Pullman's Palace-Car Company v. Pennsylvania/Opinion of the Court
Upon this writ of error, whether this tax was in accordance with the law of Pennsylvania is a question on which the decision of the highest court of the state is conclusive. The only question of which this court has jurisdiction is whether the tax was in violation of the clause of the constitution of the United States granting to congress the power to regulate commerce among the several states. The plaintiff in error contends that its cars could be taxed only in the state of Illinois, in which it was incorporated, and had its principal place of business. No general principles of law are bettersettled or more fundamental than that the legislative power of every state extends to all property within its borders, and that only so far as the comity of that state allows can such property be affected by the law of any other state. The old rule, expressed in the maxim mobilia sequntur personam, by which personal property was regarded as subject to the law of the owner's domicile, grew up in the Middle Ages, when movable property consisted chiefly of gold and jewels, which could be easily carried by the owner from place to place, or secreted in spots known only to himself. In modern times, since the great increase in amount and variety of personal property, not immediately connected with the person of the owner, that rule has yielded more and more to the lex situs,-the law of the place where the property is kept and used. Green v. Van Buskirk, 5 Wall. 307, and 7 Wall. 139; Hervey v. Locomotive Works, 93 U.S. 664; Harkness v. Russell, 118 U.S. 663, 679, 7 Sup. Ct. Rep. 51; Walworth v. Harris, 129 U.S. 355, 9 Sup. Ct. Rep. 340; Story, Confl. Laws, § 550; Whart. Confl. Laws, §§ 297-311. As observed by Mr. Justice Story, in his commentaries just cited: '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.' For the purposes of taxation, as has been repeatedly affirmed by this court, personal property may be separated from its owner; and he may be taxed on its account at the place where it is, although not the place of his own domicile, and even if he is not a citizen or a resident of the state which imposes the tax. Lane Co. v. Oregon, 7 Wall. 71, 77; Railroad Co. v. Pennsylvania, 15 Wall. 300, 323, 324, 328; Railroad Co. v. Peniston, 18 Wall. 5, 29; Tappan v. Bank, 19 Wall. 490, 499; State Railroad Tax Cases, 92 U.S. 575, 607, 608; Brown v. Houston, 114 U.S. 622, 5 Sup. Ct. Rep. 1091; Coe v. Errol, 116 U.S. 517, 524, 6 Sup. Ct. Rep. 475; Marye v. Railroad Co., 127 U.S. 117, 123, 8 Sup. Ct. Rep. 1037. It is equally well settled that there is nothing in the constitution or laws of the United States which prevents a state from taxing personal property employed in interstate or foreign commercelike other personal property within its jurisdiction. Delaware ail road Tax, 18 Wall. 206, 232; Telegraph Co. v. Texas, 105 U.S. 460, 464; Ferry Co. v. Pennsylvania, 114 U.S. 196, 206, 211, 5 Sup. Ct. Rep. 826; Telegraph Co. v. Attorney General, 125 U.S. 530, 549, 8 Sup. Ct. Rep. 961; Marye v. Railroad Co., 127 U.S. 117, 124, 8 Sup. Ct. Rep. 1037; Leloup v. Mobile, 127 U.S. 640, 649, 8 Sup. Ct. Rep. 1380. Ships or vessels, indeed, engaged in interstate or foreign commerce upon the high seas or other waters which are a common highway, and having their home port, at which they are registered under the laws of the United States at the domicile of their owners, in one state, are not subject to taxation in another state at whose ports they incidentally and temporarily touch for the purpose of delivering or receiving passengers or freight. But that is because they are not, in any proper sense, abiding within its limits, and have no continuous presence or actual situs within its jurisdiction, and therefore can be taxed only at their legal situs,-their home port, and the domicile of their owners. Hays v. Steam-Ship Co., 17 How. 596; St. Louis v. Ferry Co., 11 Wall. 423; Morgan v. Parham, 16 Wall. 471; Ferry Co. v. East St. Louis, 107 U.S. 365, 2 Sup. Ct. Rep. 257; Ferry Co. v. Pennsylvania, 114 U.S. 196, 5 Sup. Ct. Rep. 826. Between ships and vessels, having their situs fixed by act of congress, and their course over navigable waters, and touching land only incidentally and temporarily, and cars or vehicles of any kind, having no situs so fixed, and traversing the land only, the distinction is obvious. As has been said by this court: 'Commerce on land between the different states is so strikingly dissimilar, in many respects, from commerce on water, that it is often difficult to regard them in the same aspect in reference to the respective constitutional powers and duties of the state and federal governments. No doubt commerce by water was principally in the minds of those who framed and adopted the constitution, although both its language and spirit embrace commerce by land as well. Maritime transportation requires no artificial road-way. Nature has prepared to hand that portion of the instrumentality employed. The navigable waters of the earth are recognized public highways of trade and intercourse. No franchise is needed to enable the navigator to use them. Again, the vehicles of commerce by water being instruments of intercommunication with other nations, the regulation of them is assumed by the national legislature. So that state interference with transportation by water, and especially by sea, is at once clearly marked and distinctly discernible. But it is different with transportation by land.' Railroad Co. v. Maryland, 21 Wall. 456, 470.

