Southern Pacific Company v. Commonwealth of Kentucky On Relation of George Alexander

• Decision Date: 13 November 1911
• Docket Number: No. 247,247
• Citation: 56 L.Ed. 96,32 S.Ct. 13,222 U.S. 63
• Parties: SOUTHERN PACIFIC COMPANY, Plff. in Err., v. COMMONWEALTH OF KENTUCKY ON RELATION OF GEORGE H. ALEXANDER et al., Revenue Agent
• Court: U.S. Supreme Court

222 U.S. 63

32 S.Ct. 13

56 L.Ed. 96

SOUTHERN PACIFIC COMPANY, Plff. in Err.,

v COMMONWEALTH OF KENTUCKY ON RELATION OF GEORGE H. ALEXANDER et al., Revenue Agent.

No. 247.

Argued October 11 and 12, 1911.

Decided November 13, 1911.

Messrs. Alex. Pope Humphrey and Maxwell Evarts for plaintiff in error.

[Argument of Counsel from pages 64-66 intentionally omitted] Messrs. Matt J. Holt and Joseph Selligman for defendant in error.

Mr. Justice Lurton delivered the opinion of the court:

The question arising upon this writ of error is, whether certain steamships owned by the Southern Pacific Company, a corporation of the state of Kentucky, are taxable in Kentucky as property having a taxable situs there.

The Southern Pacific Company is a corporation organized under a special act of the general assembly of Kentucky of March 17, 1884. Acts of 1883-84, p. 725. Very wide and diverse powers are thereby conferred, among them being the right to own, lease, maintain, and operate railroads, telegraphs, and steamships, though prohibited from owning, leasing, or operating 'any railroad within the state of Kentucky.' By an act of March 21, 1888, the act of March 17, 1884, was amended by adding thereto the following: 'Except subject to and in conformity with the provisions of the laws of the state of Kentucky applicable to railroads, and acquiring no special rights that may be possessed by any railroads in the state, except the general and ordinary rights of common carriers as possessed by railroads generally.' The company is required to keep its principal office in the state, with power to open other offices at places outside of the state, as its business may make convenient.

By virtue of the authority conferred, the company has acquired and is operating a line of railway from New Orleans and Galveston to San Francisco and Portland, to say nothing of connecting lines in the same region, either owned, leased, or controlled through stock domination. It also owns and operates a line of twenty steamships between the ports of New York and New Orleans, New York and Galveston, and New Orleans and Havana, Cuba. Auxiliary to these ships it also owns barges, tugs, and ferryboats, which operate exclusively in the harbors of the ports mentioned. These tugs, barges, etc., were held to have acquired a permanent situs in such ports, under the ruling in Old Dominion S. S. Co. v. Virginia, 198 U. S. 299, 49 L. ed. 1059, 25 Sup. Ct. Rep. 686, 3 A. & E. Ann. Cas. 1100, and in this the state of Kentucky acquiesced, leaving open only the question of the taxable situs of the ocean-going steamships.

All of these ships are enrolled at the port of New York, and carry on their sterns the words 'New York,' as required by the statute. Two of them sail between New Orleans and Havana, five between New York and New Orleans exclusively, and thirteen interchangeably between New York and New Orleans, and New York and Galveston, Texas. The enrolment at New York, and the marking of the name of that port upon the stern of these vessels, is only of importance upon the question of an actual situs at New York. The owner has no power to give his vessel a taxable situs by the arbitrary selection of a home port which is neither his domicil nor the domicil of actual situs. St. Louis v. Wiggins Ferry Co. 11 Wall. 423, 20 L. ed. 192; Old Dominion S. S. Co. v. Virginia, 198 U. S. 299, 49 L. ed. 1059, 25 Sup. Ct. 686, 3 A. & E. Ann. Cas. 1100; Ayer & L. Tie Co. v. Kentucky, 202 U. S. 409, 50 L. ed. 1082, 26 Sup. Ct. Rep. 679, 6 A. & E. Ann. Cas. 205.

Sections 4141 and 4178, Revised Statutes (U. S. Comp. Stat. 1901, pp. 2808, 2830), as amended by the act of June 23, 1874 (18 Stat. at L. 252, chap. 467), give to an owner the right to mark upon the stern of his vessel either the name of the place of enrolment, the place where the vessel was built, or the place where the owner resides.

As the place of enrolment is not of itself determinative of the place of taxation, it is obvious that the right to select a place to be marked upon the stern as a place of hail, or home port, does not confer the arbitrary right upon the owner of selecting a place for the taxation of his vessel. To give to the statute this construction, said this court in Ayer & L. Tie Co. v. Kentucky, cited above, 'would be simply to hold that its purpose was to endow the owner with the faculty of arbitrarily selecting a place for the taxation of his vessel, in defiance of the law of domicil, and in disregard of the principle of actual situs.'

