Argument for Defendant in Error.

198 U. S.

U. S. 194; Adams Express Co. v. Ohio, 166 U. S. 185, 224; Am. Refrigerator Co. v. Hall, 174 U. S. 70.

Mr. Hampton L. Carson, Attorney General of the State of Pennsylvania, with whom Mr. Frederic W. Fleitz was on the brief, for defendant in error:

The tax claimed is not a tax directly laid upon tangible property situate outside of the State, but is a capital stock tax imposed directly upon the capital stock of a Pennsylvania corporation at a fixed rate of five mills upon each dollar of the actual value of the whole capital stock, including bonds, mortgages, moneys at interest, owned by the company, franchises and property of other kinds. Commonwealth v. Railroad Co., 188 Pa. St. 185; Commonwealth v. Coal Co., 197 Pa. St. 553; Laws of Pennsylvania, 1891, 229.

The legislature has a general power of taxation which is necessary for the existence and preservation of the government.

It may be exercised to any extent to which the State may choose to carry it, not in violation of the powers granted to the Federal Government or the restrictions set forth in the state constitution. Sharpless v. Philadelphia, 21 Pa. St. 160.

The legislature may tax the same subject once, twice or oftener. Such power is not prohibited by the constitution, the only feature required being that the intention must be clear. Commonwealth v. Coal Co., 156 Pa. St. 488; Commonwealth v. Lehigh C. & N. Co., 162 Pa. St. 603.

Conceding that instrumentalities of interstate commerce cannot be taxed by the State where the taxation interferes with the commerce itself it is a well settled principle as to tangible property that at times it is to be treated as practically intangible because of its roving character. Vessels engaged in foreign or interstate commerce have their situs at their port of registry and are taxable there, and shares of stock in national banks, located in this State, owned by non-residents of this State are taxable here. Vessels, if unregistered, have

198 U.S.

Argument for Defendant in Error.

their situs for taxation in the State which is the domicil of their owner. Commonwealth v. Standard Oil Co., 101 Pa. St. 119; Pullman Co. v. Commonwealth, 107 Pa. St. 156; aff'd Pullman Co. v. Pennsylvania, 141 U. S. 18; Commonwealth v. Dredging Co., 122 Pa. St. 386; Commonwealth v. D., L. & W. R. R. Co., 145 Pa. St. 96; Commonwealth v. Coal Co., 197 Pa. St. 551.

The principal subjects of corporate taxation in Pennsylvania are capital stock, shares and franchises. The tax on capital stock of corporations has always been levied upon capital stock according to the value of the property which it represents. Commonwealth v. Standard Oil Co., 101 Pa. St. 119; Whitworth on Tax. of Corp. in Pennsylvania, ch. I, § 14, pp. 59-140.

The capital stock tax claimed is not a tax laid, or sought to be laid, directly upon tangible property beyond the territorial limits of Pennsylvania or the protection of her laws. Deductions from the value of the capital stock of a Pennsylvania corporation cannot be allowed for property which has not acquired a foreign situs, because of its return in value to the treasury of the company. It is the value of the stock that is taxed and not the property representing that value. Commonwealth v. Mining Co., 5 Pa. County Ct. Rep. 89; Commonwealth v. Coal Co. 197 Pa. St. 551.

We do not concede that the coal in question was permanently located and actually taxed in States other than Pennsylvania; nor do we concede the pertinency of the case of Brown v. Houston, 114 U. S. 622, and the authorities cited in support and confirmation thereof.

Before the coal had started on its journey, the right of Pennsylvania to tax capital stock, into the value of which the value of the coal had entered, had attached and could not be divested.

The cases cited by plaintiff in error as to state taxes on goods in course of transportation are inapplicable to this case. There is no Federal question. Kirtland v. Hotchkiss, 100 U. S. 491; People v. Commissioners, 104 U. S. 466.

MR. JUSTICE PECKHAM, after making the foregoing statement, delivered the opinion of the court.

The Supreme Court of Pennsylvania bases its decision in this case on the authority of Commonwealth v. Pennsylvania Coal Co., 197 Pa. St. 551, which it regards as controlling upon the question involved. The right to include the value of the coal in question in the valuation of the capital stock of the company is based upon the construction given by the Supreme Court of Pennsylvania to the Pennsylvania statute of 1891, and this court is concluded by that construction. People v. Weaver, 100 U. S. 539, 541.

The only question for this court to determine is whether, in refusing to deduct the value of the coal mined in Pennsylvania, and which at the time of the appraisement was situated outside the jurisdiction of the State, from the value of the capital stock, the state court denied any right of the plaintiff in error, which was protected by the Federal Constitution.

