various methods.1

nois Railroad Tax Cases, 92 U. S. 578; Gloucester Ferry Co. v. Pennsylvania, 114 U. S. 209; 13 Am. & Eng. Corp. Cas. 356; Western Union Tel. Co. v. Atty. Gen'l, 125 U. S. 552; Mohawk, etc., R. Co. v. Člute, 4 Paige (N. Y.) 384; Oswego Starch Factory v. Dolloway, 21 N. Y. 449; People v. Com'r of Taxes, 23 N. Y. 192; Bank of Republic v. Hamilton Co., 21 Ill. 54; People v. Bradley, 39 Ill. 144; Porter v. Rockford, etc., R. Co., 76 Ill. 561; Ottawa Glass Co. v. McCaleb, 81 Ill. 556; New Orleans City Gas Light Co. v. Board of Assessors, 31 La. Ann. 475.

When a corporation is organized in a state, its capital stock is taxable in that state, though the owners are nonresidents. Faxton v. McCosh, 12 Iowa 527.

Capital stock may be taxed as to amount, by a prior act, and as to the rate, by a subsequent act, and the latter is not a repeal of the former. Com. v. Erie R. Co., 98 Pa. St. 127.

Taxation of the excess in value of the capital stock of a corporation, over that of its tangible property subjected to taxation, is not prohibited by a statutory provision that when the tangible property of a corporation is listed and assessed for taxation, its shares of capital stock shall not be. Hyland v. Central Iron, etc., Co., 129 Ind. 68.

Decision of Auditor-General-Pennsylvania. As to the power of the Auditor-General and State Treasurer to correct the decision of their predecessors, that a corporation is not liable, under its charter, to a tax on its capital stock, see Com. v. Pennsylvania Co., 145 Pa. St. 266.

Personal Property.-Capital stock is personal property, and taxable as such. St. Charles Street R. Co. v. Assessors, 31 La. Ann. 852; Louisiana Oil Co. v. Assessors, 34 La. Ann. 618; State v. Creveling, 39 N. J. L. 465; State v. Jersey City, 45 N. J. L. 480; St. Louis Mut. L. Ins. Co. v. Charles, 47 Mo. 462; Jones v. Davis, 35 Ohio St. 474; State v. Morgan, 108 Ill. 326; Quincey R. Bridge Co. v. Adams Co., 88 Ill. 615; State Bank v. Richmond, 79 Va. 113; People v. Brooklyn Assessors, 16 Hun (N. Y.) 196; Whittaker v. Brooks (Ky. 1890), 13 S. W. Rep. 355; U. S. v. Marquette, etc., R. Co., 17 Fed. Rep. 719; State v. Hornbaker, 41 N. J. L. 519; Watson's Ford Bridge Co. v. Čom.,

117 Pa. St. 265; Com. v. Erie R. Co., 98 Pa. St. 127; McKeen v. Northampton County, 49 Pa. St. 519; Whitesell v. Northampton County, 49 Pa. St. 526; Kansas Mut. L. Assoc. v. Hill, 51 Kan. 636; People v. Tax Com'rs, 28 Hun (N. Y.) 261; People v. Home Ins. Co., 29 Cal. 533; Maltby v. Reading, etc., R. Co., 52 Pa. St. 140; Life Assoc. of America v. Board of Assessors, 49 Mo. 512.

1. In Alabama and Nebraska, the capital stock not invested in property otherwise listed, is taxed against the corporation at its market value. Alabama Civil Code, 1887, § 453 (S), 478; Nebraska Comp. Stat. 1887, PP. 590, 591.

In Delaware, a tax of one-half of one per cent. of the cash value of the capital stock is assessed against the corporation, in addition to specific taxes on property, and a tax on earnings. Delaware Code 1874, p. 42.

In Georgia, all corporations excepting banks, where there is not a different mode of taxation specially prescribed, pay the same rate per cent. upon the whole amount of their capital stock paid in, as is levied on other capital. Georgia Code 1882, § 816.

In Illinois, the capital stock of all corporations incorporated by the state is assessed at its value, including the franchise less the assessed value of its tangible property. Illinois Rev. Stat. 1889, ch. 120, §§ 1, 3. This law, which further provides that the capital stock of certain classes of corporations shall be assessed by the state board of equalization and of other corporations, by the local assessors, is not in conflict with Illinois Const., art. 9, § 1, which empowers the legislature to tax "persons or corporations owning or using franchises or privileges, in such manner as it shall direct by general law, uniform as to the class upon which it operates." Sterling Gas. Co. v. Higby, 134 Ill. 557; 32 Am. & Eng. Corp. Cas. 348; Ottawa Gas Light, etc., Co. v. People (Ill. 1891), 27 N. E. Rep. 924.

