Section 171 of the constitution provides that taxes shall be levied and collected for public purposes only. They shall be uniform upon all property subject to taxation within the territorial limits of the authority levying the tax, and all taxes shall be levied and collected by general laws."

Section 174: "All property whether owned by natural persons or corporations shall be taxed in proportion to its value unless exempted by this constitution, and all corporate property shall pay the same rate of taxation paid by individual property. Nothing in this constitution shall be construed to prevent the general assembly from providing for taxation based upon incomes, licenses or franchises."

Section 181: "The general assembly may, by general laws only, provide for the payment of license fees on franchises, stock used for breeding purposes, the various trades, occupations and professions, or a special or excise tax; and may, by general laws, delegate the power to counties, towns, cities, and other municipal corporations, to impose and collect license fees on stock used for breeding purposes, on franchises, trades, occupations and professions." Stone & Sudduth and Ramsey & Maxwell, for complainant. W. J. Hendricks, for defendant.

BARR, District Judge. The demurrer to the bill raises: (1) The question of the jurisdiction of this court. (2) Whether or not the tax, as alleged in the bill, is upon interstate commerce, and within the inhibition of the federal constitution. (3) Is this tax, as provided by the Kentucky legislature, a violation of the constitution of Kentucky?

The jurisdiction of the court is claimed because of the diverse citizenship of the parties, and because the tax is alleged to be in violation of the federal constitution. The diverse citizenship is aptly alleged, and the amount of the tax in controversy which is sought to be enjoined, so far as it may have been for the benefit of the state, is more than $2,000, exclusive of interest and costs, and that appears upon the face of the bill. The bill, in addition to seeking to enjoin the collection of the taxes levied for the benefit of the state of Kentucky, seeks to enjoin the auditor, Norman, from certifying to the different county clerks, 68 in number, their respective proportions of the taxes assessed by the board of valuation and assessment, and alleges that these local taxes, with the tax for the benefit of the state of Kentucky, will amount to about $10,000. The aggregate of these local taxes is thus shown to be over $2,000, exclusive of interest and costs. The case, we think, is not within the principle of Fishback v. Telegraph Co. (decided by the supreme court March 2, 1896) 16 Sup. Ct. 506, and the previous case of Walter v. Railroad Co., 147 U. S. 370, 13 Sup. Ct. 348. In both of these cases it was sought to enjoin the collection of local taxes which had been assessed and levied by the respective counties and municipalities. Hence the local taxes had been distinctly separated, so that a separate action could have been maintained against the counties and municipalities, if the taxes had been paid under protest. Here it is sought to prevent the auditor from completing the appraisement and levy of taxes, which, if completed without legal authority, would be a wrongful act, and one probably subjecting him to an action by the party injured thereby. However this may be, the amount of tax in controversy between the plaintiff and the defendant, for the benefit of the state of Kentucky, is over $2,000, exclusive of interest and

costs.

The jurisdiction of the circuit court seems, therefore, to be clear, from the face of the bill.

The bill alleges, as ground for the equitable jurisdiction and the granting of an injunction, the complainant's liability to a multiplicity of suits if the assessment and levy is completed, and an irreparable injury which will be caused by the enforcement of the penalties of the law for the nonpayment of these illegal taxes. It is the uniform practice in this state to allow an injunction to restrain either the assessment or collection of illegal taxes, and the equity jurisdiction in such cases has been frequently sustained by the court of appeals. See Louisville & N. R. Co. v. Warren County Ct., 5 Bush, 245; Gates v. Barrett, 79 Ky. 295; Water Co. v. Clark, 94 Ky. 47, 21 S. W. 246. But, independently of this uniform practice in this state, which sustains the exercise of equitable jurisdiction of injunction in such cases, the allegations of this bill, as to the multiplicity of suits, and the irreparable injury which the assessment and collection of these taxes will cause the complainant, are, we think, sufficient to sustain the equitable jurisdiction upon general principles. Telegraph Co. v. Poe, 61 Fed. 469; Sanford v. Poe, 16 C. C. A. 305, 69 Fed. 546. These cases are distinctly in point, as there the equitable jurisdiction was sustained because of the multiplicity of suits which would follow from the completion of an assessment, and the levy of the local taxes, which local taxes, separated, would have been less than the $2,000 limit.

