of civil appeals. Subsequently the supreme | in the state. It was contended, as it is concourt expressed itself explicitly in State v. tended here, that this provision made one Shippers' Compress & Warehouse Co. 95 law of the act and the act of 1895, and that Tex. 603, 69 S. W. 58, and State v. Laredo the exemptions of the latter became part of Ice Co. 96 Tex. 461, 73 S. W. 951. the former and made it unconstitutional. In other words, the effect was (we quote from the opinion of the court) "thereby to give exemption from prosecution under the law of 1899 to those persons who are ex

1895." The supreme court of Texas rejected the contention. Its reasoning was not very direct or circumstantial, but it in effect held that the act of 1899 did not continue the provisions of the prior acts, wheth

The object in State v. Shippers' Compress & Warehouse Co. was to forfeit the charter of the compress company for violating the anti-trust law of 1895, in that the incorporators combined "to restrict aids to com-empted by the provisions of the law of merce." The law was attacked as unconstitutional. To the contention the court said: "The defendant insists that the law is unconstitutional, therefore void in whole, and will not support the action to forfeit the charter. Upon the same objection we helder constitutional or unconstitutional, merethe anti-trust law of 1889 to be constitutional, and there is no such difference between the two laws as would affect the decision of this question. We believe that our decision is correct; that the law is not in contravention of the Constitution of the state, nor of the United States. Houck v. Anheuser-Busch Brewing Asso. 88 Tex. 189, 30 S. W. 869."

The court then referred to Connolly v. Union Sewer Pipe Co. 184 U. S. 540, 46 L. ed. 679, 22 Sup. Ct. Rep. 431, and in submission to its authority held the law of 1895, so far as it came within the terms of that case, invalid, and would not support an action by the state to recover a penalty for a violation of the law; nor would it, in suits between corporations and individuals, support a defense based upon the fact that the right of action originated in violation of the anti-trust law. "But," the court remarked, "to the extent that the statute of this state is not embraced in the decision of the Supreme Court of the United States, we shall adhere to our former decision that it is constitutional and valid, and therefore enforceable by the state."

That is, the court decided the act of 1895 was valid to the extent that it authorized the state to revoke the license of a foreign corporation, and to forfeit the charter of a domestic corporation. The other provisions of the act were held invalid, and the right to make this distinction was based on Wa ters-Pierce Oil Co. v. Texas.

State v. Laredo Ice Co. was instituted to recover penalties for the violation of the anti-trust law of 1899. The ice company was a domestic corporation, and it was proceeded against for having formed a combination to regulate and fix prices. In defense, the company asserted the unconstitutionality of the act.

It is provided in § 14 of the act of 1899 that the provisions of preceding sections and the fines and penalties provided for violations of the act shall be held and construed to be cumulative of all laws now in force

ly because it was declared to be cumulative. And the court decided the law of 1899 to be constitutional, because it did not contain the discriminating features of the prior laws. Under the laws of Texas, therefore, combinations of the kind described in the various anti-trust laws, whether by agriculturalists or organized laborers or others, are forbidden and penalized, and the oil company is not discriminated against.

But it may be said that, if the inequalities of prior anti-trust acts have been removed by the act of 1899, they still remain in the Revised Statutes of the state and in the Penal Code, and by those statutes and that Code the excepted classes are exempted from indictment and punishment, while the oil company is subject to both. We need not consider the statutes referred to or consider how far this discrimination can exist, in view of the decision of the supreme court of the state in State v. Laredo Ice Co. Granting it can exist, the case at bar is not a criminal prosecution. It involves only the anti-trust laws and their prohibitions, and penalties. And in them, we have seen, by the effect of the act of 1899 there is no inequality of operation. It is the effect of that decision also that the laws of the state against combinations and trusts are formed into a harmonious system, of which the criminal provisions in other statutes and the Code are a part, and that their provisions can be adjusted and reconciled so as to have constitutional operation.

Judgment affirmed.

(197 U. S. 134) SOUTHERN COTTON OIL COMPANY et al., Plffs. in Err.,

v.

STATE OF TEXAS. Constitutional law-validity of Texas antitrust laws-due process of law-equal protection of the laws-conclusiveness of state court's construction of state statutes.

This case is governed by the decision in National Cotton Oil Co. v. Texas, ante, 379.

