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with the tariff act as then in force.” In other words, whether the treaty went into effect in April or in December was unimportant, being in effect under the act of Congress when liquidation was made it determined the rate of duty. The proposition, if true, is decisive and makes all others in the case valueless. Appellant submits the proposition without other argument than its statement, and we may, therefore, reply to it briefly. It is plainly in contradiction of section 20 of the Customs Administrative Act as amended. That section subjects merchandise to the rate of duty in force at the time of withdrawal for consumption, not the rate in force at the time of liquidation. See United States v. Burr, 159 U. S. 78, 83, 84.

Judgment affirmed.








Nos. 81, 82, 586, 587, 588. Argued April 9, 1906.- Decided May 28, 1906.

If the state statute as construed by its highest court is valid under the

Federal Constitution this court is bound by that construction. The State of origin remains the permanent situs of personal property not

withstanding its occasional excursions to foreign parts, and a State may tax its own corporations for all their property in the State during the year even if every item should be taken into another State for a period and

then brought back. The taxation of cars under the New York franchise tax law, belonging to a

202 U.S.

Argument for Plaintiff in Error.

New York corporation is not unconstitutional as depriving the owner of its property without due process of law because the cars are at times temporarily absent from the State—it appearing that no cars permanently without the State are taxed.

The facts are stated in the opinion.

Mr. Albert H. Harris, with whom Mr. Ira A. Place and Mr. Thomas Emery were on the brief, for plaintiff in error:

The subject matter taxed, as herein complained of, is the use and exercise of the franchise, privilege and business of transportation of persons and commodities. Ownership or possession of the corporate franchise to be or to do, do not subject the owner or possessor to the tax.

Notwithstanding the continued existence of the corporation, and continued existence and possession of the corporate capacity, powers, faculties and franchises with which it was at its creation endowed, if none of its capital is employed within this State during the tax year, section 182 imposes no tax. People ex rel. Singer Mfg. Co. v. Wemple, 150 N. Y. 46; People ex rel. Niagara River Hydraulic Co. v. Roberts, 30 App. Div. 180, which the Court of Appeals affirmed on opinion below. 157 N. Y. 676.

Exercise of the franchise is the foundation for imposition of the tax, and the average amount of capital stock employed is the basis of computation of the tax. People ex rel. U. V. Copper Co. v. Roberts, 156 N. Y. 586; People ex rel. Commercial Cable Co. v. Morgan, 178 N. Y. 433; People ex rel. Brooklyn R. T. Co. v. Morgan, 57 App. Div. 335; aff’d 168 N. Y. 672; People ex rel. Mutual Trust Co. v. Miller, 177 N. Y. 51.

The use and exercise of the franchise, privilege or business of transportation thus taxed is that of carrying on commerce either intrastate, interstate or foreign. The general unrestricted power to contract for the transportation of persons and property, possessed by plaintiff in error, embraced the power not only to make contracts at places foreign to this State, but also to make contracts for such transportation to

Argument for Plaintiff in Error.

202 U.S.

and from points and via routes in foreign States and countries. Railroad Law, N. Y. $ 78; Bank of Augusta v. Earle, 13 Pet. 519; Day v. 0. & L. C. R. R. Co., 107 N. Y. 129; Matter of N. Y. L. & W. Ry. Co., 35 Hun, 220; Matter of Townsend, 39 N. Y. 171.

It is necessary to the power of taxation upon the use and exercise of a franchise, privilege or business, that such use and exercise thereof be carried on within the territorial domain of the taxing sovereignty; and that the franchise, privilege or business so there used and exercised be such as is within the organic prerogative of that sovereignty to tax the use of.

The State grants the privilege of exercising a public franchise, and, in consideration of that grant, exacts from those who accept and avail themselves thereof, payment, to be computed upon the basis of the amount of capital.

The business transacted and the functions exercised in movements of relator's cars outside of this State are primarily those commanded and compelled by the Federal Government in its power to regulate interstate commerce.

So far as such exercise of franchises affords warrant for state taxation, computed upon the basis of the capital employed therein or otherwise, and as well regarding such exercise of franchises as is involved in the portion of car movements, which is outside of this State, as also such exercise of franchises as have regard to transportation wholly outside of this State, the right and power of state taxation is exclusively that of the respective States wherein the cars are thus employed. The Delaware Railroad Tax, 18 Wall. 206, 232; Erie Railroad Co. v. Pennsylvania, 158 U. S. 431, 436.

