of a * railway lying in different counties, including its furniture, is not legal. The personal property of the corporation is liable. to taxation, if at all, at the residence of the owner, which, in such case, is considered to be the place of their principal office of business. 14

The same rule seems to obtain in Rhode Island.15

pany was transacted at one of the places where the secretary resided, and where orders were issued, that must be regarded as the only "principal office” of the company for the purpose of serving process under the English statute.

And in a late case in New Hampshire, it was held, that if a railroad corporation is located in another state, and all its property is taxed in that state, to the corporation, on the same valuation and at the same rate as the property of an individual, a stockholder residing in this state is not liable to be taxed for his stock in the road. Smith v. Exeter, 37 N. H. R. 556. This point was not raised in the Pennsylvania cases cited infra, McKeen v. County of Northampton, and Whitesell v. County of Northampton, 49 Penn. St. 519, 526. And see Conwell v. Connersville, 15 Indiana R. 150.

15 Providence & Worcester Railroad v. Wright, 2 Rhode Island R. 459. See also Louisville & Portland Canal Company v. Commonwealth, 7 B. Munroe,

160.

In a late case in the Supreme Court of Vermont (Thorpe v. The Rutland & Burlington Railw., 27 Vt. R. 140), a doubt is expressed in regard to the entire soundness of the principle of legislative exemptions of corporations from taxation. It may be sound, perhaps, within certain limits, and so far as it can be clearly shown to have formed an essential ingredient in the consideration which induces the corporators to accept their charter, and undertake the offices thereby created. If it were apparent, that without the exemption the company would not have accepted their charter, it might with great propriety be urged, that the indispensable condition of its existence should be held inviolable, even by the legislature.

And it is possible to attach some such importance to exemptions from special taxation. By this we do not mean a tax imposed upon the stock or property of a particular company, but upon a class of corporations, by themselves, as upon banks, or railways, which it is conceded may be taxed, as a class, to the limit of exhausting all their profits, and thus virtually, although indirectly, causing their destruction. An exemption from this kind of taxation, or, in other words, a provision in the charter of a corporation, that all taxes levied upon it shall be in common with the same amount of property of other persons throughout the state, would certainly be just, and ought to be held binding upon future legislatures, and could form no unreasonable abridgment of the state sovereignty.

It is this kind of exemption which the United States Supreme Court at first claimed, in regard to the agencies of the national government, as an indispensable quality of the paramount sovereignty accorded to that government within its appropriate sphere. McCulloch v. The State of Maryland, 4 Wheaton, 316.

*In some of the states the capital stock of a corporation is taxable to the company in the town where it keeps its principal business office.16

Ch. J. Marshall says expressly, in concluding the opinion in that case, that the limitation there imposed upon the power of the states to tax the Bank of the United States, "does not extend to a tax paid by the real property of the bank, in common with the other real property within the state, nor to a tax imposed on the interest which the citizens of Maryland may hold in this institution, in common with other property of the same description throughout the state."

Under this exception it was supposed that shareholders in the United States Bank were liable to taxation by the several states in common with other bankstock owners. But it has been since held, that the owners of United States government stock were not liable to taxation upon that stock. Weston v. The City of Charleston, 2 Peters, 449.

The distinction, however, between a special tax upon a corporation, its property, or even its capital, and a tax upon the income of shareholders derived from the stock, is a broad and obvious one, and would seem to mark the limit of exemptions of the property of corporations from taxation, without undue abridgment of legislative authority and of the essential elements of state sovereignty. But the cases already referred to show, that the right of legislative exemption has been carried further, in some cases, and such seem to be the decisions of the national tribunal, in the last resort. Gordon v. The Appeal Tax Court, 3 Howard, 133.