The complainant is not seeking relief because the valuation and assessments of the board are excessive, but that the entire valuation and assessment is illegal and void. It may be assumed as settled that the state of Kentucky has authority to levy and collect a tax on all of the property of the complainant, tangible as well as intangi ble, if within the taxing power of the state. This right, however, is subject to certain constitutional limitations. Hence, the state cannot tax foreign or interstate commerce as such, nor can it tax its agencies or instrumentalities in such a manner as to interfere with the regulation of this commerce, which belongs exclusively to congress. The state may tax property within the state, though it be employed in whole or in part in foreign or domestic commerce, as that use does not, of itself, exempt it from liability to taxation as is all other property within the jurisdiction of the state. Delaware Railroad Tax Cases, 18 Wall. 232; W. U. Tel. Co. v. Attorney General of Massachusetts, 125 U. S. 530, 8 Sup. Ct. 961; Leloup v. Port of Mobile, 127 U. S. 640, 8 Sup. Ct. 1380; Pullman's Palace-Car Co., v. Pennsylvania, 141 U. S. 18, 11 Sup. Ct. 876; Cable Co. v. Adams, 155 U. S. 688, 15 Sup. Ct. 268, 360. The present inquiry is, therefore, as to the kind of tax which is sought to be imposed, and the location of the property sought to be taxed.

There is much difficulty in construing the various provisions of the Kentucky Statutes heretofore quoted. It will be seen that the language of section 4077 is that certain corporations and companies "shall, in addition to the other taxes imposed by law, annually pay a tax on its franchise to the state and a local tax thereon to the county, incorporated city, town, and taxing district where its fran-'

chise may be exercised." A "franchise," in its legal sense, is defined by Chief Justice Taney, in Bank v. Earle, 13 Pet. 595, thus:

"Franchises are special privileges conferred by government upon individuals, and do not belong to the citizens of the country generally. of common right. It is essential to the character of a franchise that it should be a grant from the sovereign authority, and in this country no franchise can be held which is not derived from a law of the state."

If this were the only meaning of the word "franchise" in this section, many other provisions of the law would be meaningless. Thus, other provisions of this law distinctly apply, not only to corporations, but to companies and associations who have no corporate existence, and who have no franchise. They apply to domestic companies and associations, as well as to foreign companies and associations. And so the capital stock, the value of which is to be ascertained by this board of valuation and assessment, applies, by the express provisions of the other sections, to associations and companies, as well as to corporations. As we construe the law, the legis lature intended that the corporations, companies, and associations named in the various sections should be treated as an entirety, and taxed as such; and in using the words "capital stock" it intended to include all of the property of these corporations, companies, and associations, and to have all of the property valued as an entirety.

The information which is required of the corporations, companies, and associations, both foreign and domestic, by sections 4078 and 4079, is for the purpose of enabling the board of valuation and assessment to value and assess the capital stock of the corporations, companies, and associations. The capital stock to be valued by the board includes the entire property, tangible and intangible, wherever situated, and from this value is to be taken all of its tangible property, wherever situated, assessed for taxation in this state or elsewhere. The value of this tangible property is to be taken from the valuation of the entire capital stock, and what remains is the value of the property which is to be taxed under the provisions of this act. Section 4079. Thus, the tax mentioned in section 4077 is not an additional tax upon the same property, but a tax upon the intangible property of the corporation, company, or association, that has not been taxed as tangible property. And it is provided in another section that, if the corporation, either foreign or domestic, "be a railroad, telegraph, telephone, express, sleeping, dining, palace, or chair car company, the lines of which extend beyond the limits of this state, that the proportion of the value of the capital stock which the length of the lines operated, leased, owned or controlled, in this state bears to the total length of the lines owned, leased, or controlled in this state and elsewhere shall be considered in fixing the value of the corporate franchise of such corporation liable for taxation in this state." The same rule is applied to local taxation authorized by counties, cities, etc., and, in addition, all tangible property locally taxed is to be deducted. Section 4081. Thus, the taxation of these corporations', companies', and associations' intangible property is taxed upon the basis of the mileage of the lines inside and outside the state. This taxation assumes that there is used in the

common business of the companies, corporations, and associations inside the state an average proportion of its intangible property.

