Sanford v. Poe/Dissent White

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Opinion of the Court
Dissenting Opinion

United States Supreme Court

165 U.S. 194

Sanford  v.  Poe

Mr. Justice WHITE, dissenting.

Not being able to concur in the opinion and judgment of the court in the foregoing cases, I am impelled, by what I conceive to be the serious nature or the questions involved, to state the reasons for my dissent.

It is elementary that the taxing power of one government cannot be lawfully exerted over property not within its jurisdiction or territory, and within the territory and jurisdiction of another. The attempted exercise of such power would be a clear usurpation of authority, and involve a denial of the most obvious conceptions of government. This rule, common to all jurisdictions, is peculiarly applicable to the several states of the Union, as they are by the constitution confined within the orbit of their lawful authority, which they cannot transcend without destroying the legitimate powers of each other, and, therefore, without violating the constitution of the United States.

This limitation upon the taxing power was early declared by Mr. Chief Justice Marshall in McCulloch v. State of Maryland, 4 Wheat. 316, where it was said (page 429):

'All subjects over which the sovereign power of a state extends are objects of taxation; but those over which it does not extend are, upon the soundest principles, exempt from taxation. This proposition may almost be pronounced self-evident.'

In Hays v. Steamship Co., 17 How. 596, a tax imposed upon 12 steamships belonging to the company, which, while engaged in lawful trade and commerce between the port of San Francisco and ports and territories without the state, were temporarily within the jurisdiction of California, was held illegal. This court, by Mr. Justice Nelson, declared that the vessels were not properly abiding within the limits of California, so as to become incorporated with the other personal property of that state; that their situs was at the home port, where the vessels belonged, and where the owners were liable to be taxed for the capital invested and where the tax had been paid.

In St. Louis v. Wiggins Ferry Co., 11 Wall. 423, the validity of a tax assessed by the city of St. Louis upon the boats of a ferry company, an Illinois corporation, as property within the city of St. Louis, was considered. This court held that Illinois was the home port of the boats, that they were beyond the jurisdiction of the authorities by which the taxes were assessed, and that the validity of the taxes could not be maintained. It was observed (page 430):

'Where there is jurisdiction neither as to person nor property, the imposition of a tax would be ultra vires and void. If the legislature of a state should enact that the citizens or property of another state or country should be taxed in the same manner as the persons and property within its own limits, and subject to its authority, or in any manner whatsoever, such a law would be as much a nullity as if in conflict with the most explicit constitutional inhibition. Jurisdiction is as necessary to valid legislative as to valid judicial action.'

In State Tax on Foreign-Held Bonds, 15 Wall. 300, a tax laid by the state of Pennsylvania on the interest paid by the railroad company on its bonds was held to be a tax upon the bonds, the property not of the debtor company but of its creditors, and that so far as such bonds were held by nonresidents of the state, they were property beyond its jurisdiction. It was declared that no adjudication should be necessary to establish so obvious a proposition as that property lying beyond the jurisdiction of a state is not a subject upon which the taxing power can be legitimately exercised, and that 'the power of taxation, however vast in its character and searching in its extent, is necessarily limited to subjects within the jurisdiction of the state.' Of the act there under consideration, the court said (page 321):

'It is only one of many cases where, under the name of taxation, an oppressive exaction is made without constitutional warrant, amounting to little less than an arbitrary seizure of private property. It is, in fact, a forced contribution levied upon property held in other states, where it is subjected or may be subjected to taxation upon an estimate of its full value.'

In Morgan v. Parham, 16 Wall. 471, it was adjudged, upon the authority of the Hays Case, supra, that the state of Alabama could not lawfully tax a vessel registered in New York, but employed in commerce between Mobile, in that state, and New Orleans, in Louisiana. The situs of the vessel was held to be at the home port, in New York, where its owner was liable to be taxed for its value.

The circumstance that the steamer might not actually have been taxed in New York during the years for which the taxes in controversy were levied was held to be unimportant. The court said (page 478):

'Whether the steamer Frances was actually taxed in New York during the years 1866 and 1867 is not shown by the case. It is not important. She was liable to taxation there. That state alone had dominion over her for that purpose.'

In Delaware Railroad Tax, 18 Wall. 206, this court, in considering an objection interposed to a taxing act, that it imposed taxes upon property beyond the jurisdiction of the state, observed (page 229): 'If such be the fact, the tax to that extent is invalid, for the power of taxation of every state is necessarily confined to subjects within its jurisdiction.'

In Gloucester Ferry Co. v. State of Pennsylvania, 114 U.S. 196, at pages 206-209, 5 Sup. Ct. 826, 829-831, Mr. Justice Field reviews the cases just cited. The Gloucester Ferry Company was a New Jersey corporation, and operated a ferry between Gloucester, N. J., and Philadelphia. The state of Pennsylvania laid a tax on the appraised value of the capital stock of the ferry company, which owned no property in Pennsylvania except the lease of a slip or dock, where its ferryboats put up in plying across the river between the two states.

In this court it was sought in argument to support the tax in question by advancing the theory of 'a homogeneous unit.' The counsel said (page 201):

'The tax is upon the capital stock of the corporation, 'not in separate parcels, as representing distinct properties, but as a homogeneous unit, partaking of the nature of personalty,' and taxable where its corporate functions are exercised or its business done. The franchise itself may constitute the material part of all its property, since not only its wharves and slips, but also its boats, might be leased, and in that case the tax would be measured by the value of the franchise, represented by the extent of its exercise within the state, and not by its tangible property situated there. The extent of its property subject to the taxing power is immaterial. Its franchise would be worthless without the leasehold interest owned by it in the city of Philadelphia. The value of its franchise depends upon the leasehold, and it will, therefore, not do to say that it has no property within the jurisdiction of the taxing power. It does not seem necessary to inquire further as to an ownership of property within the jurisdiction of Pennsyivania.'

