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domicile is under no obligation in reference to the collection thereof.

CORPORATIONS.-The interests of owners of shares in the capital of a corporation are taxable as the personal property of such owners. It is usual in some countries to tax foreign corporations more heavily than domestic corporations. By the American law, the property of the corporations is distinguished from the interests of its shareholders for the purposes of taxation, as well as for other purposes. A State has no power to tax the interest of bonds (secured in this case by mortgage) given by a railway corporation, and binding every part of the road, when the road lies partially in another State; being one road owned by a company incorporated by the two States. The effect of allowing such tax would be to enable each State to tax property beyond its own limits.-Railroad Company vs. Jackson, 7 Wallace's U. S. Supreme Court Rep., p. 262. See Secs. 3640-3663, post. Upon considerations somewhat similar to those referred to, it may be suggested that shares in corporations, as distinguished from the property of the corporation, should not be taxed.-See Secs. 3640, 3641, post.

SHIPPING is taxable only by the Government whose character it bears. This is the rule laid down in Hays vs. Pacific Mail Steamship Co., 17 Howard's U. S. Sup. Ct. Rep., p. 596, as applicable at least so long as the vessel gains no situs in the foreign State. See, also, People ex rel. Hoyt vs. Commissioners on local taxation (Harper's ed.), p. 45. See Secs. 3644-5-6, post.

PROPERTY IN TRANSIT between different jurisdictions, whether actually in motion or awaiting directions or means of transportation, is only taxable under ordinary revenue laws applicable to importation or exportation, under the exclusive control of Congressbeing a commercial regulation. This rule we understand to be generally recognized. The power to tax property sent into a State, and lying there awaiting sale, seems clear, although the policy of it is questioned. Rep. of Wells and others, Commissioners, on local taxation (Harper's ed.), p. 45. See Sec. 3638, post. This note is frequently referred to under the sections of Chap. III, post.

OUR STATE LEGISLATION on the subject. The revenue system of the Code embraced in this Title will, it is hoped, prove a successful attempt to bring system out of confusion. It has been in force only a short time, and its authors and the Legislature adopting it have reason to congratulate themselves that so far at least it has been received and acknowledged as a vast improvement upon former enactments. Though the State has had an existence of more than twenty years, the Courts have been left to grope among the odds and ends of crude legislation, unsystematized and illy digested, for something tangible and worthy the name of " method" upon one of the most important subjects of government—taxation.It would be profitless, chronologically or otherwise, to recapitulate or refer to here the conflicting cases-necessarily very numerouswhich our Supreme Court have been compelled to decide under former revenue laws. A few of the later cases, where these questions are all elaborately discussed, will disclose not only the necessity which existed for the change made in these laws, but will also give the foundation for the change, and by presenting the existing difficulties, point out to a certain degree the means of avoiding them which were employed in the preparation of this revenue system under the constitutional provisions governing the subject. The case of The People vs. McCreery, 34 Cal., p. 434, et seq., was an appeal from the District Court, Fifteenth Judicial District, City and County of San Francisco. This was an action by the people of the State against defendant to recover the sum of eight thousand one hundred and sixty-four dollars and fifty cents, alleged to be due for taxes on certain personal property, levied in the City and County of San Francisco, for the fiscal years 1865-6 and 1866-7. The personal property on which the taxes were levied consisted of one hundred and twenty-five thousand dollars loaned at interest by defendant McCreery to James Lick, and secured to be repaid by a deed of trust of certain real property situated on the corner of Sutter and Montgomery streets, known as the “Lick House." In the Court below the trial was by the Court without a jury, upon an agreed statement of facts, coupled with a stipulation that defendant could interpose any defense he might choose. The defendant had judgment, and plaintiff appealed therefrom and from an order denying a motion for a new trial. The other facts and the issues presented by the pleadings and on appeal are sufficiently stated in the opinion of the Court.

In the first portion of this decision Justice Rhodes disposes of questions arising from numerous specific enactments. The revenue law then existing classified all property subject to taxation, and attempted a complete enumeration, which, it will be observed, is not attempted in the text of Section 3607 of this Title, but

it declares simply that "all property is subject to taxation," with the exception of the property of the United States and the State. Justice Rhodes then, on p. 438, proceeds as follows:

“The counsel for the defendant hold, as we understand them, that the assessment roll was made under the provisions of the Act of May 9th, 1862 (Stats. 1862, p. 509), and of the Act of March 6th, 1863 (Stats. 1863, p. 35). We do not agree with the learned counsel in respect to the Act of 1862. An examination of the multitudinous Revenue Acts applicable to San Francisco—a part general and a part special, with provisions incongruous, conflicting, and sometimes absurd—is not so attended with pleasure that it will be unnecessarily undertaken. The result of our exploration is far from being satisfactory, for we are not sure that we are able to discover the particular provision applicable to any particular point in the controversy."

