Lumberville Delaware Bridge Co. v. State Board of Assessors

The opinion of the court was delivered by Garrison, J. The Lumberville Delaware Bridge Company, a corporation created in 1836, by the legislature of this — 533 — state, resists the payment of the license fee imposed under the fourth section of “An act to provide for the imposition of state taxes upon certain corporations and for the collection thereof.” Pamph. L. 1884, p. 232. The pertinent provision of this section is in these words: “All other corporations incorporated under the laws of this state and not hereinbefore provided for shall pay a yearly license fee or tax of one-tenth of one per cent, on the amount of the capital stock of such corporations.” The first ground of opposition is that the imposition of this tax upon the prosecutor is a burden upon, and hence a regulation of, commerce between the states, in violation of the exclusive jurisdiction of the federal congress. It is not questioned that the power to regulate commerce between the states has been by the constitution of the United States committed exclusively to congress, and it is furthermore established that the omission of congress to legislate with reference to the matter thus committed to it implies not that the states may legislate with respect thereto, but that commerce shall be free from all statutory regulations until congress sees fit to impose them. Robbins v. Shelby County, 120 U. S. 489, and cases there cited. It is also established law that no state has the right to lay any impost upon interstate commerce -in any form, whether by way of duties upon the subject of transportation or by way of license fee imposed upon the occupation or business of carrying it on. These doctrines, while they secure to congress the exclusive right to make laws having for their object the control of commerce among the states and the regulation of any and all of the incidents of that commerce, do not invalidate state laws otherwise legitimate merely because they casually affect interstate commerce. In Robbins v. Shelby County, supra, Mr. Justice Bradley, speaking of the exclusive right of congress to make express regulations for interstate commerce, says: “It is also an established principle, as already indicated, that the only way — 534 — in which commerce between the states can be legitimately affected by state laws is when, by virtue of its police power and its jurisdiction over persons and property within its limits, a state provides for the security of the lives, limbs, health and comfort of persons and the protection of property, or when it does those things which may otherwise incidentally affect commerce, such as the establishment and regulation of highways, canals, railroads, wharves, ferries and other commercial facilities, and the imposition of taxes upon persons residing within the state or belonging to its population. * * * But, in making such internal regulations, no discrimination can be made adversely to the persons or property of other states, and no regulation can be made directly affecting interstate commerce.” And in Leloup v. Mobile, 127 U. S. 648, the same judge again says: “We may here repeat what we have so often said before, that this exemption of interstate and foreign commerce from state regulation does not prevent the state from taxing the property of those engaged in such commerce located within the state as the property of other citizens is taxed, nor from regulating matters of local concern which may incidentally affect commerce, as wharfage, pilotage and the like.” Numerous decisions illustrate the application of these principles by the highest federal court and serve to elucidate their meaning. The cases in which state legislation has been set aside as an unwarrantable regulation of commerce fall naturally into the following groups : 1. Those in which the state law has made discriminations adversely to other states. Guy v. Baltimore, 100 U. S. 434; Webber v. Virginia, 103 Id. 344; Walling v. Michigan, 116 Id. 446; Asher v. Texas, 128 Id. 129; Stoutenburgh v. Hennick, 129 Id. 141. 