Adams Exp Co v. Ohio State Auditor, 337
| Decision Date | 15 March 1897 |
| Docket Number | No. 337,337 |
| Citation | 17 S.Ct. 604,41 L.Ed. 965,166 U.S. 185 |
| Parties | ADAMS EXP. CO. v. OHIO STATE AUDITOR |
| Court | U.S. Supreme Court |
James C. Carter and Lawrence Maxwell, for the petition.
[Petition for Rehearing from pages 185-217 intentionally omitted]
We have had before us at the present term several cases involving the taxation of the property of express companies, some coming from Ohio, some from Indiana, and one from Kentucky; also a case from the latter state involving the taxation of the property of the Henderson Bridge Company. The Ohio and Indiana cases were decided on the 1st of February. 165 U. S. 1974, 17 Sup. Ct. 305. Petitions for rehearing of those cases have been presented, and are now before us for consideration.
The importance of the questions involved, the close division
in this court upon them, and the earnestness of counsel for the express companies in their original arguments, as well as in their briefs on this application, lead those of us who concurred in the judgments to add a few observations to what has hitherto been said.
Again and again has this court affirmed the proposition that no state can interfere with interstate commerce through the imposition of a tax, by whatever name called, which is in effect a tax for the privilege of transacting such commerce; and it has as often affirmed that such restriction upon the power of a state to interfere with interstate commerce does not in the least degree abridge the right of a state to tax at their full value all the instrumentalities used for such commerce.
Now, the taxes imposed upon express companies by the statutes of the three states of Ohio, Indiana, and Kentucky are certainly not in terms 'privilege taxes.' They purport to be upon the property of the companies. They are therefore not, in form at least, subject to any of the denunciations against privilege taxes which have so often come from this court. The statutes grant no privilege of doing an express business, charge nothing for doing such a business, and contemplate only the assessment and levy of taxes upon the property of the express companies situated within the respective states; and the only really substantial question is whether, properly understood and administered, they subject to the taxing power of the state property not within its territorial limits. The burden of the contention of the express companies is that they have within the limits of the state certain tangible property, such as horses, wagons, etc.; that that tangible property is their only property within the state; that it must be valued as other like property, and upon such valuation alone can taxes be assessed and levied against them.
But this contention practically ignores the existence of intangible property, or, at least, denies its liability for taxation. In the complex civilization of to-day, a large portion of the wealth of a community consists in intangible property, and there is nothing in the nature of things or in the limitations of the federal constitution which restrains a state from tax-
ing at its real value such intangible property. Take the simplest illustration: B., a solvent man, purchases from A. certain property, and gives to A. his promise to pay, say, $100,000 therefor. Such promise may or may not be evidenced by a note or other written instrument. The property conveyed to B. may or may not be of the value of $100,000. If there be nothing in the way of fraud or misrepresentation to invalidate that transaction, there exists a legal promise on the part of B. to pay A. $100,000. That promise is a part of A.'s property. It is something of value, something on which he will receive cash, and which he can sell in the markets of the community for cash. It is as certainly property, and property of value, as if it were a building or a steamboat, and is an justly subject to taxation. It matters not in what this intangible property consists,—whether privileges, corporate franchises, contracts, or obligations. It is enough that it is property which, though intangible, exists, which has value, produces income, and passes current in the markets of the world. To ignore this intangible property, or to hold that it is not subject to taxation at its accepted value, is to eliminate from the reach of the taxing power a large portion of the wealth of the country. Now, whenever separate articles of tangible property are joined together, not simply by a unity of ownership, but in a unity of use, there is not infrequently developed a property, intangible though it may be, which in value exceeds the aggregate of the value of the separate pieces of tangible property. Upon what theory of substantial right can it be adjudged that the value of this intangible property must be excluded from the tax lists, and the only property placed thereon be the separate pieces of tangible property?
The first question to be considered, therefore, is whether there is bolonging to these express companies intangible property, property differing from the tangible property; a property created by either the combined use or the manner or use of the separate articles of tangible property, or the grant or acquisition of franchises or privileges, or all together. To say that there can be no such intangible property, that it is
something of no value, is to insult the common intelligence of every man. Take the Henderson Bridge Company's property, the validity of the taxation of which is before us in another case. The facts disclosed in that record show that the bridge company owns a bridge over the Ohio, between the city of Henderson, in Kentucky, and the Indiana shore, and also 10 miles of railroad in Indiana; that that tangible property—that is, the bridge and railroad track—was assessed in the states of Indiana and Kentucky at $1,277,695.54, such, therefore, being the adjudged value of the tangible property. Thus, the physical property could presumably be reproduced by an expenditure of that sum, and if placed elsewhere on the Ohio river, and without its connections or the business passing over it or the franchises connected with it, might not of itself be worth any more. As mere bridge and tracks, that was its value. If the state's power of taxation is limited to the tangible property, the company should only be taxed in the two states for that sum; but it also appears that it, as a corporation, had issued bonds to the amount of $2,000,000, upon which its was paying interest; that it had a capital stock of $1,000,000; and that the shares of that stock were worth not less than $90 per share in the market. The owners, therefore, of that stock, had property which, for purposes of income and purposes of sale, was worth $2,900,000. What gives this excess of value? Obviously, the franchises, the privileges the company possesses,—its intangible property.
Now, it is a cardinal rule, which should never be forgotten, that whatever property is worth for the purposes of income and sale it is also worth for purposes of taxation. Suppose such a bridge were entirely within the territorial limits of a state, and it appeared that the bridge itself cost only $1,277,000, could be reproduced for that sum, and yet it was so situated with reference to railroad or other connections, so used by the traveling public, that it was worth to the holders of it, in the matter of income, $2,900,000, could be...
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