[No. 38.] Argued November 1, 2, 1904. Decided February 27, 1905.

IN ERROR to the Court of Civil Appeals

IN

in and for the Third Supreme Judicial District of the State of Texas to review a judgment which affirmed a judgment of the District Court of Travis County, in that State, forfeiting the license of a foreign corporation to do business in that State, because of its violation of the anti-trust laws. Affirmed.

See same case below (Tex. Civ. App.), 72 S. W. 1135.

The facts are stated in the opinion.

Messrs. William V. Rowe, R. S. Lovett, Ralph Oakley, and James A. Baker for plaintiffs in error.

Mr. C. K. Bell for defendant in error.

Mr. Justice McKenna delivered the opinion of the court:

ing state banks and other moneyed corporations from that adopted for the taxation of national banks does not necessarily conflict with U. S. Rev. Stat. § 5219 (U. S. Comp. Stat. 1901, p. 3502), authorizing state taxation of shares of stock in national banks, but exacting that the tax, when levied, shall be at no greater rate than that imposed on other moneyed corporations.

2. A discrimination against national banks,

and in favor of state banks and other moneyed corporations, forbidden by U. S. Rev. Stat. § 5219 (U. S. Comp. Stat. 1901, p. 3502), results from the taxation of shares of stock of national banks, under Cal. Pol. Code, §§ 3608-3610, at their market value, while the construction given by the highest state court to the provisions for the taxation of the "property" of state banks and other moneyed corporations does not require, although property is defined by Cal. Const. art. 13, 1, as including "franchises," that the assessing officers shall include in the assessment all the intangible elements of value which form part of the market and selling value of shares of stock.

[No. 44.]

The Southern Cotton Oil Company is a New Jersey corporation doing business in Argued November 7, 1904. the state of Texas by virtue of a permit issued June 3, 1897, under the laws of the

ruary 27, 1905.

Decided Feb

state. The object of this suit is to forfeit APPEAL from the United States Circuit

the permit of the company for the violation

ceedings.

Court of Appeals for the Ninth Circuit of the anti-trust statutes of the state. The to review a decree which affirmed a decree violation of the statutes alleged against it of the Circuit Court for the Northern Disis the same as that alleged against the Na-trict of California, dismissing a suit to retional Cotton Oil Company in No. 37. [Na- strain the enforcement of taxes on shares tional Cotton Oil Co. v. Texas, 197 U. S. of stock of a national bank. Decrees of both 115, 25 Sup. Ct. Rep. 379, 49 L. ed. —] -] courts below reversed and the cause reThe defenses are the same, and were pre-manded to the Circuit Court for further prosented by demurrer. The demurrer was overruled, and, the Southern Cotton Oil Company declining to plead further, judg ment was entered forfeiting its permit to do business in the state, except such as might be and constitute interstate commerce. The judgment was affirmed by the court of civil appeals. A rehearing was denied, and a writ of error from the supreme court refused. This writ of error was then sued out.

The facts are stated in the opinion.

Messrs. William S. Wood, E. S. Pillsbury, Alfred Sutro, and Lloyd & Wood for appellant.

Messrs. William Irwin Brobeck and Percy V. Long for appellee.

Mr. Justice White delivered the opinion of the court:

The appellant bank sued to restrain the The questions are identical with those pre-enforcement of, state, county, and city taxes, sented in No. 37, and on its authority the judgment of the Court of Civil Appeals is affirmed.

(197 U. S. 70)

levied for the year 1900, upon shares of stock of the bank. Adequate averments were made to show equitable jurisdiction. Cummings v. Merchants' Nat. Bank, 101 U. S. 153, 157, 25 L. ed. 903, 904; Hills v.

SAN FRANCISCO NATIONAL BANK, National Albany Exch. Bank, 105 U. S. 319,

Appt.,

v.

WASHINGTON DODGE, as Assessor of the
City and County of San Francisco.

L

26 L. ed. 1052; Lander v. Mercantile Nat. Bank, 186 U. S. 458, 46 L. ed. 1247, 22 Sup. Ct. Rep. 908. The taxes were alleged to be in conflict with the law of the United States. Rev. Stat. § 5219, U. S. Comp. Stat. 1901,

State taxation of national bank stock-dis- p. 3502.

crimination.

