value might be reached by the state .authorities on the basis indicated.

"No more reason is perceived for limiting the valuation of the property of express companies to horses, wagons, and furniture, than that of railroad, telegraph, and sleeping-car companies, to roadbed, rails, and ties, poles and wires, or cars. The unit is a unit of use and management, and the horses, wagons, safes, pouches, and furniture, the contracts for transportation facilities, the capital necessary to carry on the business-whether represented in tangible or in intangible property in Ohio, possessed. a value in combination and from use in connection with the prop erty and capital elsewhere, which could as rightfully be recognized in the assessment for taxation in the instance of these companies as the others.

"We repeat that while the unity which exists may not be a physical unity, it is something more than a mere unity of ownership. It is a unity of use, not simply for the convenience or pecuniary profit of the owner, but existing in the very necessities. of the case resulting from the very nature of the business."

37

A strong dissenting. opinion, concurred in by four justices, was rendered in this case. In a petition for a rehearing of the case," Mr. James C. Carter, of counsel for the express company, declared: "The step now taken by the present decision is to evolve a new general proposition, not declared or distinctly discussed in. any of the prior cases, that where there is what is called a unity of use between several pieces of property not united together by any physical tie, some of the pieces situated within and some without the State, the value of the parts within may be determined by the value of the whole, even though the part within be physically separable, and is, as separated, an ordinary thing, having an ordinary market value based upon its capability of similar uses in a multitude of different businesses, differing in nothing, so far as the ascertainment of value is concerned, from the thousand other classes of chuttels which form the usual subjects of taxation."

27 Adams Express Co. v. Ohio State Auditor, 166 U. S. 185; 17 Sup. Ct. Rep. 604; 41 L. ed. 965.

In the opinion refusing the rehearing prayed for, Justice Brewer said: "The Adams Express has, according to its showing, in round numbers $4,000,000 of tangible property scattered through the different States, and with that tangible property thus scattered transacts its business. By the business which it transacts, by combining into a single use all these separate pieces and articles of tangible property by the contracts, franchises, and privileges which it has acquired and possesses, it has created a corporate property of the actual value of $16,000,000. Where is the situs of this intangible property? Is it simply where its home office is, or in the State which gave it its corporate franchise; or is that intangible property distributed wherever its tangible property is located and its work is done? Clearly, as we think, the latter. Every State within which it is transacting business and has its property, more or less, may rightfully say that the $16,000,000. of value which it possesses springs not merely from the original grant and corporate property by the State which incorporated it, or from the mere ownership of the tangible property, but it springs from the fact that that tangible property it has combined with contracts, franchises, and privileges into a single unit of property, and this State contributes to that aggregate value not merely the separate value of such tangible property as is within its limits, but its proportionate share of the value of the entire property. In conclusion let me say that this is eminently a practical age; that we must recognize things as they are and as possessing a nature which is accorded to them in the markets of the world, and that no fine-spun theories about situs should interfere, to enable these large corporations whose business is carried on through many States to escape from bearing in each State such burden of taxation as a fair distribution of the actual value of their property among those States requires."

" 38

38" As incident to this unit rule of valuation with mileage apportionment, the corporation has the right to show by all proper evidence that the application of the mileage rule of apportionment to such valuation is for any reason imperfect and unjust. Thus it may show that it holds property included in such valuation, as an entirety which is exempt from taxation. It

§ 537. Taxation of Capital Stock of Companies Operating in Two or More States.

In taxing the property within the State of a company operating in two or more States the not unusual practice has been to levy the tax on the capital stock of the company, taking as the basis of assessment such proportion of its capital stock as the amount of its business within the State bears to the entire business done; and in railroads, telegraph and telephone companies, determining this proportion by the proportion of the total mileage of track or wires lying within the State. This, for example, was the method employed in the leading case of Pullman's Palace Car Co. v. Pennsylvania, decided in 1891. This also, was the method employed in Delaware, L. & W. R. Co. v. Pennsylvania, in which it will be remembered it was held that in appraising the capital stock, tangible property located in other States might not be included.

39

§ 538. Taxation of Movables.

40

In a series of cases the Supreme Court has held that in taxing the rolling stock of railway, sleeping-car and refrigerator companies, a State may estimate the number of cars upon the average kept and used within the State, and for the determination of this average may use. any reasonable rule, the .one ordinarily employed being that of mileage Conversely that part of the property of a corporation which upon an average is kept and employed outside of the State may not be taxed.42

41

may also show that its property in other States is of disproportionate value, as, for instance, that it is located in a more densely settled community, where it is disproportionately more productive, or consists of terminals in large cities or other States. All such facts are relevant as bearing upon the value of the State's portion of the entire property. A state statute or a procedure by a State under a statute which denied the company the opportunity of proving such facts, would doubtless be held invalid." Judson, Taxation, $ 261.