But this court, speaking through Mr. Justice Field, completely answered the argument, as follows (page 205, 114 U.S., and page 829, 5 Sup. Ct.):

'If by reason of landing or receiving passengers and freight at wharves or other places in a state, they can be taxed by the state on their capital stock, on the ground that they are thereby doing business within her limits, the taxes which may be imposed may embarrass, impede, and even destroy such commerce with the citizens of the state. If such a tax can be levied at all, its amount will rest in the discretion of the state. It is idle to say that the interests of the state would prevent oppressive taxation. Those engaged in foreign and interstate commerce are not bound to trust to its moderation in that respect. They require security.'

Of the Gloucester Ferry Case, it was observed by this court in Philadelphia & Southern S. S.C.o. v. Pennsylvania, 122 U.S. 344, 7 Sup. Ct. 1124, that 'it is hardly necessary to add that the tax on the capital stock of the New Jersey company, in that case, was decided to be unconstitutional, because, as the corporation was a foreign one, the tax could only be construed as a tax for the privilege or franchise of carrying on its business, and that business was interstate commerce.'

In New York, L. E. & W. R. Co. v. Commonwealth of Pennsylvania, 153 U.S. 646, 14 Sup. Ct. 952, this court denied the power of the state of Pennsylvania to require a foreign railroad company doing business within its borders to deduct therefrom, when paying interest upon its obligations in New York, the amount of a tax assessed by the state upon the bonds and moneyed capital owned by the residents of Pennsylvania. The money in the hands of the company in New York was held to be property beyond the jurisdiction of Pennsylvania. The court said (page 646, 153 U.S., and page 958, 14 Sup. Ct.) that 'no principle is better settled than that the power of a state, even its power of taxation, in respect to property, is limited to such as is within its jurisdiction.'

This inherent want of power in every government to transcend its jurisdiction is subject, as already stated, to an additional limitation as to the several states of the Union, resulting from those provisions of the constitution of the United States which, in so far as they restrict the power of the states, necessarily create limitations to which they are all subject, and from which they cannot depart without a violation of the constitution. It will not be necessary to allude to every special restriction on the power of the states resulting from the constitution, but it will suffice for my present purpose to refer to one only, the necessary existence of which has often been recognized to have been one of the most cogent motives leading to the adoption of the constitution, and upon the enforcement of which it has often been declared the perpetuity of our institutions depend, to wit, the inhibition resulting from the provision of the constitution of the United States conferring on congress power to regulate interstate commerce.

Under the interstate commerce clause of the constitution, as held by this court, speaking through Mr. Justice Bradley, in Leloup v. Port of Mobile, 127 U.S. 648, 8 Sup. Ct. 1384, 'no state has the right to lay a tax on interstate commerce in any form, whether by way of duties laid on the transportation of the subjects of that commerce, or on the receipts derived from that transportation, or on the occupation or business of carrying it on, and the reason is that such taxation is a burden on that commerce, and amounts to a regulation of it, which belongs solely to congress.' The following cases were referred to as supporting the proposition thus enunciated: Case of State Freight Tax, 15 Wall. 232; Pensacola Tel. Co. v. W. U. Tel. Co., 96 U.S. 1; Mobile v. Kimball, 102 U.S. 691; W. U. Tel. Co. v. Texas, 105 U.S. 460; Moran v. New Orleans, 112 U.S. 69, 5 Sup. Ct. 38; Gloucester Ferry Co. v. State of Pennsylvania, 114 U.S. 196, 5 Sup. Ct. 826; Brown v. Houston, 114 U.S. 622, 5 Sup. Ct. 1091; Walling v. People of Michigan, 116 U.S. 446, 6 Sup. Ct. 454; Pickard v. Car Co., 117 U.S. 34, 6 Sup. Ct. 635; Wabash, St. L. & P. Ry. Co. v. People of Illinois, 118 U.S. 557, 7 Sup. Ct. 4; Robbins v. Taxing Dist., 120 U.S. 489, 7 Sup. Ct. 592; Philadelphia & Southern S. S.C.o. v. Pennsylvania, 122 U.S. 336, 7 Sup. Ct. 1118; Telegraph Co. v. Pendleton, 122 U.S. 347, 7 Sup. Ct. 1126; Ratterman v. Telegraph Co., 127 U.S. 411, 8 Sup. Ct. 1127.

The following cases, since decided, enforce the same principle: Asher v. Texas, 128 U.S. 129, 9 Sup. Ct. 1; Stoutenburgh v. Hennick, 129 U.S. 141, 9 Sup. Ct. 256; Lyng v. Michigan, 135 U.S. 161, 10 Sup. Ct. 725; McCall v. California, 136 U.S. 104, 10 Sup. Ct. 881; and Crutcher v. Kentucky, 141 U.S. 47, 11 Sup. Ct. 851.

These authorities were reviewed by this court in Brennan v. City of Titusville, 153 U.S. 289, 14 Sup. Ct. 829, where, speaking through Mr. Justice Brewer, it was held that a municipal corporation could not lawfully tax a nonresident manufacturer of goods for the privilege of endeavoring to sell his goods by means of an agent sent into the state to solicit orders therefor. This court there said (page 303, 153 U.S., and page 833, 14 Sup. Ct.): 'This tax is a direct charge and burden upon the business, and, if a state may lawfully exact it, it may increase the amount of this exaction until all interstate commerce in this mode ceases to be possible; and, notwithstanding the fact that the regulation of interstate commerce is committed by the constitution to the United States, the state is enabled to say that it shall not be carried on in this way, and to that extent to regulate it.'

