paid for a loan, the other for a fire or life risk. When are they earned? In the one case when the loan is made, in the other when the risk is begun. They each then become the property of the company, to be disposed of in its discretion-to be divided as profits among stockholders, used as increased capital, or kept as a reserve fund against contingent losses. As to the argument that the premiums are not earned until the risks expire, and that there is a liability therefor, which it is said is proper to be considered in estimating the strength of the company, or the actual value of the stock, and to be valid as to accumulated surplus, it must go farther and show that the premiums are not the property of the company. When the contract is complete and risk begun, it is entire, and there is no apportionment or return of premium without express stipulation,' and when there is a stipulation, in the event of transfer, that a part of the premium may be reclaimed, it is a contingency, and not a charge upon the premium that takes away the right of property and ownership. This liability is of the same class as possible losses by fire, provided for by capital and the reserved fund, to be claimed out of the general assets of the company. The court held: 1. That accumulated surplus in stock insurance companies is the fund in excess of its capital stock paid in, after payment of debts and liabilities. 2. That the liabilities upon policies issued and unexpired, is a contingent and not a fixed liability, and does not affect the character of the fund arising from premiums as surplus capital or accumulated surplus. 3. That in fire policies for a fixed sum and for a definite term, the contract is entire ; the premium, when the risk begins, is the property of the company for purposes of taxation, though held subject to contingent losses.* Where a statute provides for the taxation "of shares of stock in banks and other incorporated companies, and of property owned by incorporated companies, over and above their capital stock," an insurance company having a capital stock of $100,000, but having cash on hand and money loaned amounting to $300,000, was held to be properly assessed under this statute for the latter sum.3

In Wisconsin, the general tax law imposes a tax upon the "undivided profits and all other means not forming a part of the capital stock of every incorporated company." A special tax was imposed upon the capital stock of banks. A bank having paid the tax, claimed

1 Hunter v. Wright, 10 Barn. & Cres. 714.

2 State v. People's Fire Ins. Co. 35 N. J. Law (6 Vroom), 575. Zabriskie, Chan., dissented in an able and earnest opinion.

St. Louis Mut. Ins. Co. v. Charles, 47 Mo. 466.

that it was not liable under the general tax law, for profits in excess of capital. The court held that capital stock, in the sense of the banking laws of Wisconsin, has reference to the funds paid in by the stockholders, to be used and managed by the bank for banking purposes. The tax is on the franchise, measured by this amount, and is the same if part of the capital be lent; but "accumulated profits" which have never been divided among the stockholders, but have been retained for banking purposes, are not a part of its capital stock in such a sense as to be exempt from the operation of the general tax law.1

$89. Real and Personal Estate, and Shares, how taxed-Rule in Massachusetts.-As a general rule, the real estate of all corporations is taxed to the corporation in the county or city where it is situated. The rule as to personal property varies in different States, and even in the same State it varies according to the character of the corporation, the legislature, in its discretion, taxing one class of corporations in a different manner from another. In Massachusetts, prior to 1862, manufacturing corporations were taxed on their real estate and machinery according to value, in the place where the property was situated. There was no tax upon their personal property, other than that placed upon the shares of stock in such corporations. The shares were assessed to the stockholders at their domicile, but in ascertaining their value for taxation, the value of the real estate and machinery was deducted. Under a general statute for taxing all stocks in incorporated companies, the stock of a bank is to be assessed to stockholders at the residence of the owners, and the real estate to the bank where it is situated, but the value of the real estate is not to be deducted in ascertaining the value of the shares. It was by express statute that the value of the real estate and machinery was deducted in assessing the shares of manufacturing corporations.3

In 1862, the policy was changed by imposing an excise tax upon the franchises of fire and marine insurance companies and savings banks.

In 1864, the principle was extended to include all corporations having a capital stock divided into shares, except banks of issue and

1 State Bank of Wisconsin v. The City of Milwaukee, 18 Wisc. 295. The tax law of Wisconsin has been changed; now it is on "the capital stock paid in and so remaining undiminished by losses, inclusive of the value of all other personal property of any stock company." Street's Digest of Taxation, p. 178.

