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dent stockholder in a domestic corporation | city, the treasurer of the state, and the by the imposition, under Md. Code Pub. Gen. transportation company. The relief prayed Laws, art. 81, as a condition of such ownerwas based on averments that the laws of ship, of a personal liability for the taxes upon his stock, to be enforced by a personal Maryland under which the taxes were levied action brought against him by the corpora- were repugnant to the state and Federal tion to recover the amount of the tax which Constitutions, upon grounds specified in the it is compelled to pay on his behalf. bill. A decree was entered sustaining gen2.

defendants, and dismissing the bill. This was affirmed by the court of appeals of Maryland. 96 Md. 310, 53 Atl. 942.

Messrs. William P. Maulsby and Edwin G. Baetjer for plaintiff in error. Messrs. Albert C. Ritchie and W. Cabell Bruce for defendants in error.

Lack of any provision for notice to a non-eral demurrers, interposed by the various resident stockholder in a domestic corporation of the assessment of taxes on his stock, or for opportunity for contest by him as to the correctness of the valuation, does not render invalid, as denying due process of law, so much of Md. Code Pub. Gen. Laws, art. 81, as imposes upon him, as a condition of such ownership, a personal liability for the taxes upon his stock, to be enforced by a personal action brought against him by the corporation to recover the amount of the tax which it is com- Mr. Justice White, after making the pelled to pay on his behalf, since that foregoing statement, delivered the opinion statute is construed by the state courts as of the court: constituting the corporation in legal effect the agent of the stockholders, to receive notice and to represent them in proceedings for

the correction of the assessment.

[No. 86.]

Argued December 8, 9, 1904. Decided ruary 20, 1905.

The subjects and methods of taxation of property within the state of Maryland are regulated generally by article 81 of the Code of Public General Laws of that state.

A tax for state purposes and one for local purposes is laid upon all property. In each Feb-year the officers of domestic corporations are

N ERROR to the Court of Appeals of the State of Maryland to review a judgment which affirmed a judgment of the Circuit Court of Baltimore City, in that State, sustaining demurrers to, and dismissing, a bill to enjoin the collection of a tax on a nonresident stockholder in a domestic corporation. Affirmed.

required to furnish information respecting the value of the shares of stock in such corporations to the state tax commissioner, who determines the aggregate value thereof, deducts therefrom the assessed value of the real estate owned by the corporation, and the quotient, obtained by dividing the remainder by the total number of shares of stock, is treated as the taxable value of each share, subject, however, to correction

See same case below, 96 Md. 310, 53 Atl. on appeal to the state comptroller and state 942.

Statement by Mr. Justice White: The New York & Baltimore Transportation Line was chartered in 1847 by the general assembly of Maryland, and it still exists by virtue of an extension in 1876 of its charter. At all times the corporation has maintained its principal office in the city of Baltimore.

James C. Corry, a resident and citizen of Pennsylvania, acquired 150 shares of the stock of the transportation line, having a face value of $20 per share.

The 150 shares standing in Corry's name, as stated, were assessed for the years 1899 and 1900 for state and the municipal taxes of the city of Baltimore, the total taxes being $43.27 for the year 1899 and $36.49 for the year 1900. Conformably to the laws of Maryland, payment of said taxes was demanded of the transportation company. To restrain compliance with this demand, Corry commenced the present suit, making defendants to the bill of complaint the mayor and council of Baltimore, the treasurer of the

treasurer after notice to the corporation of the valuation fixed by the tax commissioner. The rate of the state tax is determined by the general assembly, and that for municipal purposes in Baltimore is fixed by the mayor and council of that city. The levy on property in Baltimore, both for state and city purposes, is made by the municipal authorities. In case of stock in Maryland corporations owned by nonresidents the statutes declare that the situs of such stock, for the purpose of taxation, shall be at the principal office of the corporation in Maryland, and such shares are there assessed at their value to the owners. The statutes undoubtedly impose upon a Maryland corporation the duty of paying for and on account of the owners the taxes assessed in respect of the shares, and compel such payment without reference to the dividends, giving to the corporation a lien upon the shares of stock, and entitling the corporation, when it pays the taxes, to proceed by a personal action to recover the amount paid. Dugan v. Baltimore, 1 Gill & J. 499, 502; Baltimore v. Howard, 6 Harr. & J. 383, 394; American

Coal Co. v. Allegany County, 59 Md. 197; | porations were created by the state, and were Hull v. Southern Development Co. 89 Md. 8, 11, 42 Atl. 943.