It would appear to be a very obvious necessity of the state, as well as of the national sovereignty, that the right to levy a tax upon income should exist, and remain perpetual and inviolable. Hence upon principle, it would seem, that the opinion of Thompson, J., in Weston v. The City of Charleston, in which he maintained, that the tax upon the income of the owner of United States stocks, was valid, and constitutional, and that of Catron, J., in State Bank of Ohio v. Knoop, sustained by the decisions of the state courts, then under consideration, and the opinion of Parker, Chief Justice, in Brewster v. Hough, 10 N. H. R. 138, maintaining the want of power, in a state legislature, to grant a perpetual ex

16 Mohawk and Hudson Railw. v. Clute, 4 Paige, 384. Where a question arises in which of two or more jurisdictions a party is taxable, he will be allowed to maintain a bill of interpleader against them, to determine the question. Thompson v. Ebetts, 1 Hopkins, Ch. 272. See also Bank of Utica v. Utica, 4 Paige, 399. The dividends of passenger railway companies are liable to city taxes. Railw. Company v. Philadelphia, 49 Penn. St. 251. And in Cornwell v. Town of Connersville, 15 Indiana R. 150, it was held that a corporation can be taxed, in the place where such corporation is located, only upon its corporate property as distinguished from the interests of the several stockholders, which were taxable in those places where they respectively resided. And see McKeen v. County of Northampton, 49 Penn. St. 519; Whitesell v. Same, Ib. 526. * 527

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6. But the owners of stock in railway companies are liable to taxation upon it, without reference to any tax imposed upon the company. And upon this ground it was decided that the company were not liable to taxation upon the track, or stations, unless specially so provided by statute, because this would be * virtually double taxation.17 The owner of stock is liable to emption from taxation, was the sounder view of the law. And as we have elsewhere said, we should not be surprised to find hereafter this whole subject of the right of a state legislature, to exempt corporations, by their charter, from taxation, brought in question, or, at all events, limited to exemption from special taxation. But the law, at present, is probably otherwise.

It seems, too, that upon principle, an exemption of this character is not an essential franchise of the corporation, and is therefore necessarily temporary in its nature, as much so as the grant of a power to regulate its own police, which could confessedly, at any time, be resumed by the state. Our views in regard to the distinction between the essential franchises of a corporation, and those which are merely incidental, the former of which are inviolable, even by act of legislation, and the latter merely temporary, and necessarily subject to the will of the legislature, are sufficiently explained in the opinion, in Thorpe v. The Rutland & Burlington Railw., Post, § 232. In New Jersey, it has been held that a legislative grant of corporate franchises, privileges, and immunities must be construed in strict accordance with the objects and purposes intended. Any right, power, or privilege not expressly granted or necessarily implied, is understood to be excluded. If a corporation, created for a specific purpose and exempted from taxation, invest its funds in property to be used for speculation or a direct profit, and not for the specific purposes contemplated by their charter and the objects pretended by the corporators, such property, real or personal, is liable to taxation, although the ultimate appropriation of such profits may be to the object specified. The means employed must be consistent with and necessary to the attainment of the proposed object. State v. City of Elizabeth, 4 Dutcher, 103. See State Treasurer v. Somerville & Eastern Railw., 4 Dutcher, 21.

17 Bangor and Piscataqua Railw. v. Harris, 21 Maine R. 533. But in Cumberland Marine Railw. Co. v. Portland, 37 Maine R. 444, this case is said to have been decided contrary to Rev. Stat. 1838, which expressly makes “improved lands taxable," sed quære. And in other states it is held the state may lawfully tax both the stock and the road, as a fixture, or tax one when the other is exempted, by parity of reason. But see cases under note (18), which seem to take a different view. Illinois Central Railw. v. County of McLean, 17 Ill. R. 291, 296; Philadelphia, Wilmington, and Balt. Railw. v. Bayless, 2 Gill, 355. In McKeen v. County of Northampton, 49 Penn. St. 519, it is held that the taxing power, resting upon the mutual duties between state and citizen of protection and support, and extending over all the persons lawfully within the territory, and all the property that either followed such persons or fell locally within the territorial limits of the state, was rightfully exercised over manufac

taxation, whether the corporation be in the state of his residence or not, and even where it is taxed in another state.18 And where one becomes himself the lessee of the works of a company, and is liable to taxation upon its property, in the place of his residence, he is also liable to be taxed, in the same place, for the stock he owns in the same company.19 Where a railway is required to pay into the state treasury a certain sum annually, from its "income," this is to be understood as its net income of that year, and where, in any year the net income is not sufficient to pay that sum, the company are not obliged to make up the deficiency, from the excess of other years.20

7. Under the general laws of different states, by which real estate is made liable to taxation, railways have not generally been held liable to taxation as a fixture, its stock being liable in the hands of the shareholders. But there are some exceptions to this practice.