The question then arises, does the tax imposed by the state of Ohio upon express companies violate either of the two elementary propositions to which I have just referred?

Under the law of Ohio express companies are taxed in three forms: First, their real estate is assessed, for state, county, and municipal purposes, in the same manner as is real estate within the state belonging to other companies and persons; second, such companies are also taxed upon their gross receipts derived from business done within the state (91 Ohio Laws, 237); and, third, they are additionally assessed by a state board (90 Ohio Laws, 330, as amended by 91 Ohio Laws, 220). It is the assessment resulting from the last of these provisions which is involved in the cases now under consideration.

In compliance with the law the companies returned to the state board a statement for the year 1893, showing-First, the amount of capital stock, and its par and market value; second, a detailed account of the entire real and personal property of the companies, and its assessed value; and, third, their entire gross receipts during the taxing year for business done within the state of Ohio. For the years 1894 and 1895 the statements, under the requirements of the amendatory statute of May 10, 1894 (91 Ohio Laws, 220), exhibited-First, the number of shares of capital stock, and its par and market value; second, a detailed statement of the real estate owned in Ohio, and its assessed value; third, a full and correct inventory of the personal property, including moneys and credits owned in Ohio, and the value thereof; fourth, the total value of the real and personal property owned and situate outside of Ohio; fifth, the entire gross receipts of the company, from whatever source derived, of business wherever done for the taxing year; and, sixth, the gross receipts of each company in Ohio, from whatever source derived.

It is proper here to notice that, while the gross receipts in Ohio of express companies was required to be stated, there was no direction that mention should be made of the sum of the payments properly chargeable against such gross receipts, to wit, disbursements to railroad companies or individuals for transportation facilities, wages of its army of employees, care and maintenance of its horses, and other operating expenses.

Although the assessment on the real estate and on the gross receipts may be relevant to some aspects of the controversy now examined, I eliminate them from consideration, as the direct issue here presented concerns the taxation asserted to be only upon the personal property.

The value of the personal property within the state of Ohio returned by the express companies was averred in each bill, and was conceded by the demurrer to have been correct. The valuation thus returned, and the amount of the assessment levied on such personal property by the state board, is shown in the following table:

and as Alleged by

in the Bills. State Board.

Adams Express Co.... $53,080 74. $460,033

American Express Co.. 27,300 00. 400,576

United States Express Co.. 26,318 00 397,300

Adams Express Co.... $41,102 60. $543,569

American Express Co.. 21,795 00. 446,142

United States Express Co.. 26,333 00 481,348

Adams Express Co.... $42,065 00. $533,095

American Express Co.. 23,430 00. 499,373

United States Express Co.. 28,438 00 488,264

It thus appears that for the year 1893 property possessing an actual value of but $106,698.74 was assessed as being worth $1,257,909.53; in 1894 property valued at $89,230.60 was assessed at $1,471,059; and for 1895 property worth but $93,933 was assessed at $1,520,734.10,-a total valuation during three years of property worth only $289,862.34 at $4,249,702.63.

In addition to this enormous taxation, the real estate and the gross receipts of the companies have also been taxed for all state, county, and municipal purposes. It cannot, I submit, be asserted with reason that the nearly $4,000,000 of excess on the assessment of the tangible property laid by the state board resulted from assessing only the actual intrinsic value of such property, since to so contend would be not only beyond all reason, but would also be destructive of the admission by the demurrer that the companies possessed no other personal property within the state of Ohio but that returned by them, and that its actual and intrinsic value was correctly set forth. The assessment, therefore, must necessarily have taken into consideration some other property, or some element of value other than the real intrinsic worth of the property assessed.

The fact of the vast excess of the valuation over and above the admitted value of the property is not, however, the only mode by which it is conclusively demonstrated that the assessment resulted from the consideration and estimate by the state board of sources of value extrinsic to the property assessed. One of the assessments in controversy was made under the Ohio law of April 27, 1893, and the others under the law of May 10, 1894, and, although there is some difference between the two statutes, they both, as I have already said, substantially require express companies to make return of their real and personal property within the state, the value thereof, the number of shares of their capital stock, their market value, and a statement of the gross receipts for business done within the state of Ohio during the taxing year, from whatever source derived. Considering the obligation thus imposed to report the total value of the stock of the companies and all their gross earnings, as also the total routes over which their agents traveled, etc., and putting these things in connection with the extraordinary amount by which the valuation exceeds the actual value of the property assessed, it leaves no reasonable doubt that the sources of reported value, which were entirely outside of the territory and beyond the jurisdiction of the state of Ohio, were by some process of calculation added to the intrinsic value of the property within the state, thereby assessing not only the property within the state, but a proportion, also, of all the property situated without its territorial boundaries.

