So, to nearly $20,000, at the date of assessment. This property was held liable to taxation in the village. Earl, J.: "The contracts represent the debts secured by them. They are the subject of larceny, and a transfer of them transfers the debt. If this kind of property does not exist where the obligation is held, where does it exist? It certainly does not exist where the debtor may be, and follow his person. And while, for some purposes in the law, by legal fiction, it follows the person of the creditor, and exists where he may be, yet it has been settled that for purposes of taxation this legal fiction does not, to the full extent, apply, and that such property belonging to a non-resident creditor may be taxed in the place where the obligations are held by his agent." This case was followed where K., residing in Kansas, sold land in Illinois, took notes for the deferred payments, a deed to be made when all paid. The notes were deposited in Illinois, and were never in Kansas. The notes were not taxable in Kansas.? where a person was domiciled at his death in Illinois, and was the owner or holder of bonds of a private corporation of Missouri, which were sent to Missouri for collection, and ancillary administration was necessary on his estate in order to collect the bonds, the bonds were held liable to tax in Missouri. "The actual situs," say the court, "of personal property, and not the domicile of the owner, determines under the law of what State it shall be taxed." Where a party domiciled in Canada died there, owning personal property in North Carolina, ancillary administration was granted in North Carolina, and the personal property situate in that State was held liable to a succession tax. It is to be noticed that in the first two cases, while the actual owner of the debts was a non-resident, yet the evidences of debt, the agent of the creditor, and debtor were all in the State exercising the power to tax, and the investments were regarded as permanent; and in the last two cases, the person who held the legal title to the property was under the control of the State exercising the power to tax. They are not cases like those ante, sect. 41, where the simple question was whether the property should be taxed at the residence of the debtor or that of the creditor. In Connecticut, under a statute taxing all property 1 People v. Trustees of Village of Ogdensburg, 48 N. Y. 390, 397, 398. This case, as well as Hoyt v. Commissioners of Taxes, 23 N. Y. 224-236, overruled Wilson v. The Mayor of New York, 4 E. D. Smith, 675, which adopted, in its fullest sense, the doctrine that personal estate has no situs away from the owner's domicile. 2 Wilcox v. Ellis, 14 Kans. 588. 3 St. Louis County v. Taylor's Administrator, 47 Mo. 594. Alvany v. Powell, 2 Jones' Equity, 51. This case contains a fine discussion of the doctrine of the situs of personal property, and claims that the fiction that such property follows the person, has no application to revenue laws. in the State, all loans made to persons in other States, and secured on real estate there, are included; the debt follows the person.1 In Illinois, under a statute requiring "all property, real or personal, in this State, all moneys, credits, investments in bonds, of persons residing in this State, or used or controlled by persons residing in this State, shall be taxed, &c.," loans made by a person in that State were held liable under the following state of facts. D. was a man of mature years, unmarried, lived with his father in New York. He came to Pekin, in Tazewell county, every year, to loan money upon real estate, for himself, his father and other parties; the loans were permanent investments; principal and interest were reinvested on the same kind of security. The deeds were recorded in Tazewell and other counties, where the security was situated. While engaged in this business, Pekin was his headquarters; it was his post office address; the banking house of R. & Co., in Pekin, was his place of doing business generally. When R. & Co. quit business, he kept his office and did business with L. & Co., in the same city; had a table and desk there for the transaction of business, kept his valuable papers, and sometimes money, in the safe of their bank. When he went east he left his papers in relation to loans not completed, and notes maturing during his absence, in the safe, and sometimes in the care of R. & Co. Most of the notes were taken payable in Pekin, and if payable elsewhere, actually paid in Pekin. This was all D. did while in Pekin; he gave his whole attention to it. He stayed from one to four months, never leaving while he had money on hand, remaining away only during the hot and sickly season, and then returning. The loans, amounting to $250,000, were held liable to tax in Pekin; it was thought that D. was a resident of the State in the sense of the statute. § 43. Stocks of Corporations.