Kirtland v. Hotchkiss

• Decision Date: 01 October 1879
• Citation: 25 L.Ed. 558,100 U.S. 491
• Parties: KIRTLAND v. HOTCHKISS
• Court: U.S. Supreme Court

100 U.S. 491

100 U.S. 491

25 L.Ed. 558

KIRTLAND v. HOTCHKISS.

October Term, 1879

ERROR to the Supreme Court of Errors, Litchfield County, State of Connecticut.

Charles W. Kirtland, a citizen of Connecticut, instituted this action for the purpose of restraining the enforcement of certain tax-warrants levied upon his real estate in the town in which he resided, in satisfaction of certain State taxes, assessed against him for the years 1869 and 1870. The assessment was by reason of his ownership, during those years, of certain bonds, executed in Chicago, and made payable to him, his executors, administrators, or assigns in that city, at such place as he or they should by writing appoint, and, in default of such appointment, at the Manufacturers' National Bank of Chicago. Each bond declared that 'it is made under, and is, in all respects, to be construed by the laws of Illinois, and is given for an actual loan of money, made at the city of Chicago, by the said Charles W. Kirtland to the said Edwin A. Cummins, on the day of the date hereof.' They were secured by deeds of trust, executed by the obligor to one Perkins, of that city, upon real estate there situated, the trustee having power by the terms of the deed to sell and convey the property and apply the proceeds in payment of the loan, in case of default on the part of the obligor to perform the stipulations of the bond.

The statute of Connecticut, under which the assessment was made, declares, among other things, that personal property in that State 'or elsewhere' should be deemed, for purposes of taxation, to include all moneys, credits, choses in action, bonds, notes, stocks (except United States stocks), chattels, or effects, or any interest thereon; and that such personal property or interest thereon, being the property of any person resident in the State, should be valued and assessed at its just and true value in the tax-list of the town where the owner resides. The statute expressly exempts from its operation money or property actually invested in the business of merchandizing or manufacturing, when located out of the State. Conn. Revision of 1866, p. 709, tit. 64, c. 1, sect. 8.

The court below held that the assessments complained of were in conformity to the State law, and that the law itself did not infringe any constitutional right of the plaintiff.

This writ of error is prosecuted by Kirtland upon the ground, among others, that the statute of Connecticut thus interpreted and sustained is repugnant to the Constitution of the United States.

Mr. Ashbel Green, Mr. William Cothren, and Mr. Julien T. Davies, for the plaintiff in error.

The statutes of Connecticut in question are unconstitutional, because,——

I. They regulate commerce among the several States. Const. U. S., art. 1, subd. 3, sect. 8; Laws of Conn., Revision of 1866, p. 709, tit. 64, c. 1, sect. 8, p. 713, sect. 24; Laws of 1872, c. 113. The power to impose discriminating burdens upon property is a power to prohibit or destroy. The plaintiff in error was burdened on account of the foreign origin of his bonds and mortgages, and was therefore unconstitutionally taxed. Welton v. State of Missouri, 91 U. S. 275; Brown v. Maryland, 12 Wheat. 436; Crandall v. State of Nevada 6 Wall. 35; Case of the State Freight Tax, 15 id. 232; Cook v. Pennsylvania, 97 U. S. 566. The grant of power by the Constitution to Congress to regulate commerce was intended to secure absolutely and uniformly free commerce between the States. Crandall v. State of Nevada, supra; Erie Railroad Co. v. State, 31 N. J. L. 531. Money is both the subject and instrument of commerce. Johnson, J., in Gibbons v. Ogden, 9 Wheat. 589; McLean, J., in Nathan v. Louisiana, 8 How. 80; Daniel, J., in United States v. Marigold, 9 id. 567. The unconstitutionality of a tax is determined by the subject upon which the tax is laid. St. Louis v. Ferry Company, 11 Wall. 423; Ward v. Maryland, 12 id. 418; Case of the State Freight Tax, supra. The tax falls, in this case, upon money that is exported from Connecticut. If it be constitutional, that State could, so far as loaning money is concerned, prescribe non-intercourse between her citizens and those of other States. For the purposes of taxation, no deduction from the assessed valuation of his real estate is permitted to a party in Illinois, by reason of his mortgage indebtedness. Connecticut attempts to regulate commerce among the several States, inasmuch as her statutes discriminate in taxation against resident mortgagees who loan in Illinois, where no such deduction is permitted, in favor of her own residents, making similar loans on lands within her own limits. Revision of 1866, tit. 64, c. 1, pp. 709, 715, sects. 8, 35, 36, 37.

II. They 'abridge the privileges or immunities of citizens of the United States.' Fourteenth Amendment Const., sect. 1. One of these 'privileges or immunities' is the right to pass in and out of all the States. Crandall v. State of Nevada, supra. This right cannot exist in conjunction with a nullifying right by the State where the citizen resides to tax or impose discriminating burdens upon him for his acts, his lawful business, or his property in another State. Lamb v. Bowser, 7 Biss. 315, 372.

