Syllabus.

ADAMS EXPRESS COMPANY v. KENTUCKY.1

APPEAL FROM THE CIRCUIT COURT OF THE UNITED STATES FOR THE DISTRICT OF KENTUCKY.

No. 586. Argued December 11, 14, 1896. - Decided March 15, 1897.

Section 4077 of the compilation of the Kentucky statutes of 1894 provides that each of the enumerated companies or corporations; "every other like company, corporation or association"; and also "every other corporation, company or association having or exercising any special or exclusive privilege or franchise not allowed by law to natural persons, or performing any public service, shall, in addition to the other taxes imposed on it 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 franchise may be exercised"; and in the succeeding sections the words "franchise," "franchises " and " corporate franchise" are used. Held that, taking the whole act together, and in view of the provisions of sections 4078, 4079, 4080 and 4081, it was evident that the word "franchise" was not employed in a technical sense, and that the legislative intention was plain that the entire property, tangible and intangible, of all foreign and domestic corporations, and all foreign and domestic companies possessing no franchise, should be valued as an entirety, the value of the tangible property be deducted, and the value of the intangible property thus ascertained be taxed under these provisions; and as to railroad, telegraph, telephone, express, sleeping car, etc., companies, whose lines extend beyond the limits of the State, that their intangible property should be assessed on the basis of the mileage of their lines within and without the State; but that from the valuation on the mileage basis the value of all tangible property should be deducted before the taxation was applied.

So far as the commerce clause and the Fourteenth Amendment of the Federal Constitution are concerned, this scheme of taxation is not in contravention thereof, as already determined in Adams Express Company v. Ohio State Auditor, 165 U. S. 194, and cases cited.

Considered as a property tax, it is in harmony with the provisions of the constitution of the Commonwealth of Kentucky.

Section 174 of the constitution of Kentucky does not prevent intangible property from being taxed, and the tax mentioned in section 4077 is not an additional tax upon the same property, but upon intangible property which has not been taxed as tangible property.

1 The docket title of this case is Levi C. Weir, President of the Adams Express Company, Appellant v. L. C. Norman, Auditor of Public Accounts for the Commonwealth of Kentucky.

Statement of the Case.

Neither section 172 of the Kentucky constitution, nor any other section, confines the levy of an ad valorem tax to tangible property.

The statute, as construed by the Court of Appeals of the State of Kentucky, cannot be overthrown for failure to conform to the requirements of sections 171, 172 and 174 of the state constitution.

THIS was a bill filed in the Circuit Court of the United States for the District of Kentucky on behalf of the Adams Express Company to enjoin the collection and certification of taxes against it for the year 1895 under an act of Kentucky of November 11, 1892, entitled "An act relating to revenue and taxation," carried forward as chapter 108 of the compilation of the Kentucky statutes of 1894, page 1291. The case comes to this court on appeal from a decree of the Circuit Court sustaining a demurrer and dismissing the bill as amended. The decree proceeded on the grounds stated by Judge Barr in the opinion of the court in Western Union Telegraph Co. v. Norman, 77 Fed. Rep. 13.

The bill charged the statute of Kentucky, under which the tax complained of was levied, to be in contravention of the Constitution of the United States, and also of sections 171, 172 and 174 of the constitution of Kentucky. Similar averments to those considered in Adams Express Company v. Ohio State Auditor, 165 U. S. 194, appear in this bill, and need not be repeated at length. It is stated that the Adams Express Company had no property in the State of Kentucky in the year 1895, except certain horses, wagons, harness, trucks, safes, office fixtures and other appliances, located at different points in the State, and that all of said property, including the moneys and credits of the company within the State, were duly returned and assessed for state, county, municipal and other purposes; that the said cash value of the same was $36,614.53, and that the taxes thereon were duly paid; and that the tax complained of is an assessment for state, county, municipal and other purposes on the further sum of $1,463,040. Sections 171, 172, 174 and 181 of the constitution are as follows:

" 171. The general assembly shall provide by law an annual tax, which, with other resources, shall be sufficient to

Statement of the Case.

defray the estimated expenses of the Commonwealth for each fiscal year. 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.