In Indiana, corporations not taxed by special provisions of the statute, are taxed on all property, including franchises and excess of capital stock over property otherwise taxed. Indiana Acts 1891, p. 203, § 12.

In Kansas, the capital stock of corporations is assessed at its true value

in money, less the value of corporate realty and personalty in the state. Kansas Gen. Stat. 1889, § 6858.

In Michigan, the capital stock of corporations shall not be taxed as such. Michigan Acts 1891, p. 173.

In Minnesota, the capital stock and franchises of corporations, except as otherwise provided, shall be listed for taxation where the principal office of the corporation is located. Minnesota Stat. 1891, § 1432.

In Mississippi, corporations are taxed on their capital stock at their principal place of business. Mississippi Rev. Code, § 473.

In Missouri, capital stock is taxed as personalty. Missouri Rev. Stat. 1889, 7510. Stock in banks and insurance companies is not taxed to the owner, but is returned by the president of the company. Missouri Acts 1891, p. 195. Not only the original, but also the subsequently acquired, capital stock of a corporation, is liable to taxation. St. Louis Mut. Ins. Co. v. Charles, 47 Mo. 462.

In New Jersey, manufacturing, mining, etc., corporations, organized under the Act of April 7th, 1875, are taxed on their capital stock at its actual value, and on their surplus. Sup. to New Jersey Rev. 1886, p. 161.

In New York, the capital stock, and surplus exceeding ten per cent. of the capital, less the value of the real estate and shares of stock actually owned by the corporation in other corporations paying a tax on capital in the state, is assessed at its actual value, and is taxed in the same manner as other personal and real property. New York Rev. Stat. 1889 (Birdseye), p. 2954, § 19.

In Nebraska, the capital stock of all domestic corporations is assessed for taxation at the market value of all the shares of stock, less the assessed value of the real and personal property otherwise taxed. Nebraska Comp. Stat. 1887, pp. 590, 591.

In Nevada and Arkansas, capital stock is taxed as personalty. Nevada

Gen. Stat. 1885, § 1081; Arkansas Rev. Stat. 1884, § 5585.

In Oregon, corporations are taxed on such part of their capital stock as is liable to taxation and is not invested in real estate. Oregon Gen. Stat. 1887, § 2731.

In Pennsylvania, all corporations excepting manufacturing companies, pay a tax on their capital stock, varying from three mills on each $1 of the actual value of the capital stock of insurance companies to eight mills on each $1 of the par value of shares in banks. Pennsylvania Laws 1891, p.

238, §§ 21-25.

In South Carolina, corporations are taxed on their capital stock in proportion to the amount of tangible property which they have in the state, representing that capital. South Carolina Gen. Stat. 1882, § 194.

In Vermont, the statute taxing the capital stock of corporations, allows for the exemption of so much thereof as may be invested in property otherwise taxed. Vermont Rev. Laws, § 288. And when the stock of a corporation does not exceed in value the property which it represents, all of which is assessed to the corporation, it should not be assessed to the stockholders under the provisions of the Vermont statute providing for the deduction from the value of the stock, of the value of the real and personal property of the corporation represented by the stock, and itself taxed. Willard v. Pike, 59 Vt. 202.

1. Cooper v. Corbin, 105 Ill. 224; 13 Am. & Eng. Corp. Cas. 394. The capital stock tax becomes a lien on the corporation's personalty only from the

issue of the warrant for its collection. Saup v. Morgan, 108 Ill. 326.

2. See supra, this title, Distinguished from Property Tax.

3. As to federal securities, see People v. Com'rs of Taxes, etc., 2 Wall. (U. S.) 200; Bank of Commerce v. New York, 2 Black (U. S.) 620; Monographic note, People v. Com'rs of Taxes, 3 Am. L. Reg. 558; Maguire v. Board of

Revenue, 71 Ala. 401; 6 Am. & Eng. Corp. Cas. 452; Weston v. Charleston, 2 Pet. (U. S.) 449; People v. Com'rs of Taxes, etc., 2 Black (U. S.) 620; People v. Com'rs of Taxes, etc., 2 Wall. (U. S.) 200; Whitney v. Madison, 23 Ind. 331.

As to state bonds, see State v. Stonewall Ins. Co., 89 Ala. 335; 8 Ry. & Corp. L. J. 308, where the court, by Clopton, J., said, in construing Alabama Civil Code, 1887, § 453 (9): "Regarded as a tax upon property, the question then is, whether, under the revenue law, the corporation is entitled to a deduction from the assessed value of its capital stock of such portion as is invested in the bonds of the state.