-Stock means an individual interest in the dividends as they are declared, and a right to a pro rata distribution of the effects of the corporation at dissolution of the corporation. It is in the nature of a chose in action, has no locality, and of necessity follows the person of the owner; the tax upon it is in the nature of a tax upon income, which of necessity is confined to the person of the owner. In McKeen v. Northampton, the court say: 1 Kirtland v. Hotchkiss, 42 Conn. 426. Supervisors of Tazewell County v. Davenport, 40 Ill. 197. 3 Union Bank of Ternessee v. State, 9 Yerg. 490; Angell & Ames on Corporations, 458; McKeen v. Northampton County, 49 Penn. St. 519; Waltham v. Inhabitants of Waltham, 10 Metc. (Mass.) 334. This was a case of stock pledged to a bank as collateral security, taxed to the owner not to the bank. See opinion as to the nature of stock, citing English authorities, in Barrington v. Berkshire, 16 Pick. 572; Webb v. Burlington, 28 Vt. 188; Oliver v. Washington Mills, 11 Allen, 268. "The defendant below, being a citizen of this State, it is clear he is subject personally to its power to tax, and that all his property accompanying his person, or falling legitimately within the territorial jurisdiction of the State, is equally within its authority. The interest. which an owner of shares has in the stock of a corporation is personal. Whithersoever he goes it accompanies him, and when he dies his domicile governs its succession." "Intangible property has no actual situs. If for purposes of taxation we assign it a legal situs, surely that situs should be the place where it is owned, and not the place where it is owed. To make it follow the debtor instead of the creditor is to tax poverty instead of wealth." 2 In Alabama, it is thought that gold coin, treasury notes of the United States, and stocks of foreign corporations owned by citizens of Alabama, but on deposit in New York city, are not taxable in Alabama, because the laws of the State cannot operate beyond its limits. In Iowa, shares of stockholders in corporations of that State, though owned by non-residents, are held liable to taxation in that State.* The court says, "The interest of each shareholder is properly within the jurisdiction of the State. The certificate of shares may be with the person of the non-resident owner. But it is only paper evidence of such interest, the property it represents being within reach of the taxing power. The legislature has thought proper to provide that the property of this company, which has its existence by virtue of its enactments, shall bear its proportion of the burden of taxation in this way. Those who seek the benefit of this company, do so with this understanding." At first blush this seems to sustain a different view from the cases just noticed, but a more particular examination will show that it does not. The decision was rendered upon the construction of the following statute: "Corporations shall be taxed through the shares of the stockholders, and when stockholders are non-residents, their interest shall be taxed in the county in which is situated their principal business office, within the State." The statute recognizes the distinction that the corporation is a person liable to taxation for its corporate property and privileges, and is entirely distinct from the individual stockholders, who are liable to taxation in the State of their residence for their property, including stock in this corporation. It is the corporation that is taxed, and the shares of stockholders are 1 See also City of Richmond v. Daniel, 14 Gratt. 385. Samuels, J., draws a distinction between stocks and credits, p. 389. 2 Walsh, J., in Worthington v. Sebastian, Tr., 25 Ohio, N. S. 1. stocks in foreign corporations. 3 Vanner v. Calhoun, 48 Ala. 178. Taxing bonds and 4 Faxton ». McCosh, 12 Iowa, 527, 530. looked to merely as a measure of the tax, which it is deemed proper this corporation should pay. The tax is upon the corporation for the privilege of its existence in the State. The court distinguish the case from Davenport v. Mississippi & Missouri Railroad Co.: "The property is in the State, owned by the mortgagor, but the case does not decide that the property of the mortgagor upon which the debt is secured, is not liable to tax, but that the debt secured, owned by the non-resident, shall not be taxed to the mortgagee. In Pennsylvania, several late cases have extended the principle of Faxton v. McCosh, in such a manner as to entirely overrule the earlier case of McKeen v. Northampton County, already cited. The first of these cases arose out of an act laying a tax "on mortgages, money owing by