The coal itself, when the appraisement of the value of the capital stock was made, was concededly beyond the jurisdiction of the State of Pennsylvania. It was taxable (and in fact was taxed) in the States where it rested for the purpose of sale, at the time when the appraisement in question was made. Brown v. Houston, 114 U. S. 622. In that case the court held that the coal was properly taxed by the State of Louisiana, though it had but lately arrived from the State of its origin, Pennsylvania, and was at the time of the taxation awaiting sale in Louisiana, and was, in fact, soon thereafter sold and taken out of the country to a foreign State. It was said that the coal, on arrival at New Orleans for the purpose of sale, at once became intermingled with the general property of the State of Louisiana and was taxable like any other tangible property therein. In Coe v. Errol, 116 U. S. 517, the question was relative to the validity of the tax on the lumber imposed in the State of its origin, as that State had taxed the lumber before it had actually left the State, although it was

intended for transportation to another State for sale. It was held that the tax was proper, so long, and so long only, as such transportation had not yet actually commenced. After that the State had no right to tax it. In the case at bar the coal had been transported to and was actually resting in another State for sale when the appraisement was made, and under the foregoing cases it was then intermingled with property in the foreign State where it rested and was at that time liable to taxation therein. The right of the foreign State to tax under such circumstances was again upheld in Pittsburg & Southern Coal Co. v. Bates, 156 U. S. 577, where the coal was taxed while awaiting sale in such State. See Kelley v. Rhoads, 188 U. S. 1; Diamond Match Co. v. Ontonagon, 188 U. S. 82. We must, therefore, take it as plain, under the foregoing decisions, that this coal, at the time of the appraisement of the value of the capital stock for taxation by Pennsylvania, had become intermingled with the mass of property in the other States, to which portions of it had respectively been sent, and that it was a proper subject for taxation for both state and local purposes in such States. Where the proceeds of the sale might go when the coal was sold, whether into the treasury of the company at its offices in New York City, or indirectly to the State of its incorporation, is not important. The coal had not been sold when the appraisement of the value of the capital stock was made, and at that time it was outside the jurisdiction of the State of Pennsylvania. A tax on that coal, eo nomine, or specifically, could not then be laid by that State, as counsel concede.

Now, was this tax, in substance and effect, laid upon the coal which was beyond the jurisdiction of Pennsylvania? The Supreme Court of Pennsylvania has held that a tax on the value of the capital stock is a tax on the property and assets of the corporation issuing such stock. Commonwealth v. Standard Oil Co., 101 Pa. St. 119, 145; Fox's Appeal, 112 Pa. St. 337; Commonwealth v. Delaware &c. R. R. Co., 165 Pa. St. 44. This court has also frequently held that a tax on the VOL. CXCVIII-23

value of the capital stock of a corporation is a tax on the property in which that capital is invested, and in consequence no tax can thus be levied which includes property that is otherwise exempt. Bank of Commerce v. New York City, 2 Black, 620; Bank Tax Case, 2 Wall. 200; Pullman's Car Co. v. Pennsylvania, 141 U. S. 18, 25; Fargo v. Hart, 193 U. S. 490, 498, 499.

The cases of the taxation upon the value of the capital stock of the banks, or on a valuation equal to the amount of their capital stock paid in or secured to be paid in, as reported in 2 Black and 2 Wall., supra, involved the question of the taxation of United States bonds and other securities of the United States, in which the capital of the banks was invested, which were exempt from taxation; but the holding of the court was that those bonds and securities were in fact taxed by a tax upon the value of the capital of the bank, which was invested in such bonds and securities. Of course, the distinction between the capital stock of a corporation, and the shares into which it may be divided and held by individual shareholders, is borne in mind and recognized, and nothing herein affects that distinction. The question here is simply as to the value of the capital stock with reference to the assessment and taxation upon the corporation itself which issues it, and has nothing to do with the individual shareholder. Van Allen v. Assessors, 3 Wall. 573; Bank of Commerce v. Tennessee, 161 U. S. 134, 146.

Counsel for defendant in error find no fault with the principle stated in Brown v. Houston, supra, and that line of cases, nor with the general proposition laid down in the other cases cited, that a tax on the value of the capital stock is a tax on the property of the corporation in which the capital is invested. They deny, however, their applicability to the facts of this case. They concede that the courts of Pennsylvania have held that tangible property, permanently located outside of the State, for the use and benefit of the corporation, and owned by it, is exempt from taxation under this statute.