Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/505

 CHAP. VIII.] CORPORATION AND STATE. [§ -±82. cies and instruments of the national government would be incompatible with that government's existence. Since the greatest of constitutional decisions, McCulloch v. Maryland, 1 these propositions have not been questioned. § 482. The exemption of Federal agencies from state taxa- tion is held to depend, not upon the nature of the agencies, nor upon the manner in which they are j^f^i constituted, nor even upon the fact that they are such agencies. Does the tax, in truth, impair their power to serve the Federal government as they were intended to serve it? this is the material question. 2 Accordingly, while a state tax on the operations of a Federal agency or instrument would be void as a direct obstruction to the exercise of the powers of the Federal government, yet if such agency or instrument be a stock corporation, a state tax upon its property may be valid, provided the tax leaves the corporation free efficiently to dis- charge its duties to the Federal government, and in no way impairs the functions of the corporation as a Federal agency. 3 If these propositions are correct, a fortiori the employment of a corporation, originally chartered by a state, in the service of the Federal government, does not exempt it from state taxa- tion ; at least in the absence of legislation on the part of Con- gress indicating that such exemption is deemed by Congress 1 4 Wheat. 405. Franchises granted to a corporation by Congress cannot be taxed by a state. California v. Pacific R. R. Co., 127 U. S. 1. A state cannot tax the capital stock of a cor- poration issued for patent rights granted by the United States. Com- monwealth v. Philadelphia County, 157 Pa. St. 527; Peo. ex rel. Edison Co. v. Assessors, 156 N. Y. 481 ; copy- rights are likewise exempt from the taxing power of the state. Peo. ex rel. A. J. Johnson Co. v. Roberts, 159 N. Y. 70. 2 Railroad Co. v. Peniston, 18 Wall. 5. 3 Railroad Co. v. Peniston, supra; Central Pac. R. R. v. California, 1G2 U.S. 91; Adams Exp. Co. v. Ohio, 165 U. S. 194; National Bk. v. Com- monwealth, 9 Wall. 353; see Bank of Commerce v. New York City, 2 Black, 620; Bank Tax Case, 2 Wall. 200; Society of Savings v. Coite, 6 Wall. 594; Provident Institution ». Massachusetts, 6 Wall. 611; Hamil- ton Co. v. Massachusetts, 6 Wall. 633. A state tax on the capital stock is not a tax on franchises granted by the Federal government, and is valid. Keokuk and Hamilton Bridge Co. v. Illinois, 175 U. S. 626. It may be assumed, however, inasmuch as Con- gress has power to charter corpora- tions only in furtherance of some Federal object, that any state tax on the property of corporations so char- tered, in any way discriminating against them, would be held uncon- stitutional. 485