In Ferry Co. v. Pennsylvania, on which the plaintiff in error much relies, the New Jersey corporation taxed by the state of Pennsylvania, under one of the statutes now in question, had no property in Pennsylvania except a lease of a wharf at which its steam-boats touched to land and receive passengers and freight carried across the Delaware river; and the difference in the facts of that case and of this and in the rules applicable was clearly indicated in the opinion of the court as follows: 'It is true that the property of corporations engaged in foreign or interstate commerce, as well as the property of corporations engaged in other business, is subject to taxation, provided, always, it be within the jurisdiction of the state.' 114 U.S. 206, 5 Sup. Ct. Rep. 829. 'While it is conceded that the property in a state belonging to a foreign corporation engaged in foreign or interstate commerce may be taxed equally with like property of a domestic corporation engaged in that business, we are clear that a tax or other burden imposed on the property of either corporation because it is used to carry on that commerce, or upon the transportation of persons or property, or for the navigation of the public waters over which the transportation is made, is invalid and vid  as an interference with and an obstruction of the power of congress in the regulation of such commerce.' 114 U.S. 211, 5 Sup. Ct. Rep. 832. Much reliance is also placed by the plaintiff in error upon the cases in which this court has decided that citizens or corporations of one state cannot be taxed by another state for a license or privilege to carry on interstate or foreign commerce within its limits. But in each of those cases the tax was not upon the property employed in the business, but upon the right to carry on the business at all, and was therefore held to impose a direct burden upon the commerce itself. Moran v. New Orleans, 112 U.S. 69, 74, 5 Sup. Ct. Rep. 38; Pickard v. Car Co., 117 U.S. 34, 43, 6 Sup. Ct. Rep 635; Robbins v. Taxing Dist., 120 U.S. 489, 497, 7 Sup. Ct. Rep. 592; Leloup v. Mobile, 127 U.S. 640, 644, 8 Sup. Ct. Rep. 1380. For the same reason, a tax upon the gross receipts derived from the transportation of passengers and goods between one state and other states or foreign nations has been held to be invalid. Fargo v. Michigan, 121 U.S. 230, 7 Sup. Ct. Rep. 857; Steam-Ship Co. v. Pennsylvania, 122 U.S. 326, 7 Sup. Ct. Rep. 1118.

The tax now in question is not a license tax or a privilege tax; it is not a tax on business or occupation; it is not a tax on or because of the transportation of the right of transit of persons or property through the state to other states or countries. The tax is imposed equally on corporations doing business within the state, whether domestic or foreign, and whether engaged in interstate commerce or not. The tax on the capital of the corporation on account of its property within the state is, in substance and effect, a tax on that property. Ferry Co. v. Pennsylvania, 114 U.S. 196, 209, 5 Sup. Ct. Rep. 826; Telegraph Co. v. Attorney General, 125 U.S. 530, 552, 8 Sup. Ct. Rep. 961. This is not only admitted, but insisted on, by the plaintiff in error.

The cars of this company within the state of Pennsylvania are employed in interstate commerce; but their being so employed does not exempt them from taxation by the state; and the state has not taxed them because of their being so employed, but because of their being within its territory and jurisdiction. The cars were continuously and permanently employed in going to and fro upon certain routes of travel. If they had never passed beyond the limits of Pennsylvania, it could not be doubted that the state could tax them, like other property within its borders, notwithstanding they were employed in interstate commerce. The fact that, instead of stopping at the state boundary, they cross that boundary in going out and coming back, cannot affect the power of the state to levy a tax upon them. The state, having the right, for the purposes of taxation, to tax any personal property found within its jurisdiction, without regard to the place of the owner's domicile, could tax the specific cars which at a given moment were within its borders. The route over which the cars travel extending beyond the limits of the state, particular cars may not remain within the state; but the company has at all times substantially the same number of cars within the state, and continuously and constantly uses there a portion of its property; and it is distinctly found, as matter of fact, that the company continuously, throughout the periods for which these taxes were levied, carried on business in Pennsylvania, and had about 100 cars within the state.

The mode which the state of Pennsylvania adopted to ascertain the proportion of the company's property upon which it should be taxed in that state was by taking as a basis of assessment such proportion of the capital stock of the company as the number of miles over which it ran cars within the statebore to the whole number of miles in that and other states over which its cars were run. This was a just and equitable method of assessment; and, if it were adopted by all the states through which these cars ran, the company would be assessed upon the whole value ofits  capital stock, and no more. The validity of this mode of apportioning such a tax is sustained by several decisions of this court in cases which came up from the circuit courts of the United States, and in which, therefore, the jursdiction of this court extended therefore, the jurisdiction of this court extended case, and was not limited, as upon writs of error to the state courts, to questions under the constitution and laws of the United States.