2. Those in which the impost was upon the subject of transportation. The State Freight Tax, 82 U. S. 232; Railroad Company v. Husen, 95 Id. 465 ; Cook v. Pennsylvania, 97 Id. 566; Brown v. Houston, 114 Id. 622; Lyng v. Michigan, 135 Id. 161. — 535 — 3. Those in which the state tax was in effect a tax upon; the business engaged in interstate commerce, because imposed;, upon its agencies. Robbins v. Shelby County, 120 U. S. 489; McCall v. California, 136 Id. 104; Norfolk W. R. Co. v. Pennsylvania, Id. 115; Crutcher v. Kentucky, 141 Id. 47. Its earnings: Fargo v. Michigan, 121 Id. 230; Philadelphia S. S. Co. v. Pennsylvania, 122 Id. 326. Its methods: Moran v. New Orleans, 112 Id. 69; Pickard v. Pullman Southern Car Co., 117 Id. 34. Or directly upon its business: Pensacola Telegraph Co. v. Western Union Telegraph Co., 96 Id. 1; Western Union Telegraph Co. v. Texas, 105 Id. 460; Wabash, St. Louis and Pacific Railway Co. v. Illinois, 118 Id. 557; Western Union Telegraph Co. v. Pendleton, 122 Id. 347; Ratterman v. Western Union Telegraph Co., 127 Id. 411; Leloup v. Mobile, Id. 640. Upon the other hand, state legislation has been upheld, notwithstanding commerce was incidentally affected thereby. In respect to the licensing of ferries: Wiggins Ferry Co. v. East St. Louis, 107 U. S. 365; Maine v. Grand Trunk Railway Co., 142 Id. 217. The imposition of fees for wharfage: Packet Company v. Keokuk, 95 Id. 80; Packet Company v. St. Louis, 100 Id. 428; Packet Company v. Catlettsburg, 105 Id. 563; Transportation Company v. Parkersburg, 107 Id. 698; Ouachita Packet Co. v. Aiken, 121 Id. 444. The taxation of property, including capital stock: Coe v. Errol, 116 Id. 517; Western Union Telegraph Co. v. Massachusetts, 125 Id. 530; Pullman Palace Car Co. v. Pennsylvania, 141 Id. 18. The taxing of franchises or corporate privileges derived from the state : Delaware Railroad Tax Case, 85 Id. 206; Maine v. Grand Trunk Railway Company, 142 Id. 217; Horn Silver Mining Co. v. New York, 143 Id. 305. And in a recent case a state tax upon a general occupation was sustained, notwithstanding the special business taxed consisted in negotiating sales with non-resident merchants. Ficklen v. Shelby, 145 U. S. 1. In the case of Horn Silver Mining Company v. New York this language is used : “ The right and privilege, or the franchise, as it may be termed, of being a corporation is of great — 536 — value to its members and is considered as property separate and distinct from the property the corporation itself may acquire. According to the law of most states this franchise or privilege of being a corporation is deemed personal property, and is subject to separate taxation. The extent of the tax is a matter purely of state regulation, and any interference with it is beyond the jurisdiction of this court. The objection that it operates as a direct interference with interstate commerce we do not think tenable. The tax is not levied upon articles imported, nor is there any impediment to their importation.” The franchise here referred to as property subject to the taxing power is likewise the subject of remark in the case of Minot v. The Philadelphia, Wilmington and Baltimore Railroad Company, 85 U. S. 206 (the Delaware Railroad Tax Case): “ The exercise of the authority which every state possesses to tax its corporations and all their property, real and personal, and their franchises, and to graduate the tax upon the corporations according to their business or income or by the value of their property when this is not done by discriminating against rights held in other states and the tax is not on imports, exports or tonnage or transportation to other states, cannot be regarded as conflicting with any constitutional power of congress. The tax imposed by the act in question affects commerce among the states and impedes the transit of persons and property from one state to another just in the same way and in no other that taxation of any kind necessarily increases the expenses attendant upon the use or possession of the thing taxed. That taxation produces this result of itself constitutes no objection to its constitutionality. As was very justly observed in this court in a recent case (State Tax on Railway Gross Receipts, 82 U. S. 284): ‘ Every tax upon personal property or upon occupations, business or franchises affects more or less the subjects and the operations of commerce. Yet it is not everything that affects commerce that amounts to a regulation of it within the meaning of the constitution.’ ” This language is quoted not because the word “ franchise ” is there used in the precise sense to be presently ascribed to it, — 537 — but for the purpose of showing that a payment for a state privilege may incidentally affect commerce without ■ being in a constitutional sense a regulation of it. The franchise that is taxed as property is the privilege enjoyed by a corporation of exercising certain powers derived from the state, whereas the franchise with which we have to do is the right to exist in corporate form without reference to the powers that under such form the company may exercise. This distinction, although formulated by Mr. Justice Field in Home Insurance Company v. New York, 134 U. S. 594, was not strictly adhered to in his subsequent expressions, probably because there was nothing in that case