The general 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, is not affected by the fact that the property
is employed in interstate transportational on either land or
water.
Vessels registered or enrolled are not exempt from ordinary
rules respecting taxation of personal property. The artificial
status created as the home port of a vessel, under § 4141,
Rev.Stat., only controls the place of taxation in the absence of an
actual situs elsewhere.
Vessels, though engaged in interstate commerce, employed in such
commerce wholly within the limits of a state are subject to
taxation in that state although they may have been registered or
enrolled at a port outside its limits.
On March 17, 1904, the Supreme Court of Appeals of the State of
Virginia, in a matter appealed from a finding of the State
Corporation Commission, entered the following findings and
order:
"That the Old Dominion Steamship Company was a nonresident
corporation, having been incorporated by the Senate and House of
Representatives of the State of Delaware; that it was then and had
been for many years theretofore engaged in the transportation of
passengers and freight on the Atlantic Ocean and communicating
navigable waters between the City of New York, in the State of New
York, and Norfolk, and certain other ports within the State of
Virginia. That said steamship company, in the prosecution of its
said transportation business, owned and operated the vessel
property above named; that these vessels, with the exception of the
tug
Germania, whose movements and use will be hereinafter
stated, visited various ports or points within the State of
Virginia for the purpose of receiving freight and passengers, for
which they
Page 198 U. S. 300
issued bills of lading and tickets to points outside the State
of Virginia; that, owing to the shallow waters where these vessels
plied, it was impossible in most instances for the larger
oceangoing steamers of the company to be used; that, in
consequence, the vessels above enumerated were used to receive the
freight and passengers as aforesaid, giving the shipper of freight
a bill of lading for the same, destined to New York and other
points outside of Virginia, and the passenger a ticket to his
destination, and thus transported such freight and passengers to
deeper water at Norfolk and Old Point Comfort, where, upon such
bills of lading and tickets, the passengers and freight were
transferred to one of the larger ocean-going vessels of the
steamship company, and so the ultimate destination, namely, New
York and elsewhere outside of Virginia, was reached; that any other
business transacted by the above-named vessels was incidental in
character and comparatively insignificant in amount; that the said
vessels were built and designed for interstate traffic especially,
and were adjuncts to or branches of the main line of the Old
Dominion Steamship Company between New York and Norfolk; that each
and all of the said vessels were regularly enrolled, under the
United States laws, outside of the State of Virginia, with the name
and port of such enrollment painted on the stern of each of them;
that the said vessels, though regularly enrolled and licensed for
coastwise trade, were then used on old established routes upon
navigable waters within Virginia, as follows, to-wit:"
"First. The steamer
Hampton Roads between Fort Monroe
and Hampton and Norfolk."
"Second. The steamer
Mobjack between points in Mathews
and Gloucester Counties and Norfolk."
"Third. The steamers
Luray and
Accomac between
Smithfield and Norfolk."
"Fourth. The steamer
Virginia Dare between Suffolk and
Norfolk."
"Fifth. The steamers
Berkeley and
Brandon
between Richmond and Norfolk; and "
Page 198 U. S. 301
"The steamers
Berkeley and
Brandon ply between
Richmond and Norfolk. These two steamers were completed in the year
1901, or early in 1902, one of them having been constructed at the
William R. Trigg shipyard in the City of Richmond, and the other
outside of the State of Virginia. Early in the year 1902, they were
placed upon the line between Norfolk and Richmond, one steamer
leaving Richmond each evening and arriving in Norfolk each morning,
thus giving a night trip every night each way between Richmond and
Norfolk. At the time these steamers were placed upon this route,
and since that time, the Old Dominion Steamship Company has, by
public advertisement, called attention to the fact that these two
steamers were especially fitted in the matter of stateroom
accommodations for carrying passengers between Richmond and
Norfolk, and the said two steamers have since that time been
advertising for the carriage of passengers and freight on their
route between Richmond and Norfolk, and have been regularly
carrying freight and passengers between the said two points in
Virginia as well as taking on freight and passengers for further
transportation on their ocean steamers at Norfolk. The Old Dominion
Steamship Company applied, under the revenue laws of the State of
Virginia, for a license to sell liquor at retail on each of these
steamers, and on July 1, 1902, there was granted, through the
Commissioner of the Revenue of the City of Richmond, a license to
the Old Dominion Steamship Company for the sale of liquor at retail
on each of these steamers, said licenses to expire on April 30,
1903. On or about the same time, the said steamship company
complied with the revenue laws of the United States and paid the
necessary revenue tax through the custom house at the City of
Richmond for the purpose of selling liquor at retail on each of
these steamers. In the spring of 1903, the said steamship company,
in order to obtain licenses to sell liquor at retail on each of
these steamers, applied for the same in the City of Richmond, and
complied with the requirements of section 143 of the new revenue
law, approved April 16, 1903, and so obtained
Page 198 U. S. 302
licenses for the year 1903-1904 to sell liquor at retail on each
of these steamers on their route between the cities of Richmond and
Norfolk, and likewise, on or about the same time, complied with the
revenue laws of the United States in the matter of selling liquor
at retail on each of the said steamers on said route."