Notwithstanding the use of the words "franchise" and "corporate franchise" in the several sections of this statute, we are of the opinion that the property to be taxed under its provisions as intangible property is not confined to franchises or corporate franchises, but it is intended to include all intangible property, by the mode indicated, whether or not such property be legally "franchises" or "corporate franchises." It is not a tax upon an occupation or franchise granted by other states or by the United States, but a tax upon the property owned and enjoyed by these several associations, companies, and corporations, which is claimed to be within the taxing power of the state. The power of taxation by a state over telegraph companies is clearly stated by Chief Justice Fuller in a recent case. He says:

"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 the 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 cevised 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 impedi. ment."

And, again, he says:

"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, 1124." Cable Co. v. Adams, 155 U. S. 695-697, 15 Sup. Ct. 269, 270.

See, also, Pullman's Palace-Car Co. v. Pennsylvania, 141 U. S. 18, 11 Sup. Ct. 876.

In that case (Cable Co. v. Adams) the court sustained a tax upon the telegraph company which was distinctly a tax for the privi lege of doing business in the state, upon the ground that it was no more than the property itself ordinarily would be burdened by an ad valorem tax; and in discussing the character of the tax as being a privilege tax, the court say:

"In marking the distinction between the power over commerce and municipal power, literal adherence to particular nomenclature should not be allowed to control construction in arriving at the true intention and effect of state legislation." Page 700, 155 U. S., and page 271, 15 Sup. Ct.

The case of W. U. Tel. Co. v. Attorney General of Massachusetts, 125 U. S. 530, 8 Sup. Ct. 961, is, we think, distinctly in point, not only in regard to disregarding the nomenclature of the state statute, but also as to the constitutionality of a tax like the one now being considered. In that case the state of Massachusetts enacted a tax law which is substantially in terms that of the Kentucky statute as to ascertaining the cash value of the capital stock of the corporations and associations either organized under its laws or foreign corporations doing business in the state, except that, in the assessment and tax complained of there, no deduction was made for real estate situated outside of the state of Massachusetts, and which was valued at over $3,000,000, and presumably taxed elsewhere, when the facts showed that there was no real estate of the company within the territorial limits of that state. That law required that a tax should be paid upon its "corporate franchise" at a valuation equal to the, aggregate value of the shares of its capital stock, as determined in the mode prescribed therein, and this was made applicable to corporations or associations chartered or organized elsewhere than in the state. Justice Miller, in the course of the opinion (page 547, 125 U. S., and page 963, 8 Sup. Ct.) said:

"The argument is very much pressed that it is a tax upon the franchise of the company, which franchise, being derived from the United States by virtue of the statute above recited, cannot be taxed by a state; and counsel for appellant occasionally speaks of a tax authorized by the law of Massachusetts, upon this as well as other corporations doing business within its territory, whether organized under its laws or not, as a tax upon their franchises. But, by whatever name it may be called, as described in the laws of Massachusetts, it is essentially an excise upon the capital of the corporation. The laws of that commonwealth attempt to ascertain the just amount which any corporation engaged in business within its limits shall pay as a contribution for the support of the gov ernment, upon the amount and value of the capital so engaged by it therein."

This case has been frequently cited, and has been approved in the cases of Massachusetts v. W. U. Tel. Co., 141 U. S. 41, 11 Sup. Ct. 890, and Cable Co. v. Adams, 155 U. S. 699, 15 Sup. Ct. 270. In the case of Massachusetts v. W. U. Tel. Co., 141 U. S. 45, 11 Sup. Ct. 891, Justice Gray again says, in speaking of this Massachusetts tax, that:

"By whatever name the tax may be called, as described in the laws of Massachusetts, it is essentially an excise upon the capital of the corporation, and these laws attempt to ascertain the just amount which any corporation engaged in business within its limits shall pay, as a contribution for the support of its government, upon the amount and value of the capital so employed by it therein."

This mode of ascertaining and assessing the value of the property has been sustained by the supreme court in the case of Railway Co. v. Backus, 154 U. S. 439, 14 Sup. Ct. 1122; and also the circuit court of appeals, in Sanford v. Poe, have held a law of Ohio, not unlike this one, as not within the inhibitions of the federal constitution. See 16 C. C. A. 305, 69 Fed. 547.

This bill states with some detail the complainant's different kinds of property in this state on the 15th of September, 1893, and its value as claimed by it, and the valuation and assessment of its property on that day as made by the board of valuation and as