Since, therefore, an artificial situs for purposes of taxation is not acquired by enrolment nor by the marking of a name upon the stern, the taxable situs must be that of the domicil of the owner, since that is the situs assigned to tangibles where an actual situs has not been acquired elsewhere. The ancient maxim which assigns to tangibles, as well as intangibles, the situs of the owner for purposes of taxation, has its foundation in the protection which the owner receives from the government of his residence; and the exception to the principle is based upon the theory that if the owner, by his own act, gives to such property a permanent location elsewhere, the situs of the domicil must yield to the actual situs and resulting dominion of another government. Thus, in St. Louis v. Wiggins Ferry Co. 11 Wall. 423, 430, 20 L. ed. 192, 194, this court, after referring to the taxing power of a state as extending to all persons and property within its territorial jurisdiction, said:

'In the eye of the law, personal property, for most purposes, has no locality. . . . In a qualified sense it accompanies the owner wherever he goes, and he may deal with it and dispose of it according to the law of his domicil. If he die intestate, that law, wherever the property may be situate, governs its disposal, and fixes the rights and shares of the several distributees. But this doctrine is not allowed to stand in the way of the taxing power in the locality where the property has its actual situs, and the requisite legislative jurisdiction exists. Such property is undoubtedly liable to taxation there in all respects as if the proprietor were a resident of the same locality. The personal property of a resident at the place of his residence is liable to taxation, although he has no intention to become domiciled there. Whether the personal property of a resident of one state, situate in another, can be taxed in the former, is a question which, in this case, we are not called upon to decide.'

The question thus reserved was decided adversely to the state of domicil in Union Refrigerator Transit Co. v. Kentucky, 199 U. S. 194, 50 L. ed. 150, 26 Sup. Ct. Rep. 36, 4 A. & E. Ann. Cas. 493.

The persistence with which this court has declared and enforced the rule of taxability at the domicil of the owner of vessel property, when it did not appear that the vessels had an actual situs elsewhere, is illustrated by the cases of Hays v. Pacific Mail S. S. Co. 17 How. 596, 15 L. ed. 254; Morgan v. Parham, 16 Wall. 471, 21 L. ed. 303; St. Louis v. Wiggins Ferry Co. 11 Wall. 423, 20 L. ed. 192; Old Dominion S. S. Co. v. Virginia, 198 U. S. 299, 49 L. ed. 1059, 25 Sup. Ct. Rep. 686, 3 A. & E. Ann. Cas. 1100, and the case of Ayer & L. Tie Co. v. Kentucky, 202 U. S. 409, 50 L. ed. 1082, 26 Sup. Ct. Rep. 679, 6 A. & E. Ann. Cas. 205.

In Hays v. Pacific Mail S. S. Co. it appeared that the ships of the company were the property of a New York corporation, and that they were registered at the port of New York, where the capital represented by them was assessed for taxation. They were regularly and continuously employed on the Pacific coast, and were re- fitted and repaired from time to time at Benicia, in the state of California. Concerning these ships, which the state of California sought to tax, upon the theory that they had an actual situs in that state, this court said:

'These ships are engaged in the transportation of passengers, merchandise, etc., between the city of New York and San Francisco, by the way of Panama, and between San Francisco and different ports in the territory of Oregon. They are thus engaged in the business and commerce of the country, upon the highway of nations, touching at such ports and places as these great interests demand, and which hold out to the owners sufficient inducements by the profits realized or expected to be realized. And so far as respects the ports and harbors within the United States, they are entered and cargoes discharged or laden on board, independently of any control over them, except as it respects such municipal and sanitary regulations of the local authorities as are not inconsistent with the Constitution and laws of the general government, to which belongs the regulation of commerce with foreign nations and between the states.

'Now, it is quite apparent that if the state of California possessed the authority to impose the tax in question, any other state in the Union, into the ports of which the vessels entered in the prosecution of their trade and business, might also impose a like tax. It may be that the course of trade or other circumstances might not occasion as great a delay in other ports on the Pacific as at the port of San Francisco. But this is a matter accidental, depending upon the amount of business to be transacted at the particular port, the nature of it, necessary repairs, etc., which in no respect can effect the question as to the situs of the property, in view of the right of taxation by the state.

'Besides, whether the vessel, leaving her home port for trade and commerce, visits, in the course of her voyage or business, several ports, or confines her operations in the carrying trade to one, are questions that will depend upon the profitable returns of the business, and will furnish no more evidence that she has become a part of the personal property within the state, and liable to taxation at one port than at the others. She is...