!

33 L. ed. 1025, 10 Sup. Ct. Rep. 593; Plum- I national banks "held by any person or body mer v. Coler, 178 U. S. 115, 44 L. ed. 998, corporate" under certain conditions not nec20 Sup. Ct. Rep. 829. The theory of all essary here to be stated. Acting under the these cases is that the taxes are not Im-authority of this law, the state of New posed upon the assets of the corporation or the property of the decedent, but, in the one case, upon the franchise granted by the state, and, in the other case, upon the right of succession to property on the death of the owner which is conferred by the state.

York assessed the shares of Van Allen in the First National Bank of Albany. At that time all the capital of the bank was invested in United States securities, and it was asserted that a tax upon the individual in respect of the shares he held in the bank was, unless the holdings in United States securities were deducted, a tax upon the securities themselves. But a majority of the court held otherwise, saying by Mr. Justice Nelson: "The tax on the shares is not a tax on the capital of the bank. The corporation is the legal owner of all the property of the bank, real and personal; and, within the powers conferred upon it by the charter, and for the purposes for which it was created, can deal with the corporate property as absolutely as a private individual can deal with his own.

But another line of cases cannot so easily be dismissed. They were relied upon by the supreme court of Iowa, and the respect due to the opinion of that court demands that the reasons why we think those cases do not apply to the case at bar should be fully stated. These cases relate to the right of the state to tax at their full value shares of stock as the property of the shareholders. Although the states may not, in any form, levy a tax upon United States securities, they may tax, as the property of their owners, the shares of banks and The interest of the shareholder other corporations whose assets consist in entitles him to participate in the net profits whole or in part of such securities, and, in earned by the bank in the employment of valuing the shares for the purposes of tax- its capital, during the existence of its ation, is not necessary to deduct the value charter, in proportion to the number of his of the national securities held by the cor- shares; and, upon its dissolution or termiporation whose shares are taxed. The right nation, to his proportion of the property to tax the shares of national banks arises that may remain of the corporation after by congressional authority, but the right the payment of its debts. This is a disto tax shares of state banks exists inde-tinct, independent interest or property, held pendently of any such authority, for the by the shareholder like any other properstate requires no leave to tax the holdings ty that may belong to him. Now, it is this in its own corporations. The right of such interest which the act of Congress has left taxation rests upon the theory that shares subject to taxation by the states, under in corporations are property entirely dis- the limitations prescribed." tinct and independent from the property of the corporation. The tax on an individual in respect to his shares in a corporation is not regarded as a tax upon the corporation itself. This distinction, now settled beyond dispute, was mentioned in M'Culloch v. Maryland, 4 Wheat. 316, 4 L. ed. 579, where, in the opinion of Chief Justice Marshall declaring a tax upon the circulation of a branch bank of the United States beyond the power of the state of Maryland, it was said that the opinion did not extend "to a tax imposed on the interest which the citizens of Maryland may hold in this institution, in common with other property of the same description throughout the state." The distinction appears, however, to have been first made the basis of a decision in Van Allen v. Assessors (Churchill v. Utica), 3 Wall. 573, 18 L. ed. 229. The national bank act, as amended in 1864 [13 Stat. at L. 112, chap. 106] (Rev. Stat. § 5219, U. S. Comp. Stat. 1901, p. 3502), permitted the states to include in the valuation of personal property for taxation the shares of

In an opinion in which Justices Wayne and Swayne joined, Chief Justice Chase dissented from the judgment upon the ground that taxation of the shareholders of a corporation in respect of their shares was an actual though an indirect tax on the property of the corporation itself. But the distinction between a tax upon shareholders and one on the corporate property, although established over dissent, has come to be inextricably mingled with all taxing systems, and cannot be disregarded without bringing them into confusion which would be little short of chaos.