"Sixth. The steam tug
Germania, which was used in the
harbor of Norfolk and Hampton Roads for the purpose of docking the
large ocean-going steamers of the Old Dominion Steamship Company,
and the transferring from different points in those waters freight
from connecting lines destined to points outside of Virginia."
"And the court, having maturely considered said transcript of
the record of the finding aforesaid and the arguments of counsel,
is of opinion that the legal situs of the vessels and barges
assessed for taxation by the finding of the State Corporation
Commission is, for that purpose, within the jurisdiction of the
State of Virginia, and that said property is amenable to the tax
imposed thereon, notwithstanding the fact that said vessels and
barges are owned by a nonresident corporation, that they may have
been enrolled under the act of Congress at some port outside the
State of Virginia, and that they are engaged, in part, in
interstate commerce, and doth so decide and declare. Therefore it
seems to the court here that the finding of the State Corporation
Commission appealed from is without error, and said finding is
approved and affirmed. It is further considered by the court that
the appellee recover against the appellant thirty dollars damages
and its costs by it about its defense expended upon this appeal.
"
Page 198 U. S. 305
MR. JUSTICE BREWER delivered the opinion of the Court.
The facts being settled, the only question is one of law. Can
Virginia legally subject these vessels to state taxation? The
general rule is 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. This rule is not affected by the fact that the
property is employed in interstate transportation.
Pullman's
Palace Car Company v. Pennsylvania, 141 U. S.
18, in which Mr. Justice Gray, speaking for the Court,
said (p.
141 U. S.
23):
"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."
See also Cleveland &c. Railway Co. v. Backus,
154 U. S. 439.
154 U. S. 445;
Western Union Telegraph Co. v. Taggart, 163 U. S.
1,
163 U. S. 14.
This is true as to water as well as to land transportation. In
Gloucester Ferry Company v. Pennsylvania, 114 U.
S. 196,
Page 198 U. S. 306
114 U. S. 217,
Mr. Justice Field, in delivering the opinion of the Court, after
referring to certain impositions upon interstate commerce,
added:
"Freedom from such impositions does not, of course, imply
exemption from reasonable charges, as compensation for the carriage
of persons, in the way of tolls or fares, or from the ordinary
taxation to which other property is subjected, any more than like
freedom of transportation on land implies such exemption."
See also Passenger
Cases, 7 How. 283, in which Mr. Justice McLean said
(p.
48 U. S.
402):
"A state cannot regulate foreign commerce, but it may do many
things which more or less affect it. It may tax a ship or other
vessel used in commerce, the same as other property owned by its
citizens."
The same doctrine is laid down in the same case by Mr. Chief
Justice Taney (p.
48 U. S. 479).
See also Transportation Company v. Wheeling, 99 U. S.
273. That the service in which these vessels were
engaged formed one link in a line of continuous interstate commerce
may affect the state's power of regulation, but not its power of
taxation. True, they were not engaged in an independent service, as
the cabs in
Pennsylvania Railroad Company v. Knight,
192 U. S. 21, but,
being wholly within the state, that was their actual situs. And, as
appears from the authorities referred to, the fact that they were
engaged in interstate commerce does not impair the state's
authority to impose taxes upon them as property. Indeed, it is not
contended that these vessels, although engaged in interstate
commerce, are not subject to state taxation, the contention being
that they are taxable only at the port at which they are enrolled.
In support of this contention, the two principal cases relied upon
are
Hays v. Pacific Mail Steamship
Company, 17 How. 596, and
Morgan v.
Parham, 16 Wall. 471. Registry and enrollment are
prescribed by Rev.Stat. sections 4141 and 4311, for vessels of the
United States engaged in foreign and domestic commerce. Section
4141 reads:
Page 198 U. S. 307
"SEC. 4141. Every vessel, except as is hereinafter provided,
shall be registered by the collector of that collection district
which includes the port to which such vessel shall belong at the
time of her registry; which port shall be deemed to be that at or
nearest to which the owner, if there be but one, or, if more than
one, the husband or acting and managing owner of such vessel,
usually resides."
