business and persons. A State tax, to be valid and to constitute due process of law, must be levied upon property, business or persons within its jurisdiction.

§ 393. Jurisdiction of State in taxation of property

There can of course be no question as to the power of the State to tax all real property within its limits. It is also clearly established that all property, movable as well as immovable, actually located within the confines of the State, is subject to its taxing power, except of course property reserved therefrom under the constitutional provisions already considered. The fiction which plays so important a part in other branches of the law, that movable property has its situs at the domicil of the owner, has no application to the power of the State to subject all property, movable and immovable, within its limits, to taxation. Movables actually located in the State therefore may be taxed there, though the owner may be domiciled elsewhere. Thus Story says: 1

"The general doctrine is not controverted that, although movables are for many purposes to be deemed to have no situs except that of the domicile of the owner; yet, this being but a legal fiction, it yields whenever it is necessary for the purpose of justice that the actual situs of the thing should be examined. A nation within whose territory any personal property is actually situate, has an entire dominion over it while therein, in point of sovereignty and jurisdiction, as it has over immovable property situate there."

This principle of public law has been repeatedly declared by the Supreme Court in relation to the taxing power of the States. In Coe v. Errol, 2 it was argued that the logs claimed

1 Story's Conflict of Laws, 7th Ed., Sec. 550.

2 116 U. S. 517.

to be in transit through New Hampshire were taxed to their owners in Maine as part of their general stock in trade. But the court held that this would have no influence on the decision of the question whether they were taxable in New Hampshire, saying, at page 524:

“We have no difficulty in disposing of the last condition of the question, namely, the fact (if it be a fact) that the property was owned by persons residing in another State; for, if not exempt from taxation for other reasons, it cannot be exempt by reason of being owned by non-residents of the State. We take it to be a point settled beyond all contradiction or question, that a State has jurisdiction of all persons and things within its territory which do not belong to some other jurisdiction, such as the representatives of foreign governments, with their houses and effects, and property belonging to or in the use of the government of the United States. If the owner of personal property within a State resides in another State which taxes him for that property as part of his general estate attached to his person, this action of the latter State does not in the least affect the right of the State in which the property is situated to tax it also. It is hardly necessary to cite authorities on a point so elementary."

§ 394. State may tax money and securities in its jurisdiction of non-resident owners.

Where personal property is located within the State, whatever its form, whether evidences of debt or otherwise, it may be subjected to the State's taxing power, irrespective of the residence of the owner. Thus the State may establish an independent situs for taxation of bonds, mortgages and other securities of non-resident owners, located in its jurisdiction.

This principle was applied in a recent case in the Supreme

Court from Louisiana, where it was held that certain notes and mortgages, which had been inherited by a citizen of New York from a citizen of Louisiana, but were in the possession of an agent, in New Orleans, were taxable in Louisiana. The court said that the maxim mobilia sequuntur personam, was at best only a legal fiction, and that there had been frequent recognition of the power of a State to separate, for the purposes of taxation, the situs of personal property from the domicil of the owner. As to the remark in the State Tax on Foreign Held Bonds Case, that personal property consisting of bonds and mortgages generally has no situs independent of the owner, the court said at p. 320:

"This last sentence, properly construed, is not to be taken as a denial of the power of the legislature to establish an independent situs for bonds and mortgages, when those properties are not in the possession of the owner, but simply that the fiction of law, so often referred to, declares their situs to be that of the domicile of the owner, a declaration which the legislature has no power to disturb, when in fact they are in his possession."

The court also declared that there was nothing in the case of Kirtland v. Hotchkiss,3 conflicting with these decisions. It was there held that a State might tax one of its citizens on bonds belonging to him, although such bonds were secured by mortgage on property situated in another State," and it was assumed that the situs of such intangible property was at the domicil of the owner, as there was no legislation in that State attempting to set aside that general rule in respect to the matter of situs.

It was further said that, while, in the absence of statute, bills and notes are treated as choses in action and are not

1 New Orleans v. Stempel, 175 U. S. 309.

2 Infra, § 399.

3 Infra, § 421.

subject to levy and sale on execution, yet by the statutes. of many States they are made so subject to seizure and sale, as any tangible personal property. And the opinion concluded, p. 322:

66

It is well settled that bank bills and municipal bonds are in such a concrete tangible form that they are subject to taxation where found, irrespective of the domicile of the owner; are subject to levy and sale on execution, and to seizure and delivery under replevin; and yet they are but promises to pay-evidences of existing indebtedness. Notes and mortgages are of the same nature; and while they may not have become so generally recognized as tangible personal property, yet they have such a concrete form that we see no reason why a State may not declare that if found within its limits they shall be subject to taxation."

The same principle was applied1 where the estate of a non-resident of Minnesota, who had loaned to residents of that State large sums upon notes and mortgages, which were in the possession of a resident agent, was held properly chargeable with taxes on these securities.2

§ 395. Property in hands of resident agents subject to taxing power.

In the case of New Orleans v. Stempel, supra, the notes, mortgages and bonds were in the possession of the local administrator. But the principle has been applied in numerous cases where money of non-residents has been placed in the hands of resident agents for permanent investment and reinvestment.

Thus it was held in a leading case in Vermont, Catlin v. Hull, decided in 1849, that notes, mortgages, etc., in

1 Bristol v. Washington County, 177 U. S. 133.

2 See also McCutchen v. Rice County, 7 Fed. Rep. 558.

3 21 Vt. 152.

the hands of a local agent belonging to a non-resident, had a taxable situs in that State, the court saying in an opinion by Judge Poland: "We are not only satisfied, that this method of taxation is well founded in principle and upon authority, but we think it entirely just and equitable, that, if persons residing abroad bring their property and invest it in this State, for the purpose of deriving profit from its sudden employment here, and thus avail themselves of the benefits and advantages of our laws for the protection of their property, their property should yield its due proportion towards the support of the government, which thus protects it." And the court, referring to a qualifying provision of the statute which is notable for its regard to interstate comity in taxation, added: "And as this power of taxation in this State is only to be exercised in cases, where such property is not shown to be taxed to the real owner, where he resides, we think, that there is no reason for saying, that this power has been attempted to be exercised in an unjust spirit, or that its exercise shows any want of proper comity in our State government." 1

8

This principle was approved by the Supreme Court, not only in New Orleans v. Stempel 2 but also in Bristol v. Washington County. In the latter case a citizen of New York had, for many years, kept a sum of money invested in Minnesota, through a local agent. It was held that this investment was subject to taxation in Minnesota and that the amount of the tax was a claim against the property of the owner, which, after his death, could be proved against his estate in that State. The court therefore directed the Circuit Court to enter judg

1 More recent judicial utterances in other States do not show this solicitude lest the State be accused of want of "proper comity" in taxation. See Sec. 427 et seq.

2 Supra, Sec. 394.

8 177 U. S. 133; see also Walker v. Jacks, 31 C. C. A. 462.