tax imposed on cigarette selling by the Iowa code, because sales by jobbers and wholesalers, in doing an interstate business with customers outside of the state, are exempted from its provisions. Reference is made to a series of wellknown cases arising under the anti-trust laws of the several states, to the effect that laws against combinations in trade must be uniform in their application as applied to all persons within the same general class. These cases, however, have but limited application to laws imposing taxes, where the right of classification is held to permit of discrimination between different trades and callings when not obviously exercised in a spirit of prejudice or favoritism. The distinction was recognized in Connolly v. Union Sewer Pipe Co., 184 U. S. 540. It can scarcely be doubted that if that case had dealt with the subject of taxation, a discriminative tax upon producers of agricultural products, either greater or less than that imposed upon other manufacturers or producers, might have been held valid without denying to either party the equal protection of the laws. There is a clear distinction in principle between persons engaged in selling cigarettes generally or at retail, and those engaged in selling by wholesale to customers without the state. They are two entirely distinct occupations. One sells at retail, the other at wholesale; one to the public generally, and the other to a particular class; one within the state, the other without. Why the legislature should have made the distinction is not entirely clear, but the section is not open to the objection of denying to the dealers in cigarettes the equal protection of the laws. Cook v. Marshall County, 196 U. S. 261.

§ 356. Taxation of corporate franchise. The Federal Constitution does not forbid state taxation of the franchise of a domestic corporation at a different rate than is assessed upon the tangible property in the state. Inequality in valuation for taxation of a franchise, as compared with other taxable property, must be systematic

and intentional in order to justify a Federal court in enjoining the apportionment and certification of the tax to the several counties, where the assessment does not appear to have been made on such a different scale of values from that adopted elsewhere as to deny the equal protection of the laws guaranteed by the Fourteenth Amendment, which was the only ground invoked to sustain the Federal jurisdiction. Looking first at the assessment of the franchise, there is no such certainty that it was made on a different scale of values from that adopted elsewhere as would warrant an attack upon it under the Fourteenth Amendment, even if otherwise that attack could be maintained. But the supposed infringement of the Fourteenth Amendment is the only ground on which the railroad company could come into the circuit court, and if that ground fails, and obviously fails, the Supreme Court would be very cautious, at least, in interfering with the state's administration of its taxes upon other considerations which would not have given it jurisdiction. Coulter v. Louisville & Nashville R. Co., 196 U.S. 599.

§ 357. Taxation of street railways. A street railway company is not denied the equal protection of the laws by a municipal tax on its business at the rate of $100 per mile or fraction of a mile of its trackage in the city streets because a steam railway, making an extra charge for local deliveries of freight brought over its road from outside the city, is not subject to this tax. The plaintiff contends that a classification which distinguishes between an ordinary street railway and a steam railroad making an extra charge for local deliveries of freight brought over its road from outside the city is contrary to the Fourteenth Amendment and void. The state courts held that this was a business tax, lawfully imposed, and that the plaintiff did not stand like the steam railroad which is subject to taxation by the state alone. The difference between the two railroads is obvious, and warrants the

diversity in the mode of taxation. The steam railroad may be assured to do the great and characteristic part of its work outside the city, while the plaintiff does its work within the city. If the former escapes city taxation, it does so only because its main business is not in the city, and the state reserves it for itself. Savannah, T. & I. of H. R. Co. v. Savannah, 198 U. S. 392.

§ 358. Tax on special franchises. The reduction, on account of annual payments "in the nature of a tax" covered by existing agreements, which is made by New York laws from the amount of the special franchise tax provided for by statute, does not render the statute invalid either as denying the equal protection of the laws to street railway companies who agreed to pay a lump sum for their franchises, or as depriving such companies of their property without due process of law. The exemption of the subsurface street railway in New York city from the operation of the special franchise tax does not make that statute invalid, as denying the owners of the surface street railways in that city the equal protection of the laws, or as depriving them of their property without due process of law. It is insisted that the special franchise tax denies the relator the equal protection of the laws in three separate and distinct aspects. (1) That it adds to the obligations of their various contracts while preserving all the burdens of those contracts; (2) That it provides for the deduction of annual payments covered by existing contracts from the amount of tax levied, by reason of which deduction those who agreed to pay for their franchises lump sums or annual amounts less than the new tax are discriminated against; (3) That it discriminates against surface railways and subjects them to taxation, while their competitors, operating under the surface of many of the same streets, are to be exempted. To which the court replied: (1) There had been no impairment of contract obligations, and the fact that the companies for so many years escaped the burden is their good fortune,

and in no manner discharges them from the ordinary burdens of taxation which the present law imposes. (2) The lump sum is so obviously a payment for the franchise that it cannot be considered in any just sense as possessing the nature of a tax. It is not even rental. It is like money paid for a tract of land,-part of the purchase price. Further, the whole matter of allowing a reduction on account of that which is spoken of as "in the nature of a tax," is a matter of grace on the part of the legislature. The franchises were held subject to taxation, and the fact that the state has consented that a certain reduction shall, in some cases, be made, does not entitle every holder of a franchise to a like reduction. There is nothing in the Federal Constitution to prevent a state from granting exemptions from taxation. (3) There is a difference between surface and subsurface street railways sufficient to justify a diversity in the mode and extent of taxation. Citing Savannah, T. & I. of H. R. Co. v. Savannah, 198 U. S. 392. New York ex rel. Metropolitan Street R. Co. v. State Board of Tax Com'rs, 199 U. S. 1.

§ 359. Validity of state inheritance tax. Brothers and sisters of a decedent may be subjected to the burden of the inheritance tax imposed by the California act of 1893, as amended, without denying them the equal protection of the laws guaranteed by the Fourteenth Amendment, although such legislation does not impose any tax on such strangers to the blood as the wife or widow of a son or the husband of a daughter of the deceased. The contention that the act was repugnant to the Fourteenth Amendment, on this ground, reduces itself to and must depend on the soundness of the argument that the Fourteenth Amendment compels the states, in levying inheritance taxes, and, a fortiori, in regulating inheritances, to conform to blood relationship. That is to say, in their last analysis all the arguments depend upon the proposition that the Fourteenth Amendment has taken away

from the states the power to regulate the passage of property by death or the burdens which may be imposed resulting therefrom, because that amendment confines the states absolutely, both as to the passage of such property and as to the burdens imposed thereon, to the rule of blood relationship. To state the proposition is to answer it. A state may prefer near relatives by affinity to collateral relatives. The Fourteenth Amendment does not deprive a state of the power to regulate and burden the right to inherit, but at the most can only be held to restrain such an exercise of power as would exclude the conception of judgment and discretion, and which would be so obviously arbitrary and unreasonable as to be beyond the pale of governmental authority. Campbell v. California, 200 U. S. 87.

§ 360. State inheritance tax. Successions which have been finally closed and administered upon may be exempted from the inheritance tax imposed by the Louisiana act of June 28, 1904, without rendering such statute void as making an arbitrary classification which amounts to a denial of the equal protection of the laws, where the highest state court makes the validity of the tax depend upon this classification by deciding that the state can tax the property until it has passed out of the succession of the testator. Successions which have been closed are exempt from the tax, and a discrimination is claimed to be made between heirs whose rights have become fixed and vested on the same day. The classification is said to be purely arbitrary. But the state supreme court made the validity of the tax depend on the very fact which is attacked as an improper basis of classification. The court decided the property bequeathed was property the state could tax, "until it had passed out of the succession of the testator." It was certainly not improper classification to make the tax depend upon a fact without which it would have been invalid. In other words, those who are subject to be taxed cannot complain that they are denied