The case was submitted upon the pleadings and an agreed statement of facts. A 1. The adoption of a different method for tax- decree of dismissal was affirmed by the cir

cuit court of appeals for the ninth circuit. | assessed and taxed, but no assessment shall That court deemed that the cause was con- be made of shares of stock; nor shall any trolled by the reasoning of an opinion de- holder thereof be taxed therefor." livered in deciding a previous case (Nevada Nat. Bank v. Dodge), the opinion in which case is reported in 50 C. C. A. 145, 119 Fed. 57.

method is employed as to the stock of state | peals and in this court, and was elaborately banks and other state moneyed corporations. discussed by both parties in the argument In Davenport Nat. Bank v. Board of at bar, viz., that, irrespective of the face of Equalization, 123 U. S. 83, 31 L. ed. 94, 8 the state law, that law is void because of a Sup. Ct. Rep. 73, it was decided that the discrimination against national banks, withprovision of § 5219 of the Revised Statutes in the principles settled in the Davenport [U. S. Comp. Stat. 1901, p. 3502], au- Case. thorizing the taxation of shares of stock in national banks, but exacting that the tax when levied should be at no greater rate than that imposed on other moneyed capital, did not require the states, in taxing their own corporations, "to conform to the system of taxing national banks upon the shares of their stock in the hands of their owners."

True it is in the Davenport Case it was also decided that the prohibition in the act of Congress of a higher rate of taxation of shares of stock in national banks than on other moneyed capital operated to avoid any method of assessment or taxation, the usual or probable effect of which would be to discriminate in favor of state banks and against national banks. True, also, is it | that in the same case it was held that, even where no such discrimination seemingly arose on the face of the statute, nevertheless, if from the record it appeared that the system created by the state in its practical execution produced an actual and material discrimination against national banks, it would be the duty of the court to hold the state statute to be in conflict with the act of Congress, and therefore void.

As, then, no conflict necessarily arises between the act of Congress and the state law, solely because the latter provides one method for taxation of state banks and other moneyed corporations and another method for national banks, it follows that the contention, that the state law, for that reason, is repugnant to the act of Congress, is without merit. And this brings us to consider the contention of the appellant, which we think was embraced in the pleadings, which was expressly covered by the stipulated facts, the overruling of which was assigned as error in the circuit court of apfornia. In making such assessment to each stockholder there shall be deducted from the value of his shares of stock such sum as is in the same proportion to such value as the total value of its real estate and property exempt by law from taxation bears to the whole value of all the shares of capital stock in said national bank. And nothing herein shall be construed to exempt the real estate of such national bank from taxation. And the assessment and taxation of such shares of stock in said national banking associations shall not be at a greater rate than is made or assessed upon other moneyed capital in the hands of individual citizens of this state.

3610. The assessor charged by law with the assessment of said shares shall, within ten days

To determine this latter contention requires an analysis of the two systems which the law of California enforces, in order that the two may be accurately compared.

Under the law the shares of national banks must be valued at their "full cash value," which the statute defines to mean the amount at which they "would be taken for a just debt due from a solvent debtor." These words are but synonymous with the requirement that, in assessing shares of stock, their market value must be the criterion. This is the case, for, eliminating exceptional and extraordinary conditions, giving an abnormal value for the moment to stock, it is apparent that the general market value of stock is its true cash and selling value. That such is the meaning of the words in the legislation of California is indisputable, in view of the provision of § 3640 of the Political Code, which made market value the rule for assessing shares of stock during the period when the taxation of shares of stock generally prevailed, and that such requirement was mandatory was in effect held by the supreme court of California. Miller v. Heilbron, 58 Cal. 133, 138.

What, then, was embraced in the assessment of the shares of stock at their full cash or selling or market value? It embraced, not only the book value of all the assets of the corporations, but the good will, the dividend-earning power, the ability with which the corporate affairs were managed, the confidence reposed in the capacity and permanency of tenure of the officers, and all those other indirect and intangible increments of value which enter into the estimate of the worth of stock, and help to fix the market value or selling price of the shares. Considering this subject in Adams after he has made such assessment, give written notice to each national banking association of such assessment of the shares of its respective shareholders; and no personal or other notice to such shareholder of such assessment shall be necessary for the purpose of this act. And, in case the tax on any such stock is unsecured by real estate owned by the holder of such stock, then the bank in which said stock is held shall become liable therefor; and the assessor shall collect the same from said bank, which may then charge the amount of the tax so collected to the account of the stockholder owning such stock, and shall have a lien, prior to all other liens, on his said stock, and the dividends and earnings thereof, for the reimbursement to it of such taxes so paid.

