SUSQUEHANNA POWER CO. V. STATE TAX COMM'N

• Decision Date: 13 April 1931
• Citation: 283 U. S. 297
• Court: U.S. Supreme Court

Susquehanna Power Company v.State Tax Commission of Maryland (No. 2)

No. 369

Argued March 20, 1931

Decided April 13, 1931

283 U.S. 297

APPEAL FROM THE COURT OF APPEALS OF MARYLAND

Syllabus

A state tax on the capital stock of a corporation based on an assessment equal to the value of its personal property within the state without regard to liens or debts was construed and upheld by the state court as an indirect tax on the personalty, which was not taxed otherwise. Held an adequate state ground of decision, obviating consideration of constitutional objections directed to a different construction of the statute. P. 300.

Dismissed.

Appeal from a judgment sustaining a capital stock tax. Reported below: 159 Md. 359, 151 A. 39.

Page 283 U. S. 298

MR. JUSTICE STONE delivered the opinion of the Court.

This case is here on appeal, § 237 Jud.Code as amended by Act of January 31, 1928 from a judgment of the Court of Appeals of Maryland, 151 A. 39, upholding an order of appellee, the state Tax Commission, which fixed an assessment on the capital stock of appellant for 1929 taxation at ,000,000.

The assessment was made under the provisions of Article 81, §§ 154, 163, 166, and 166A, of the Maryland Code. Sections 163, 166, and 166A impose a tax on the capital stock of every domestic corporation, which "shall be collected from" the corporation, and which, when paid, may be charged to stockholders, and is a lien upon their stock. At the time of the adoption of § 163, corporations were exempt from taxation on their real and personal property, but § 163 provided that

"in no case shall the stock of any corporation, in the aggregate, be valued at less than the full value of the real estate and chattels, real or personal, held by or belonging to such corporation."

Direct taxation of real property of domestic corporations was restored by Laws 1896, c. 1208 § 1(2), and by § 166-A, supra, it was provided that, in assessing the stock of corporations for taxation, the taxable value should be ascertained by deducting the assessed value of the corporation's real estate from the aggregate value of all its stock.

Appellant is a Maryland corporation, and has been granted a license by the Federal Power Commission. Acting under it, it has constructed a dam on the Susquehanna River, in connection with which it has established and is operating a power project. See Susquehanna Power Co. v. State Tax Commission, ante, P. 291. All its shares of capital stock are owned by the Philadelphia

Page 283 U. S. 299

Electric Power Company, a Pennsylvania corporation, with its only place of business in that commonwealth. The report of appellant to the Commission for the assessment of its capital stock showed its gross assets to be ,821,885.28, of which its tangible personal property was not less than ,000,000, its total liabilities ,954,998.92, and its net worth ,866,886.36. The order of the Commission fixed the aggregate value of the capital stock at ,726,132, from which it deducted ,726,132, the assessed value of its real estate, leaving ,000,000 as the assessed value of the stock.

Appellant challenges the taxing statute, as applied, on the ground that it violates the due process clause of the Fourteenth Amendment because the assessed valuation required by it is arbitrary and excessive and because it imposes a tax on intangible shares of stock owned by a nonresident, which have a situs, for purposes of taxation, only at the owner's residence. Appellant also assails the statute on the ground that, as the assessed value of the capital stock includes a value attributable to the license granted to appellant by the Federal Power Commission, the tax is on a federal instrumentality, which the...