to call for a nice use of terms. In this state we tax each of these so-called franchises. The former, as in the case of the right to own and operate a railroad, is taxed as property having a true value, which it is the duty of the state board to ascertain for the purposes of constitutional assessment. On the other hand, the naked right of existing in corporate^form is taxed as in the case before us, not at its true value, as it would have to be if it were property, but at a sum arbitrarily imposed by the legislature as an annual fee, the amount of which is to be computed by reference to the capital of the company as a criterion. It is in short a poll tax levied upon domestic corporations for the right to be. Such a tax is not upon property or assets, and does not in any way concern the nature of the business the company may be.-authorized to carry on. If the business chance to be one of commercial intercourse with other states, the burden incidental to corporate existence does not, under the federal decisions just cited, constitute a regulation of that commerce. Standard Underground Cable Co. v. Attorney-General, 1 Dick. Ch. Rep. 270, is not in point; it held merely that the manufacture of an instrument of commerce was not itself commerce. In Honduras Company v. Board of Assessors, 25 Vroom 278, the license fee under the act of 1884 was held to be constitutionally imposed upon a corporation created by certificate — 538 — in 1887 for the purpose of engaging in foreign commerce. That decision is an authority for this. The case of a corporation created by special act prior to 1884 for the express purpose of engaging in interstate commerce does not come under any different rule. The taxing act is general and the yearly fee provided by it falls as an incidental burden upon all miscellaneous corporations alike, without regard to the businesses in which they may be severally engaged. Such a tax is not, in my opinion, open to any constitutional objection. This determination and the ground upon which it rests, are a sufficient answer to the second, third, fourth, sixth, seventh and eighth reasons filed by the prosecutor, all of which proceed upon the notion that the tax is imposed upon Something beside the right of the domestic corporation to exist as such. There remains for consideration the fifth reason, viz., that if the imposition of the tax'be legal, yet it is computed upon erroneous principles. The contention in this respect is, that inasmuch as the erection of the bridge was a joint enterprise, requiring the concurrent legislation of two states, the capital to be taken as the criterion of the license fee should be one-half of the capital the domestic corporation was authorized to have. This argument was in all probability suggested by the decision of this court in Easton Delaware Bridge Co. v. Metz, Collector, 3 Vroom 199. That case has, however, no application. The tax there considered was imposed directly upon the capital and surplus which, so the court held, was intended by the legislature to embrace one-half of an enterprise resting in dual legislation. Since the last amendments of the constitution such a tax is a legal impossibility, and the construction placed by the court upon the legislative intent, with respect to the amount of property to be embraced in the tax, is of no aid in the present case, where the tax is not upon capital or property put to the common use of a domestic and a foreign organization, but is the price the domestic company must pay for the right of corporate life. Such a right is in its nature indivisible and the fee therefor must necessarily be an entirety. — 539 — In computing such a fee the board of assessors has no discretion — the legislative mandate is plain and cannot be departed from by the assessors nor modified by the courts. In The Evening Journal Association v. The State Board of Assessors, 18 Vroom 36, the business in which the capital of the corporation was invested was considered by this court for the purpose of determining whether it was a “manufacturing company ” within the meaning of the statute. And in The Press Printing Company v. The State Board of Assessors, 22 Vroom 75, the court, finding that the coi’poration was, in one sense and as to a distinct part of’ its capital, a manufacturing company, adopted as the criterion for the ' ascertainment of the amount of the tax which, under the act of 1881 (Rev. Sup., p. 602), the court was required to impose, the capital of the corporation not within the exemption. In the present case no such questions arise. The tax, therefore, was rightfully computed at one-tenth. of one per cent, of the capital stock of the prosecutor, and is in that shape affirmed.