39 141 U. S. 18; 11 Sup. Ct. Rep. 876; 35 L. ed. 613.

40 198 U. S. 341; 25 Sup. Ct. Rep. 669; 49 L. ed. 1077.

41 Pullman's Palace Car Co. v. Pennsylvania, 141 U. S. 18; 11 Sup. Ct. Rep. 42 Union Refrigerator Transit Co. v. Kentucky, 199 U. S. 194; 26 Sup. Ct. Rep. 36; 50 L. ed. 150; New York v. N. Y. C. & H. R. R. Co., 202 U. S. 584; 26 Sup. Ct. Rep. 714; 50 L. ed. 1155.

§ 539. Taxation of Intangible Personal Property.

Whereas, with reference to the taxation of tangible personal property, the practice has been to determine its situs by its actual location, with respect to intangible personalty, the principle of mobilia sequuntur personam has generally, though as we shall presently see, not always been applied.

In Union Refrigerator Transit Co. v. Kentucky43 the court say: "There is an obvious distinction between tangible and intangible property, in the fact that the latter is held secretly; that there is no method by which its existence or ownership can be ascertained in the State of its situs except, perhaps, in the case of mortgages or shares of stock. So if the owner be discovered, there is no way by which he can be reached by process in a State other than that of his domicile, or the collection of the tax otherwise enforced. In this class of cases the tendency of modern authorities is to apply the maxim mobilia sequuntur personam, and to. hold that the property may be taxed at the domicile of the owner as the real situs of the debt, and also, more particularly in the case of mortgages, in the State where the property is retained. Such have been the repeated rulings of this court."

44

§ 540. Doctrine of State Tax on Foreign-Held Bonds Case. However, in the case of State Tax on Foreign-Held Bonds,+ decided in 1873, was laid down a rule which, if strictly adhered to, would have greatly embarrassed the 'States in their attempts to tax intangible personal property. In this case it was declared that bonds and other evidences of indebtedness are property in the hands of the holders, and, when held by non-residents of the State in which issued, are property beyond the jurisdiction of, and therefore not taxable by, that State. The law contested in this case had required that a railroad company should, before the payment of the interest on certain of its bonds, retain out therefrom the amount of the tax and pay it over to the State. By this direction, it was held, the law operated to impair the obligation

43 199 U. S. 194; 26 Sup. Ct. Rep. 714; 50 L. ed. 1155.

44 15 Wall. 300; 21 L. ed. 179.

of the contract between the company and its non-resident bondholders. And the court held that it was such an impairment cause it was not a proper exercise of the taxing power, the court saying: "The bonds issued by the Railway Company in this case are undoubtedly property, but property in the hands of the holders, not property of the obligors. So far as they are held by non-residents of the State, they are property beyond the jurisdiction of the State. The law which requires the treasurer of the company to retain five per cent. of the interest due to the nonresident bondholder is not, therefore, a legitimate exercise of the taxing power. It is a law which interferes between the company and the bondholder, and under pretense of levying a tax commands the company to withhold a portion of the stipulated interest and pay it over to the State. It is a law which thus impairs the obligation of the contract between the parties."

The reasoning by which the court reached the doctrine that the bond in the hands of non-resident bondholders was property without the jurisdiction of the State is given in the note below. 45

45" Corporations may be taxed, like natural persons, upon their property and business. But debts owing by corporations, like debts owing by individuals, are not property of the debtors in any sense; they are obligations of the debtors, and only possess value in the hands of the creditors. With them they are property, and in their hands they may be taxed. To call debts property of the debtors, is simply to misuse terms. All the property there can be, in the nature of things, in debts of corporations, belongs to the creditors, to whom they are payable, and follows their domicile, wherever that may be. Their debts can have no locality separate from the parties to whom they are due. This principle might be stated in many different ways, and supported by citations in numerous adjudications, but no number of authorities and no forms of expression could add anything to its obvious truth, which is recognized upon its simple statement. The property mortgaged belonged entirely to the Company, and so far as it was situated in Pennsylvania was taxable there. If taxation is the correlative of protection, the taxes which it there paid were the correlative for the protection which it there received. And neither the taxation of the property, nor its protection, was augmented or diminished by the fact that the Corporation was in debt or free from debt. The property in no sense belonged to the non-resident bondholder or to the mortgagee of the Company. The mortgage transferred no title; it created only a lien upon the property. Though in form a conveyance, it was both at law and in equity a mere security for the debt.

"Such being the character of a mortgage in Pennsylvania, it cannot be said,