Commonwealth v. Am. Bell Teleph. Co.

Opinion, Mb. Chief Justice Paxson : This was an attempt on the part of the commonwealth to tax the capital stock of the American Bell Telephone Company, to the extent that its capital was employed in “ doing business within this commonwealth.” Under the facts as found by the court below, we are very clear the commonwealth is not entitled to collect such tax. The company is a corporation created by the laws of the state of Massachusetts. Its principal office or place of business is in the city of Boston. It has no office, agent, or place of business in this state. All the contracts for rent and royalty of telephones were made in Boston, and the payments therefor were made there. It leases to certain Pennsylvania corporations the use of the telephones, and furnishes the instruments, which remain the property of the company, and are to be paid for whether used or not. The Pennsylvania corporations carry on the business here. They construct and own the necessary lines of wires, switches, switch-boards, and other apparatus necessary to carry on the business. They maintain their own offices, and employ and pay the officers and agents needed to carry it on. The telephone company transacts no business here; it has no part of its capital or - property here, except the instruments in question, which, as before observed, are leased to Pennsylvania corporations, with a license to use the same. Under such state of facts it would seem clear that the telephone company could not be taxed as doing business within this state. It was contended, however, on the part of the common wealth, that, because the company had in its contract with the Pennsylvania corporations, reserved a certain power of control over telephones leased to them, and might, upon certain breaches of said contracts, enter upon, take possession of, and operate [229] said telephones, the said company was doing business here, and became liable to the tax. There is a wide distinction, however, between the right to do business and actually doing it. It may be that should said company proceed to enforce its rights under these contracts, and after taking possession of the telephones, operate them, it would be doing business here. But that contingency has not arrived. It is to be observed that this was not a tax upon the instruments owned by the company, and operated here under license. The instruments as such are perhaps within the taxfiig power of the commonwealth, for the reason that they are here and within her jurisdiction. It matters not to the state to whom they belong. But the state has not laid such tax; on the contrary, it is a tax upon capital stock, and as the company transacts no business within the state, no portion of its capital is here in point of fact, or by construction of law. Authorities are scarcely needed for so plain a proposition. It is sufficient to refer to Commonwealth v. Standard Oil Company, 101 Pa. 119. Judgment affirmed.