§ 172. All property, not exempted from taxation by this constitution, shall be assessed for taxation at its fair cash value, estimated at the price it would bring at a fair voluntary sale; and any officer, or other person authorized to assess values for taxation, who shall commit any wilful error in the performance of his duty, shall be deemed guilty of misfeasance, and upon conviction thereof shall forfeit his office, and be otherwise punished as may be provided by law.”

"§ 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 on income, licenses or franchises."

" 181. The general assembly shall not impose taxes for the purposes of any county, city, town or other municipal. corporation, but may, by general laws, confer on the proper authorities thereof, respectively, the power to assess and collect such taxes. 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."

Sections 190 to 208 refer to corporations, the latter section. reading: "The word corporation' as used in this constitution shall embrace joint stock companies and associations."

Chapter 108 of the compilation of 1894 is divided into articles as well as sections, and may be referred to by way of con

Statement of the Case.

venience. There are some slight differences from the act of 1892 not material to be noted. The first article contains the general provisions relating to the assessment and collection of taxes "upon all property."

Sections 4019 and 4020 are as follows:

"S4019. An annual tax of forty-two and one half cents upon each one hundred dollars of value of all property directed to be assessed for taxation, as hereinafter provided, shall be paid by the owner, person or corporation assessed. The aggregate amount of tax realized by all assessments shall be for the following purposes: Fifteen (15) cents for the ordinary expenses of the government; five (5) cents for the use of the Sinking Fund; twenty-two (22) cents for the support of the common schools, and one half of one cent for the Agricultural and Mechanical College, as now provided by law, by an act entitled 'An act for the benefit of the Agricultural and Mechanical College,' approved April twenty-ninth, one thousand eight hundred and eighty, including the necessary travelling expenses of all pupils of the State entitled to free tuition in said college, and who continue students for the period of ten months, unless unavoidably prevented.

"§ 4020. All real and personal estate within this State, and all personal estate of persons residing in this State, and of all corporations organized under the laws of this State, whether the property be in or out of this State, including intangible property, which shall be considered and estimated in fixing the value of corporate franchises as hereinafter provided, shall be subject to taxation, unless the same be exempt from taxation by the constitution, and shall be assessed at its fair cash value, estimated at the price it would bring at a fair voluntary sale."

Article two relates to the assessment of property by the assessors, to whom every person in the Commonwealth must give in a list of all his property under oath.

Section 4058 provides for schedules with interrogatories to be propounded to each person, "with affidavit thereto attached, to be signed and sworn to by the person whose property is assessed." The schedules contain a long list of

Statement of the Case.

items, including all forms of tangible and intangible, real, personal and mixed property; the enumeration being exceedingly minute. The first eleven items relate to bonds; notes secured by mortgage; other notes; accounts; cash on hand; cash on deposit in bank; cash on deposit with other corporations; cash on deposit with individuals; all other credits or money at interest; stock in joint stock companies or associations; stock in foreign corporations.

The third article covers the assessment of corporations; corporations generally; banks and trust companies; building and loan associations; turnpikes.

Sections 4077, 4078, 4079, 4080, 4081, 4082 and 4091 are as follows:

"§ 4077. Every railway company or corporation, and every incorporated bank, trust company, guarantee or security company, gas company, water company, ferry company, bridge company, street railway company, express company, electric light company, electric power company, telegraph company, press dispatch company, telephone company, turnpike company, palace car company, dining car company, sleeping car company, chair car company and every other like company, corporation or association, also every other corporation, company or association having or exercising any special or exclusive privilege or franchise, not allowed by law to natural persons, or performing any public service, shall, in addition to the other taxes imposed on it 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 franchises may be exercised. The auditor, treasurer and secretary of State are hereby constituted a board of valuation and assessment, for fixing the value of said franchise, except as to turnpike companies, which are provided for in section four thousand and ninety-five of this article, the place or places where such local taxes are to be paid by other corporations on their franchise, and how apportioned, where more than one jurisdiction is entitled to a share of such tax, shall be determined by the board of valuation and assessment, and for the discharge of such other duties as may be imposed