The Maryland decisions have also settled that the tax is on the stockholder personalally, because of his ownership of the stock, and is not on the stock in rcm or on the corporation. The Maryland doctrine on the subject is shown by the opinion of the court of appeals of Maryland in United States Electric Power & Light. Co. v. State, 79 Md. 63, 28 Atl. 768, where the court said (p. 70, Atl. p. 768):

"But the tax is not a tax upon the stock or upon the corporation, but upon the owners of the shares of stock, though the officers of the corporation are made the agents of the state for the collection of the state tax. It is not material what assets of other property make up the value of the shares. Those shares are property, and, under existing laws, are taxable property. They belong to the stockholders respectively and individually, and when, for the sake of convenience in collecting the tax thereon, the corporation pays the state tax upon these shares into the state treasury, it pays the tax, not upon the company's own property, nor for the company, but upon the property of each stockholder, and for each stockholder respectively, by whom the company is entitled to be reimbursed. Hence, when the owner of the shares is taxed on account of his ownership, and the tax is paid for him by the company, the tax is not levied upon or collected from the corporation at all."

See, also, Hull v. Southern Development Co. 89 Md. 8, 11, 4 Atl. 943.

Substantially similar laws for the taxing of stock in Maryland corporations were in force in Maryland at the time of the incorporation of the transportation company, and have been in force ever since.

All the claims of Federal right here as serted are embraced in and will be disposed of by passing on two propositions, which we shall consider separately.

The first proposition is that, as the authority of the state of Maryland to tax is limited by the effect of the 14th Amendment to the Constitution of the United States to persons and property within the jurisdiction of the state, and as the tax in question was not in rem against the stock, but was in personam against the owner, the power attempted to be exercised, as it imposed a personal liability, was wanting in due process of law.

The court of appeals of Maryland disposed of this contention by deciding that it was in the power of the state of Maryland to fix, for the purposes of taxation, the situs of stock in domestic corporations held by a nonresident. It also held that, as such cor

subject to its regulating authority, it was within its power to impose, as a condition to the right to acquire stock in such corporations, the duty of paying the taxes assessed on the stock, and, moreover, that the state might compel the corporation to pay such taxes on behalf of the stockholder, and confer upon the corporation a right of action to obtain reimbursement from a stockholder when the payment was made. The court, in its opinion in this case, did not expressly elaborate the foregoing considerations, but contented itself by referring to previous decisions by it made. Among the cases so referred to was the case of American Coal Co. v. Allegany County, 59 Md. 185, 193, where it was said:

"The appellant is a Maryland corporation, deriving its existence and all its powers and franchises from this state. And such being the case, it is settled that the sovereign power of taxation extends to everything which exists by the authority of the state, or which is introduced by its permission, except where such power is expressly, or by necessary implication, excluded. The separate shares of the capital stock of the corporation are authorized to be issued by the charter derived from the state, and are subject to its control in respect to the right of taxation, and every person taking such shares, whether resident or nonresident of the state, must take them subject to such state power and jurisdiction over them. Hence, the state may give the shares of stock held by individual stockholders a special or particular situs for purposes of taxation, and may provide special modes for the collection of the tax levied thereon."

That it was rightly determined that it was within the power of the state to fix, for the purposes of taxation, the situs of stock in a domestic corporation, whether held by residents or nonresidents, is so conclusively settled by the prior adjudications of this court that the subject is not open for discussion. Indeed, it was conceded in the argument at bar that no question was made on this subject. The whole contention is that, albeit the situs of the stock was in the state of Maryland for the purposes of taxation, it was nevertheless beyond the power of the state to personally tax the nonresident owner for and on account of the ownership of the stock, and to compel the corporation to pay, and confer upon it the right to proceed by a personal action against the stockholder in case the corporation did pay. Reiterated in various forms of expression, the argument is this: that as the situs of the stock within the state was the sole source of the jurisdiction of the state to tax, the taxation must be confined to an assessment in

rem against the stock, with a remedy for en- | scription or charter contract of the subforcement confined to the sale of the thing|ject." taxed, and hence without the right to compel the corporation to pay, or to give it, when it did pay, a personal action against the owner.