Ac

The Van Allen Case has settled the law that a tax upon the owners of shares of stock in corporations, in respect of that stock, is not a tax upon United States securities which the corporations own. cordingly, such taxes have been sustained by this court, whether levied upon the shares of national banks by virtue of the congressional permission, or upon shares of state corporations by virtue of the power inherent in the state to tax the shares

here is one of power, and not of economics. If the state has not the power to levy this tax, we will not inquire whether another tax, which it might lawfully impose, would have the same ultimate incidence. Precisely the same argument was made and rejected in Owensboro Nat. Bank v. Owensboro, 173 U. S. 664, 43 L. ed. 850, 19 Sup. Ct. Rep. 537. There it appeared that a tax upon the intangible property of a national bank had been levied under the name of a franchise tax. Such a tax upon one of the agencies of the national government is beyond the power of the state. But it was contended that, although the tax was not in form upon shares in the hands of shareholders (a tax lawful by the permission Congress has given), it was the equivalent of such a tax. To this contention the court, by Mr. Justice White, replied: "To be equivalent in law involves the proposition that a tax on the franchise and property of a bank or corporation is the equivalent of a tax on the shares of stock in the names of the shareholders. But this propo

of such corporation. The tax assessed to shareholders may be required by law to be paid in the first instance by the corporations themselves, as the debt and in behalf of the shareholder, leaving to the corporation the right to reimbursement for the tax paid from their shareholders, either under some express statutory authority for their recovery or under the general principle of law that one who pays the debt of another, at his request, can recover the amount from him. First Nat. Bank v. Kentucky, 9 Wall. 353, 19 L. ed. 701; Lionberger v. Rouse, Wall. 468, 19 L. ed. 721; First Nat. Bank v. Chehalis County, 166 U. S. 440, 41 L. ed. 1069, 17 Sup. Ct. Rep. 629; Merchants' & M. Nat. Bank v. Pennsylvania, 167 U. S. 461, 42 L. ed. 236, 17 Sup. Ct. Rep. 829; Cleveland Trust Co. v. Lander, 184 U. S. 111, 46 L. ed. 456, 22 Sup. Ct. Rep. 394. The theory sustaining these cases is that the tax was not upon the corporations' holdings of bonds, but on the shareholders' holdings of stock; and an examination of them shows that in every case the tax was assessed upon the property of the share-sition has been frequently denied by this holders, and not upon the property of the corporation. There is nothing in them which justifies the tax under consideration here, levied, as has been shown, on the corporate property. Without further review of the authorities it is safe to say that the distinction established in the Van Allen Case has always been observed by this court, and that, although taxes by states have been permitted which might indirectly affect United States securities, they have never been permitted in any case except where the taxation has been levied upon property which is entirely distinct and independent from these securities. On the other hand, whenever, as in these cases, the tax has been upon the property of the corporation, so far as that property has consisted of such securities, it has been held void.

One other consideration only needs to be noticed. It is said that where a tax is levied upon a corporation, measured by the value of the shares in it, it is equivalent in its effect to a tax (clearly valid) upon the shareholders in respect of their shares, because, being paid by the bank, the burden falls eventually upon the shareholders in proportion to their holdings. It was upon this view that the lower court rested its opinion. But the two kinds of taxes are not equivalent in law, because the state has the power to levy one, and has not the power to levy the other. The question

This fact, assumed, but not stated, in Cleveland Trust Co. v. Lander, is shown by

the record to exist.

The

court, as to national banks, and has been
overruled to such an extent in many other
cases relating to exemptions from taxation,
or to the power of the states to tax, that
to maintain it now would have the effect
to annihilate the authority to tax in a
multitude of cases, and as to vast sums
of property upon which the taxing power
is exerted in virtue of the decisions of this
court holding that a tax on a corporation
or its property is not the legal equivalent
of a tax on the stock, in the names of the
stockholders.
If the mere coinci-
dence of the sum of the taxation is to be
allowed to frustrate the provisions of the
act of Congress, then that act becomes
meaningless and the power to enforce it in
any given case will not exist.
argument that public policy exacts that
where there is an equality in amount be-
tween an unlawful tax and a lawful one,
the unlawful tax should be held valid, does
not strike us as worthy of serious con-
sideration." These words apply with equal
force to the case at bar. Moreover, it may
be said that, if given the effect claimed,
the consideration that the ultimate burden
of the tax is distributed upon the share-
holders in proportion to their holdings
would have saved the taxes condemned in
the Bank of Commerce Case and the Bank
Tax Case, and, indeed, all taxes assessed
upon the property of corporations, and
the immunity from state tax of United
States bonds owned by corporations would
indirectly be absolutely destroyed.

