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may tender or claim the right to pay-than by paying the tax under protest, and within thirty days suing the collector to recover it; the judgment recovered, if any, to be a first claim on the treasury,- it was held that this act did not leave a party without adequate remedy for enforcing his right to pay his taxes in the bills, and did not, therefore, impair the obligation of the state contract. But if, under the law which provides for the issue of obligations, a tender thereof for taxes is a discharge, the tender, notwithstanding any subsequent legislation, will have that effect, and the tax payer, if his property is seized for the taxes, may reclaim it on legal process.2

Exemption of agencies of government. No state can impose taxes on persons, property or other subjects of taxation which are not within its jurisdiction. This is self-evident, but it has peculiar application in this country under the federal constitution, which apportions the sovereign authority between the state and the nation, and gives to each over certain subjects an exclusive jurisdiction. Whatever pertains to this exclusive jurisdiction is excluded from the taxing power of the other as much as if it were beyond its territorial limits. The rules upon this subject, as they have been laid down by the authorities, appear to be the following:

1. General Liability. Every person within a state owing temporary or permanent allegiance to it; all property of every description within the state and entitled to the protection of its laws; every private franchise, privilege, business or occupation, is subject to be taxed by the state, in return for the benefits received and anticipated from state government and protection. But they are also on precisely the same grounds subject to be taxed by the federal government, whenever its necessities or policy shall be thought to require it.3

1 Tennessee v. Sneed, 96 U. S., 69. Compare Poindexter v. Greenhow, 114 U. S., 270.

2 Poindexter v. Greenhow, 114 U. S., 270.

3 It is said in Lane County v. Oregon, 7 Wall., 71, that with the exception of the restrictions expressly imposed by the constitution of the United States, the state power of taxation in respect to property, business and persons within its limits remains entire. There is nothing in the constitution which contemplates authorizing any direct abridgment of this power by the national legislature.

2. National and State Powers Exclusive. It is the theory of our system of government that the state and the nation alike are to exercise their powers respectively in as full and ample a manner as the proper departments of government shall determine to be needful and just, and as might be done by any other sovereignty whatsoever. This theory by necessary implication excludes wholly any interference by either the state or the nation with an independent exercise by the other of its constitutional powers. If it were otherwise, neither government would be supreme within what has been set apart for its exclusive sphere, but, on the other hand, would be liable at any time to be crippled, embarrassed, and perhaps wholly obstructed in its operations, at the will or caprice of those who for the time being wielded the authority of the other. And that an exercise of the power to tax might have that effect is manifest from a consideration of the nature of the power. Any "power which in its nature acknowledges no limits," and which, even in a lawful and legitimate exercise, may be carried to the extent of an absolute appropriation of property. or destruction of the franchise or privilege upon which it is exerted,2 must, as a power of one sovereignty, be incapable of being admitted within the jurisdiction of another for exercise at the discretion of the power wielding it. And the state and the nation having each their separate and distinct sphere, within which they are permitted, by the fundamental law, to exercise independent authority, the principle which excludes from one sovereignty the taxing power of another is as much applicable within the American Union to the taxation of state and nation respectively, as it is elsewhere.

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3. Federal Agencies. It follows as a necessary and inevitable conclusion, that the means or agencies provided or se

1 Per Marshall, Ch. J., in Weston v. Charleston, 2 Pet., 449, 466; Lane County v. Oregon, 7 Wall., 71; Bank of Commerce v. New York, 2 Black, 620; Carroll v. Perry, 4 McLean, 25; Cheaney v. Hooser, 9 B. Monr., 330, 339; Veazie Bank v. Fenno, 8 Wall., 533, 548; State v. Bell, 1 Phil. (N. C.), 76. Compare Berney v. Tax Collector, 2 Bailey, 654.

