundary,
they cross that boundary in going out and coming back cannot affect
the power of the state to levy a tax upon them. The state, having
the right, for the purposes of taxation, to tax any personal
property found within its jurisdiction, without regard to the place
of the owner's domicile, could tax the specific cars which at a
given moment were within its borders. The route over which the cars
travel extending beyond the limits of the state, particular cars
may not remain within the state; but the company has at all times
substantially the same number of cars within the state, and
continuously and constantly uses there a portion of its property,
and it is distinctly found as matter of fact that the company
continuously, throughout the periods for which these taxes were
levied, carried on business in Pennsylvania, and had about one
hundred cars within the state.
The mode which the State of Pennsylvania adopted to ascertain
the proportion of the company's property upon which it should be
taxed in that state was by taking as a basis of assessment such
proportion of the capital stock of the company as the number of
miles over which it ran cars within the state bore to the whole
number of miles in that and other states over which its cars were
run. This was a just and equitable method of assessment, and if it
were adopted by all the states through which these cars ran, the
company would be assessed upon the whole value of its capital
stock, and no more.
The validity of this mode of apportioning such a tax is
sustained by several decisions of this Court in cases which came up
from the circuit courts of the United States, and in which,
therefore, the jurisdiction of this Court extended to the
determination of the whose case, and was not limited, as upon writs
of error to the state courts, to questions under the Constitution
and laws of the United States.
Page 141 U. S. 27
In the
State Railroad Tax Cases, 92 U. S.
575, it was adjudged that a statute of Illinois by which
a tax on the entire taxable property of a railroad corporation,
including its rolling stock, capital, and franchise, was assessed
by the state board of equalization, and was collected in each
municipality in proportion to the length of the road within it, was
lawful and not in conflict with the constitution of the state, and
Mr. Justice Miller, delivering judgment, said:
"Another objection to the system of taxation by the state is
that the rolling stock, capital stock, and franchise are personal
property, and that this, with all other personal property, has a
local situs at the principal place of business of the corporation,
and can be taxed by no other county, city, or town but the one
where it is so situated. This objection is based upon the general
rule of law that personal property, as to its situs, follows the
domicile of its owner. It may be doubted very reasonably whether
such a rule can be applied to a railroad corporation as between the
different localities embraced by its line of road. But, after all,
the rule is merely the law of the state which recognizes it, and
when it is called into operation as to property located in one
state and owned by a resident of another, it is a rule of comity in
the former state, rather than an absolute principle in all cases.
Green v. Van Buskirk, 5
Wall. 312. Like all other laws of a state, it is therefore subject
to legislative repeal, modification, or limitation, and when the
Legislature of Illinois declared that it should not prevail in
assessing personal property of railroad companies for taxation, it
simply exercised an ordinary function of legislation."
92 U.S.
92 U. S.
607.
"It is further objected that the railroad track, capital stock,
and franchise is not assessed in each county where it lies
according to its value there, but according to an aggregate value
of the whole, on which each county, city, and town collects taxes
according to the length of the track within its limits. . . . It
may well be doubted whether any better mode of determining the
value of that portion of the track within anyone county has been
devised than to ascertain the value of the whole road and apportion
the value within the county
Page 141 U. S. 28
by its relative length to the whole. . . . This Court has
expressly held in two cases, where the road of a corporation ration
ran through different states, that a tax upon the income or
franchise of the road was properly apportioned by taking the whole
income or value of the franchise, and the length of the road within
each state, as the basis of taxation.
Delaware Railroad
Tax, 18 Wall. 206;
Erie Railroad v.
Pennsylvania, 21 Wall. 492."
92 U.S.
92 U. S.
608-611. So, in
Western Union Telegraph Co. v.
Attorney General of Massachusetts, 125 U.
S. 530, this Court upheld the validity of a tax imposed
by the State of Massachusetts upon the capital stock of a telegraph
company on account of property owned and used by it within the
state, taking as the basis of assessment such proportion of the
value of its capital stock as the length of its lines within the
state bore to their entire length throughout the country.
Even more in point is the case of
Marye v. Baltimore &
Ohio Railroad, 127 U. S. 117, in
which the question was whether a railroad company incorporated by
the State of Maryland, and no part of whose own railroad was within
the State of Virginia, was taxable under general laws of Virginia
upon rolling stock owned by the company and employed upon
connecting railroads leased by it in that state, yet not assigned
permanently to those roads, but used interchangeably upon them and
upon roads in other states, as the company's necessities required.
