Argument for Insurance Company.

196 U. S.

the court held that the municipal bonds on deposit in Ohio were subject to taxation under the laws of the State; that there was no personal liability of the complainant on account of said taxes, and therefore a civil action to recover the taxes should be enjoined; that for the year 1903 the collection of taxes could not be enforced, as the United States bonds were substituted before the time for returning property for that year; that the bonds might be seized by distraint to satisfy the taxes levied upon the municipal securities for the years they were on deposit, and the court therefore refused to enjoin the execution of the distress warrant, except for the taxes and penalty for the year 1903, and rendered a decree enjoining the collection of the taxes by civil action.

Both parties appealed, the company from so much of the decree as permitted distraint of the United States securities for the collection of taxes levied with respect to the municipal bonds, the treasurer and auditor of Franklin County from so much of the decree as denies the right of the State to prosecute a civil action against the company to recover the taxes aforesaid, and from so much thereof as restrained the officials from attempting to collect the taxes assessed against the municipal bonds for the year 1903.

Mr. Judson Harmon and Mr. Hartwell Cabell, with whom Mr. W. O. Henderson was on the brief, for Scottish Union and National Insurance Company, appellant in No. 360 and appellee in No. 361:

The municipal bonds deposited with the superintendent of insurance by foreign insurance companies under the requirements of section 3660, Revised Statutes, Ohio, are not taxed by the laws of Ohio.

Under State Tax on Foreign Held Bonds Case, 15 Wall. 300; Walker v. Jack, 31 C. C. A. 462; New Orleans v. Stempel, 175 U. S. 309; Blackstone v. Miller, 188 U. S. 189, a State has the right to class municipal bonds as tangible personal property, and to tax them when found in the State, but the State of

196 U.S.

Argument for Insurance Company.

Ohio has elected to treat such securities, not as tangible property, but as a species of intangible property, depending for taxability, not upon the situs of the paper, but upon the situs of some person in Ohio sustaining a specified relation to the bonds; that as the constitution and statutes have been construed by the Supreme Court of Ohio, these requirements do not here exist.

Judge Lurton in West. Assurance Co. v. Halliday, 126 Fed. Rep. 257, which was a case similar to this, ignores the fact that the State has not by statute taxed such bonds. As such the decision was contrary to the decisions of the Supreme Court of Ohio, see Art. XII. Ohio Const. 1851; Lamb v. Lane, 8 Ohio St. 167; Chisholm v. Shields, 67 Ohio St. 374; §§ 27302735 and 2744-2746, Rev. Stat. Ohio; Exchange Bank v. Hines, 3 Ohio St. 1, 39; Worthington v. Sebastian, 25 Ohio St. 1, 8; Myers v. Seaberger, 45 Ohio St. 232; Lander v. Burke, 65 Ohio St. 532.

Credits as well as municipal or railroad bonds would fall within Judge Lurton's definition of personal property under his construction of the same section and could be taxed whenever the paper evidence is found in Ohio, although neither held nor owned by a person in the State, and contra this proposition see Brown v. Noble, 42 Ohio St. 405, 409; Sommers v. Boyd, 48 Ohio St. 648; Payne v. Watterson, 37 Ohio St. 121; Sims v. Best, 1 Ohio. Cir. Ct. Rep. (N. S.) 41; S. C., 25 Ohio Cir. Ct. Rep. 149; Heintz v. Cameron, 70 Ohio St. 491.

As to construction of a proviso such as that in § 21 of the act of 1852, now § 2745, see Dwarris on Statutes, 514; Minis v. United States, 15 Pet. 423, 445; In re Webb, 24 How. Pr. 247; Boon v. Joliet, 22 Illinois, 258; Walsh v. Van Horn, 22 Ill. App. 170.

As to how these bonds are held and whether any person in the State holds them in such capacity as would bring him within the law requiring their return for taxation or as to whether the superintendent of insurance is a trustee, see Myers v. Seaberger, 45 Ohio St. 232; Walker v. Jack, 79 Fed. Rep. 138;

Argument for Insurance Company.

196 U.S.

McNeill v. Hagerty, 51 Ohio St. 255, 266; French v. Bobe, 64 Ohio St. 323, 341; State v. Matthews, 64 Ohio St. 419. For the construction of other state statutes similar to those of Ohio, see People v. Home Ins. Co., 29 California, 534, 544; Life Ins. Co. v. Commissioners, 28 How. Pr. 41, 57; Catlin v. Hull, 21 Vermont, 152; Hoyt v. Commissioners, 23 N. Y. 224; Life Ins. Co. v. Comptroller, 31 N. Y. 32. The treatment of Ohio of foreign insurance companies does not indicate the intentions attributed in the Halliday Case, 126 Fed. Rep. 257. See State v. Reinmund, 45 Ohio St. 214.

Appellant is a non-resident, absent from the State, and personal judgment cannot be rendered against it. Rev. Stat., Ohio, § 2859; Judson on Taxation, § 414; Cooley on Taxation, 3d ed., 24; Pomeroy's Remedial Rights, §1; State Tax on Foreign Held Bonds, 15 Wall. 300, 319; Dewey v. Des Moines, 173 U. S. 193, 201; New York v. McLean, 170 N. Y. 374; Bristol v. Washington County, distinguished, and see Assessors v. Comptoir National, 191 U. S. 388, 403; Lafayette Ins. Co. v. French, 18 How. 404.