But these contentions are also in effect long since foreclosed by decisions of this court. First Nat. Bank v. Kentucky, 9 Wall. 353, 19 L. ed. 701; Tappan v. Merchants' Nat. Bank, 19 Wall. 490, 22 L. ed. 189. In First Nat. Bank v. Kentucky (pp. 361, 362, L. ed. p. 703,) it was said: "If the state cannot require of the bank to pay the tax on the shares of its stock, it must be because the Constitution of the United States, or some act of Congress, forbids it.

"If the state of Kentucky had a claim against a stockholder of the bank who was a nonresident of the state, it could undoubt edly collect the claim by legal proceeding, in which the bank could be attached or garnisheed, and made to pay the debt out of the means of its shareholders under its control. This is, in effect, what the law of Kentucky does in regard to the tax of the state on the bank shares."

In substance, the contention is that the conceded principle has no application to taxation by a state of shares of stock in a corporation created by it, because, by the Constitution of the United States, the states are limited as to taxation to persons and things within their jurisdiction, and may not, therefore, impose upon a nonresident, by reason of his property within the state, a personal obligation to pay a tax. By the operation, therefore, of the Constitution of the United States, it is argued the states are restrained from aflixing, as a condition to the ownership of stock in their domestic corporations by nonresidents, a personal liability for taxes upon such stock, since the right of the nonresident to own property in the respective states is protected by the Constitution of the United States, and may not be impaired by subjecting such ownership to a personal liability for taxation. But the contention takes for granted the very issue involved. The principle upheld by the rulings of this court to which we have referred, concerning the taxation by the states of stock in national banks, is that the sovereignty which creates a corporation has the

And it was further observed (p. 363, L. incidental right to impose reasonable regulaed. p. 704):

"The mode under consideration is the one which Congress itself has adopted in collecting its tax on dividends, and on the income arising from bonds of corporations. It is the only mode which, certainly and without loss, secures the payment of the tax on all the shares, resident or nonresident; and, as we have already stated, it is the mode which experience has justified in the New England states as the most convenient and proper, in regard to the numerous wealthy corporations of those states." But it is insisted that these rulings concerned taxation by the states of the shares of stock in national banks, under the provisions of the national banking act, and are therefore not applicable. The contention is thus expressed:

"This act forms a part of the charter of the national banks, and provides for this liability. Charters can and frequently do undoubtedly provide for a personal liability of stockholders in various forms; the liability to creditors of the corporation is one of the common illustrations, and the liability may be thus imposed for a tax as well as for any other debt or obligation. The court therefore held [in the Tappan Case, page 500] that under the national banking act the shareholders were liable, because that act 'made it the law of the property.' The liability arose, not out of the taxing power of the sovereign, but from the sub

tions concerning the ownership of stock therein, and that a regulation establishing the situs of stock for the purpose of taxation, and compelling the corporation to pay the tax on behalf of the shareholder, is not unreasonable regulation. Applying this principle, it follows that a regulation of that character, prescribed by a state, in creating a corporation, is not an exercise of the taxing power of the state over persons and things not subject to its jurisdiction. And we think, moreover, that the authority so possessed by the state carries with it the power to endow the corporation with a right of recovery against the stockholder for the tax which it may have paid on his behalf. Certainly, the exercise of such a power is no broader than the well-recognized right of a state to affix to the holding of stock in a domestic corporation a liability on a nonresident as well as a resident stockholder in personam, in favor of the ordinary creditors of the corporation. Flash v. Conn, 109 U. S. 371, 27 L. ed. 966, 3 Sup. Ct. Rep. 263; Whitman v. National Bank, 176 U. S. 559, 44 L. ed. 587, 20 Sup. Ct. Rep. 477; Nashua Sav. Bank v. AngloAmerican Land Mortg. & A. Co. 189 U. S. 221, 230, 47 L. ed. 782, 786, 23 Sup. Ct. Rep. 517, and cases cited; Platt v. Wilmot, 193 U. S. 602, 612, 48 L. ed. 809, 813, 24 Sup. Ct. Rep. 542.

