141 U.S. 18 (1891), Pullman's Palace Car Co. v. Commonwealth of Pennsylvania

Citation:141 U.S. 18, 11 S.Ct. 876, 35 L.Ed. 613
Case Date:May 11, 1891
Court:United States Supreme Court

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141 U.S. 18 (1891)

11 S.Ct. 876, 35 L.Ed. 613




United States Supreme Court.

May 11, 1891

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[11 S.Ct. 877] This was an action brought by the state of Pennsylvania against Pullman's Palace Car Company, a corporation of Illinois, in the court of common pleas of the county of Dauphin in the state of Pennsylvania, to recover the amount of a tax settled by the auditor general and approved by the treasurer of that state for the years 1870 to 1880, inclusive, on the defendant's capital stock, taking as the basis of assessment such proportion of its capital stock as the number of miles of railroad over which cars were run by the defendant in Pennsylvania bore to the whole number of miles in this and other states over which its cars were run. All these taxes were levied under successive statutes of Pennsylvania, imposing taxes on capital stock of corporations incorporated by the laws of Pennsylvania or of any other state, and doing business in Pennsylvania, computed on a certain percentage of dividends made or declared. The taxes for 1870-1874 were levied under the statute of May 1, 1868, No. 69, § 5, which applied to corporations of every kind, with certain exceptions not material to this case; and fixed the amount of the tax at half a mill on every 1 per cent. of dividend. P. L. 1868, p. 109. The taxes for 1875-1877 were levied under the statute of April 24, 1874, No. 31, § 4, which applied to all corporations in any way engaged in the transportation of freight or passengers, and fixed the tax at ninetenths of a mill on every 1 per cent. of dividend. P. L. 1874, p. 70. The taxes for 1878-1880 were levied under the statutes of March 20, 1877, No. 5, § 3, and of June 7, 1879, No. 122, § 4, applicable to all corporations, except building associations, banks, savings institutions, and foreign insurance companies, and fixing the tax at half a mill on each 1 per cent. of dividend of 6 per cent. or more on the par value of the capital stock, and, when the dividend was less, at three mills on a valuation of the capital stock. P. L. 1877, p. 8; P. L. 1879, p. 114.

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A trial by jury was waived, and the case submitted to the decision of the court, which found the following facts: 'The defendant is a corporation of the state of Illinois, having its principal office in Chicago. Is business was, during all the time for which tax is charged, to furnish sleeping-coaches and parlor and dining-room cars to the various railroad companies, with which it contracted on the following terms: The defendant furnished the coaches and cars, and the railroad companies attached and made them part of their trains, no charge being made by either party against the other. The railroad companies collected the usual fare from passengers who traveled in their coaches and cars, and the defendant collected a separate charge for the use of the seats, sleeping-berths, and other conveniences. Business has been carried on continuously by the defendant in this way in Pennsylvania since February 17, 1870, and it has had about 100 coaches and cars engaged in this way in the state during that time. The cars used in this state have, during all the time for which tax is charged, been running into, through, and out of this state.' Upon these facts the court held 'that the proportion of the capital stock of the defendant invested and used in Pennsylvania is taxable under these acts; and that the amount of the tax may be properly ascertained by taking as a basis the proportion which the number of miles operated by the defendant in this state bears to the whole number of miles operated by it, without regard to the question whether any particular car or cars were used;' and therefore gave judgment for the state. That judgment was affirmed upon writ of error by the supreme court of the state, for reasons stated in its opinion as follows: 'We think it very clear that the plaintiff in error is engaged in carrying on such a business within this commonwealth as to subject it to the statutes imposing taxation. While at tax on the capital stock of a company is a tax on its property and assets, yet the capital stock of a company and its property and assets are not identical. The coaches of the company are its property. They are operated within this state. They are daily passing from one end of the state to the other. They are used in performing the functions for which the corporation was created. The fact that they also are operated in other states cannot wholly exempt them from taxation here. It reduces the value of the property in this state, justly subject to taxation here. This was recognized in the court below, and we think the proportion was fixed according to a just and equitable rule.' 107 Pa. St. 156, 160. Pullman's Palace-car Company sued out a writ of error from this court, and filed six assignments of error, the substance of which was summed up in the brief of its counsel as follows: 'The court erred in holding that any part of the capital stock of the Pullman Company was subject to taxation by the state of Pennsylvania by reason of its running any of its cars into, out of, or through the state of Pennsylvania in the course of their employment in the interstate transportation of railway passengers.'


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Edward Isham, John S. Runnells, Wm. Burry, and M. E. Olmsted, for plaintiff in error.

W. S. Kirkpatrick and J. F. Sanderson, for the Commonwealth.


Mr. Justice GRAY, after stating the facts as above, delivered the 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

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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 [11 S.Ct. 878] 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 S.Ct. 51; Walworth v. Harris, 129 U.S. 355, 9 S.Ct. 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.

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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 S.Ct. 1091; Coe v. Errol, 116 U.S. 517, 524, 6 S.Ct. 475; Marye v. Railroad Co., 127 U.S. 117, 123, 8 S.Ct. 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 Railroad 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 S.Ct. 826; Telegraph Co. v. Attorney General, 125 U.S. 530, 549, 8 S.Ct. 961; Marye v. Railroad Co., 127 U.S. 117, 124, 8 S.Ct. 1037; Leloup v. Mobile, 127 U.S. 640, 649, 8 S.Ct. 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...

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