We regret that we are constrained to dif

Mr. Justice Holmes delivered the opinion. of the court:

fer with the supreme court of the state | personis, and Messrs. E. B. McClanahan and on a question, relating to its law. But, S. H. Derby for defendant in error Ables. holding the opinion that the law directly taxes national securities, our duty is clear. If, by the simple device of adopting the value of corporation shares as the measure of the taxation of the property of the corporation, that property loses the immunities which the supreme law gives to it, then national securities may easily be taxed when ever they are owned by a corporation, and the national credit has no defense against a serious wound.

This is a writ of error to review a judgment for the defendants in a suit upon a contract. 16 Haw. 332, 485. At the trial a nonsuit was ordered, subject to exceptions taken by the plaintiff. A motion for a new trial was made but was dismissed, and this dismissal also was excepted to. The supreme court held that the former exceptions were presented too late, but that the latter was open and raised the question whether the judgment of nonsuit was right as matter of law. It discussed this question and

The CHIEF JUSTICE, Mr. Justice Harlan, sustained the judgment. This was on Deand Mr. Justice Peckham dissent.

Error to Hawaiian supreme court-effect of amending jurisdictional statute.

A writ of error from the Federal Supreme Court to the supreme court of the territory of Hawaii which would not lie when final judgment was entered cannot be sustained as an exercise of the appellate jurisdiction conferred by the act of March 3, 1905 (33 Stat. at L. 1035, chap. 1465), § 3, amending the act of April 30, 1900 (31 Stat. at L. 141, 158, chap. 339), § 86, because a petition for rehearing, which the territorial supreme court entertained and acted upon, was not denied by that court

until after the later statute went into effect.

[No. 107.]

cember 14, 1904. In January, 1905, a petition for rehearing was filed; it was entertained by the court, and, after argument, was denied on March 6, 1905. The defendants in error now move to dismiss, the main ground being that the act of March 3,

1905, chap. 1465, § 3 (33 Stat. at L. 1035), amending the act of April 30, 1900, chap. 339, § 86 (31 Stat. at L. 141, 158), granting writs of error, etc., does not apply.†

It is answered for the plaintiff in error that, as the petition for rehearing was entertained and acted upon by the supreme court of the territory, the time to be considered is the date when the petition was denied, and that that was after the statute went into effect. Voorhees v. John T. Noye Mfg. Co. 151 U. S. 135, 38 L. ed. 101, 14 Sup. Ct. Rep. 295; Northern P. R. Co. v. Holmes, 155 U. S. 137, 39 L. ed. 99, 15 Sup. Ct. Rep. 28. No doubt the decisions cited and others show that where a right to take the case up exists at the time of the original judgment, the time limited for the writ of error on appeal does not begin to run until the petition for rehearing is disposed of. But there are limits to even that rule.

Submitted March 18, 1907. Decided April When an appeal in bankruptcy, required by

22, 1907.

N ERROR to the Supreme Court of the I Territory of IIawaii to review a judgment which overruled exceptions from the Circuit Court of the First Circuit in that territory, which had ordered a nonsuit in an action on a contract. Dismissed for want of jurisdiction.

See same case below, 16 Haw. 332; on rehearing, 16 Haw. 485.

The facts are stated in the opinion. Mr. Thomas Milner Harrison, in propria persona, and Messrs. David L. Withington, A. G. M. Robertson, and W. R. Castle for plaintiff in error.