In the State Railroad Tax Cases, 92 U.S. 575, it was adjudged that a statute of Illinois, by which a tax on the entire taxable property of a railroad corporation, including its rolling stock, capital, and franchise, was assessed by the state board of equalization, and was collected in each municipality in proportion to the length of the road within it, was lawful, and not in conflict with the constitution of the state; and Mr. Justice MILLER, delivering judgment, said: 'Another objection to the system of taxation by the state is that the rolling stock, capital stock, and franchise are personal property, and that this, with all other personal property, has a local situs at the principal place of business of the corporation, and can be taxed by no other county, city, or town but the one where it is so situated. This objection is based upon the general rule of law that personal property, as to its situs, follows the domicile of its owner. It may be doubted very reasonably whether such a rule can be applied to a railroad corporation as between the different localities embraced by its line of road. But, after all, the rule is merely the law of the state which recognizes it; and when it is called into operation as to property located in one state and owned by a resident of another, it is a rule of comity in the former state rather than an absolute principle in all cases. Green v. Van Buskirk, 5 Wall. 312. Like all other laws of a state, it is therefore subject to legislative repeal, modification, or limitation; and when the legislature of Illinois declared that it should not prevail in assessing personal property of railroad companies for taxation, it simply exercised an ordinary function of legislation.' 92 U.S. 607, 608. 'It is further objected that the railroad track, capital stock, and franchise is not assessed in each county where it lies, according to its value there, but according to an aggregate value of the whole, on which each county, city, and town collects taxes according to the length of the track within its limits.' 'It may well be doubted whether any better mode of determining the value of that portion of the track within any one county has been devised than to ascertain the value of the whole road, and apportion the value within the county by its relative length to the whole.' 'This court has expressly held in two cases, where the road of a corporation ration ran through different states, that a tax upon the income or franchise of the road was properly apportioned by taking the whole income or value of the franchise, and the length of the road within each state, as the basis of taxation. Delaware Railroad Tax, 18 Wall. 206; Railroad Co. v. Pennsylvania, 21 Wall. 492.' 92 U.S. 608, 611. So in Telegraph Co. v. Attorney General, 125 U.S. 530, 8 Sup. Ct. Rep. 961, this court upheld the validity of a tax imposed by the state of Massachusetts upon the capital stock of a telegraph company, on account of property owned and used by it within the state, taking as the basis of assessment such proportion of the value of its capital stock as the length of its lines within the state bore to their entire length throughout the country.

Even more in point is the case of Marye v. Railroad Co., 127 U.S. 117, 8 Sup. Ct. Rep. 1037, in which the question was whether a railroad company incorporated by the state of Maryland, and no part of whose own railroad was within the state of Virginia, was taxable under general laws of Virginia upon rolling stock owned by the company and employed upon connecting ail roads leased by it in that state, yet not assigned permanently to those roads, but used interchangeably upon them and upon roads in other states, as the company's necessities required. It was held not to be so taxable, solely because the tax laws of Virginia appeared upon their face to be limited to railroad corporations of that state; and Mr. Justice MATTHEWS, delivering the unanimous judgment of the court, said: 'It is not denied, as it cannot be, that the state of Virginia has rightful power to levy and collect a tax upon such property used and found within its territorial limits as this property was used and found, if and whenever it may choose, by apt legislation, to exert its authority over the subject. It is quite true, as the situs of the Baltimore and Ohio Railroad Company is in the state of Maryland, that also, upon general principles, is the situs of all its personal property; but for purposes of taxation, as well as for other purposes, that situs may be fixed in whatever locality the property may be brought and used by its owner by the law of the place where it is found. If the Baltimore and Ohio Railroad Company is permitted by the state of Virginia to bring into its territory, and there habitually to use and employ, a portion of its movable personal property, and the railroad company chooses so to do, it would certainly be competent and legitimate for the state to impose upon such property, thus used and employed, its fair share of the burdens of taxation imposed upon similar property used in the like way by its own citizens. And such a tax might be properly assessed and collected in cases like the present, where the specific and individual items of property so used and employed were not continuously the same, but were constantly changing, according to the exigencies of the business. In such cases the tax might be fixed by an appraisement and valuation of the average amount of the property thus habitually used, and collected by distraint upon any portion that might at any time be found. Of course, the lawfulness of a tax upon vehicles of transportation used by common carriers might have to be considered in particular instances with reference to its operation as a regulation of commerce among the states, but the mere fact that they were employed as vehicles of transportation in the interchange of interstate commerce would not render their taxation invalid.' 127 U.S. 123, 124, 8 Sup. Ct. Rep. 1039, 1040. For these reasons, and upon these authorities, the court is of opinion that the tax in question is constitutional and valid. The result of holding otherwise would be that, if all the states should concur in abandoning the legal fiction that personal property has its situs at the owner's domicile, and in adopting the system of taxing it at the place at which it is used and by whose laws it is protected, property employed in any business requiring continuous and constant movement from one state to another would escape taxation altogether. Judgment affirmed.

BROWN, J., not having been a member of the court when this case was argued, took no part in its decision.

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