It was held not to be so taxable, solely because the tax laws of
Virginia appeared upon their face to be limited to railroad
corporations of that state, and Mr. Justice Matthews, delivering
the unanimous judgment of the Court, said:
"It is not denied, as it cannot be, that the State of Virginia
has rightful power to levy and collect a tax upon such property
used and found within its territorial limits as this property was
used and found, if and whenever it may choose, by apt legislation,
to exert its authority over the subject. It is quite true, as the
situs of the Baltimore and Ohio Railroad Company is in the State of
Maryland, that also, upon general principles, is the situs of all
its personal property; but for
Page 141 U. S. 29
purposes of taxation, as well as for other purposes, that situs
may be fixed in whatever locality the property may be brought and
used by its owner by the law of the place where it is found. If the
Baltimore and Ohio Railroad Company is permitted by the State of
Virginia to bring into its territory, and there habitually to use
and employ, a portion of its movable personal property, and the
railroad company chooses so to do, it would certainly be competent
and legitimate for the state to impose upon such property, thus
used and employed, its fair share of the burdens of taxation
imposed upon similar property used in the like way by its own
citizens. And such a tax might be properly assessed and collected
in cases like the present, where the specific and individual items
of property so used and employed were not continuously the same,
but were constantly changing according to the exigencies of the
business. In such cases, the tax might be fixed by an appraisement
and valuation of the average amount of the property thus habitually
used, and collected by distraint upon any portion that might at any
time be found. Of course, the lawfulness of a tax upon vehicles of
transportation used by common carriers might have to be considered
in particular instances with reference to its operation as a
regulation of commerce among the states, but the mere fact that
they were employed as vehicles of transportation in the interchange
of interstate commerce would not render their taxation
invalid."
127 U.S.
127 U. S.
123-124. For these reasons and upon these authorities,
the Court is of opinion that the tax in question is constitutional
and valid. The result of holding otherwise would be that if all the
states should concur in abandoning the legal fiction that personal
property has its situs at the owner's domicile and in adopting the
system of taxing it at the place at which it is used and by whose
laws it is protected, property employed in any business requiring
continuous and constant movement from one state to another would
escape taxation altogether.
Judgment affirmed.
MR. JUSTICE BRADLEY, with whom concurred MR. JUSTICE FIELD and
MR. JUSTICE HARLAN, dissenting.
Page 141 U. S. 30
I dissent from the judgment of the Court in this case, and will
state briefly my reasons. I concede that all property, personal as
well as real, within a state and belonging there may be taxed by
the state. Of that there can be no doubt. But where property does
not belong in the state, another question arises. It is the
question of the jurisdiction of the state over the property. It is
stated in the opinion of the Court as a fundamental proposition on
which the opinion really turns that all personal as well as real
property within a state is subject to the laws thereof. I conceive
that that proposition is not maintainable as a general and absolute
proposition. Among independent nations, it is true, persons and
property within the territory of a nation are subject to its laws,
and it is responsible to other nations for any injustice it may do
to the persons or property of such other nations. This is a rule of
international law. But the states of this government are not
independent nations. There is such a thing as a Constitution of the
United States, and there is such a thing as a government of the
United States, and there are many things, and many persons, and
many articles of property that a state cannot lay the weight of its
finger upon because it would be contrary to the Constitution of the
United States. Certainly property merely carried through a state
cannot be taxed by the state. Such a tax would be a duty, which a
state cannot impose. If a drove of cattle is driven through
Pennsylvania from Illinois to New York for the purpose of being
sold in New York, while in Pennsylvania, it may be subject to the
police regulations of the state, but it is not subject to taxation
there. It is not generally subject to the laws of the state, as
other property is. So if a train of cars starts at Cincinnati for
New York, and passes through Pennsylvania, it may be subject to the
police regulations of that state while within it, but it would be
repugnant to the Constitution of the United States to tax it. We
have decided this very question in the case of
State
Freight Tax, 15 Wall. 232. The point was directly
raised and decided that property on its passage through a state in
the course of interstate commerce cannot be taxed by the state,
because taxation is incidentally regulation,
Page 141 U. S. 31
and a state cannot regulate interstate commerce. The same
doctrine was recognized in
Coe v. Errol, 116 U.
S. 517. And surely a state cannot interfere with the
officers of the United States in the performance of their duties,
whether acting under the judicial, military, postal, or revenue
departments. They are entirely free from state control. So a
citizen of the United States, or any other person, in the
performance of any duty or in the exercise of any privilege under
the Constitution or laws of the United States is absolutely free
from state control in relation to such matters. So that the general
proposition that all persons and personal property within a state
are subject to the laws of the state, unless materially modified,
cannot be true. But when personal property is permanently located
within a state for the purpose of ordinary use or sale, then indeed
it is subject to the laws of the state and to the burdens of
taxation, as well when owned by persons residing out of the state
as when owned by persons residing in the state. It has then
acquired a situs in the state where it is found. A man residing in
New York may own a store, a factory, or a mine in Alabama stocked
with goods, utensils, or materials for sale or use in that state.