The fact that it was by this method that the sum of the personal property liable for taxation was fixed by the board results clearly and unmistakably from the opinion of the supreme court of the state of Ohio in State v. Jones, 51 Ohio St. 492, 37 N. E. 945, in which case the court sustained the validity of the taxes here questioned. The supreme court of Ohio therein declared that the state board, whose duty it was to assess express companies, was 'not required [2] to fix the value of such property upon the principle that the value of the entire property of the company shall be deemed the same as the value of its entire capital stock, thus making the respective values equivalents of each other. But, taking the market value of the entire capital stock as a datum, the board is only to be guided thereby in ascertaining the true value in money of the company's property in this state. The statute does not bind the board to find the value of the entire property of the company equal to that of the entire capital stock.' Although the requirement, in so many words, to assess property outside the state, is thus said not to be found in the statute, yet that it in substance so provides is acknowledged, for, adds the Ohio court, 'the property of a corporation may be regarded in the aggregate as a unit, an entirety, as a plant designed for a specific object, and its value may be estimated, not in parts, but taken as a whole. If the market value-perhaps the closest approximation to the true value in money-of the corporate property as a whole were inquired into, the market value of the capital stock would become a controlling factor in fixing the value of the property. * * * The market value of the capital stock, it is urged, has no necessary relation to the value of the tangible property of the corporation. But such is the well-understood relation between the two that not only is the value of the capital stock an essential factor in fixing the market value of the corporate plant, but the corporate capital or property has a reflex action on the value of the capital stock. * * * If, by reason of the good will of the concern, or the skill, experience, and energy with which its business is conducted, the market value of the capital stock is largely increased, whereby by the value of the tangible property of the corporation, considered as an entire plant, acquires a greater market value than it otherwise would have had, it cannot properly be said not to be its true value in money, within the meaning of the constitution, because good will and other elements indirectly entered into its value. * * * We discover no satisfactory reason why the same rule should not apply to the valuation of corporate property,-why the selling value of the capital stock, as affected by the good will of the business, should be excluded from the consideration of the board of appraisers and assessors under the Nichols law, charged with the valuation of corporate property in this state, especially as the capital stock, when paid up, practically represents at least an equal value of the corporate property.'

Now, this language is susceptible only of one meaning; that is, that in assessing the actual intrinsic value of tangible property of express companies in the state of Ohio it was the duty of the assessing board to add to such value a proportionate estimate of the capital stock, so as thereby to assess, not only the tangible property within the state, but also, along with such property, a part of the entire capital stock of the corporation, without reference to its domicile, and equally without reference to the situation of the property and assets owned by the company from which alone its capital stock derives value. In other words, although actual property situated in states other than Ohio may not be assessed in that state, yet that it may take all the value of the property in other states, and add such portion thereof as it sees fit to the assessment in Ohio, and that this process of taxation of property in other states, in violation of the constitution, becomes legal, provided, only, it is called 'taxation of property within the state.'

I submit that great principles of government rest upon solid foundations of truth and justice, and are not to be set at naught and evaded by the mere confusion of words. In considering a question of taxation in Postal Tel. Cable Co. v. Adams, 155 U.S. 688, 15 Sup. Ct. 268, 360, to which case I shall hereafter refer, this court said (page 698, 155 U.S., and page 270, 15 Sup. Ct.): 'The substance, and not the shadow, determines the validity of the exercise of the power.' It seems to me that, to maintain the tax levied by the state of Ohio, this ruling must be reversed, and the doctrine be announced that the shadow is of more consequence than the substance. Such result would appear to inevitably flow from the holding referred to, now affirmed by the court. Nothing, I submit, can be plainer than the fact that the value of the capital stock of a corporation represents all its property, franchises, good will,-indeed, everything owned by it wherever situated. I reiterate, therefore, that the rule which recognizes that, for the purpose of assessing tangible property in one state, you may take its full worth, and then add to the value of such property a proportion of the total capital stock, is a rule whereby it is announced that the sum of all the property, or an arbitrary part thereof, situated in other states, may be joined to the valuation of property in one state for the purpose of increasing the taxation within that state. What difference can there be between an actual assessment by Ohio of property situated in New York, Pennsylvania, Massachusetts, or in any of the other states of the Union, and the taking by Ohio of an aliquot part of the value of all the property situated in such other states, and adding it, for the purpose of assessment, to the value of property in Ohio? The recognition of this method breaks down both of the well-settled and elementary rules to which I have in the outset adverted.

First, the rule which forbids one state to extend its power of taxation beyond its jurisdiction to property in another state. If the express companies are domiciled in New York, and having millions of property there situated and subject to taxation, all of which gives value to their capital stock, and hence enters into the sum of its worth, how can it be that to tax a proportion of the value of all that property is not taxing the property itself? This proportion of the capital stock, added to the inherent value of the property in the state of Ohio, is, therefore, an actual taxation by the state of Ohio of property situated in the state of New York.

It seems to me that not only the illegality but the injustice of this taxation by the state of Ohio on these express companies, which is now upheld, is clear. Let me suppose that the bonds, stocks, other investments, and elements, which represent the capital of the companies, and therefore producing the resultant value of such capital stock, are situated in the states of New York, Pennsylvania, and Massachusetts. These items, thus making up the value of the capital stock, being so situated in such states, are, of course, entirely and wholly, at their full value, assessable in those states. The attribution of an aliquot share of the value of the capital stock to the state of Ohio, and the consequent right of that state to tax such value, in no way deprives the states of New York, Pennsylvania, and Massachusetts of their ders for its full value. But, as attributing right to assess the property within their borders for its full value. But, as attributing property gives that state the right to tax the proportion allotted, it follows, by an inevitable deduction, that the recognition of the right here claimed practically subjects the property in the states of New York, Pennsylvania, and Massachusetts to double taxation. unless those states voluntarily forego the inherent power of taxation vested in them to levy a tax upon all the property within their respective jurisdictions. Certainly the states of New York, Massachusetts, and Pennsylvania would, if they were independent sovereignties, removed from the jurisdiction of the constitution of the United States, be driven to protect, by retaliatory legislation, their citizens, as was the case between the states prior to the adoption of the constitution. But, having entered into the Union, these states are bereft of all such relief, and must thus look for the protection of their citizens to the remedies afforded by the constitution itself. The rule now announced allows Ohio to exercise an authority in violation of the constitution, and thereby strips, not only the citizens of the other states, but those states themselves, of all redress, by depriving them of the safeguards which it was the avowed purpose of the constitution to secure.