The municipal bonds formerly on deposit being no longer within the State, the taxes levied with respect to them cannot now be collected by distraint or other proceeding in rem directed against the complainant's United States bonds now deposited in the State.

For construction of §§ 2838 and 2731, see Spence v. Frye, 2 Wkly. Law Gaz. 103; Citizens' Bank Assignment, 2 West. L. Monthly, 121; Chisholm v. Shields, 67 Ohio St. 374. See also as to freedom of bonds from lien, New Orleans v. Stempel, 175 U. S. 309.

The municipal bonds belonging to complainant formerly on deposit having been removed from the State eleven days prior to the day preceding the second Monday in April, 1903, no taxes can be assessed with reference to such bonds for the year then beginning or any part thereof.

As to construction on § 2737 see Shotwell v. Moore, 129 U. S. 590.

196 U. S.

Argument for Bowland.

Mr. Augustus T. Seymour, with whom Mr. Wade H. Ellis, Attorney General of the State of Ohio, Mr. Edward L. Taylor, Jr., Mr. Karl T. Webber and Mr. Thomas Ross were on the brief, for Bowland and others, appellees in No. 360 and appellants in No. 361.

The bonds have a situs for taxation in Ohio and were properly taxed. West. Assurance Co. v. Halliday, 110 Fed. Rep. 259; S. C., 126 Fed. Rep. 257; S. C., 193 U. S. 673.

Municipal bonds are in such a concrete tangible form that they are subject to taxation where found, irrespective of the domicile of the owner, and a State has the right to tax such bonds whenever they can be localized within its jurisdiction. State Tax on Foreign Held Bonds, 15 Wall. 300; Savings Loan Society v. Multnomah Co., 169 U. S. 421; New Orleans v. Stempel, 175 U. S. 309; Bristol v. Washington Co., 177 U. S. 133; Judson on Taxation, $394; Blackstone v. Miller, 188 U. S. 189; Board of Assessors v. Comptoir National, 191 U. S. 388, 403; Carstairs v. Cochran, 193 U. S. 10; Lee v. Sturges, 46 Ohio St. 153; Hubbard v. Brush, 61 Ohio St. 252.

Under the constitution and statute law of Ohio, investments in bonds held in that State and owned by non-residents of the State, are taxable within the State. Const. § 2, Art. XII; §3, Art. XIII; 44 Ohio Laws, 85; §§ 2734-2737, 2744, 2745, Rev. Stat.; Lee v. Sturges, 46 Ohio St. 153; Worthington v. Sebastian, 25 Ohio St. 1; Grant v. Jones, 39 Ohio St. 506; Sims v. Best, 25 Ohio Cir. Dec. 149; Heintz v. Cameron, 70 Ohio St. 491.

The nature of the deposit required by § 3660 is not such as to exempt bonds so deposited from taxation within the State. British &c. Ins. Co. v. Commission, 18 Abb. Pr. 118; Int. Life Ins. Co. v. Commission, 28 Barb. 318; People v. Home Ins. Co., 29 California, 533.

Section 2745 provides a method of taxation for foreign insurance companies in addition to the general statutes authorizing the levy of taxes, and the legislature had no power to substitute a special method of taxation for the provision of the general laws relating thereto.

Statutes which strip a government of any portion of its prerogative or give exemption from the general burden, should receive a strict interpretation. 1 Desty on Taxation, 180; Yazoo &c. Ry. Co. v. Thomas, 132 U. S. 174; New Orleans &c. Ry. Co. v. New Orleans, 143 U. S. 192; Chicago &c. Ry. v. Guffey, 120 U. S. 569; Phænix Ins. Co. v. Tennessee, 161 U. S. 174; Erie Ry. Co. v. Pennsylvania, 21 Wall. 492; Delaware R. R. Tax, 18 Wall. 206.

The privilege exercised by appellant under § 3660 to substitute United States bonds for the municipal bonds upon deposit with the superintendent of insurance, leaves the substituted bonds subject to all the obligations against the property originally on deposit.

The power of the State to impose conditions upon a nonresident seeking to engage in business within its borders is beyond question. Waters-Pierce Oil Co. v. Texas, 177 U. S. 28; Cooper v. California, 155 U. S. 648; Judson on Taxation, $158.

The provisions in the statutes for summarily collecting the taxes are not repugnant to the Fourteenth Amendment. The right of the sovereign to proceed in this manner is as old as the common law. 2 Desty on Tax. 750, 776; Judson on Tax. § 330; Palmer v. McMahon, 133 U. S. 660; Murray's Lessee v. Hoboken Land & Imp. Co., 18 How. 272, 281; Springer v. United States, 102 U. S. 586; Cooley on Tax. 302; Ohio Act of 1792, Chase's Statutes, 119; 1 Ohio Laws, 58; 25 Ohio Laws, 25; 29 Ohio Laws, 291; Rev. Stat. Ohio, § 1095.

There is no constitutional objection to the right of a State to collect unpaid taxes, assessed on account of personal property, owned by a non-resident, having a taxing situs within the State, by distraint of any property belonging to such nonresident found within the territorial limits of the State. Desty on Tax. § 6, pp. 7, 11, and cases cited; Black's Law Dict. 253; Blackstone, Bk. I, p. 138; Bk. II, pp. 2–15; 27 Am. & Eng. Ency. of Law, 648, 673. As to obligation to pay taxes, see Railway Co. v. Reynolds, 183 U. S. 475; Allen v. Armstrong,