2 Boston & Sandwich Glass Co. v. City of Boston, 4 Metc. 184; Salem Iron Factory Co. v. Inhabitants of Danvers, 10 Mass. 514.

3 Tremont Bank v. City of Boston, 1 Cush. 142.

deposit, and the stockholders of such corporations were exempt from taxation upon their shares in the place of their residence.1 But these acts did not lay a tax upon the personal property of corporations, and mutual insurance companies were not embraced by them."

It was claimed that the act of 1865 applied to mutual insurance companies, but that act was construed to be a provision as to the mode in which the shares of national bank stock should be assessed to those already liable to taxation, and not intended to create a new class of tax-payers.3

Railroads.-In Massachusetts, railroads are regarded as public easements, and the works erected by the corporation as public works, and as such exempt from taxation, on the same principle as State houses, jails, court houses, and other public works. The exemption is however limited, as to real estate, to the five rods which they are allowed to take under the right of eminent domain, and to all buildings erected thereon which are necessarily incident to the railroad and its objects. So land owned by a city, taken under the authority of the legislature for the purpose of supplying the city with water, is taken under the right of eminent domain for public use, and is not liable to taxation.5 But a grist mill is not a public work so as to be exempt from taxation. The real estate of a corporation owning a grist mill is taxed where it is situate, and the shares to the owners at their residence. In Pennsylvania and Kentucky, as in Massachusetts, the property of railroads and canals is exempt from taxation. In the first-named State the exemption is limited to such property as is appurtenant and indispensable to the construction and preparation of the road for use.s

6

There is nothing in the Constitution of the United States or that of Massachusetts that forbids the taxation of corporations of other States, or their exclusion from doing business in the State, in case of a failure to pay the tax; and even if it does not transact business in

9

1 Manufacturers' Ins. Co. v. Loud, 99 Mass. 146; Commonwealth v. Hamilton Manuf. Co. 12 Allen, 298.

? Commonwealth v. Berkshire Ins. Co. 98 Mass. 25.

Murray v. Berkshire Life Ins. Co. 104 Mass. 586; and § 44, ante, as to national bank

shares.

Inhabitants of Worcester v. Western R. R. Co. 4 Metc. 564.

Wayland v. Co. Com'rs, 4 Gray, 500.

" Boston Water Power Co. v. City of Boston, 9 Metc. 199.

'Louisville R. R. Co. v. Warren Co. 5 Bush (Ky.) 243.

Berks Co. v. Railroad, 6 Barr, 70; Schuylkill Nav. Co. v. Berks Co. 11 Penn, St.

the State, shares of its stock held by residents of Massachusetts may be taxed.1

In New York the real estate of railroads is taxed in the county or town in which it is situated. On the same principle in England railways are liable to rates for the poor of the respective parishes through which they pass.3 As to the manner in which such real estate is to be valued for assessment, there are two views. The courts of New York hold that the land is not to be valued as an isolated piece of land, unconnected with anything at either end beyond the limits of the town in which the land lies, but it is to be valued as real estate used for railroad purposes, looking to its position with reference to other parts of the road, and the business and profit derived therefrom. It is to be estimated in the same manner as real estate used for a mill is valued for milling purposes, and not according to its value for a church or for banking purposes. In Maryland the view is taken that buildings and rails should be taxed as of the value they bear, irrespective of their being portions of a railroad, and that taxing the land as land, is the proper rule."

It is sometimes a question as to what constitutes real estate. In New York the railroads have a fee in the lands taken for their purposes generally, but where the track of a railroad was laid in a highway, and the corporation had no interest in the land, save a right to use the same for the passage of their trains and vehicles to and fro over the track, the term "land" as used in the statute was considered sufficiently broad to include this interest in land of the corporation, and an assessment of such interest as land was sustained." The mains of a gas company under the streets of a city are not regarded as real estate liable to taxation by the city; they are personal estate of the company.'