It is contended that no deduction can be made under the statute, except of such portions as may be invested in property otherwise taxed. The argument is, that the capital stock includes everything in which it is invested, and that expressly excepting the portion of its investments in property otherwise taxed is the exclusion of such portions as may be invested in property non-taxable. Unless a deduction from the assessed value of the capital stock of the portion in vested in bonds of the state is allowed, then there exists the anomaly of taxing, in the form of capital stock, investments expressly exempted from all taxation. If a part of the money capital of an individual be invested in state bonds, it will be conceded that such part is not liable to taxation; why then should it be held that the portion of the capital of corporations so invested is taxable?"

1. Quincy R. Bridge Co. v. Adams Co., 88 Ill. 615. See INTERSTATE COмMERCE, vol. 11, p. 548; Michigan, etc., R. Co. v. Auditor Gen'l, 9 Mich. 448.

2. Pullman's Palace Car Co. v. Pennsylvania, 141 U. S. 18; 46 Am. & Eng. Ř. Cas. 236, aff'g 107 Pa. St. 156. From

this decision Bradley, Field and Harlan, JJ., dissented, contending that it was inconsistent with the case of State Freight Tax, 15 Wall. (U. S.) 232.

Where a part of the capital stock of a domestic corporation represents the value of a leasehold interest in a railroad entirely without the state, the amount thereof should be deducted, in computing the valuation of the capital stock as a basis for taxation. Com. v. Delaware, etc., R. Co. (Pa. 1891), 22 Atl. Rep. 157; 44 Alb. L. J. 279.

3. Van Allen v. Assessors, 3 Wall. (U. S.) 584; Albany City Nat. Bank v. Maher, 19 Blatchf. (U. S.) 178. See supra, this title, Definition of Capital Stock.

4. Indebtedness May Be Considered.People v. Coleman, 49 Hun (N. Y.)607.

Where commissioners of taxes are to determine the assessed value of the capital stock of a corporation, the thing to be taxed is the capital of the company, and not the shares of the stockholders. Such capital and surplus must be assessed at its own value, and, when that is correctly known and determined, no other value can be substituted for it. When its amount and value are undisclosed and unknown, the assessors may consider the market value of the share stock and the general condition of the company, as indicative of surplus or deficiency, and of the probable amount of either. They may further resort to such means of information when the amount of capital and surplus is disclosed, but the assessors have sufficient reason to disbelieve the statement, and such reason is founded upon facts established by competent proof. Where the corporation presents to the assessors a sworn statement of its assets and liabilities, the truth of which is not questioned or doubted by the assessors, they have no discretion to assess the value of the capital stock

at a larger sum independently of the established facts. People v. Coleman, 126 N. Y. 433.

A leading case on this subject is Porter v. Rockford, etc., R. Co., 76 Ill. 561, in which the following rules, adopted by the state board of equali zation, were under consideration: "First, the market or fair cash value of the shares of capital stock and the market or fair cash value of the debt, excluding such indebtedness for current expenses, shall be combined or added together, and the aggregate amount so ascertained shall be taken and held to be the fair cash value of the capital stock, including the franchises respectively of such companies and associations. Second, from the aggregate amount ascertained as aforesaid, there shall be deducted the aggregate amount of the equalized or assessed valuation of all the tangible property respectively of such companies and associations, such equalized or assessed valuation being taken in each case, as the same may be determined by the equalization or assessment of property by this board, and the amount remaining in each case, if any, shall be taken and held to be the amount and fair cash value of the capital stock, including the franchise, which this board is required by law to assess respectively against companies and corporations now or hereafter created under the laws of this state." The foregoing rules were upheld, and the case was affirmed and the rules approved in State Railroad Tax Cases, 92 U. S. 578.

When the tax is upon the market value of the capital stock, evidence of the value of the shares when they have been withdrawn from the market may be ascertained from other sources; and, when they have been exchanged for securities, the value fixed upon them in the exchange is a proper basis for the assessment. Planters' Crescent Oil Co. 1. Jefferson Parish, 41 La. Ann. 1137.

Where a bridge owned by a corporation was duly declared a county bridge, the surplus of the damages assessed over the amount of capital stock, which was divided among the stockholders, was in the nature of profits, and a proper measure of the tax upon the capital stock. Matson's Ford Bridge Co. v. Com., 117 Pa. St. 265; 20 Am. & Eng. Corp. Cas. 604.

In estimating the value of the capital stock, the assessed value of the real estate should be deducted. People v.

Com'rs of Taxes, 46 How. Pr. (N. Y.) 227.

An assessment of the stock of a corporation is not illegal because its value is determined by including realty in another state in which the company has invested part of its capital. American Coal Co. v. Alleghany Co., 59 Md. 187.