By sections 4131 and 4311, vessels registered or enrolled are
declared to be deemed vessels of the United States. As stated by
Chancellor Kent in his Commentaries, vol. 3, p. *139:
"The object of the registry acts is to encourage our own trade,
navigation, and shipbuilding, by granting peculiar or exclusive
privileges of trade to the flag of the United States and by
prohibiting the communication of those immunities to the shipping
and mariners of other countries. These provisions are well
calculated to prevent the commission of fraud upon individuals, as
well as to advance the national policy. The registry of all vessels
at the custom house, and the memorandums of the transfers, add
great security to title, and bring the existing state of our
navigation and marine under the view of the general government. By
these regulations, the title can be effectually traced back to its
origin."
This object does not require, and there is no suggestion in the
statutes, that vessels registered or enrolled are exempt from the
ordinary rules respecting taxation of personal property. It is
true, by section 4141, there is created what may be called the home
port of the vessel, an artificial situs, which may control the
place of taxation in the absence of an actual situs elsewhere, and
to that extent only do the two cases referred to go.
In
Hays v. Pacific Mail Steamship
Company, 17 How. 596, ocean steamers owned and
registered in New York and regularly plying between Panama and San
Francisco and ports in Oregon, remaining in San Francisco no longer
than was necessary to land and receive passengers and cargo and in
Benicia only for repairs and supplies, were held not subject to
taxation
Page 198 U. S. 308
by the State of California. In the course of the opinion, by Mr.
Justice Nelson, it was said (p.
58 U. S.
599):
"We are satisfied that the State of California had no
jurisdiction over these vessels for the purpose of taxation; they
were not properly abiding within its limits so as to become
incorporated with the other personal property of the state; they
were there but temporarily, engaged in lawful trade and commerce,
with their situs at the home port, where the vessels belonged, and
where the owners were liable to be taxed for the capital invested,
and where the taxes had been paid."
Clearly the ruling was that these steamers had acquired no
actual situs within the State of California; that occasionally
touching at ports in the state did not make them incorporated with
the other personal property of the state. Hence, having no situs in
California, they were not subject to taxation there, but were
subject to state taxation at the artificial situs established by
their registry.
In
Morgan v.
Parham, 16 Wall. 471, it appeared that a steamship
was registered in New York, under the ownership of the plaintiff;
that she was employed as a coasting steamer between Mobile and New
Orleans; that she was regularly enrolled as a coaster in Mobile by
her master, and received a license as a coasting vessel for that
and subsequent years. It was held that she was not subject to
taxation by the State of Alabama. Mr. Justice Hunt, in delivering
the opinion of the Court, said (pp.
83 U. S.
474-476):
"The fact that the vessel was physically within the limits of
the City of Mobile at the time the tax was levied does not decide
the question. Thus, if a traveler on that day had been passing
through that city in his private carriage, or an emigrant with his
worldly goods on a wagon, it is not contended that the property of
either of these persons would be subject to taxation, as property
within the city. It is conceded by the respective counsel that it
would not have been."
"On the other hand, this vessel, although a vehicle of commerce,
was not exempt from taxation on that score. A steamboat
Page 198 U. S. 309
or a post coach engaged in a local business within a state may
be subject to local taxation although it carry the mail of the
United States. The commerce between the states may not be
interfered with by taxation or other interruption, but its
instruments and vehicles may be. . . . 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 other words, here, as in the prior case, there was no actual
situs of the vessel. She had not become commingled with the general
property of the state, and was therefore subject to taxation at the
artificial situs -- the port of her registry.
In
Transportation Company v. Wheeling, supra, Mr.
Justice Clifford concludes his discussion with this statement (p.
99 U. S.
285):
"From which it follows as a necessary consequence that the
enrollment of a ship or vessel does not exempt the owner of the
same from taxation for his interest in the ship or vessel as
property, upon a valuation of the same, as in the case of other
personal property."
Of course, if the enrollment does not exempt vessels from
taxation as other personal property, the place of enrollment,
whether within or without the state in which the property is
actually situated, is immaterial, for other like property is
taxable at its actual situs.
So far as the state authorities are concerned, reference may be
made to
Lott v. Mobile Trade Company, 43 Ala. 578;
National Dredging Company v. State, 99 Ala. 462;
Northwestern Lumber Co. v. Chehalis County, 25 Wash.
95.
Our conclusion is that, where vessels, though engaged in
interstate commerce, are employed in such commerce wholly within
the limits of a state, they are subject to taxation in that state
although they may have been registered or enrolled at
Page 198 U. S. 310
a port outside its limits. The conclusion therefore reached by
the Court of Appeals of Virginia was right, and its judgment is
Affirmed.
