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takes on the form of a conspiracy, and may be prohibited or punished, if the result be hurtful to the public or to the individual against whom the concerted action is directed Callan v. Wilson, 127 U. S. 555, 556.

But the plaintiffs in error say that the action which they have taken is purely defensive, and that they cannot maintain themselves as independent dealers supplying the consumer if the producers or wholesalers from whom they buy may not be prevented from competing with them for the direct trade of the consumer.

For the purpose of suppressing this competition they have not stopped with an individual obligation to refrain from dealing with one who sells within his own circle, and thereby deprives him of a possible customer, but have agreed not to deal with any one who makes sales to consumers, which sales might have been made by any one of the seventy-seven independent members of the association. Thus they have stripped themselves of all freedom of contract in order to compel those against whom they have combined to elect between their combined trade and that of consumers. That such an agreement is one in restraint of trade is undeniable, whatever the motive or necessity which has induced the compact. Whether it would be an illegal restraint at common law is not now for our determination. It is an illegal combination and conspiracy under the Mississippi statute, That is enough if the statute does not infringe the Fourteenth Amendment.

The argument that the situation is one which justified the defensive measures taken by the plaintiffs in error is' one which we need neither refute nor concede. Neither are we required to consider any mere question of the expediency of such a law. It is a regulation of commerce purely intrastate, a subject as entirely under the control of the State as is the delegated control over interstate commerce exercised by the United States. The power exercised is the police power reserved to the States. The limitation upon its exercise con

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tained in the Federal Constitution is found in the Fourteenth Amendment, whereby no State may pass any law by which a citizen is deprived of life, liberty or property without due process of law. A like limitation upon the legislative power will be found in the constitution of each State. That 'legislation might be so arbitrary or so irrational in depriving a citizen of freedom of contract as to come under the condemnation of the Amendment may be conceded.

In dealing with certain Kansas legislation in regulation of state commerce, which was claimed to be so extreme as to be an unwarranted infringement of liberty of contract, this court, in Smiley v. Kansas, 196 U. S. 447, 457, said:

“Undoubtedly there is a certain freedom of contract which cannot be destroyed by legislative enactment. In pursuance of that freedom parties may seek to further their business interests, and it may not be always easy to draw the line between those contracts which are beyond the reach of the police power and those which are subject to prohibition or restraint. But a secret arrangement, by which, under penalties, an apparently existing competition among all the dealers in a community in one of the necessaries of life is substantially destroyed, without any merging of interests through partnership or incorporation, is one to which the police power extends. This is as far as we need go in sustaining the judgment in this case."

We confine ourselves to so much of the act assailed as was construed and applied in the present case. If there should arise a case in which this legislation is sought to be applied where any interference with freedom of contract would be beyond legislative restraint, it will be time enough for interference by the courts.

As observed in Smiley v. Kansas, where the breadth of the act was criticised, “Unless appellant can show that he himself has been wrongfully included in the terms of the law, he can have no just ground of complaint.” The same principle has been often announced by this court in many cases, the

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last instance being in Citizens' National Bank v. Kentucky, an opinion handed down with, and immediately following, this.

The excessive penalties provided by the Mississippi statutes have been urged as making the act unconstitutional under Ex parte Young, 209 U. S. 123. No penalties were demanded in the present case, the State contenting itself with a bill in equity to dissolve the association. The penalty provisions are plainly separable from the section under which such a combination is declared illegal. The penalty section not being invoked, we are not called upon to give any opinion in respect to it. United States v. Delaware &c. R. Co., 213 U. S. 366, 417; Southwestern Oil Co. v. Texas, handed down April 4, ante, p. 114.

It is enough to say that the act as construed and applied to the facts of this case by the Supreme Court of Mississippi exhibits no such restraint upon liberty of contract as to violate the Federal Constitution. The decree must therefore be

Affirmed.

CITIZENS NATIONAL BANK v. COMMONWEALTH OF

KENTUCKY FOR THE USE AND BENEFIT OF BOYLE COUNTY.

ERROR TO THE COURT OF APPEALS OF THE STATE OF KENTUCKY.

No. 135. Argued March 10, 1910.-Decided May 2, 1910.