2 McCullough v. Maryland, 4 Wheat., 316, 431, per Marshall, Ch. J.; Veazie Bank v. Fenno, 8 Wall., 533, 518, per Chase, Ch. J.; National Bank v. United States, 101 U. S., 1; Savings Association v. Marks, 3 Woods, 553. 3 See Railroad Co. v. Husen, 95 U. S., 465.

lected by the federal government as necessary or convenient to the exercise of its functions cannot be subjected to the taxing power of the states, since, if they could be, a state dissatisfied therewith, or disposed for any reason to cripple or hamper the operations of the federal government, might tax them to an extent that would impair their usefulness, or even put them out of existence. On this ground the power of the states to tax the United States Bank was denied, the bank having been chartered as an agency of government. This principle is applicable to the national banks now in operation, which also have been called into existence by the federal government for its purposes or at least on grounds of national policy. But the sovereignty in whose interest the exemption exists is fully protected if it controls in respect to taxation; and it may, in its discretion, permit its own agencies or its own property to be taxed by the other, under limitations prescribed by itself, as the federal government has permitted the states to tax the national banks as they tax other moneyed corporations within their jurisdiction. On the general principle above stated, the states are 'precluded from taxing the salaries or emoluments of national officers, or the loans of the United States contracted under its constitutional power to borrow money for its purposes, or the

1 McCulloch v. Maryland, 4 Wheat., 316; Osborne v. Bank of United States, 9 Wheat., 738.

2 Van Allen v. Assessors, 3 Wall., 573; Austin v. Boston, 14 Allen, 359; Flint v. Boston, 99 Mass., 141; State v. Newark, 39 N. J., 380; National Bank v. Mobile, 62 Ala., 284; Sumter Co. v. National Bank, 62 Ala., 464.

3 Van Allen v. Assessors, 3 Wall., 573; National Bank v. Commonwealth, 9 Wall., 353; Union Nat. Bank v. Chicago, 3 Biss., 82.

4 Dobbins v. Commissioners of Erie County, 16 Pet., 435. In Melcher v. Boston, 9 Met., 73, a clerk in a postoffice was held taxable by the state on his income. See Sweat v. Boston, etc., R. Co., 5 N. B. R., 249.

5 Weston v. Charleston, 2 Pet., 449; Bank of Commerce v. New York, 2 Black, 620; Bank Tax Case, 2 Wall., 200; Van Allen v. Assessors, 3 Wall., 573; People v. The Commissioners, 4 Wall., 244; Bradley v. People, 4 Wall., 459; The Banks v. The Mayor, 7 Wall., 16; Bank v. Supervisors, 7 Wall., 26; German Am. Bank v. Burlington, 54 Ia., 609. Compare State v. Jackson, 33 N. J., 450; Commonwealth v. Hamilton Manuf. Co., 12 Allen, 298; Commonwealth v. Provident Inst., 12 Allen, 312; Coite v. Society for Savings, 32 Conn., 173. A tax on the franchise of a corporation whose capital is in part invested in United States securities is not a tax on such securities. Society for Savings v. Coite, 6 Wall., 594; Provident Institution v. Massachusetts, 6 Wall., 611; Hamilton Company v. Massachusetts, 6 Wall., 632;

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revenue stamps issued by the United States and held by individuals, or treasury notes issued and circulating as money, or the messages of the government sent by telegraph. But the mere fact that a corporation receives its charter and pecuniary or other aid from the United States does not fix its character as a federal agency, nor does the fact that the United States sometimes makes use of it for its purposes, as it might of a similar convenience brought into existence in some other way. And a state may tax the property of federal agencies with other property in the state, and as other property is taxed, when no law of congress forbids, and when the effect of the taxation will not be to defeat or hinder the operations of the national government. A different rule, as has been well said, "would remove from the reach of state taxation all the property of every agent of the government. Every corporation engaged in the transportation of mails or of government property, of every description, by land or water, or in supplying materials for the use of the government, or in performing any service of whatever kind, might claim the benefit of the exemption," 5 and the effect would be to embarrass and injure the state to the benefit of individuals rather than of the nation."

