McKeen v. County of Northampton

• Decision Date: 29 June 1865
• Citation: 49 Pa. 519
• Parties: McKeen <I>versus</I> The County of Northampton.
• Court: Pennsylvania Supreme Court

49 Pa. 519

McKeen versus The County of Northampton.

Supreme Court of Pennsylvania.

June 29, 1865.

ERROR to the Common Pleas of Northampton county.

COPYRIGHT MATERIAL OMITTED

Edward J. Fox and H. D. Maxwell, for plaintiff, argued, that this was an attempt by the state to tax property beyond its limits, and, therefore, not subject to its control. The Warren Foundry and Machine Company is a manufacturing corporation, whose place of business and whose entire property is situated in the state of New Jersey. That property is taxed by the state in which it is situate. The plaintiff is a member of that corporation, his money, in part, has purchased the property of the company, but he resides in this state.

It is not a company whose capital is not of taxable visible real property, subject to general taxation in the state where located, as insurance companies, &c., making profits by insuring in Pennsylvania, but realty, &c., subject to taxation like any other land for all local purposes, as well as on their capital for state purposes, in the state where located. These stock certificates of plaintiff in error merely represent his title or quantum of ownership, the same as his deed would if the company was not incorporated, and he was tenant in common with the other contributors to the purchase.

In Story's Conflict of Laws, it is said: "That every nation possesses an exclusive sovereignty and jurisdiction within its own territory. The direct consequence of this rule is, that the laws of every state affect and bind directly all property whether real or personal within its territory." § 18.

"The sovereign has power and authority over his subjects, and over the property which they possess within his dominions." § 19.

"Another maxim or proposition is, that no state or nation can by its laws directly affect or bind property out of its own territory, or bind persons not resident therein, whether they are natural born subjects or others. This is a natural consequence of the first proposition, for it would be wholly incompatible with the equality and exclusiveness of the sovereignty of all nations, that any one nation should be at liberty to regulate either persons or things not within its own territory. It would be equivalent to a declaration, that the sovereignty over a territory was never exclusive in any nation, but only concurrent with that of all nations; that each could legislate for all, and none for itself; and that all might establish rules, which none were bound to obey. The absurd results of such a state of things need not be dwelt upon. Accordingly Rodenburg has significantly said, that no sovereign has a right to give the law beyond his own dominions; and if he attempts it, he may be lawfully refused obedience, for whenever the foundation of laws fails there, their force and jurisdiction fail also." § 20. See also McCullough v. The State of Maryland, 4 Wheat. 487; Borough of Carlisle v. Marshal, 12 Casey 402.

What protection or value does the state of Pennsylvania or the county of Northampton give to funds invested in New Jersey? It is right to tax the funds, say the court, in the case last cited, "because the safety and value of the fund depend on the existence of the government, which such taxes go to support." If this be the reason why the taxing power may levy the tax, then the plaintiff in error here cannot be taxed for the stock in question, because the Warren Foundry Company might continue to exist and to prosper, even though both the state government of Pennsylvania and the county of Northampton were blotted out of existence."

The defendant is thus taxed simply because he is a resident of Pennsylvania, and it follows that they may go a step further and tax him for his real estate in New Jersey, New York, or elsewhere. He may as well be taxed for his real estate situated in another state, as for his money which was long since invested in real estate in another state. His certificates of stock, which may be in New Jersey, are but the evidence of the proportion of the property of the corporation of which he is owner. His title-deeds to real estate in New Jersey are only the evidence that he is the owner of the land there. Nay, more, if, because personal estate is supposed to accompany the person of the owner and may be taxed in the state, because of the residence of the owner therein, why may not the state of Pennsylvania in her chase for subjects of taxation beyond her borders, tax the stock of goods which Mr. McKeen, as a merchant, might have in New York, or even in London or Calcutta?

In the case of Commonwealth of Pennsylvania v. Trenton Delaware Bridge Company, 9 Am. Law Reg. 298, Judge Pearson decided, that as the company was incorporated by the two state of Pennsylvania and New Jersey, and one-half of the bridge only was in Pennsylvania, that only one-half of its capital stock could be taxed in Pennsylvania: citing Howell v. The State, 3 Gill. 23.

Levying a tax on the property of the corporation is taxing the individual stockholders; and if the law be as the learned judge in the court below has decided it to be, why may not the state tax the whole of the capital stock, the state of New Jersey do the same, and the state of New York tax the owners of the stock who may happen to reside there?

We contend, therefore, that as this property is not within the territory of the state, it is exempt from taxation either for state or county purposes. And if it even were in this state, the capital being taxed as a corporation, the certificates of ownership of that capital would not be subject to the same taxation over again.

O. H. Meyers and C. G. Beitel, for defendant.—The argument for the plaintiff in error is based upon the assertion, that the stock which he holds in the Warren Foundry and Machine Company is real estate, and that the certificates which he holds are the evidence of title to such real estate. This we deny. The title to the real estate owned by the Warren Foundry and Machine Company is held by the corporation, and the evidence of that is a deed, and not the certificates of stock held by the individual stockholders.

The certificates of stock are the evidence of an interest which the stockholder...