Exp. Co. v. Ohio State Auditor, 166 U. S. | to requiring that the assessing officers, in 211, 41 L. ed. 974, 17 Sup. Ct. Rep. 604, the valuing the property of a corporation, should court said: assess as property its good will, its divi"The capital stock of a corporation, and dend earning power, the confidence reposed the shares of a joint-stock association, rep-in its officers, etc. From this analysis it resent, not only tangible property, but also the intangible, including therein all corporate franchises, and all contracts, privileges, and good will of the concern."

And in Pullman's Palace Car Co. v. Central Transp. Co. 171 U. S. 138, 43 L. ed. 108, 18 Sup. Ct. Rep. 808, this was reiterated. The court, after observing that, while the franchise was one of the things entering into the computation of market value of shares of stock, said (p. 154, L. ed. p. 115, Sup. Ct. Rep. p. 815):

"The probable prospective capacity for earnings also enters largely into market value, and future possible earnings again depend to a great extent upon the skill with which the affairs of the company may be managed. These considerations, while they may enhance the value of the shares in the market, yet do not in fact increase the value of the actual property itself. They are matters of opinion upon which persons selling and buying the stock may have different views."

That this doctrine is the rule in California is clearly shown by Bank of California v. San Francisco, 142 Cal. 276, 64 L. R. A. 918, 100 Am. St. Rep. 130, 75 Pac. 832, for in that case the court, speaking of such elements of value as "dividend or profit earning power, or good will," said (p. 289, L. R. A. p. 924, Am. St. Rep. p. 141, Pac. p. 838):

"In this connection, it will be observed that these elements, so far as they may enter into the value of shares of stock, would be included in an assessment of such shares to the stockholders."

results that in the one case, that of national banks, not only the value of all the tangible property, but also the value of all the intangible elements above referred to, is assessed and taxed, whilst in the other case, that of state banks and other moneyed corporations, their property is taxed, but the intangible elements of value which we have indicated are not assessed and taxed; the consequence being to give rise to the discrimination against national banks and in favor of state banks and other moneyed corporations forbidden by the act of Congress. In the argument at bar this conclusion, it is insisted, is avoided, because, whilst under the text of the state statutes it may be that all the elements of value which are included in the assessment of shares of stock are not eo nomine assessed against state banks and other moneyed corporations as property, they are, nevertheless, assessed against such corporations under the denomination of "franchise," the duty of the assessing officer to do so being imperative, as the result of the interpretation given to the taxing law by the supreme court of the state. The proposition is thus stated in the argument of counsel:

"Under the California system, all the property of California corporations is assessed, including their franchises. It is frequently the case that the market value of the stock of the corporation is greatly in excess of the value of its property, other than its franchise. This fact was called to the attention of the state court, which recognized the force of this suggestion, and held, the Constitution and laws of the state The state banks and other corporations require the assessment and taxation of the are assessed on their property. Conceding franchise of the corporation, and that its that every species of property is assessed value, for the purpose of such assessment which is specifically enumerated as taxable and taxation, was properly ascertained by in the state Constitution, it does not follow deducting from the market value of its that the assessment of property as such in-stock the value of its corporate property and cludes good will, dividend earning power, assessing the remainder as franchise." confidence in the ability of the management, and all those other intangible elements which necessarily enter into the cash or selling value of shares of stock. As said in the passage already quoted from the Pullman Case, 171 U. S. 138, 43 L. ed. 108, 18 Sup. Ct. Rep. 808, such elements "may enhance the value of the shares [of stock] in the market, yet [they] do not in fact increase the value of the actual property it- The question then is, Do the decisions of self. They are matters of opinion upon the supreme court of California, as contendwhich persons selling and buying the stocked, place the positive duty on the assessor may have different views." In the argu- of including in an assessment of the franment at bar no law of the state was referred 'chises of state corporations all the elements

It may be conceded that, if the statutes have been interpreted by the supreme court of the state as thus asserted, and that, as so interpreted, they have been applied by the assessing officers, there would be an end to the discrimination which we have seen arises from the consideration of the result of the statutes when not so interpreted.