Second, as to the interstate commerce clause. It is clear that the recognition of a right to take an aliquot proportion of the value of property in one state, and add it to the intrinsic value of property in another state, and there assess it, is, in substance, an absolute denial and overthrow of all the great principles announced from the beginning, and enforced by the many decisions of this court, on the subject of interstate commerce. This results from the fact that the necessary consequence of the ruling in this case is this: that a corporation-and there is no distinction, in principle, in the particular here considered, between a corporation and an individual-cannot go from one state into another state of the Union, for the purpose of there engaging in interstate commerce business, without subjecting itself to the certainty of having a proportion of all its property situated in the other states added to the sum of property, however small, which it may carry into the state to which it goes, for the purposes of taxation therein. Under this system, not only is an appalling penalty imposed for going from one state into another state, but the carrying on of interstate commerce itself becomes hampered and loaded with a burden threatening its absolute destruction.

The contradiction involved in the proposition is well illustrated by the legislation and decisions of the state of Ohio. Thus, as I have said, in addition to the tax imposed on express companies, which is here considered, the law of the state of Ohio, besides assessing their real estate, also imposes a tax on the gross receipts of such companies for business done within the state. In order to save the tax here in question, the law by which this last tax is imposed is careful to provide that nothing in the imposition of the tax therein provided-that is, the tax on gross receipts-shall be construed as impairing the right to the tax on tangible property already provided for (the tax here in question) Now, in passing upon the validity of this tax on gross receipts, the supreme court of Ohio treats it as not a double tax, because the previous tax is considered as one on tangible property. Adams Exp. Co. v. State (Ohio Sup.) 44 N. E. 506. We have, therefore, both the legislature and the court of last resort of the state of Ohio upholding the enormous valuation put upon the personal property for the purposes of the tax now before us, on the theory that such valuation includes an aliquot part of the capital stock, and necessarily, therefore, also, an equal portion of all the property and earnings of the company, both in and out of the state, and yet we have the same legislature and the same tribunal upholding the tax on gross receipts on the ground that the tax first provided is purely a tax upon tangible property. Thus the departure from the pathway of principle is marked in this instance, as it is always marked, by confusion and injustice.

The wound which the ruling announced, if I correctly apprehend it, inflicts on the constitution is equally as severe upon the unquestioned rights of the states as it is upon the lawful authority of the United States, because, while submitting the states and their citizens to injustice and wrong committed by another state, it at the same time greatly weakens or destroys the efficacy of the interstate commerce clause of the constitution.

But the contention is that, however sound, as an original question, may be the reasoning upon which the tax is assailed, its validity is not now open to question, because the theory by which the state of Ohio added the value of property outside of the state to the intrinsic amount of property actually within the state for the purposes of taxation is asserted to be concluded by many adjudications of this court. The cases relied on to establish this proposition are cited in the opinion of the court. I submit that the statement made by this court in Express Co. v. Seibert, 142 U.S. 339, 12 Sup. Ct. 250, is a sufficient answer to this contention, as regards all the cases relied on decided prior to that case. The Seibert Case involved the question of the validity of a law of the state of Missouri imposing a tax upon the gross receipts of an express company in addition to the ordinary tax upon its tangible property. The court, finding the tax to be only on the business of the company within the state, held it not to be a tax on interstate commerce, and therefore valid. The court, through Mr. Justice Lamar, in speaking of the right of a state to classify express companies for the purpose of taxation, resulting from the fact that such companies were normally only owners of a small amount of tangible property in one state, said (page 354, 142 U.S., and page 254, 12 Sup. Ct.):

'On the other hand, express companies, such as are defined by this act, have no tangible property, of any consequence, subject to taxation under the general laws. There is, therefore, no way by which they can be taxed at all, unless upon a tax upon their receipts for business transacted. This distinction clearly places express companies defined by this act in a separate class from companies owning their own means of transportation.'