solvent debtors, whether by promissory notes, penal or single bill, bond or judgment," a section of which requires the officers of any corporation which pays interest on which a State tax is imposed, before payment of the same, to retain the State tax and pay the same to the treasurer of the State. Maltby, a non-resident holder of certain coupons, due before the passage of the act, presented them for payment. The company insisted on retaining the tax of three mills on each dollar of the bonds. Maltby brought suit, and the court held the company could deduct the tax. Woodward, J.; "There must be jurisdiction over either the property or the person of the owner, else the power of taxation cannot be exercised, but where the property is within our jurisdiction and enjoys the protection of our State government, it is justly taxable, and it is of no moment that the owner who is required to pay the tax, resides elsewhere. The duties of sovereign and subject are reciprocal, and any person who is protected by government in his person or property may be compelled to pay for that protection. *** What would the plaintiff's loan be worth if it were not for the franchises conferred upon the company by the commonwealth, franchises which are maintained and protected by the civil and military power of the commonwealth? Then it would seem that this kind of property, more than any other, ought to contribute to the support of the State government, and I suppose it is upon this ground that the legislature discriminates between corporation loans and private debts as objects of taxation." These views are com 1 12 Iowa, 539. 2 Maltby v. Reading & Columbia Railroad Co. 52 Penn. St. 140; Pittsburgh, Fort Wayne & Chicago Railroad Co. v. Commonwealth, 66 Penn. St. 73: The Cleveland, Painesville & Ashtabula Railroad Co. v. Commonwealth, 5 Casey, 370. These cases were overruled in State Tax on Foreign-held Bonds, 15 Wall. 300; Susquehanna Canal Co. v. Commonwealth, 72 Penn. St. 596. The Pennsylvania court adheres to the former rulings, notwithstanding the decision in 15 Wall. 300. mented on by Field, J., in State Tax on Foreign-held Bonds: 1 "The amount of all which is this; that the State which creates and protects a corporation ought to have the right to tax the loans negotiated by it, though taken and held by non-residents—a proposition which it is unnecessary to controvert. The legality of a tax of that kind would not be questioned, if in the charter of the company, or its certificates of loan, the liability of the loan to taxation were stated. The tax in that case would be in the nature of a license tax for negotiating the loan, for, in whatever manner made payable, it would ultimately fall on the company as a condition of effecting the loan, and the parties contracting with the company would provide for it by proper stipulations." The error in the reasoning of Woodward, J., results from overlooking the distinction alluded to in commenting on Faxton v. McCosh, between the corporation and the stockholders of the corporation; the corporation being a creature of the State, it may prescribe the terms of its existence in the form of a bonus or tax for the privilege of exercising its functions in the State, and that tax, as Judge Field says, may be in the form of a tax upon its loans. But the tax here was not a tax upon the corporation, it was a tax upon the creditors of the corporation, upon parties contracting with a corporation at a time when the State which created it had not burdened it with a tax upon its borrowing power, and was a violation of the obligation of the contract between the borrower and lender. The shares of stock in the national banks are an exception to the rule stated in this section; the acts of Congress as to them annul the general rule, and impart to such shares for some purposes the local character and fixity of real estate. They are taxed where the bank is situated.2 In a late case it was held that residents of New York owning stocks in foreign corporations are not taxable for them in New York, they are not property within the State.3 $ 44. Collateral Inheritance Tax.-" The right to take property by devise or descent is the creature of the law, and secured and protected by its authority. The legislature might, if it saw proper, restrict the succession to a decedent's estate, either by devise or descent to a particular class of his kindred, say to his lineal descendants and 1 15 Wall. 322. * Providence Inst. for Savings & Jewell v. City of Boston, 101 Mass. 575; Tappan v. Merchants' Nat. Bank, 19 Wall. 490; McLaughlin v. Chadwell, 7 Heisk. 389; Baker v. First Nat. Bank of Springfield, 67 Ill. 297. 3 Trowbridge v. Commissioners of Taxes, 4 Hun (N. Y.) 595. This is in conflict with the principles laid down in 23 N. Y. 224. |