Whilst it is true that the liability of the nonresident stockholder in the case before

us, as enforced by the laws of Maryland, | appeal, it would be simply impossible to fix was not directly expressed in the charter of annually a valuation on shares of capital. the corporation, it nevertheless existed in The policy of the law is to treat the corpothe general laws of the state at the time the ration not merely as tax collector after the corporation was created, and, be this as it tax has been levied, but to deal with it as may, certainly existed at the time of the ex- the representative of the shareholders in retension of the charter. This is particularly spect to the assessment of the shares, and the case, since the Constitution of Mary- when notice has been given to the corporaland, for many years prior to the extension tion, and it has the right to be heard on apof the charter of the transportation com- peal, notice is thereby given to the sharepany contained the reserved right to alter, holders, and they are accorded a hearing. amend, and repeal. From all the foregoing This is so in every instance where the asit resulted that the provisions of the gen- sessment is made by the state tax commiseral laws and of the Constitution of Mary- sioner, because the revenue laws throughout land were as much a part of the charter as if treat the corporation as the representative expressly embodied therein. Nor can this of the shareholders, and as no official other conclusion be escaped by the contention that, than the tax commissioner has power to asas the provisions of the statute imposing on sess capital stock, no notice other than the nonresident stockholders in domestic corpo- one given by him is necessary; and, as no rations a liability for taxes on their stock notice other than the one given by him is violated the Constitution of the United necessary, a notice by the municipality to States, therfore such unconstitutional re- each shareholder is not requisite." quirements cannot be treated as having been If a tax was expressly imposed upon the incorporated in the charter, for this argu- corporation, the stockholders, though interment amounts only to reasserting the erro-ested in the preservation of the assets of the neous proposition which we have already passed upon.

Having disposed of the first proposition we come to consider the second, which is that the legislation of the state of Maryland is repugnant to the Constitution of the United States, because of the omission to directly require the giving of notice to the nonresident stockholder of assessments on his stock, and opportunity for contest by him as to the correctness of the valuation fixed by the taxing officers. The highest court of the state of Maryland has construed the statutory provisions in question as, in legal effect, constituting the corporation the agent of the stockholders to receive notice and to represent them in proceedings for the correction of an assessment. Thus, in James Clark Distilling Co. v. Cumberland, 95 Md. 468, 52 Atl. 661, the court said (p. 475, Atl. p. 663):

"A notice to each shareholder is unnecessary, because the corporation represents the shareholders. The officers of the corporation are required by the Code to make an annual return to the state tax commissioner, and upon the information disclosed by that return the valuation of the capital stock is placed each year. If the valuation is not satisfactory, an appeal may be taken by the corporation for the shareholders. An opportunity is thus afforded for the shareholders to be heard through the corporation, and that gratifies all the requirements of law. If each and every shareholder in the great number of companies throughout the state had a right to insist upon a notice before an assessment of his shares could be made, and if each were given a separate right of

corporation, could not be heard to object that the statute did not provide for notice to them of the making of the assessment. The condition attached by the Maryland law to the acquisition of stock in its domestic corporations, that the stockholders, for the purpose of notice of the assessment of the stock and proceedings for the correction of the valuation thereof, shall be represented by the corporation, is not, in our opinion. an arbitrary and unreasonable one, when it is borne in mind that the corporation, through its officers, is, by the voluntary act of the stockholders, constituted their agent, and vested with the control and management of all the corporate property,—that which gives value to the shares of stock, and in respect to which the taxes are but mere incidents in the conduct of the business of the corporation. The possibility that the state taxing officials may abuse their power, and fix an arbitrary and unjust valuation of the shares, and that the officers of the corporation may be recreant in the performance of the duty to contest such assessments, does not militate against the existence of does not militate against the existence of the power to require the numerous stockholders of a corporation chartered by the state, particularly those resident without the state, to be represented in proceedings before the taxing officials through the agency of the corporation.

As we conclude that the legislation of the state of Maryland in question does not contravene the due process clause of the 14th Amendment to to the the Constitution of the United States, the judgment of the Court of Appeals of Maryland is affirmed.

(197 U. S. 1)

NORTHERN PACIFIC RAILWAY COM-| ber of persons, to quiet title, remove clouds, PANY, Plff. in Err.,

v.

and recover possession of certain parcels of real estate, alleged to be portions of its

WILLIAM S. ELY, Marvin Arnold, Julia right of way in that county.