There is no question that the situs of personal property so
situated is in the state where it is found, and that it may be
subjected to double taxation -- in the state of the owner's
residence, as a part of the general mass of his estate, and in the
state of its situs. Although this is a consequence which often
bears hardly on the owner, yet it is too firmly sanctioned by the
law to be disturbed, and no remedy seems to exist but a sense of
equity and justice in the legislatures of the several states. The
rule would undoubtedly be more just if it made the property
taxable, like lands and real estate, only in the place where it is
permanently situated. Personal as well as real property may have a
situs of its own, independent of the owner's residence, even when
employed in interstate or foreign commerce. An office or warehouse
connected with a steamship line or with a continental railway may
be provided with furniture and all the apparatus
Page 141 U. S. 32
and appliances usual in such establishments. Such property would
be subject to the
lex rei sitae and to local taxation
though solely devoted to the purposes of the business of those
lines. But the ships that traverse the sea, and the cars that
traverse the land, in those lines being the vehicles of commerce,
interstate or foreign, and intended for its movement from one state
or country to another, and having no fixed or permanent situs or
home except at the residence of the owner, cannot, without an
invasion of the powers and duties of the federal government, be
subjected to the burdens of taxation in the places where they only
go or come in the transaction of their business, except where they
belong.
Hays v. Pacific Mail Steamship
Co., 17 How. 596;
Morgan v.
Parham, 16 Wall. 471;
Transportation Co. v.
Wheeling, 99 U. S. 273. To
contend that there is any difference between cars or trains of cars
and ocean steamships in this regard is to lose sight of the
essential qualities of things. This is a matter that does not
depend upon the affirmative action of Congress. The regulation of
ships and vessels by act of Congress does not make them the
instruments of commerce. They would be equally so if no such
affirmative regulations existed. For the states to interfere with
them in either case would be to interfere with and to assume the
exercise of that power which by the Constitution has been
surrendered by the states to the government of the United States --
namely the power to regulate commerce.
Reference is made in the opinion of the Court to the case of
Railroad Company v.
Maryland, 21 Wall. 456, in which it was said that
commerce on land between the different states is strikingly
dissimilar in many respects from commerce on water, but that was
said in reference to the highways of transportation in the two
cases, and the difference of control which the state has in one
case from that which it can possibly have in the other. A railroad
is laid on the soil of the state by virtue of authority granted by
the state, and constantly subject to the police jurisdiction of the
state, while the sea and navigable rivers are highways created by
nature, and not subject to state control. The question in that
case
Page 141 U. S. 33
related to the power of the state over its own corporation in
reference to its rate of fares and the remuneration it was required
to pay to the state for its franchises -- an entirely different
question from that which arises in the present case. Reference is
also made to expressions used in the opinion in
Gloucester
Ferry Co. v. Pennsylvania, 114 U. S. 196,
which, standing alone, would seem to concede the right of a state
to tax foreign corporations engaged in foreign or interstate
commerce if such property is within the jurisdiction of the state.
But the whole scope of that opinion is to show that neither the
vehicles of commerce coming within the state nor the capital of
such corporations is taxable there, but only the property having a
situs there -- as the wharf used for landing passengers and
freight. The entire series of decisions to that effect is cited and
relied on. Of course, I do not mean to say that either railroad
cars or ships are to be free from taxation, but I do say that they
are not taxable by those states in which they are only transiently
present in the transaction of their commercial operations. A
British ship coming to the harbor of New York from Liverpool ever
so regularly and spending half its time (when not on the ocean) in
that harbor cannot be taxed by the State of New York, harbor,
pilotage, and quarantine dues not being taxes. So New York ships
plying regularly to the port of New Orleans, so that one of the
line may be always lying at the latter port, cannot be taxed by the
State of Louisiana. Cases above cited. No more can a train of cars
belonging in Pennsylvania and running regularly from Philadelphia
to New York, or to Chicago, Philadelphia to State of New York in
the one case, or by Illinois in the other. If it may lawfully be
taxed by these states, it may lawfully be taxed by all the
intermediate states, New Jersey, Ohio, and Indiana. And then we
should have back again all the confusion and competition and state
jealousies which existed before the adoption of the Constitution
and for putting an end to which the Constitution was adopted.
