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Mr. Maxwell's Argument for the Express Companies.

such of their tangible property as was found within the State of Ohio, and on their moneys and credits in the State, but to treat the companies as owning dividend producing plants, whose value is represented by the market value of their shares, and to assign a portion of that value to the State of Ohio, as being property subject to taxation in that State. The basis of the apportionment made by the board to Ohio is not disclosed; it was evidently hap-hazard and arbitrary ; but that is not material now. The point is that the state board deliberately and intentionally followed a certain rule and principle of assessment, being the rule prescribed by the statute of the State, as construed by its supreme court, and the validity of that rule is therefore raised by the record, and presents a Federal question.

II. If the Nichols law justifies the assessments complained of, it contravenes the interstate commerce clause of the Federal Constitution ; because the assessments, while purporting to be upon the property of the plaintiffs within the State, are, in fact, levied upon the plaintiffs' business (which is largely interstate commerce), by placing a fictitious and artificial value upon their property.

Under the interstate commerce clause of the Federal Constitution it is not competent for a State to tax a non-resident person or corporation engaged in interstate commerce, upon their occupation or business. The State's power of taxation, in such cases, is limited to a tax upon such of the property of the

person or corporation, as is found within the taxing jurisdiction of the State, and that property must be taxed without discrimination. It is just as much a violation of this rule of the Federal Constitution to levy a tax ostensibly on property, but really on business, by ascribing an artificial or fictitious value to the property, as to make the levy directly and in terms upon business.

III. The rule for the assessment of express companies, prescribed by the Nichols law, discriminates against the property of express, telegraph and telephone companies, on account of its mere ownership, as compared with all other property in the State, and therefore denies to those companies the equal

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protection of the law, in contravention of the Fourteenth Amendment of the Federal Constitution.

I do not deny the power of the legislature to classify property. But the power to classify is not arbitrary. It must be classification in fact, and not discrimination. Property cannot be classified in respect to mere ownership. The same kind and character of property devoted to the same uses, within the same taxing districts, cannot be taxed by one rule against one class of persons and by a different rule against another class. But that is precisely what the Nichols law attempts to do.

The classification of railroad and telegraph property as unit property is not a classification according to ownership, but according to intrinsic differences in the character, use and situation of such property, and the difficulty attending the ascertainment of its value otherwise than as a unit. These considerations make the separate classification of such property not merely convenient, but necessary, as well as natural and reasonable. But the property owned by express companies within the State of Ohio is not different in its character, uses or situations from other similar property within the State, nor is there any greater difficulty in ascertaining its value for purposes of taxation. .

IV. The Nichols law is in contravention of the Fourteenth Amendment, for the further reason that it taxes property not within the taxing jurisdiction of the State of Ohio.

It has been held more than once in this court that the power of a State to tax the property of nonresidents is limited to such of their property as is found within the State; in other words, that a State cannot tax lands lying beyond its borders, nor personal property domiciled in another State. Hays v. Pacific Steamship Co., 17 How. 596, 599 ; Railroad Co. v. Jackson, 7 Wall. 262, 267, 268 ; St. Louis v. Ferry Co., 11 Wall. 423, 430, 432; Railroad Co. v. Pennsylvania, 15 Wall. 300; Gloucester Ferry Co. v. Pennsylvania, 114 U. S. 196, 206, 210.

The ground upon wbich this immunity is secured, under the Federal Constitution, has not been clearly stated in all the

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Mr. McDougall's Argument for Appellees.

cases. The earlier ones arose prior to the adoption of the Fourteenth Amendment, but we submit, that it is depriving a person of property without due process of law, in contravention of the Fourteenth Amendment, for a State to tax property not within its jurisdiction.

V. There is no necessary or proper relation between the value of the property of an express company and the value of its capital shares.

VI. If the rule of assessment, applied by the state board against the plaintiffs, contravenes the Federal Constitution, it is immaterial whether that rule is prescribed by the statute, or whether it is adopted, independent of the statute, by the board itself.

Mr. Thomas McDougall for appellees. Mr. F. S. Monnett, Attorney General of the State of Ohio, was on his brief.

I. The constitutionality of this law under the Ohio constitution is settled by the decision of the Ohio Supreme Court. State ex rel. v. Jones, Auditor, 51 Ohio St. 492.