Arnold et al. (No. 102.)

The complaint alleged that plaintiff was the owner and entitled to a strip of land,

NORTHERN PACIFIC RAILWAY COM- 400 feet wide, on which defendants had

PANY, Plff. in Err.,

v.

WILLIAM S. ELY et al. (No. 88.)

Error to state court formality of writ of error-description of judgment-adverse possession of railroad right of way.

1. A writ of error to a state court, which incorrectly states the date of the judgment in the court below, may be dismissed without prejudice to proceedings under a second writ of error, which correctly describes the judg

ment.

2. Title to the right of way granted by Con

gress to the Northern Pacific Railroad Company for the construction of its road cannot be acquired by adverse possession for private use under a state statute of limitations ex

cept so far as the land so adversely held was

so situated that a conveyance from the gran

tee company or its successor would have been confirmed by the act of April 28, 1904, validating such conveyances of the right of way as should not diminish it to a less width than 100 feet on each side of the center of the

main track.

[Nos. 102, 88.]

wrongfully entered. Some of the defendants were defaulted. Separate answers were interposed by others, separate trials had, separate verdicts rendered, and bill of exceptions granted. As to one defendant, the case was submitted to the court for trial, and findings

of fact and conclusions of law were made and filed.

A single decree was rendered in favor of contesting defendants, from which the railway company appealed to the supreme court of the state, where the decree was affirmed. 25 Wash. 384, 54 L. R. A. 526, 87 Am. St. Rep. 766, 65 Pac. 555.

The opinion of that court was filed June 29, 1901, and judgment of affirmance entered July 30, 1901. On May 4, 1903, the case of Northern P. R. Co. v. Townsend, 190 U. S. 267, 47 L. ed. 1044, 23 Sup. Ct. Rep. 671, was decided. May 28, 1903, the railway company was allowed a writ of error from this court, the judgment of the state supreme court being described as entered June 29, 1901. The case was docketed July 23, 1903, and is now numbered 88. June 30 a second writ of error was taken out and filed below, the papers correctly describing the

Submitted December 15, 1904. Decided Feb- judgment as entered July 30, 1901, and was

ruary 20, 1905.

docketed here August 13, 1903, and is now numbered 102.

WO WRITS OF ERROR to the Supreme Plaintiff moved for leave to amend the Court of the State of Washington to re-record in No. 88 so that the date of the judgview a judgment which affirmed a judgment ment might be correctly given, and that of the Superior Court of Spokane County, in thereupon No. 102 be dismissed, or, in the that State, in favor of defendants in a suit alternative, that No. 88 be dismissed. We to quiet title, remove clouds, and recover grant the latter application, and dismiss No. possession of certain real property alleged 88 without prejudice to proceeding in No. to be portions of a railroad right of way. 102. Wheeler v. Harris, 13 Wall. 51, 20 L. Writ of error in No. 88 dismissed; judged. 531; Silsby v. Foote, 20 How. 290, 15 L. ment reversed in No. 102, and cause remanded. 822. ed for further proceedings.

See same case below, 25 Wash. 384, 54 L.
R. A. 526, 87 Am. St. Rep. 766, 65 Pac. 555.
The facts are stated in the opinion.
Messrs. C. W. Bunn and James B.
Kerr for plaintiff in error.

Messrs. Harold Preston, William E. Cullen, F. T. Post, and Samuel R. Stern for defendants in error.

The facts on which the state supreme court proceeded are thus stated:

"It may be conceded, we think, that the right of way which embraces the land in dispute was granted to the Northern Pacific Railroad Company by act of Congress in 1864, and that, to the title to the right of way thus granted to the Northern Pacific Railroad Company, the Northern Pacific Railway Company has succeeded. It may

Mr. Chief Justice Fuller delivered the also be conceded, for the purposes of this opinion of the court:

This was a suit brought by the Northern Pacific Railway Company, successor to the Northern Pacific Railroad Company, in the superior court of the county of Spokane, state of Washington, against a large num

case, that the Northern Pacific Railway Company has complied with all the terms. and provisions of the act of Congress aforesaid, and has constructed its railroad through the whole of the line of road between the points named in the granting act;

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