Lapas attēli
PDF
ePub

the judgment of the Court of Appeals, affirming the following propositions that stock of the United States is not subject to taxation under state laws; that a state law for that purpose is unconstitutional, whether it imposes a tax on the evidences of public debt by name, or includes them in the aggregate of the tax-payer's property, to be valued like the rest, at its worth; that the portion of the capital of a state bank which it has invested in United States stocks, bonds, and other securities, is not liable to taxation by the state; that the taxing power, so far as it is reserved to the states and used by them within constitutional limits, cannot be controlled or restrained by the national court, the prudence of its exercise not being a judicial question; but a state tax on the loans of the general government, is a restriction upon the constitutional power of the United States to borrow money; and if the states had such a right, being in its nature unlimited, it might be so used as to defeat the national power altogether.

§302. Prior to the decision last quoted, the statute of New York had required that the capital stock of banks should be assessed and taxed at its actual value. Shortly after the judgment of the Supreme Court, the legislature of New York changed the language of their statute, and enacted that all "banks shall be liable to taxation on a valuation equal to the amount of their stock, and their surplus earnings." Under this latter law, the banks were assessed and taxed upon such a valuation, although their capitals were partially or wholly invested in United States. securities. The Court of Appeals in New York again sustained the action of the local assessors; and held that the tax thus laid was not imposed upon the bank capitals, and, as a consequence, was not a tax upon the national securities in which such capitals were invested. Thus a mere act of legislative legerdemain was made sufficient to avoid the effect of far reaching principles established by the national judges; the substitution of an intangible "valuation" instead of the real. capital," was treated as a substantial change. But the Supreme Court of the United States swept away these refinements, and in the Bank Tax Cases,1 decided the assessment and tax

66

1 2 Wallace's R. 200.

invalid, and reaffirmed the doctrines of Bank of Commerce v. New York.1

§ 304. In the foregoing cases the banks themselves, which were created by Congress as means and instruments for managing the national finances, or which owned public securities of the United States, were taxed, and the tax was in every instance declared to be improper. Another question now presents itself. Are the shareholders in such banks also exempt from state taxation in respect of the shares which they own? A single principle of law would seem to be an answer to this question. The corporation is entirely distinct from the members who compose it; the property of the corporation is entirely distinct from the property of its stockholders. No member of a corporation, by virtue of his ownership of a number of shares, owns any portion of the lands, moneys, securities, or other property belonging to the institution; he is simply possessed of a right to participate in the profits while the business is carried on, and in the property when the corporation is wound up and dissolved. It would seem, therefore, that taxing a shareholder would, in no sense, be taxing the bank, or the property of the bank. But the question has received a judicial examination and answer. The Act of Congress of 1864, relating to the National Banks, provides in § 41, for taxation by the United States. The same section adds: "Provided that nothing in this act shall be construed to prevent all the shares in any of said associations, held by any person or body corporate, from being included in the valuation of the personal property of such person or corporation, in the assessment of taxes imposed by or under state authority." Farther provisions were inserted to prevent the states from discriminating, in the imposition of such taxes, against these national banks. New York proceeded to lay a tax on the shareholders. The case of The City of Utica v. Churchill involved the legality of the state law and the proceedings under it. The whole capital stock of the national bank referred to in the case was invested in United States securities. The Court of Appeals of New York affirmed the legality of this tax. The 26 Tiffany's (33 N. Y.) R. 161.

1 2 Black's R. 620.

shareholders thereupon carried the case to the Supreme Court of the United States, wherein it appeared under the name of Van Allen v. The Assessors.1 That court, also, sustained the power of the states to lay a tax on the shareholders. It held that the act of Congress conferred a complete authority to impose the tax, in respect to the full amount of the shares, although the capital stock of the bank might be partially or wholly invested in the bonds and other evidences of the public debt of the United States. The whole reasoning of the court would sustain the exercise of the power by the states, even though the law of Congress had been silent upon the subject. Chief Justice Chase, and Justices Wayne and Swayne dissented, and construed the act of Congress as empowering the states to tax the shareholders in respect only of such part of the bank capital as should not be invested in public securities.