Transportation between respective points one thereof within and the other without, or via routes in part within and in part without, a State, is interstate or foreign commerce. State &c. v. Knight, 192 U. S. 21.

Refusal of observance of the rule of per annum average of capital as the basis of assessment where the capital is employed in interstate commerce constitutes discrimination

202 U. S.

Argument for Plaintiff in Error.

prejudicial to such commerce, and is thus violative of the commerce clause and the due faith and credit clause of the Federal Constitution.

That the car mileage basis upon lines of companies within the State, and upon lines without the State, prima facie affords a just basis of apportionment of average total of mail, express, passenger, baggage and freight cars continuously employed by other corporations without the State, and that the road mileage operated within and without the State affords a just basis of apportionment of average total equipment continuously employed by, within and without the State, is affirmed by this court in numerous cases. State Railroad Tax Cases, 92 U. S. 575; Western Union Tel. Co. v. Massachusetts, 125 U. S. 530; Pullman's Palace Car Co. v. Pennsylvania, 141 U. S. 18; Maine v. Grand Trunk Ry. Co., 142 U.S. 217; Charlotte &c. R. R. Co. v. Gibbs, 142 U. S. 386; Columbus Southern Ry. Co. v. Wright, 151 U.S. 470; Pittsburgh &c. Ry. Co. v. Backus, 154 U. S. 421; Cleveland &c. Ry. Co. v. Backus, 154 U. S. 439; Adams Ex. Co. v. Ohio, 164 U. S. 194; S.C., 166 U. S. 185; Am. Refrig. Transit Co. v. Hall, 174 U. S. 70; Union Refrigerator Transit Co. v. Kentucky, 199 U. S. 194.

Taxation of or upon the exercise of the privilege of commerce conducted in another State, or computed upon the capital there so employed, whether such commerce be interstate, foreign or intrastate, transcends the jurisdiction of the taxing State, and thus takes property without due process of law, and denies full faith and credit to the public acts of such other State.

The power of taxation cannot embrace either person, property or business having their situs outside the taxing State. Jurisdiction of the person carrying on business or exercising privilege in the State of his domicil and in other States, cannot draw to the domiciliary State the power of taxation of business done or privilege exercised in other States.

It is requisite to due process of law that the tribunal have jurisdiction of the subject matter of such process. The taxing

Argument for Plaintiff in Error.

202 U.S.

authorities had jurisdiction of the person of the corporation taxed in Phila. Steamship Co. v. Pennsylvania, 122 U. S. 326; Louisville &c. Ferry Co. v. Kentucky, 188 U. S. 385; Del., L. & W. R. Co. v. Pennsylvania, 198 U. S. 341; Union Refrigerator Transit Co. v. Kentucky, 199 U. S. 194. They did not, however, have jurisdiction of the subject matter of the tax, and, therefore, the imposition of the tax was adjudged unauthorized and void.

Absence of congressional regulation of, or restraint or burden upon, interstate commerce, constitutes no warrant for state regulation, restraint or burden thereof. Upon like principle, absence of state regulation of, or restraint or burden upon, commerce local to such State, constitutes no warrant for another State to exercise extra-territorial jurisdiction, whereby to impose such regulation, restraint or burden.

The mere fact that a State grants and continues corporate life and capacity to a body corporate of its creation, constitutes no warrant for taxation by that State of such corporation's tangible property having its situs beyond the territorial jurisdiction of that State, or of the corporation's capital stock invested in that property, Del., L. & W.R. Co. v. Pennsylvania, 198 U. S. 341; nor for taxation of franchises owned by such corporation which were granted by authority foreign to, and have their situs outside of, the territorial jurisdiction of such State, Louisville & J. Ferry Co. v. Kentucky, 188 U. S. 385; nor of franchises owned by such corporation, but which were granted to it by the United States, California v. Pac. R. Co., 127 U. S. 1; nor of cars owned in excess of the average number thereof employed in the taxing State, Union Refrigerator Transit Co. v. Kentucky, 199 U. S. 194.

The State cannot, by conferment of corporate charter powers to transact business (1) outside of its territorial domain, or, (2), of character outside the sphere of its governance, draw to itself the power of taxation upon such exercise of the charter powers conferred by it. People ex rel. &c. v. Wemple, 138 N. Y. 1; People ex rel. &c. v. Roberts, 154 N. Y. 1.

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