III. They tax property or business situated without the State of Connecticut.

The maxim that personal property follows the owner has no force, independent of comity. Savigny, System des Heutigen Romischen Rechts, vol. viii. p. 171, sect. 366; Wharton's Private International Law, sects. 11, 13, 297. See p. 126, id.; Green v. Van Buskirk, 7 Wall. 150; Hervey v. Rhode Island Locomotive Works, 93 U. S. 664; Lewis v. Woodford, 58 Tenn. 25; Birtwhistle v. Vardill, 3 Barn. & Cress. 438, 451.

It has no application to the taxation of visible tangible property, Hoyt v. Commissioners of Taxes, 23 N. Y. 224; Pacific Steamship Co. v. Commissioners of Taxes, 46 How. Pr. (N. Y.) 315; State Tax on Foreign-held Bonds, 15 Wall. 300; nor to the taxation of negotiable choses in action. State Tax on Foreign-held Bonds Case, supra; British Com. Life Ins. Co. v. Commissioners of Taxes, 31 N. Y. 32; State of Missouri v. St. Louis County, 47 Mo. 594; People v. Home Ins. Co., 29 Cal. 533; Attorney-General v. Bowens, 4 Mee. & W. 172. It does not apply to non-negotiable choses in action, in cases of administration of the assets of a deceased person, Beers v. Shannon, 73 N. Y. 292; Noonan v. Bradley, 9 Wall. 405; see Journal du Palais, Cour de Cassation, Aug. 27, 1850 (1851, p. 205); nor in cases of confiscation, Miller v. United States, 11 Wall. 268; Brown v. Kennedy, 15 id. 591; 3 Phillimore, International Law, sect. 567, p. 688; nor in cases of foreign bankruptcy, Ogden v. Saunders, 12 Wheat. 358; Harrison v. Stenny, 5 Cranch, 289, nor in cases of attachment. It has no proper application to non-negotiable choses in action in cases of taxation. Attorney-General v. Dimond, 1 Cromp. & J. 356; Attorney-General v. Hope, 8 Bli. N. S. 44; Burchese, Operations de la Bourse, Paris, 1877, pp. 248, 861; Tappan v. Merchants' National Bank, 19 Wall. 490; Fisher v. Commissioners of Bush County, 19 Kan. 414; Varner v. Calhoun, 48 Ala. 178; Bridges v. Mayor, 33 Ga. 113.

The tax in question does not fall upon a 'person,' because it is not a poll-tax. A tax upon a person, with reference to his property, falls upon the property. Bank of Commerce v. New York City, 2 Black, 620; Bank Tax Case, 2 Wall. 200. It is not a tax upon property situated in Connecticut. 1. The money lent by the plaintiff in error belongs to his debtor. Railway Company v. Jackson, 7 Wall. 263. See 42 Conn. 438. 2. The bonds have always been in Illinois, and cannot be taxed by Connecticut. Hoyt v. Commissioners, 23 N. Y. 224; State Tax on Foreign-held Bonds, supra. 3. That debts evidenced by the bonds are not valuable independent of the debtor's property, which can be taxed only in Illinois, where it is situated. 4. The rights of the plaintiff in error, evidenced by his bonds, are protected only by Illinois, and hence cannot be taxed by Connecticut. Tappan v. Merchants' Nat. Bank, 19 Wall. 440; Catlin v. Hall, 21 Vt. 122; Fisher v. Commissioners of Bush Co., 19 Kan. 414; Bridges v. Mayor, 33 Ga. 113; People v. Gardiner, 51 Barb. (N. Y.) 352; Varner v. Calhoun, 48 Ala. 178. It really falls on acts of business performed and to be performed in Illinois, of which the bonds are the record and the evidence. Wolsey's Political Science, vol. i. p. 75. Those acts of business have an exclusive situs for taxation in Illinois, whose jurisdiction alone protects them.

IV. They are repugnant to the exclusive sovereignty of Illinois over property and acts of business within her borders, and hence are void under the provisions of the Constitution of the United States. 1. The laws of Connecticut should not be allowed to affect property and business whose situs is in Illinois. The power of Illinois to tax money within her limits, or an act of loaning and borrowing money there, must, under our form of government, exclude the power of another State from taxing Illinois money, or an act of loaning and borrowing in Illinois. Mager v. Grima et al., 8 How. 490; Story's Confl. of Laws, p. 257; The Appolon, 9 Wheat. 370; Ogden v. Saunders, 12 id. 213; Hervey v. Locomotive Works, 93 U. S. 664; Pennoyer v. Neff, 95 id. 722; Guillander v. Howell, 35 N. Y. 657; Lamb v. Bowser, 7 Biss. 315; Desmazes v. Mutual Ben. Life Ins. Co., 7 Ins. L. J. 927; Baldwin v. Hale, 1 Wall. 223; Green v. Collins, 3 Cliff. 494; D'Arcy v. Ketchum, 11 How, 73; Whitcomb v. Phoenix Ins. Co., 8 Ins. L. J. 624. 2. No express provision of the United States Constitution is necessary, if its spirit sustains a prohibition upon the interference of one State with the sovereignty of another. Ward v. Maryland, 12 Wall. 427; McCullough v. Maryland, 4 Wheat. 416; Crandall v. State of Nevada, 6 Wall. 35; Passenger Tax Cases, 7 How. 283; Weston v. City of Charleston, 2 Pet. 462. 3. The tax laws of...