In the opinion of the Court it, is suggested that if all the
states should adopt as equitable a rule of proportioning the
Page 141 U. S. 34
taxes on the Pullman Company as that adopted by Pennsylvania, a
just system of taxation of the whole capital stock of the company
would be the result. Yes, if! But Illinois may tax the company on
its whole capital stock. Where would be the equity then? This,
however, is a consideration that cannot be compared with the
question as to the power to tax at all -- as to the relative power
of the state and general governments over the regulation of
internal commerce -- as to the right of the states to resume those
powers which have been vested in the government of the United
States.
It seems to me that the real question in the present case is as
to the situs of the cars in question. They are used in interstate
commerce between Pennsylvania, New York, and the western states.
Their legal situs no more depends on the states or places where
they are carried in the course of their operations than would that
of any steamboats employed by the Pennsylvania Railroad Company to
carry passengers on the Ohio or Mississippi. If such steamboats
belonged to a company located at Chicago, and were changed from
time to time, as their condition as to repairs and the convenience
of the owners might render necessary, is it possible that the
states in which they were running and landing in the exercise of
interstate commerce could subject them to taxation? No one, I
think, would contend this. It seems to me that the cars in question
belonging to the Pullman Car Company are in precisely the same
category.
The case of
Western Union Telegraph Co. v.
Massachusetts, 125 U. S. 530, is
entirely different from the present. In that case, there was no
question as to the situs of the property taxed. It was situated
within the state, consisting of poles, and wires, and offices, and
a general plant for telegraphic purposes. The property belonged in
Massachusetts, and was consequently taxable there. There was a
phase of that case which led some of the justices of the Court to
doubt as to the proper decision to be made. The difficulty was
this: the tax was, in terms, made upon a certain proportional part
of the capital stock of the company. That proportion was regulated
by the number of miles of telegraph within
Page 141 U. S. 35
the state as compared with the number of miles of telegraph
belonging to the company in the whole country. It was objected that
the property of the company situated in Massachusetts had no
necessary relation to the said proportion of the capital stock,
because the aggregate value of the stock might depend on property,
franchises, and amount of business outside of Massachusetts,
largely out of proportion to the miles of telegraph lines outside
of that state. But the difficulty of getting at the true value of
the property within the state, and of adopting any other rule for
ascertaining it, as well as the failure of the company to show that
the rule adopted produced any unfair results, finally induced an
acquiescence in the decision, but expressly on the ground that,
though the tax was nominally on the shares of the capital stock of
the company, it was in effect a tax upon the property owned and
used by it in Massachusetts; the proportional length of the lines
in that state to their entire length throughout the whole country
being merely used as the basis for ascertaining the value of that
property. The same difficulty as to the method of determining value
exists in the present case which existed in that, but the more
serious difficulty lies in the question of the situs of the
property and the consequent jurisdiction of the State of
Pennsylvania to tax it. It is not fast property. It does not
consist of real estate. It does not attach itself to the land. It
is movable, and engaged in interstate commerce, not in Pennsylvania
alone, but in that and other states, and the question is, how can
such property be taxed by a state to which it does not belong? It
is indirectly but virtually taxing the passengers, many of them
carried from New York to Chicago, or from Chicago to New York, and
most of them from one state to another. It is clearly a burden on
interstate commerce. The opinion of the Court is based on the idea
that the cars are taxable in Pennsylvania because a certain number
continuously abide there. But how can they be said to abide there
when they only stop at Philadelphia and other stations to take on
passengers? And it is all the same whether they cross the state
entirely, or run into or out of other states with a terminus in
Pennsylvania.
Page 141 U. S. 36
It is only by virtue of such of its property as is situated in
Pennsylvania that the Pullman Company can be taxed there. Its
capital stock, as such, is certainly not taxable there. In the case
of
Western Union Telegraph Co. v. Massachusetts, the tax
was sustained only on the ground that it was a tax on the property
in Massachusetts. The idea that the capital stock, as such, could
be taxed was repudiated. The state can no more tax the capital
stock of a foreign corporation than it can tax the capital of a
foreign person. Pennsylvania cannot tax a citizen and resident of
New York, either for the whole or any portion of his general
property or capital. It can only tax such property of that citizen
as may be located and have a situs in Pennsylvania.
State Tax on Foreign
Bonds, 15 Wall. 300. And it is exactly the same
with a foreign corporation. Its capital, as such, is not taxable.
Gloucester Ferry Co. v. Pennsylvania, qua supra. To hold
otherwise would lead to the most oppressive and unjust proceedings.
It would lead to a course of spoliation and reprisals that would
endanger the harmony of the union.
MR. JUSTICE BROWN, not having been a member of the Court when
this case was argued, took no part in its decision.