When the law requires the appraisement of stock to be made between the 1st and the 15th of November, at its cash value, "not less, however, than the average price for which it sold during the year," it means that the valuation shall be the November selling price, unless the average selling price during the year shall exceed that sum, in which case the latter shall govern. Pennsylvania R. Co. v. Com., 94 Pa. St. 474; 13 Am. & Eng. R. Cas. 666.

The stock should be assessed at its actual, and not par, value. People v. Com'rs of Taxes, 64 How. Pr. (Ñ. Y.) 405. However, an assessment at par will be valid if the evidence shows the market value to be higher than the par value. St. Charles St. R. Co. v. Board of Assessors, 31 La. Ann. 852.

A law making the market value the basis of assessment is constitutional. New Orleans, etc., R. Co. v. Board of Assessors, 32 La. Ann. 19.

In People v. Com'rs of Taxes, 104 N. Y. 240, it is held that in certiorari to correct an assessment of the capital stock of a corporation made by the commissioners of taxes, it is incumbent upon the company, before it is entitled to call upon the board to correct the assessment by increasing the sum to be deducted for the value of its real estate, to give evidence and furnish data showing that the actual value exceeded the sum fixed by the commissioners.

Deduction of Foreign Realty.-In several states the value of the corporation's realty is deducted from the amount of the assessment of the capital stock. The following decisions bear on the ascertainment of the value of foreign realty for the purpose of deduction.

If the realty be situated in a foreign state, and the valuation assessed there can be ascertained, it will be adopted in New York, on the ground that to take the assessed value of real property in another state, where it is practicable and convenient to ascertain the facts, as the actual value, in the absence of some controlling circumstance which

shows to the contrary, is more apt to work substantial justice than any other mode. People v. Coleman, 52 Hun (N. Y.) 93. "But if the real estate should be in another state or country, or if for any other reason its assessed value cannot be obtained, then, as the best and nearest substitute for it, the price paid, as the presumed value, in the absence of proof, or any other standard, may be taken as the assessable value." Dictum in People v. Com'rs of Taxes, 95 N. Y. 554. See also People v. Com'rs of Taxes, 104 N. Y. 240.

1. Boston, etc., R. Co. v. Com., 157 Mass. 68. See also Pratt v. American Bell Teleph. Co., 141 Mass. 225.

2. In Alabama and Pennsylvania, it has been held that income, gain or net earnings means the whole product of the business, deducting_nothing but expenses. Montgomery Co. v. Montgomery Gas Light Co., 64 Ala. 269; Com. v. Penn Gas Coal Co., 62 Pa. St. 241. Section 7 of the Revenue Act of 1879 (Pa.) (P. L. 112), imposes a tax on the gross receipts of railroad companies for tolls and transportation."

66

In Com. v. New York, etc., R. Co. (Pa. 1891), 48 Am. & Eng. R. Cas. 633, the defendant was a foreign corporation operating a railroad through one of the counties of Pennsylvania. It leased and operated a branch railroad within Pennsylvania, which branch connected with the railroad of a canal company. The payments of the canal company to the defendant for the transportation by the canal company of coal over the branch road, were held not to be receipts for transportation within the meaning of the act. Said payments were, however, held to be receipts for tolls.

The Minnesota courts have held that "earnings" means only receipts from operation, and does not include the amount received by a railroad from another company for the right to run its trains over the road. State v. St. Paul, etc., R. Co., 30 Minn. 311; 13 Am. & Eng. R. Cas. 663.

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In New York, under a peculiarly phrased statute, it has been held that income means gross income, and that "profits means gross, not clear, profits. People v. Niagara Co., 4 Hill (N. Y.) 20; People v. New York, 18 Wend. (N. Y.) 605.

In South Carolina, the gross receipts of an express company upon which it is taxed, has been held not to include such sums as it collects for forwarding goods over connecting lines, as agents for such lines, nor such sums as the company are compelled to pay to the railroad and steamship companies over which it does business. Southern Express Co. v. Hood, 15 Rich. (S. Car.) 66; 94 Am. Dec. 141.

In Virginia, the net income of corporations is ascertained by "deducting from the gross receipts the costs of operation, repairs, and interest on indebtedness." Virginia Laws of 188384, ch. 450, § 20.

The interstate commerce commission distinguishes between earnings and income, by including in earnings only receipts from transportation, and designating as income the receipts from property owned but not operated. The aggregate it calls total earnings and income. Report on the Statistics of Railways in the United States to the Interstate Commerce Commission, 1889.

3. See Minot v. Philadelphia, etc., R. Co., 18 Wall. (U. S.) 206, where this rule is laid down.