Amended by act of March 3, 1905, chap. 1465, 3, by adding at the end of the section: "Provided, That writs of error and appeals may also be taken from the supreme court of the territory of Hawaii to the Supreme Court of the United States in all cases where the amount involved, exclusive Messrs. J. Alfred Magoon, F. B. McStock-of costs, exceeds the sum or value of five er, and Mrs. Dorothea Emerson, in propriis' thousand dollars."

27 S. C.-37.

be brought within thirty days after the judgment or decree, was not brought within that time, the fact that a petition for rehearing was filed within the time required by the court below, but after the thirty days, was held not to prolong the time for appeal. "The appellant could not reinvest himself with that right by filing a petition for rehearing." Conboy v. First Nat. Bank, 203 U. S. 141, 145, 51 L. ed. 128, 27 Sup. Ct. Rep. 50. If, at the time of final judgment, there is no right of appeal whatever, it is perhaps even plainer that a party cannot evoke a new one by filing a petition for rehearing, even if, by accident, it is kept along until an act giving an appeal is passed. Whether, in any event, a writ of error would lie in this case, it is unnecessary to decide.

Writ of error dismissed.

Insurance-suicide as defense.

2. A policy of accident insurance issued after the passage of Mo. Rev. Stat. 1879, § 5982, providing that in all suits on policies of insurance on life it shall be no defense that the insured committed suicide unless it be shown that he contemplated suicide when applying for the policy, cannot lawfully restrict the liability of the insurance company to one tenth of the principal sum insured, in the event of suicide not contemplated by the insured at the time application was made for the policy.

[No. 258.]

Argued April 12, 1907. Decided April 22, 1907.

See same case below, 75 C. C. A. 358, 144 Fed. 356.

The facts are stated in the opinion. Messrs. Frank Hagerman and Herbert S. Hadley for petitioners.

Messrs. James C. Jones, J. J. Darlington, Jones, Jones, & Hocker, and Boyle, Guthrie, & Smith for respondent.

Mr. Justice Harlan delivered the opinion of the court:

This is a suit upon an accident policy of insurance issued November 3d, 1900, by the Etna Life Insurance Company of Hartford, Connecticut, upon the life of James Whitfield, a resident of Missouri. The policy specifies various kinds of injuries; also, the amount that will be paid by the company on account of such injuries respectively. It provides: "If death results solely from such injuries within ninety days, the said company will pay the principal sum of $5,000 to Amanda M. S. Whitfield, his wife, if living; and, in event of the death of said beneficiary before the death of the insured, to the executors, administraicy recites that it was issued and accepted tors, or assigns of the insured." The polby the assured, James Whitfield, subject to certain conditions, among which are these: “... 5. In event of death, loss of limb or sight, or disability due to injuries intentionally inflicted upon the insured by any other person (except assaults committed for the sole purpose of burglary or robbery), whether such other per

66

son be sane or insane, or under the influence of intoxicants or not; or due to injuries received while fighting or in a riot; or due to injuries intentionally inflicted upon the insured by himself; or due to suicide, sane or insane; or due to the taking of poison, voluntarily or involuntarily, or the inhaling of any gas or vapor; or due to injuries received while under the influence of intoxicants or narcotics,-then, in all such cases referred to in this paragraph, the limit of this company's liability shall be one tenth the amount otherwise payable under this policy, anything to the contrary in this policy notwithstanding. 8. The maximum liability of the company hereunder in any policy year shall

ON WRIT of Certiorari to the United not exceed the principal sum hereby in

States Circuit Court of Appeals for the sured, and in no event will claim for weekEighth Circuit to review a judgment which ly indemnity be valid if claim is also made affirmed a judgment of the Circuit Court for any of the stated amounts herein profor the Western District of Missouri, limit-vided for specified injuries, based upon the ing the recovery on a policy of accident insurance because of the suicide of the insured to one tenth of the principal sum named in the policy. Reversed and reReversed and remanded for further proceedings.

same accident and resulting injuries.”

The insured died April 7th, 1902, the plaintiff, his widow and the beneficiary of the policy, alleging in her petition that he died "from bodily injuries, effected through

*Ed. Note.-For cases in point, see vol. 28, Cent. Dig. Insurance, § 1153,