Statement of the Case.

law of the State or of any other State or country, to be computed by a percentage upon its whole capital stock, and to be ascertained in the manner provided by the act, when applied to a manufacturing corporation organized under the laws of Utah, and doing the greater part of its business out of the State of New York, and paying taxes in Illinois and Utah, but doing a small part of its business in the State of New York, does not tax persons or property not within the State; nor regulate interstate commerce; nor take private property without just compensation; nor deny to the corporation the equal protection of the laws; nor impose a tax beyond the constitutional power of the State: and the remedy of the corporation against hardship and injustice, if any has been suffered, must be sought in the legislature of the State.

The cases respecting state taxation of foreign corporations reviewed.

THE Court stated the case as follows:

The defendant below, the plaintiff in error here, the Horn Silver Mining Company, is a corporation created under the laws of the Territory of Utah. The present action is brought by the People of the State of New York, upon the allegation that it was doing business within the State in 1881 and 1882, to recover certain taxes alleged to be chargeable on its "corporate franchise or business" for those years and the penalty prescribed for their non-payment in each year.

By the act of the legislature of New York, approved May 26, 1881, (1 Sess. Laws, 1881, p. 481, c. 361,) amending a previous act providing for levying taxes for the use of the State upon certain corporations, joint-stock companies and associations, it was declared that every corporation, joint-stock company, or association then or thereafter incorporated or organized under any law of the State, or of any other State or country, and doing business in the State, with certain specified exceptions not important in this case, should be subject to a tax "upon its corporate franchise or business," to be computed in a mode specified, which was by a certain percentage upon its capital stock measured by the dividend on the par value of that stock, or, where there were no dividends, or its dividends were less than a certain percentage upon the par value of the capital stock, then according to a certain percentage upon the actual value of the capital stock, during the year.

Statement of the Case.

The complaint in the action alleges the facts necessary to charge the corporation under this act for both years; that the amount of tax due pursuant to its provisions for the year ending on the first day of November, 1881, was $7500, and the additional sum of $1500 as a penalty for the delay of the company in paying the tax for two years after it became due, and that the amount of taxes due for the year ending on the first day of November, 1882, was $30,000, with the further sum of $3000 as a penalty of ten per centum for the delay of the defendant in paying the same.

The defendant answered the various allegations of the complaint, denying them so far as they charge liability to the people of New York, and setting up that it had been at all times a manufacturing corporation organized and existing under the laws of Utah; that it had never exercised any franchises or powers under the laws of New York; that its capital stock of ten millions of dollars was issued in payment for real estate in Utah and Illinois, which consists entirely of mining property and improvements thereon, and a refinery; that during the years ending November 1, 1881 and 1882, it carried on in the State of New York the business of manufacturing bars of silver from Utah and Illinois into standard bars; that said business constituted but a small portion of its entire business, and was the only business carried on in the State of New York, except its financial business and correspondence; that its capital stock was only partially employed in New York; and that it paid taxes both in Utah and in Illinois. It insisted that the statute, upon which the action was brought, was invalid and inoperative as to it because of the facts set forth, and because it established an unjust and unequal system of taxation, and fixed the amount of tax wholly without regard to the extent of the corporate franchises exercised by it in the State, and without regard to the amount of business done within the State, or the amount of capital employed or the amount of its capital stock held in the State, and the extent of the protection and benefits derived from its laws and agencies, and because it sought to tax property and persons not within the jurisdiction of the State or in

Argument for Plaintiff in Error.

any way subject to its authority, and violated the principles of equality and uniformity. It also insisted that the taxation attempted was, in effect, the taking of private property without just compensation, the denial to defendant of the equal protection of the laws, and a regulation of commerce among the several States, and taxing property and business without the jurisdiction of the State of New York. By consent of parties the case was referred to a referee to hear and determine all the issues of law and fact therein. The referee found that the defendant was a corporation created and organized under the laws of the Territory of Utah, and was at all times mentioned in the complaint, doing business in the State of New York, and liable to be taxed on its corporate business under the provisions of section 3 of the act of New York above cited. He also found, in substance, that the stock and capital of the defendant were properly appraised and the amount of the tax was assessed in conformity with the provisions of that act, and that, accordingly, the sums above mentioned, amounting to $41,250, were due; and he directed a judgment to be entered therefor in favor of the plaintiff.

