Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/501

 CHAP. VIII.] CORPORATION AND STATE. [§ 479. power of a state to tax is subject to restrictions to which the taxing power of Congress is not ; and, in the first place, is lim- ited by the territorial limitations to the political jurisdiction of the state. 1 Thus, a state cannot tax the interest on bonds held by a non-resident, secured by a railroad mortgage, al- though the railroad lies within the limits of the state ; for such bonds are property in the possession of their owners, and when held by non-residents, are property beyond the jurisdic- tion of the state, and, consequently, not subject to her tax laws, which can have no extra-territorial operation. 2 Neither can a state tax the entire track and equipment, or the total capital stock of a railroad company whose track lies partly without the boundaries of the state; but may tax only the portion of the road within its limits, or such proportion of the total capital stock as represents that portion. 3 i Commonwealth v. Standard Oil Co., 107 Pa. St. 119; cf. State v. Stephens, 146 Mo. 622. 2 Case of the State Tax on Foreign Held Bonds, 15 Wall. 300. It makes no difference that the mortgaged property lies within the state, for a debt has no situs apart from the domicile of the creditor. lb. See Kirtland v. Hotchkiss, 100 U. S. 491; Bonaparte v. Appeal Tax Court, 21 Am. Law Reg., N. S. 290 (U. S. Supr. Ct.); Railroad Co. v. Jackson, 7 Wall. 262; Commonwealth v. Ches- apeake, etc., R. R. Co., 27 Gratt. (Va.) 344; Valle v. Zeigler, 84 Mo. 214. It has, however, been recently held, that bonds belonging to a non- resident decedent, issued by a for- eign corporation, but which are actually in a box in the state, are subject to taxation by the Transfer Tax Act, because physically present in the state. Whiting, in re, 150 N. Y. 27. On the other hand, bonds of a domestic corporation, belonging to non- resident decedent, and actually outside of the state, and passing by will to non-residents, are not sub- ject to this tax. Bronson. in re, 150 31 N. Y. 1. Personal property other than a debt may have a situs apart from the domicile of the owner, at least for the purposes of taxation. Thus, the legislature of a state may, for the purpose of taxation, locate shares of stock in a national bank at the bank's place of business, though the shareholders reside elsewhere. Tappan v. Merchants 1 Nat. Bk., 19 Wall. 491; see, also, North Car. R. R. Co. v. Commissioners, 91 N. C. 454; St. Albans v. Nat. Car Co., 57 Vt. 68; Crossley v. East Orange, 62 N. J. L. 583; compare Miller v. U. S., 11 Wall. 269. However, shares may be taxed at the residence of the owner also. Thus, a city may tax its citi- zens on shares owned by them in the stock of a foreign corporation; and it may do this, although the state incorporating the corporation also taxes the shares. Seward v. City of RisiDg Sun, 79 Ind. 351 ; see Cm'wealth v. Gloucester Ferry Co., 98 Pa. St. 105; McKeen v. North'ton Co., 49 Pa. St. 519; Worth v. Com- missioners, 90 N. C. 409 ; State v. Kidd, 125 Ala. 413. 3 State Treasurer v. Aud'r-Gen'l, 481