An act assessing stockholders of national banks, although illegal as to a

class of stockholders not similarly taxed on shares in other moneyed institutions, may be legal as to the class which is similarly taxed; and so held that § 3 of the act of March 21, 1900, of Kentucky, providing for back assessments on shares of national banks, although not legal as to non-resident stockholders, there having been no statute prior to 1900, providing for the assessing of stock of non-resident stockholders of other moneyed corporations, is not illegal as to res

Argument for Plaintiffs in Error.

217 U.S.

ident stockholders, as there were statutory provisions for assessing them for stocks in other moneyed corporations of the State prior to

1900. Covington v. First National Bank, 198 U.S. 100, distinguished. A statute is not lacking in due process of law within the Fourteenth

Amendment if it simply provides a new remedy for collecting a tax

liability already legally existing under prior law. A state statute may make a bank the agent for its own shareholders

in compelling returns, and make it liable for taxes assessed against

the shareholders. The constitutionality of a statute cannot be attacked because it re

lates to a certain class by one not of that class. Shares of stock of a national bank pass from one holder to another

subject to the burden of taxes and if not properly returned for taxation as required by law the liability remains until barred by limi

tation and may be enforced although the stock has been transferred. Liability for a tax is not subject to rules applicable to the vendor's

equity of one buying without notice. Seattle v. Kelleher, 195 U. S.

351. The fact that the par value of shares of a national bank has been re

duced does not affect the right of taxation or to back assess unlisted shares. The shares are the same although reduced. C'itizens' Savings Bank v. Owensboro, 173 U. S. 636; Covington v. First

National Bank, 198 U. S. 100, followed to effect that the act of March 21, 1900, of Kentucky, does not impair the obligation of the supposed contract under the Hewitt Bank Act of that State.

The facts, which involve the validity of the statute of Kentucky of March 21, 1900, in regard to taxation of shares of stock of national banks, are stated in the opinion.

Mr. Robert Taylor Quisenberry for plaintiffs in error:

The interpretation placed on § 3, of the act of March 21, 1900, by the Court of Appeals of Kentucky, not only brings its operation into violation of $ 5219, Revised Statutes, but departs from the rule that a statute shall have a prospective operation only, unless its terms show clearly a legislative intent that it shall operate retrospectively. Watts v. Commonwealth, 78 Kentucky, 331; Lawrence v. City of Louisville, 96 Kentucky, 598; Ohio Valley Telephone Co. v. City of Louis

217 U.S.

Argument for Plaintiffs in Error.

ville, 94 S. W. Rep. 17; United States v. American Sugar Co., 202 U. S. 577; United States v. Barr, 159 U. S. 778.

But a tax upon shares of stock in national banks is the individual debt of the owner of the shares. If the judgment in this proceeding is sustained, then the bank must pay it out of the assets of the bank, thereby using the property in which the shareholder of 1909 or 1910 has an interest, to pay the debt of another party, together with a twenty per cent penalty, which would not only violate the Constitution and laws of the United States, but all known principles of law.

The court below erred in declaring that the shares of resident stockholders were taxable under general law of the States for the years prior to 1900. Covington v. First National Bank, 198 U. S. 100; National Bank v. Owensboro, 173 U. S. 676; Owen County Court v. Farmers' National Bank, 59 S. W. Rep. 7; Scobee v. Bean, 109 Kentucky, 526, do not sustain this contention, or are in error.

The rule in Kentucky is that the situs of personal property is the domicil of its owner, and is there taxable. Lexington v. Fishback, 109 Kentucky, 770; Frankfort v. Fidelity Trust Co., 111 Kentucky, 667.

Therefore to tax national bank shares according to "general law,” as defined by the state.court would result in taxing only those shares which were owned by the residents and citizens of Kentucky, and omitting all shares of stock owned by non-residents. If all the shares of stock were owned and controlled by non-residents then, according to the law of taxation so laid down no tax could be assessed against said shares in Kentucky, but they would have to be taxed, like other choses in action, at the domicil of their owner. But see 8 5219, Revised Statutes.

This proceeding neither discloses the name nor residence of any owners or holders of shares of stock in the Citizens' National Bank, nor the agent or attorney of such owner, nor the name of the person in possession of said shares. The owner of said shares is excluded from all participation in the

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