Commonwealth v. American Dredging Co.

Decision Date01 October 1888
Docket Number38
Citation15 A. 443,122 Pa. 386
CourtPennsylvania Supreme Court

Argued June 1, 1888


No. 38 May Term 1888, Sup. Ct.; court below, No. 487 June Term 1887 C.P.

In 1887, the American Dredging Company appealed to the court below from the settlement by the auditor general and state treasurer, on December 15, 1886, of taxes claimed to be due on its capital stock, under the act of June 7, 1879, P.L 112. The objections filed averred that a tax of $1,485 was charged upon property of the company which had no situs within the jurisdiction of the commonwealth.

At the trial of the cause which was without a jury, under the act of April 22, 1874, P.L. 109, and was submitted without argument and without points presented on either side, the court McPHERSON, J., found the following facts:

1. The defendant is a corporation of this commonwealth, chartered by the act of April 9, 1867, P.L. 956, with power "to own construct, operate and dispose of dredging machines, steam tugs, lighters, machinery and appliances for improvement of harbors, channels, docks and water-courses." Under this act and a supplement of March 28, 1873, P.L. 446, its capital stock for the tax year ending the first Monday of November, 1886, was $495,000.

2. During this year $232,803.22 of its capital stock was invested in land and buildings situate in the state of New Jersey; $92,000 thereof was invested in four dredges, which were built outside of the state of Pennsylvania, three of which have never been within the limits of the state, and the fourth of which had never been within its limits until after the end of the said year; $6,000 thereof was invested in a tug which was built outside of Pennsylvania, and was not within its limits during the said year; and $38,500 thereof was invested in eleven scows which were built outside of Pennsylvania, and have never been within its limits. During the said year, the said real estate and other property were all employed for corporate purposes in the states of New Jersey, Maryland and Virginia.

3. During the year in question, the defendant declared two dividends, each of three per cent, upon $495,000, and this settlement taxes the whole capital stock under the act of 1879, section 4, at the rate of one half mill for each one per cent of dividend.

Upon these facts the conclusion of law was as follows:

[It has been decided in Commonwealth v. Pennsylvania Coal Company, 5 Pa. C.C.R. 90, note, that so much of the tangible property of a domestic corporation as is situate in other states, and there employed in its corporate business, is not taxable by this commonwealth.] We, therefore, hold that the commonwealth can only recover tax upon $125,696.78 of the defendant's capital stock. The amount due is as follows:

3 mills upon $125,696.78,

$ 377 09

Interest from February 13, 1887, to May 10, 1888,

56 12

Attorney General's commission,

18 85

$ 452 06

For which sum we direct judgment to be entered if exceptions are not filed according to law.

To this decision, the commonwealth filed exceptions, which were overruled in the following opinion and decree, McPHERSON, J.:

The commonwealth's exceptions are based upon the proposition that the situs of a vessel for purposes of taxation is the port where it is registered, and in support of this view we are referred to Hayes v. Pacific Mail S. Co., 17 How. 596, and Morgan v. Parham, 16 Wall. 471. These cases consider the act of congress of 1792 as it affects steamships engaged in commerce between the states, and are manifestly dealing with a different subject from that now before us. They decide that a steamship owned and registered in New York and engaged in carrying freight and passengers between New York and other states, or between ports in other states, may not be taxed by such other states, and rest their reasoning upon the act of Congress and the commercial clause of the federal constitution. No such state of facts is now presented. The scows and dredges in question are not engaged in commerce and are not among the ships or vessels required to be registered by the act of 1792. They, and the tug which moves them, are merely tools, and like other personal property may at one time be used within the state, and may at another be used beyond its limits. We can see no difference in principle between the case in hand and those to be found in the note to 5 Pa. C.C.R., 90. The question would be the same if the defendant's business were to excavate upon land and not under water. The scoops and shovels in the former would correspond to the scows and dredges in the latter, for all these implements are simply means by which excavation is done, and it would seem clear under the authorities just referred to, that the capital stock of an excavation company, representing that part of its plant employed for example in Iowa, would not be taxable in this commonwealth. The fact that scows and dredges must be moved and used upon the water, does not change their character as tools or make them "ships or vessels" within the act of 1792.

Exception overruled, and judgment directed in accordance with the opinion previously filed.

Thereupon the commonwealth took this writ, specifying that the court erred:

1. In the conclusion of law marked.

2. In not holding that $92,000 of the capital stock of the defendant company, invested in four dredges, $6,000 thereof invested in a tug, and $38,500 thereof invested in eleven scows, employed by the company for its corporate purposes, were taxable by the state of Pennsylvania, although the property mentioned was not actually within her borders during the taxing year.

3. In not holding, as matter of law, that the situs of the said vessels, for the purpose of taxation of capital stock invested therein, was within the state of Pennsylvania.

Judgment reversed, and a procedendo awarded.

Mr. John F. Sanderson, Deputy Attorney General (with him Mr. W. S. Kirkpatrick, Attorney General), for the plaintiff in error:

The only question in the case is, whether the steam tug, dredges and scows, used by the defendant corporation in its corporate business, outside of Pennsylvania, have or have not a situs for the taxation of its capital stock invested therein, within the state.

1. The ordinary rule as to the situs of tangible personal property for purposes of taxation is not applied to vessels. Their situs for the purpose of taxation is their home port of registry, or, if unregistered, the residence of their owner. This distinction is pointed out in Pullman Pal. Car. Co. v. Twombly, 29 F. 66; Hayes v. Pacific Mail Steamship Co., 17 How. 596; Morgan v. Parham, 16 Wall. 471; Perry v. Terrence, 8 Ohio 52; Pomeroy Salt Co. v. Davis, 21 Ohio 523; People v. Commissioners of Taxes, 64 N.Y. 541.

2. Where vessels are owned by a corporation, the residence of the corporation is their home port, and there they are taxable, notwithstanding the corporation may have its office in another state: St. Louis...

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