From these remarks of the Court, as well as from those which immediately follow, the justice of our language supra in this note, as to the difficulties of the Courts, is manifest. The Court proceeds:

** The first section of the Act of May 9th, 1862, prescribing the manner in which the assessment roll of personal property shall be made by the Assessordirecting him to enter the names of the persons, etc., assessed, and the amount of the tax, without requiring him to enter the property or its valuation-probably repealed all previous provisions defining the manner of making such roll; but this provision, whatever may have been its meaning or effect, was superseded by Section 1 of the Act of March 6th, 1863 (Stats. 1863, p. 35), amendatory of the Act of 1859 (Stats. 1859, p. 346), which latter Act was amendatory of the general Revenue Act of 1857—the Act which, with its amendments, became applicable to San Francisco alone. Section 4 of the Act of 1857, as amended in 1863, provides for the making of the assessment roll of personal property, and directs the Assessor, among other things, to set down in a separate column 'all personal property taxable to each [person, etc.) under the classification provided for in Section 2 of this Act.' The second section of the Act of 1859 is an amendment of the third section of the Act of 1857. The last amendment of the third section of the Act of 1857 which we find was passed in 1862 (Stats. 1862, p. 57). The section divides personal property into nine classes. The property assessed in this case falls within the fourth class, to wit: All money at interest or loaned, whether secured by pledge,

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mortgage, or otherwise; all solvent debts exceedin what may be due from such person, corporation, association, or firm. The defendant contends that as this class is divisible into seven species of property, it was the duty of the Assessor to state the particular species of the property which may be entered as of this class, together with its valuation; and in support of this position reliance is placed on Falkner v. Hunt, 16 Cal., p. 167. At the time the assessment was made, which was under consideration in Falkner v. Hunt, Section 3 of the Act of 1857 did not prescribe any classification of personal property, and the Court held that it must be described in the assessment roll by its different species in manner defined in Section 5 of the Act. One object of the amendment of Section 3, in 1862, was to enable the taxpayer and the Assessor to group the property under the classification therein specified; at least, if that was not the object, we are at a loss to understand what was the purpose of the classification. A description, with the minuteness and particularity contended for by the defendant, would be prolix and cumbersome, and would serve no useful purpose.

Take the second class: 'All stocks of goods on hand, all goods, wares, merchandise, and chattels of every description. The same rule that would require the Assessor to specify in different items, money loaned secured by pledge, money loaned secured by mortgage, money loaned secured by deed of trust, or by the obligation of a third person, or other security, would require the Assessor to give the description of each chattel falling within that class which was not included within “stocks of goods.' The Legislature could not have intended so useless a proceeding. The only reason why a particular description of the property assessed may be required by the person assessed, is that he may know whether it has been properly valued. It is admitted that the only money loaned out by the defendant, and the only solvent debts due him, during said fiscal years, was the one hundred and twenty-five thousand dollars, for the taxes upon which this suit is brought, and is the one hundred and twentyfive thousand dollars loaned by the defendant to one James Lick, secured to be paid by a deed of trust,' etc. As a matter of fact, the defendant was not misled, and could be under no misapprehension as to the meaning of the assessment. (People vs. Home Insurance Company, 29 Cal., p. 549; People vs. Empire Gold and Silver Mining Company, 33 Cal., p. 171.) It certainly was money loaned, and it was also a solvent debt.

"THE TERM “SOLVENT DEBT' duplicates all the other species of property mentioned in that class, in the same manner that‘chattels' does all the personal property mentioned in the section. Treating the property as a solvent debt, we see no necessity for adding that the amount is in excess of the owner's indebtedness, for it is only the excess that is taxable. But regarding money loaned as the more specific and proper designation, was it necessary also to state the security ? Suppose that, instead of being included in one loan, the one hundred and twenty-five thousand dollars had in fact been loaned to one hundred and twenty-five different persons, in sums of one thousand dollars each, and that each borrower had given security, amongst which was to be found all the forms indicated by the words of the statute: Whether secured by pledge, mortgage, or otherwise '—if otherwise' means other forms of security. The position taken by the defendant would require the Assessor to state each debt and the nature of the security. This would increase the roll to dimensions beyond all reason, and we think to very little useful purpose. In Falkner vs. Hunt it is said that money loaned' would be a sufficient description. And we think that is the more apparent since property is classified by the statute, and the taxpayer is required to make his statement in that form. The classification would be useless unless brief mention of the property in the roll would be sufficient.

“If there is still any doubt about the sufficiency of the description under the provisions of the statute, the curative Act we first referred to corrects all errors of mere mode and form-the roll showing that the property of the defendant was entered and valued. The property is described in the roll, with its valuation,

follows: 'Money,' valuation, '5,000.' 'Money loaned,' valuation, $125,000,' and over the column of valuation is the word dollars,' indicating the meaning of the figures in the column. . The requirement of the Constitution that the valuation shall be made by the Assessor, does not, necessarily, imply that a minute or full description shall be given in the roll. The terms and manner of description are the proper subject of legislative action, and may be made as general as it was by the Revenue Act of 1861—personal property'—which was upheld in People vs. Sneath, 28 Cal., p. 612. This disposes of all the points in respect to the assessment for 1865-6, which we think it necessary to notice."


2_VOL. II.

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