The referee also found that the defendant paid taxes, both in the Territory of Utah and in the State of Illinois in the years 1881 and 1882, and that the greater part of its business was out of the State of New York as well as the greater part of the capital used in its business.

Upon the findings of the referee judgment was entered in the Supreme Court of the State for the amount reported, and the case, being taken to the Court of Appeals, was there affirmed. Being then remitted to the Supreme Court and entered there, the case was brought, on a writ of error, to this court.

Mr. Julien T. Davies (with whom was Mr. Edward Lyman Short on the brief) for plaintiff in error.

I. The taxes in question are not license taxes imposed upon a foreign corporation as a prerequisite of doing business in the State of New York. The New York statutes impose a tax for revenue. Their purpose is to do this, and they are enacted

Argument for Plaintiff in Error.

under the taxing power. They are not license laws, enacted under the police power of the State. These taxes are not the price of a permit to do business within the State, the payment of which is a condition precedent to the transaction of such business. They are to be judged therefore as tax laws. The title of the acts of 1880 and 1881 is,

"An Act to provide for raising taxes for the use of the State upon certain corporations," etc. The Constitution of the State of New York makes the title of an act in some cases of controlling importance, and it is held to be a "legitimate " subject for consideration in "determining the intent of special legislative action.” Westchester Fire Ins. Co. v. Davenport,

91 N. Y. 514, 585.

The language of Mr. Justice Blatchford in Philadelphia Fire Association v. New York, 119 U. S. 110, 119, shows distinctly the difference between a license fee which is a prerequisite to doing business for the future and a tax. "This Pennsylvania corporation came into the State of New York to do business by the consent of the State, under this act of 1853, with a license granted for a year, and has received such license annually, to run for a year. It is within the State for any given year under such license, and subject to the conditions prescribed by statute. The State, having the power to exclude entirely, has the power to change the conditions of admission at any time for the future, and to impose as a condition the payment of a new tax, or a further tax, as a license fee. If it imposes such license fee as a prerequisite for the future, the foreign corporation, until it pays such license fee, is not admitted within the State or within its jurisdiction. is outside, at the threshold, seeking admission, with consent not yet given."

It

This law, therefore, can obtain no support from any assumed principle or rule of law that any burden may be imposed upon a foreign corporation as a condition of doing business in any State.

The legislature could not, because of its power to impose a burden upon foreign corporations as a condition of doing business, take money or property from a foreign corporation,

Argument for Plaintiff in Error.

already lawfully doing business there, by an absolute and unconditional demand. It will hardly be disputed that a corporation created by one State may do business in another by virtue of interstate comity, unless prohibited by the law or established policy of the latter. Cowell v. Springs Co., 100 U. S. 55; Christian Union v. Yount, 101 U. S. 352.

II. The taxes in question, in the view of the court of appeals of the State of New York, were laid upon the business of the Horn Silver Mining Company transacted in the State of New York. That business consisted: (1) In selling to the United States, at its Assay Office in the city of New York, the silver bullion bars refined in Chicago from base bullion sent there from Utah, where the ore is mined and smelted into base bullion. (2) In transmitting a large part of the proceeds of the sales in New York to Utah. (3) In retaining the remainder of the proceeds of sales in the city of New York, loaning them and keeping them in bank until required for the payment of dividends, and then paying dividends in New York therefrom. (4) In maintaining an office for officers and directors.

The taxes in question, then, if the construction of the Court of Appeals be accepted, fall upon the business of the Horn Silver Mining Company done in the State of New York during the years 1881 and 1882, measured by its entire capital stock taken at a valuation in the case of the tax for the year 1881, and measured by the rate of annual dividends multiplied upon the entire capital stock in the case of the tax for the year 1882. As that business is principally and primarily the business of importing silver bullion into the State of New York and there selling it, all other business being merely incidental thereto, the taxes in question fall upon transactions of that character.

III. The business of bringing bars of silver from Chicago to New York and there selling them is interstate commerce. Inasmuch as interstate commerce, consisting in the transportation, purchase, sale and exchange of commodities, is national in its character, and must be governed by a uniform system, Congress, so long as it does not pass any law to regulate it or