The same question was again presented, with a similar result, to the New York court in The People v. Commissioners of Taxes, and their judgment was again affirmed by the Supreme Court of the United States.

§ 305. The conclusions to be drawn from these cases may be summarily stated as follows. States may exert their power of taxation generally upon persons and property within their boundaries; but they cannot thereby interfere with any functions of the nation. They cannot tax national property; or the evidences of the national debt owned by individuals; or banks incorporated by the nation as a part of its general scheme of finance; or salaries of national officers. In a word, all the means which are employed by the nation to carry on its legitimate functions are entirely beyond the reach of the several states.

On the other hand Congress may tax any thing created by the separate states, which is property or a franchise in the hands of individuals; banks and all other corporations; state stocks and other securities in the hands of private owners; the proceedings in state courts. Nothing, certainly, exhibits in a stronger light the inherent distinction between the paramount

1 3 Wallace's R. 573.
34 Wallace's R. 244.

28 Tiffany's (35 N. Y.) R. 423.

supremacy of the nation and the subordination of, the states, than this comparison between their respective powers of tax

ation.

§ 306: A curious and important question has arisen from the exercise by Congress of its power to tax, which may be referred to in this connection. When the United States has established a system of excise duties, and among other things has required that persons carrying on certain kinds of business shall pay a license fee, and take out a license, can a state interfere with persons who have complied with these requirements, or prevent them from prosecuting the particular business for which they have received a national license? No case has arisen which answers the question thus put; for the internal revenue law specially declares that "no such license shall be construed to authorize" the carrying on a business or trade "within any state or territory in which it is or shall be specially prohibited by the laws thereof, or in violation of the laws of any state or territory." In McGuire v. The Commonwealth, the Supreme Court held, under this section of the law of Congress, that a person licensed to sell liquors in Massachusetts, was still controlled by the prohibitory legislation of that state; although a strong attempt was made at the bar to convince the court that these provisions of the revenue law were repugnant to the rest of the act, were unconstitutional and void. The same doctrine has since been reaffirmed.

II. Express Limitations upon the Power of the States to Tax.

§307. We are now to examine the effect of those express restrictions upon the taxing power of the states, contained in the Constitution. States may levy and collect no duties upon imports or exports, except such as are absolutely necessary for the execution of their inspection laws, and no tonnage duties. The reason of this limitation is plain. As the United States. government was intended to have the control of every thing pertaining to commerce, any interference by the states with this subject, any attempt on their part to impose duties on

1 3 Wallace's R. 387.

articles imported or exported, would produce all the disorder which the Constitution was framed to obviate.

Many cases have arisen in which a construction has been given to state statutes that seemed to trench upon these provisions of the organic law. The questions which have been discussed are, (1) whether these statutes did in effect lay duties on imports or exports, so as to bring them within the general restriction; and (2) whether they were measures absolutely necessary to carry into execution the local inspection laws, and therefore within the exception. As the limitation under consideration applies exclusively to a particular class of taxes, the whole subject is intimately connected with the regutation of commerce.

§ 308. What classes of legislation are embraced under the denomination of inspection laws? Strictly speaking, inspection laws provide for a service to be performed on land, upon articles within the country, the product of growth or manufacture. The object of such service is to improve the quality of the articles and fit them for exportation or for domestic use. The tax or duty necessary for the execution of inspection laws using the term in the sense now described - would be in the nature of a fee or fixed compensation paid for this

service.

§ 309. The first of a series of cases in the Supreme Court of the United States giving construction to the clauses in question is that of Brown v. The State of Maryland.1 The legislature of Maryland had passed a statute requiring all importers of foreign goods by the bale or package, to take out a license for which they were to pay a prescribed fee; and in case of refusal they were to be subjected to certain penalties. The constitutionality of this act was brought before the court, and the statute was held to be invalid, because it did, in fact, impose a duty on imports, and it was not claimed to be in aid of any measures that are included within the general description of inspection laws. The opinion of the court, given by C. J. Marshall, is too long to be quoted or condensed, and will be referred to again in Section III. of this chapter. One im

1 12 Wheaton's R. 419.

« iepriekšējāTurpināt »