The argument here advanced in favor of the tax, therefore, simply is that what this court said could not be done in a decision rendered in January, 1892, had theretofore been settled to the contrary by a line of adjudications. But the answer to the contention in favor of the tax does not rest alone upon this view. All the cases relied upon and referred to in argument were considered and interpreted in Postal Tel. Cable Co. v. Adams, 155 U.S. 688, 15 Sup. Ct. 268, 360. It becomes unnecessary, therefore, to review the prior cases in detail, and analyze their reasoning, since this duty was effectually performed by this court in the opinion announced in the Postal Telegraph Case. The significance of the ruling in that case, and the controlling nature of the principles which the opinion there rendered inculcated, can better be understood by considering the controversy which that case determined, and the aspect in which it was necessarily presented to this court for adjudication. The case involved the validity of a tax imposed by the state of Mississippi on a telegraph company. The tax, in the mere form of its imposition, was undoubtedly on the occupation and business of the company, and therefore was an unlawful burden on interstate commerce, as the company was engaged in such commerce. The controversy came to this court on error from the supreme court of the state of Mississippi. 14 South. 36. The attention of that court, in determining the issue presented to it, was called to all the previous decisions of this court. Considering these previous adjudications, the Mississippi court said that there was undoubtedly language in opinions of this court which seemed to support the validity of the tax there questioned, and there was also undoubtedly language in other lines of adjudication which seemed clearly to render the tax void under the constitution of the United States. In view of the apparent conflict in the cases decided by this court, the Mississippi court in its opinion marshaled the authorities upon both sides, and expressed its hesitancy and diffidence in reaching a conclusion. The Postal Telegraph Case, therefore, pointedly called the attention of this court to all the previous cases, and accentuated the arguments on both sides of the issue presented, and rendered it absolutely necessary for this court to construe and interpret all the previous adjudications. In this condition of things, in deciding the case, and holding the tax valid, although in form a tax upon interstate commerce, this court said (page 695, 155 U.S., and page 269, 15 Sup. Ct.): 'It is settled that where, by way of duties laid on the transportation of the subjects of interstate commerce, or on the receipts derived therefrom, or on the occupation or business of carrying it on, a tax is levied by a state on interstate commerce, such taxation amounts to a regulation of such commerce, and cannot be sustained. But property in a state belonging to a corporation, whether foreign or domestic, engaged in foreign or interstate commerce, may be taxed, or a tax may be imposed on the corporation on account of its property within a state, and may take the form of a tax for the privilege of exercising its franchises within the state, if the ascertainment of the amount is made dependent in fact on the value of its property situated within the state (the exaction, therefore, not being susceptible of exceeding the sum which might be leviable directly thereon), and if payment be not made a condition precedent to the right to carry on the business, but its enforcement left to the ordinary means devised for the collection of taxes. The corporation is thus made to bear its proper proportion of the burdens of the government under whose protection it conducts its operations, while interstate commerce is not in itself subjected to restraint or impediment.'

And again (page 696, 155 U.S., and page 270, 15 Sup. Ct.):

'Doubtless, no state could add to the taxation of property, according to the rule of ordinary property taxation, the burden of a license or other tax on the privilege of using, constructing, or operating an instrumentality of interstate or international commerce, or for the carrying on of such commerce; but the value of property results from the use to which it is put, and varies with the profitableness of that use, and by whatever name the exaction may be called, if it amounts to no more than the ordinary tax upon property, or a just equivalent therefor, ascertained by reference thereto, it is not open to attack as inconsistent with the constitution. Railway Co. v. Backus, 154 U.S. 439, 445, 14 Sup. Ct. 1122.'

Referring to the opinion of the supreme court of Mississippi, which directly involved all the issues presented by this case, the court said (page 697, 155 U.S., and page 270, 15 Sup. Ct.): 'And in the case at bar the supreme court, in its examination of the liability of plaintiff in error for the taxes in question, said: 'It will be thus seen at once that this is a tax imposed upon a telegraph company, in lieu of all others, as a privilege tax, and its amount is graduated according to the amount and value of the property measured by miles. It is to be noticed that it is in lieu of all other taxes, state, county, and municipal. The reasonableness of the imposition appears in the record, as shown by the second count of the declaration and its exhibits, whereby the appellant seems to be burdened in this way with a tax much less than that which would be produced if its property had been subjected to a single ad valorem tax.' This exposition of the statute brings it within the rule where ad valorem taxes are compounded or commuted for a just equivalent, determined by reference to the amount and value of the property. Being thus brought within the rule, the tax becomes substantially a mere tax on property, and not one imposed on the privilege of doing interstate business. The substance, and not the shadow, determines the validity of the exercise of the power.'

And, summing the whole up, the court concluded (page 700, 155 U.S., and page 271, 15 Sup. Ct.):

'We are of opinion that it was within the power of the state to levy a charge upon this company in the form of a franchise tax, but arrived at with reference to the value of its property within the state, and in lieu of all other taxes, and that the exercise of that power by this statute, as expounded by the highest judicial tribunal of the state in the language we have quoted, did not amount to a regulation of interstate commerce, or put an unconstitutional restraint thereon.'

This construction of the previous cases decided by this court elucidates and makes plain the fact that they proceeded upon and were intended to enforce the rule that the validity of a state tax would be determined by the substantial results of the burden imposed, and not by the mere form which it assumed, and although the form of the imposition might seem to bring the tax within the reach of the inhibition against levying a charge upon property beyond the jurisdiction of the state, or within the prohibitions of the constitution of the United States forbidding the laying of burdens on interstate commerce, this court would not interfere therewith, provided the exaction, in substance, amounted to no more than the sum of the taxation which the state might lawfully impose upon the property actually within its jurisdiction, and provided that, in reality, the burden laid by the state was not an interference with interstate commerce. This explanation and this rule was the answer given to the question directly presented as to the significance and interpretation of the previous decisions now cited as authority for the proposition that it is within the power of a state not only to tax at will property beyond its jurisdiction, but also to substantially destroy interstate commerce by heaping direct and onerous burdens thereon. Such explanation and ruling were also reiterated in the recent decision in Telegraph Co. v. Taggart, 163 U.S. 1, 16 Sup. Ct. 1054, where, at page 18, 163 U.S., and page 1059, 16 Sup. Ct., it is clearly intimated that a taxing law could not be upheld which, in its necessary operation, was shown to be oppressive and unconstitutional.