4. State Agencies. The federal government is also without power to tax the corresponding means or agencies of the states, or the salaries of state officers; the state in the exercise of its functions being entitled to the same immunity from congres

People v. Home Ins. Co., 92 N. Y., 328. The fact that federal obligations are above par does not make the premium taxable. People v. Com'rs of Taxes, 76 N. Y., 64. When income is taxed it will not be presumed to have been received in something not taxable. New Orleans v. Fourchy, 30 La. An., 910.

1 Palfrey v. Boston, 101 Mass., 329.

2 Montgomery Co. v. Elston, 32 Ind., 27; Bank of N. Y. v. Supervisors, 7 Wall., 26; Ogden v. Walker, 59 Ind., 460; Horne v. Green, 52 Miss., 452. In this last case it was held that the rule of exemption applied to national bank notes.

Telegraph Co. v. Texas, 105 U. S., 460.

Huntington v. Cent. Pac. R. Co., 2 Sawy., 503; Railroad Co. v. Peniston, 18 Wall., 5. See Thompson v. Pacific R. Co., 9 Wall., 579.

5 Thomson v. Pacific R. Co., 9 Wall., 579, 591.

6 See Railroad Co. v. Peniston, 18 Wall., 5.

sional interference that the nation is from that of the state.1 And a state municipal corporation, being only a portion of its sovereign power, created as a convenient if not a necessary part of the machinery of state government, is as much exempt from the taxation of the federal government, in all its revenues and property, as the state itself."

5. Inadmissible Personal Taxes. A tax upon persons may possibly, in some cases, tend to embarrass the operations of either national or state government, in which case it would be void unless imposed by the government which was liable to be inconvenienced by it. And, on this ground, it has been held

1 Ward v. Maryland, 12 Wall., 418, 427, per Clifford, J.; The Collector v. Day, 11 Wall., 113; Railroad Co. v. Peniston, 18 Wall., 5; Freedman v. Siegel, 10 Blatch., 327; Warren v. Paul, 22 Ind., 276, 279; State v. Gaston, 32 Ind., 1; Fifield v. Close, 15 Mich., 505; Union Bank v. Hill, 3 Cold., 325; Smith v. Short, 40 Ala., 385; Jones v. Keep's Estate, 19 Wis., 390; Sayles v. Davis, 22 Wis., 217; Moore v. Quirk, 105 Mass., 49; S. C., 7 Am. Rep., 499; Cooley's Const. Lim., 5th ed., 598, and cases cited. A railroad wholly owned by a state and operated by it is not taxable under the United States reve‐ nue laws. Georgia v. Atkins, 1 Abb. (U. S.), 22.

2 United States v. Railroad Co., 17 Wall., 322. In this case the facts were that the city of Baltimore held bonds of the Baltimore & Ohio R. R. Co. to a large amount. The internal revenue law of the United States then in force required every railroad company indebted upon bonds or other evidence of indebtedness bearing interest, or upon coupons representing the interest, to pay a tax of five per cent. upon all such interest or coupons, and authorized the company to retain the amount so paid as a tax from the creditor. The railroad company in this case refused to make the payment, so far as concerned the interest on bonds held by the city of Baltimore, and the court sustained it in the refusal, holding that the tax was not a tax upon the railroad company, but upon its creditors, and in the case of the interest in question was no more competent than if imposed directly upon the city.

That the state may tax its own municipalities or their property, if it shall see fit to do so, is undoubted; but there is always a presumption against an intent to do so. See post, ch. VI, where the cases on the subject are collected. But the presumption that public property is not intended to be taxed ceases when it has been sold, even though the title has not yet passed; and the interest of the purchaser is commonly taxed. But statutes generally provide for such cases, so as to protect the public interest. A sale of state lands for taxes is void (McCarlin v. State, 99 Ind., 478), even though the lands had come to the state by escheat, and the fact of escheat was not known when the tax was imposed. Reid v. State, 74 Ind., 252. See Louisville v. Commonwealth, 1 Duv., 295; Piper v. Singer, 4 S. & R.,

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