8. In Pennsylvania, in Lehigh Navigation Co. v. Northampton County,21 it was held, that the toll-houses and offices of a canal company, are such a necessary incident of the corporation and its functions, that they cannot be assessed and taxed as separate real estate. And in a later case,22 it was held, that such property as is appurtenant and indispensable to the construction and operation of a railway, as water-stations and depots, and probably offices, and oil-houses, and car and engine-houses, and all such erections as may fairly be regarded as necessary to the con

turing stock owned by a citizen of Pennsylvania, though the corporation was a foreign one. And see also Whitesell v. County of Northampton, 49 Penn. St. 526: Cornwell v. Connersville, 15 Indiana R. 150.

18 State v. Branin, 3 Zabriskie, 484; Easton Bridge v. Northampton, 9 Barr, 415; State v. Bently, 3 Zabriskie, 532; State v. Danser, Id. 552; Great Barrington v. Berkshire County, 16 Pick. 572. But see Gordon v. Baltimore, 5 Gill, 231, 236, and 12 Gill & J. 117.

19 Stein v. Mobile, 24 Alabama R. 591; Providence Bank v. Billings, 4 Peters (U. S.), 514; State v. Tunis, 3 Zabriskie, 546. In this case it is held, the shareholder is liable to taxation upon his shares, according to their fair market value, and not at the nominal par value.

20 Opinion of the judges in the matter of the Western Railw., 5 Met. 596. 21 8 Watts & Serg. 334.

22 Railroad v. Berks County, et vice versa, 6 Barr, 70; s. c. 2 Am. Railw. C. 306.

venient use of the road, are to be held exempt from taxation, as forming a part of the incorporeal estate of the corporation.23

*

9. But it was also said in this last case,24 that those erections, which are only indispensable to the making of profits, such as warehouses, coal-lots, coal-shutes, machine-shops, wood-yards, and what does not form part of the road, are liable to taxation.

10. In a recent case in Vermont 25 it was held, that where the charter of a railway exempted its property perpetually from taxation, this did not extend to lands and tenements which the company had acquired for convenience and which were without the limits of the six rods, which, by their charter, they were allowed to take compulsorily, and were in the occupancy of tenants or employees of the company.26

11. Where a railway company by the express provisions of its charter are liable to a defined tax upon all its capital paid in, and upon all its loans for the purpose of constructing the road, it was held that $300,000 of the capital stock which was given as a bonus to the original purchasers of the road of the state, $183,000 discount, or less, on the sale of the bonds of the company, and near half a million dollars of the bonds of the company exchanged for the bonds of another company, but which had never been used by the company, were all liable to taxation. The first, as forming a portion of the capital stock of the company, and on the ground that it made no difference that the money had never been actually paid in, since the shares had been given out upon consideration, and were thus beyond the control of

23 See Carbon Iron Co. v. Carbon County, 39 Penn. St. 251.

24 Railroad v. Berks County, supra.

25 Vermont Central Railw. v. Burlington, 28 Vt. R. 193.

26 And in Carbon Iron Co. v. Carbon County, 39 Penn. St. 251, it was held that corporations are not exempt from taxation as such, but only the public works held by them as public works, with the necessary appurtenances. Lands held by corporations for private purposes are taxable as the lands of individuals are, unless expressly exempted. The tax for state purposes, payable at the auditorgeneral's office, is a tax for the corporate franchises, and is not intended as an exemption from ordinary taxation. Ib. In Jefferson, &c. Bank v. Skelly, 1 Black (U. S.), 436, it is held by the Supreme Court of the United States that a state is not to be deemed to have abridged or surrendered the right of taxation of a corporation, unless such abridgment or surrender be expressed in the charter in terms too clear for mistake.