Testing the tax in controversy by the rule laid down in the Postal Telegraph Case, it becomes, in reason, impossible to conclude otherwise than that it is, both in form and substance, taxation by the state of Ohio of property beyond its jurisdiction, and that it also is an imposition by that state of a burden on interstate commerce. It cannot with fairness be argued that the amount of the tax is only such sum as would have resulted from a levy upon the property actually in the state, when the record admits that the aggregate value of such property for the taxing years of 1893, 1894, and 1895, amounted only to two hundred and odd thousand dollars, while the assessment exceeds this amount by nearly four millions of dollars. It cannot be said that this vast excess does not embrace property situated outside of Ohio, when both the text of the statute of that state and such text as expounded by the supreme court of the state clearly show that the sum of the excess is arrived at by adding to the property in the state the value of property situated outside thereof. Nor can it be contended that the tax here involved is not a tax on interstate commerce, in view of the fact that, from the nature of the criteria of value adopted, an aliquot part of the avails and receipts of the company of every kind is added to the taxing value in the state of Ohio, although that state had also imposed a tax upon the gross receipts from business of a purely state nature.

But, dismissing absolutely from consideration the authoritative construction of all the prior decisions of this court, announced in Postal Tel. Cable Co. v. Adams, and conceding, for the sake of argument, that the previous adjudications now relied on are unexplained by that case, and that they substantially hold that there is a so-called 'unit rule' properly applicable to the assessment for taxation of the continuous lines of telegraph and railroad companies, such concession does not in reason admit the validity of the method adopted by the state of Ohio for assessing the tangible personal property of express companies. Before proceeding to discuss this proposition, however, I call attention to the fact that I intentionally refrain from placing a sleeping-car company in the same category with telegraph and railroad companies, because the decision in the case of Pullman's Palace Car Co. v. Pennsylvania, 141 U.S. 18, 11 Sup. Ct. 876, was not founded upon the theory, nor did it purport to assert that the property or plant of a sleeping-car company was a unit, and that, of necessity, a part of such property may be measured by a rule applicable to continuous lines of road. In that decision the court merely emphasized the holding that the tax was one laid upon 100 cars of the company, possessing an actual situs in Pennsylvania. In the statement of the case (page 20, 141 U.S., and page 877, 11 Sup. Ct.) the decision of the supreme court of Pennsylvania was quoted verbatim, in which it was declared that the tax on the capital stock of the Pullman Company was in reality but a tax on its property; that the coaches of the company were such property, and that the fact that the coaches might also be operated in other states would simply reduce the value of the property in Pennsylvania justly subject to taxation there. This court practically adopted the views so expressed by the state court. When, however, it was said (page 26, 141 U.S., and page 879, 11 Sup. Ct.) that the method of assessment, to wit, taking a proportion of the capital stock ascertained on the mileage basis, as the value of 100 sleeping cars, was a just and equitable method, such statement was made with reference to the facts held to exist in the case before the court. What were those facts? The taxes demanded covered a period of 11 years, and, excluding interest from the time when payable and the attorney general's commission for collecting, aggregated but $16,321.89. 107 Pa. St. 158. Surely, this court might well say that a rule of taxation which operated to assess on 100 sleeping cars a tax of less than $1,500 per annum was, in the absence of any showing to the contrary, just and equitable to the company. No such showing was made. The objection advanced by counsel to the method of taxation was, not that the results produced were inequitable, but that (theoretically, not practically) the method adopted was improper. Indeed, the facts of that case caused the ruling there made to be but an example of the principle subsequently explicitly announced in Postal Tel. Cable Co. v. Adams, ubi supra.

It is, I submit, undeniable that, if there be such a unit rule applicable to the continuous lines of telegraph and railroad companies, its existence pushes the power of state taxation, as to these particular kinds of property, at least to the confines of the constitution, and therefore, if, under the rule of stare decisis, the cases which announce it should be followed, they should not be extended. The mere ownership, however, by an express company, of personal property within a state, presents no case for the application of a unit rule. What unity can there be between the horses and wagons of an express company in Ohio with those belonging to the same company situated in the state of New York? The conception of the unity of railroad and telegraph lines is necessarily predicated upon the physical connection of such property. To apply a rule based upon this condition to the isolated ownership, by an express company, of movable property in many states, in reality declares that a mere metaphysical or intellectual relation between property situated in one state and property found in another creates, as between such property, a close relation for the purposes of taxation. But this theory, by an enormous stride, at once advances the unit rule beyond every constitutional barrier, and causes such rule or theory to embrace property between which there is, and cannot in the nature of things be, any real union or relation whatever. If mere intellectual union between property be thus adopted as a rule of taxation, then all the restrictions upon the power of a state to tax property arising from the fact that the situs of such property is beyond its jurisdiction, as well as of the restraints arising from the interstate commerce clause of the constitution, are destroyed. Certainly, the mere fact that the same owner has movable property in one state and movable property in another state, does not, from the fact of the one ownership, create a link of continuity between the property for the purpose of taxation. The fact that, if the movable property situated in one state earns profits, and the movable property in the other likewise so earns, and that these profits go to the common owner, does not create such unity for the purpose of taxation, so as to make the property assessable in each state. This court has effectually determined that, where a corporation is engaged in interstate business, no one of the states has the power to tax the receipts of such company derived from interstate commerce business, and that the power of the states as to taxation on earnings is limited to those derived from the business done within the state. This line of concluded authority is illustrated and referred to in the recent opinion in Osborne v. State of Florida (decided at this term) 17 Sup. Ct. 214. It is therefore manifest that, where property owned in common, belonging to the same person, and situated in different states, contributes to earnings, and the proceeds of these earnings go into the treasury of the owner, and lay side by side therein, the fact that there is a common owner, that there is a common business, and that all the results of the business are in immediate contact in the common treasury, gives no power to the state to tax the whole, but only to levy on that which comes from the state business alone. How, I submit, can it now be announced that there is an imaginary unity between personal property widely separated, because that property has a common owner, without, at the same time, reversing the settied adjudications of this court on the subject of the power of a state to tax the earnings from interstate commerce?

