taxation. The matter is statutory, and there is but little uniformity in the statutes or the decisions of the various states upon the subject of corporate taxation.

§ 165. Taxation of franchises. It is not usual to separate the primary franchise-the right to be a corporation and exercise corporate powers-from the secondary franchises, such as the right to occupy the streets by a street railway, for the purpose of taxation. Some courts seem to think that, since the state charges a very small fee or none at all for incorporation, the primary franchise has no value (16); the proper view, however, seems to be that its value is whatever it adds to the convenience, efficacy, and safety of conducting the business by the corporate form of organization over other forms; in other words, what would those who have it give for it rather than do without it (17). Its value is difficult to estimate, and many rules for ascertaining its value have been suggested. Without attempting to separate the primary and secondary franchises, these two methods of valuation have been approved: (1) Find the market value of all the shares and bonds of the corporation; from this subtract the assessed value of all the real and personal property, and the balance will be the value of the franchise. (2) Ascertain the total net earnings (usually the average for a period of years); capitalize these at the average rate of interest upon short loans; from the total amount so found, subtract the assessed value of the real and personal property, and the balance represents the value of the fran

(16) Detroit Citizens Ry. v. Common Council, 125 Mich. 673. (17) Bank of California v. San Francisco, 142 Cal. 276.

chise; both of these in fact are based upon the earning capacity of the capital of the corporation, and is the business man's estimate of its value (18).

The situs of the secondary franchise, such as operating a street railroad, for purposes of taxation, is where the line is operated; the same is true as to a railroad corporation. The situs of the primary franchise is usually considered as being at the principal office of the corpora tion; it undoubtedly can be, however, considered as having a situs wherever the corporation does business, in proportion to the business done; and it is usually so considered when business is done in two or more states.

§ 166. Taxation of property. The corporate property of whatever kind is subject to taxation, the same as that of individuals. There is a tendency now to consider the property as a unit devoted to a special purpose, and to have all of it assessed by one state board instead of by local assessors. After it is assessed by the state board, the apportionment may be, and frequently is, made among the various local subdivisions of the state, in proportion to the business done in these districts, or mileage therein, in the case of railroad or telegraph companies, etc. In administering taxing laws it is not usual to consider that the term "property, real and personal," includes "franchises" unless expressly so provided, yet the legislature may so direct, and provide a method of valuation (19). And where the statute required all property to be taxed at its true value in money, and directed the assessors, in

(18) Spring Valley W. W. v. Schottler, 62 Cal. 69. (19) People v. State Board, 174 N. Y. 417.

determining the value of express, telegraph, and telephone companies, "to be guided by the value of said property as determined by the value of their entire capital stock," such proportion of the total value of the capital stock of an express company could be considered as located in Ohio, as the value of the tangible property in Ohio bore to the total value of all the tangible property of the company, wherever located (20). Patents and copyrights are not the subjects of state taxation, but good will may be taxed where the corporation does business. Patented articles and copyrighted books, etc., are taxable as property. The states cannot tax the franchises of a national corporation without the consent of Congress, nor can they tax any national government agency.

§ 167. Taxation of gross or net earnings. These may be the basis of taxation by the state in the case of corporations not engaged in interstate commerce, or upon such earnings as are not derived from such commerce. But the states cannot directly tax corporations upon the monthly or yearly earnings derived from such commerce, though of course they can tax them upon any money or property found actually in their possession on the assessment day, from whatever source derived; this is a tax on property and not earnings. It has been held also that corporations may be taxed upon their capital stock, and the tax rate may be graded according to the gross or net earnings, or dividends, whether they are partly derived from interstate commerce or not; this is on the theory that the

(20) Adams Ex. Co. v. Ohio, 165 U. S. 194, 166 U. S. 185.

tax is on the property and not on the earnings for any period (21).

§ 168. Taxation of shares. These are taxable, although the property or capital stock is taxed, and whether this is at its actual or at its face value. In several states this is held not to be double taxation (22), though others hold otherwise. The situs of shares for the purposes of taxation is usually the domicile of the owner, but the state may make their situs to be that of the domicile of the corporation, and tax them there, even though their owner lives in another state and is taxed there on the same shares (23). It has been held that alien owners may be taxed higher than resident owners, but this is not the case if the owner is a citizen of the United States residing in another state.

§ 169. National taxation of state corporations. The national government has the same power to tax state corporations and their property, as it has individuals and their property. The Federal taxing power can be used for the purpose of regulation as well as raising revenue (24).

§ 170. Repeal and forfeiture. These have already been mentioned under dissolution. If there is no power reserved to the state legislature, it cannot repeal any corporate charter, although Parliament and possibly Congress may do so; if the power to repeal is reserved without qualification, it may be exercised at any time, with or

(21) Maine v. Grand Trunk Ry. Co., 142 U. S. 217.

(22) Thrall v. Guiney, 141 Mich. 392.

(23) Tappan v. Merchant's Bank, 19 Wall. 490,

(24) Veazie Bank v. Fenno, 8 Wall. 533.

without giving any reason for so doing. Vested property rights are not destroyed however by such repeal (25); if the power to repeal is reserved upon the happening of some condition, some cases hold that there must be a judicial determination that the condition has happened, before the legislature can act; other cases hold that the matter is wholly within the power of the legislature to determine. The courts are not altogether in accord as to the effect of the repeal of general corporation lawswhether they affect the existence of corporations formed under them or not. If the power to repeal is reserved, the effect of such repeal seems to be merely a question of legislative intent, with the presumption that existing corporations are not affected, unless clearly so intended.

No reserve power is necessary for forfeiting corporate franchises for abuse or non-use; this power is implied from the nature of a franchise, and can be enforced only in the courts after a proper judicial determination of the facts. A court of law alone has the power to dissolve for breach of duty, and generally only on the complaint of the state by the attorney-general.

§ 171. Amendment. Since a charter is a contract, the general rule here is that it can be amended only by consent of both parties, that is, the state and the corporation; and further, since there is also contained in the charter a contract between the corporation and each member, the corporation cannot accept an amendment unless each member consents; and this is the rule in this country concerning material amendments, when the state has not

(25) People v. O'Brien, 111 N. Y. 1.