1 Great Barrington v. County Com'rs, 16 Pick. 572.

* Mohawk & Hudson R. R. Co. v. Clute, 4 Paige, 384; People v. Barker, 48 N. Y. 70; Buffalo & State L. R. R. Co. v. Supervisors of Erie, Id. 93. Railroads are not nonresidents of the towns through which they run. Providence & Worcester R. R. Co. v. Wright, 2 R. I. 459.

3 Angell & Ames on Corporations, §§ 444, 445; Regina v. London R. Co. 2 Railroad Cases, 629; 1 Q. B. 558. The same rule is also applied in Illinois. Sangamon & Morgan R. R. Co. v. Co. of Morgan, 14 Ill. 162.

4 48 N. Y. 77; State v. Illinois C nt. R. R. Co. 27 Ill. 64; Chicago & N. W. R. R. Co. v. Lee Co. 44 Ill. 248.

Philadelphia, Wilmington & Balt. R. R. Tax Cases, 12 Gill & J. 117. See Fitchburgh R. R. Co. v. Prescott, 47 N. H. 62, where wood, timber, logs and lumber owned by a railroad distributed along its line for use in operating and repairing the road, were taxed as a part of the road, and 14 Ill. 163, where it is said that the valuation of a road must be of that specific part in the county, having no reference to the whole value of the road; s. P. Huntingdon v. Central Pacific R. R. Co. 2 Sawyer, 503.

People v. Cassity, 46 N. Y. 46, 49.

People v. Board of Assessors of the City of Brooklyn, 39 N. Y. 81; Memphis Gaslight Co. v. State, 6 Cold. (Tenn.) 310.

Where the stock of a corporation is declared to be personal estate, and the stock is exempt from taxation, it is said that the real estate of the corporation is not subject to taxation, and that the stock embraces the property of the corporation. This is undoubtedly true, especially where a bonus is paid for the charter, and the evident intent is in consideration thereof to release from all further taxation, or where the peculiar phraseology is such as to include all the property of the corporation. As in the Virginia case, where the language of the act was that "all the machines, wagons, vehicles or carriages belonging to the company, with all their works, and all profits which may accrue from the same, shall be vested in the respective shareholders forever, in proportion to their respective shares, and shall be deemed personal estate and exempt from any charge or tax whatever." But apart from the cases of exemptions from taxation, and the cases of peculiar phraseology indicating such an intention, the mere declaration that the stock shall be "personal estate," does not prevent the real estate of the corporation from being taxed as such. In the last case cited, the charter of the company provided: "The bridge and all property appurtenant thereto, vested in and belonging to said company, shall be considered, and is hereby declared, to be personal estate." This provision was said not to apply to wharves and docks owned by the company, and not necessary to the purposes of the company. The assessment of such property to the company in the town in which it was situated, was sustained. It is true that the value of all the property of a company is included in the value of its stock, and taxing the stock and property is double taxation, but such taxation is not illegal, and while it may affect the construction of a statute, it must appear clearly that the legislature intended, by such a provision, to exempt all the property of the company from taxation, and tax the owners of the stock upon its value alone, to sustain the construction claimed by the company, that the wharves and docks are not subject to taxation.

2

The questions discussed in the Massachusetts and New York cases, settle the question that under general tax laws, for the taxation of real and personal estate, the facts that the owner of the shares of stock is taxed for them, and that the stock includes all the property of the company, will not exonerate the real property of a corporation from taxation at its full value. The State may by express statute, as in the

Bangor & Piscataquis R. R. Co. v. Harris, 21 Maine, 553; Mayor, &c. of Baltimore v. Balt. & Ohio R. R. Co. 6 Gill, 289; Richmond v. Richmond & Dan. R. R. Co. 21 Gratt. 604.

Mohawk & Hudson R. R. Co. v. Clute, 4 Paige, 384; Toll Bridge Co. v. Osborne, 35 Conn. 7.