But a few illustrations will serve at once to make clear what I submit is the impossibility, in reason, of declaring that, as a legal fact or fiction, property is unified, when between such property there is no unity or physical relation whatever.

Take, for example, the case of Brennan v. City of Titusville, supra. Of what value is the ruling in that case, that a manufacturer cannot be compelled to pay a license for the doing, through his agent, of the business of incerstate commerce, by selling his goods in a state into which such agent enters for that purpose, if the mere fact that the agent takes into the state $1,000 worth of goods creates a supposed intellectual union between those goods and the vast stock and capital of the manufacturer located in another state, so as to enable the attribution of an aliquot part of the wealth of the manufacturer to the goods in the custody of the agent for the purpose of taxation? Would it not be as true in such case to say that the capital and wealth of the manufacturer facilitates and increases the capacity of the agent to transact business, and adds value to the property the agent has for sale, as to say that the horses and wagons of an express company in New York and its capital there facilitate and aid the agents of such company, and add value to the tangible property employed by such agents, in transacting business in Ohio? It certainly cannot, I submit, with reason, be said that there is not the same unity between the operations of a manufacturer who makes his goods in one state, and sells them in another, as there is between the operations of an express company. The sale of the manufactured goods is as essentially necessary to the profits of the manufacturer as is the manufacture of the goods themselves. No profit can result from the one without the other, and to attribute a supposed unity to the business of an express company, and to deny such unity to that of a manufacturer, is, as I understand it, to declare that there is a difference when there is no possible difference.

If the rule contended for by the state of Ohio be true, why would it not apply to a corporation, partnership, or individual engaged in the dry-goods business, or any other business, having branches in various states? Would it not be as proper to say of such agencies, as it is of the agencies of express companies, that there is an intellectual unity of earnings between the main establishment and all such agencies, and therefore a right to assess goods found in an agency with relation to the capital and wealth of the original house and all the other branches situated in other states? Take the case of a merchant carrying on a general commercial business in one state and having connections of confidence and credit with another merchant of great capital in another state. If this rule be true, can it not also be said that such merchant derives advantages in his business from the sum of the capital in other states which may be availed of to extend his credit and his capacity to do business, and that, therefore, his tangible property must be valued accordingly? Suppose bankers in Bostion, Philadelphia, and New York, of great wealth, owning stocks and bonds of various kinds, send representatives to New Orleans, with a limited sum of money, there to commence business. These representatives rent offices and buy office furniture. Is it not absolutely certain that the business of those individuals would be largely out of proportion to the actual capital possessed by them, because of the fact that, reflexly and indirectly, their business and credit is supported by the home offices? In this situation, the assessor comes for their tax return. He finds noted thereon only a limited sum of money and the value of the office furniture. What is to prevent that offical, under the rule of supposed metaphysical or intellectual unity between property, from saying: 'It is true you have but a small tangible capital, and your office furniture is only worth $250, but the value of property is in its use, and, as you have various elements of wealth situated in the cities named, I will assess your property, because of its use, at a million dollars'? Such conduct would be exactly in accord with the power of taxation which it is here claimed the state of Ohio possesses, and which, as I understand it, the court now upholds. To give the illustrations, I submit, is to point to the confusion, injustice, and impossibility of such a rule.

Nor, in conclusion, I submit, is there any force in the argument, advanced at bar, that we have entered a new era, requiring new and progressive adjudications, and that, unless this court admits the power of the state of Ohio to tax to be as claimed, it will enable aggregations of capital to escape just taxation by the several states. This assertion, at best, but suggests that, unless constitutional safeguards be overthrown, harm will Come, and wrong will be done. In its last analysis the claim is but a protestion that our institutions are a failure, that time has proven that the constitution should not have been adopted, and that this court should now recognize that fact, and shape its adjudications accordingly. The claim is as unsound as the fictitious assertion of expediency by which it is sought to be supported. If it be true that by the present enforcement of the constitution and laws property will escape taxation, the remedy must come, not from violating the constitution, but from upholding it.

Within the power lodged in congress to regulate commerce between the states, ample authority exists to enact the necessary legislation to prevent the just relations between the states, and the regulation of such commerce from becoming the pretext for avoiding the proper burdens of either state or national taxation. As the necessity arises, such apt powers will doubtless be brought into operation. The recognition of the right of taxation exerted by the state of Ohio in these cases must, if followed in other states, not only reproduce the illegality and injustice here shown, but greatly increase it, as every new imposition will be a new levy on property already taxed, and result in an additional burden on interstate commerce. If the principles by which such results are brought about be recognized as lawful under the constitution, not only will congress be deprived of all power to protect the citizens of the respective states, and the states themselves, from these conditions, but it will also be rendered impotent to devise, under the power to regulate commerce, any just and fair regulation to prevent the interstate commerce clause from being made a shield for avoiding taxation, and to cause property engaged in such commerce to be subjected to just and uniform taxation on the part of the several states. Thus, by holding that the states possess the power claimed in this case to exist, not only will a wrong be committed, but that wrong will be permanently and without remedy ingrafted into our constitutional system.

I am authorized to say that Mr. Justice FIELD, Mr. Justice HARLAN, and Mr. Justice BROWN concur in this dissent.

This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).