II. The only question raised by appellants which is before this court is whether the law violates the Federal Constitution.

If the law violates the Federal Constitution, then the demurrers were erroneously sustained. If the law does not violate the Federal Constitution, then the only other question raised by the appellants is the difference of opinion between them and the board of appraisers as to the value of their property. The appellants are not entitled to have this court consider any question of difference of opinion as to the value of their property as assessed by the board for taxation merely by asserting that such action violates the Federal Constitution, unless it appears that the law under which the valuation was made does violate that Constitution. These cases are to be heard on demurrer, and if this court decides that the action complained of does not violate the Federal Constitution, it will thereby decide that the bills do not sufficiently allege such violation, that the facts set up in the bills do not show

Mr. McDougall's Argument for Appellees.

such violation; in other words, that facts which would raise a Federal question are not alleged, and that there is no such Federal question in the cases.

III. The act does not deny to the appellants due process of law, nor equal protection of the laws.

The pleadings, together with the law itself, show the following facts with reference to this subject :

1. The law itself states the times of the sessions of the board. The returns made by the companies are the statements of their cases to the boards, and they may appear if they so desire to make oral statement. Upon application, any of the companies affected has the right to appear before the board prior to the determination of the assessment, to be heard on the question of the valuation of its property for taxation. It appears from the pleadings, as a matter of fact, that the companies were present, and were heard in the matter of the valuation of their property for taxation.

2. After the valuation of the property of any company for taxation, and before the certification by the auditor of State of the apportioned valuations to the several counties, the board may, upon the application of any interested person, or on its own motion, correct the assessment.

3. If the board refuses to correct the assessment regarded by the company as erroneous, it may appeal, under section 167, Revised Statutes of Ohio, to a board composed of the governor of the State, the auditor of State, and the attorney general.

4. By section 5848, Revised Statutes of Ohio, the illegal levy and collection of taxes may be enjoined; and further, if compelled to pay the tax, complainants may sue to recover it back.

It cannot be questioned that these provisions and remedies, under the decisions of this court, and of the Ohio Supreme Court, constitute due process and equal protection of the laws. State v. Jones, 51 Ohio St. 492; Davidson v. New Orleans, 96 U. S. 97; State Railroad Tax cases, 92 U. S. 575; McMillen v. Anderson, 95 U. S. 37; Kentucky Railroad Tax cases, 115 U. S. 321; Pittsburgh, Cincinnati &c. Railway v. Backus,

Mr. McDougall’s Argument for Appellees.

154 U. S. 421; Pacific Express Co. v. Seibert, 142 U. S. 339 ; Missouri Railway Co. v. Mackey, 127 U. S. 205.

IV. The law does not violate the Constitution of the United States by interfering with interstate commerce.

The law simply provides a method for the valuation of property for taxation, and the tax laid upon the valuation made is a tax on the property of the companies in Ohio, and is not a tax upon interstate commerce. The details of that method are all directed toward ascertaining the value in money of the property in Ohio. The tax imposed is not a license tax, nor a tax on a business or occupation, nor on transportation through the State, nor upon receipts from business done outside of Ohio, nor upon property outside of Ohio. The tax imposed upon the valuation made under the law is simply a tax on the property of the companies within the State of Ohio. Such a tax is not an interference with interstate commerce in the sense in which such an interference is prohibited by the Federal Constitution. State Tax on Railway Gross Receipts, 15 Wall. 284; Cleveland, Cincinnati &c. Railway v. Backus, 154 U. S. 439, and cases cited.

(a) The property of a corporation may be fairly valued as a unit for purposes of taxation.

This has been decided so often, and so definitely, that it would hardly seem to need additional argument. It is contended by counsel for appellants that the property of the companies included under this law should be valued item by item, and that the aggregate of value of the different items, taken separately, is the value of the property of the companies for taxation. The State of Ohio claims, on the contrary, that the real value of the property of the corporations under discussion cannot be ascertained by simply valuing the items of real and personal property taken separately, and finding the total. The entire property of any one of these corporations as a unit, and used for a specific purpose, and in a certain place, has a value to the corporation, by reason of its unity and the use to which it is put, which is much greater than the value of the mere items of property taken separately.


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