American Glue Co. v. Commonwealth

Knowlton, C. J. This is a petition under the St. 1903, c. 437, § 84, for relief from the exaction of a tax on the petitioner, a domestic corporation. The petitioner’s first contention is that there should be an additional deduction under § 72 of this statute, on account of the “ property situated in another state or country and subject to taxation therein.” The value of all tangible property in other States has already been deducted; but the contention is that a part of the value of the -corporate franchise is property situated in another State, within the meaning of the [530] statute. This contention is not supported by the statute or the decisions. The corporate franchise, considered separately, is not property subject to taxation in States other than that which granted it. Louisville & Jeffersonville Ferry Co. v. Kentucky, 188 U. S. 385. The valúe of the property in other States presumably is' determined in reference to the use to which it is adapted, and its relations to the business^ and it may have a value as a part of a system that it would not have if taken away and disposed of for another purpose. The deduction of this value, under the statute, is very different from a deduction of the value of the franchise to be a corporation and exercise corporate privileges, which is granted by the State where the corporation is established. This is recognized by the decisions relied on by the petitioner, as well as others. Western Union Telegraph Co. v. Massachusetts, 125 U. S. 530. Massachusetts v. Western Union Telegraph Co. 141 U. S. 40. New York v. Roberts, 171 U. S. 658. Delaware, Lackawanna Western Railroad v. Pennsylvania, 198 U. S. 341. The question in this part of the case is, What is the true meaning of the statute ? We think its provisions, considered together, and the policy of the law, so far as it can be ascertained by its language, do not contemplate a deduction on account of. the franchise of the corporation as separate property in another State. There is no doubt of the right of the Legislature to enact a statute of this kind. Home Ins. Co. v. New York, 134 U. S. 594. Connecticut Lns. Co. v. Commonwealth, 133 Mass. 161. The other contention of the petitioner is that, under § 74 of the same chapter, the amount twenty per cent in excess of the value, as found by the tax commissioner, of the real estate, machinery and merchandise, and of securities which, if owned by a natural person resident in this Commonwealth would be liable to taxation, diminished by the deductions called for in § 72, on which amount a computation is to be made to determine the maximum tax, includes only the real estate, machinery and merchandise in this Commonwealth, and not all the real estate, machinery and merchandise of the corporation, wherever it is situated. This contention would require us to read into the section a provision that is not found there. We see no good reason for changing the statement of the statute. The subject to which this section relates is quite different from [531] that covered by § 72. That section gives a method for determining the amount of taxation upon an equitable basis. The object of this later section is to limit the taxation, by establishing a maximum which is founded upon the amount of property held by the corporation that would be taxable if held by an individual, apart from the value of its franchise and other assets which are not subject to taxation as property, and to prohibit a charge in excess of twenty per cent above the percentage upon this amount. In limiting the tax by providing a maximum, the whole of the real estate, machinery and merchandise naturally would be included as the foundation for the computation, instead of that which is found in only one State. Petition dismissed.