MR. CHIEF JUSTICE FULLER, after stating the case, delivered the opinion of the court.
Section 4077 of the compilation of the Kentucky statutes of 1894 provides that each of the enumerated companies or corporations; "every other like company, corporation or association"; and also "every other corporation, company or association having or exercising any special or exclusive privilege or franchise not allowed by law to natural persons, or performing any public service, shall, in addition to the other taxes imposed on it by law, annually pay a tax on its franchise
But from the valuation on the mileage basis the value of all tangible property is deducted before the taxation is applied.
So far as the commerce clause and the Fourteenth Amendment of the Federal Constitution are concerned, this scheme of taxation is not in contravention thereof, as already determined in Adams Express Co. v. Ohio State Auditor, 165 U.S. 194, and cases cited.
And considered as a property tax, as in our opinion the prescribed exaction must be held to be, we regard it as in harmony with the provisions of the constitution of the Commonwealth of Kentucky. The property, tangible and intangible, owned by corporations is subjected to like taxation, and so is the tangible and intangible property of individuals associated together in companies, and while the provisions of sections 4077 and 4078 do not apply to all individual taxpayers, yet reference to section 4020 and the schedule which must be returned by each taxpayer, as required by section 4058, demonstrates that individual taxpayers are also subjected to taxation on all their intangible property, whatever that may be, as well as on all their tangible property. As pointed out by
Section 174 of the constitution of Kentucky provides that "all property, whether owned by natural persons or corporations, shall be taxed in proportion to its value, unless exempted by this constitution; and all corporate property shall pay the same rate of taxation paid by individual property. Nothing in this constitution shall be construed to prevent the general assembly from providing for taxation based on income, licenses or franchises."
But this does not prevent intangible property from being taxed, and the tax mentioned in section 4077 is not an additional tax upon the same property, but on intangible property which has not been taxed as tangible property.
We concur with the views of the Circuit Court that neither section 172 of the constitution nor any other section confines "the levy of an ad valorem tax to tangible property; but, as decided by the Kentucky Court of Appeals in Levi v. Louisville, 30 S.W. Rep. 973, it does require the levy of an ad valorem tax upon personal property as well as upon real estate, and this case decides that a license tax which is not a property tax cannot be substituted for an ad valorem tax upon personal property engaged in certain commercial pursuits in the city of Louisville. It does not decide that section 171 of the constitution, which declares that taxation shall be uniform upon all property subject to taxation within the territorial limits of the authority levying the tax, applies to taxation based upon income, license or franchise. If there is any intimation upon the subject in this case, it is that taxation which is based upon income, license or franchise may be classified by the legislature; and as to licenses, they may be levied upon some
The act received consideration in Henderson Bridge Co. v. Commonwealth, 31 S.W. Rep. 486, and the Court of Appeals of Kentucky, speaking through Grace, J., said:
"Thus we see what a varied meaning this term `capital stock' may have. So that it becomes necessary to examine and see what was the object and meaning of the legislature when using this term in the clause before quoted from section 4079 of our statutes. In this examination it becomes important to notice those clauses of the constitution in reference to revenue and taxation, and see what was contemplated and enjoined by that instrument in reference to taxation. Section 172 provides: `That all property not exempt from taxation, by this constitution, shall be assessed at its fair cash value, estimated at the price it would bring at a fair voluntary sale.' ... Section 174 provides: `That all property, whether owned by natural persons or by corporations, shall be taxed in proportion to its value, unless exempted by this constitution, and all corporate property shall pay the same rate of taxation paid by individual property. Nothing in this constitution shall be construed to prevent the General Assembly from providing for taxation, based on income, licenses or franchises.'
"Thus it is manifest that what the constitution intended to be taxed was property, — all property; and, as to corporations, not only all tangible property, but that it intended to leave the legislature of the State free to tax the franchises of corporations if it so desired; that the property of a corporation should be taxed as the property of an individual. It will be observed that in these several sections quoted, `capital stock,' `stock' and `shares of stock' are not mentioned as being appropriate terms to designate the subjects of taxation, but
The statute thus construed cannot be overthrown for failure to conform to the requirements of sections 171, 172 and 174 of the state constitution.
MR. JUSTICE WHITE, with whom concurred MR. JUSTICE FIELD, MR. JUSTICE HARLAN and MR. JUSTICE BROWN, dissenting.
In its ultimate analysis the legal principles by which this case should, in our opinion, be controlled are those which were by us deemed decisive in Adams Express Co. v. Ohio, 165 U.S. 194, 229. It follows that the reasons for our dissent stated in that case are pertinent to this, and we reiterate them as expressing the grounds for our dissent from the conclusions reached by the court in this case. The facts here, however, so pointedly exemplify the force of the reasons for our dissent in that case that we briefly state them. The actual value of all the tangible property owned by the express company in Kentucky was $36,614.53. This property was assessed by the local authorities for that amount and the taxes duly paid. In addition, the value of the franchise was assessed at $1,463,040, a disproportion enormously in excess of the amount imposed by the State of Ohio, great as was that disproportion. The operation of the tax is additionally illustrated by a further fact. The tax imposed in Ohio and held to be valid in Adams Express Co. v. Ohio, considered with reference to the routes
Although the fundamental legal principles which, in our opinion, should have controlled Adams Express Co. v. Ohio are the same in this case, there are yet material differences between the Kentucky and the Ohio statutes, which we think should take this case out of the ruling in the former case, even conceding that case to have been correctly decided. The tax here levied is a franchise tax. This is fully demonstrated by the dissenting opinion in Henderson Bridge Co. v. Kentucky, this day decided, ante, 155. The levy here sought to be sustained, then, is a franchise tax, assessed on a joint stock company which has no franchise, for the bill alleges that the express company is a partnership and the demurrer concedes it. Under this state of law and fact, therefore, the effect of holding the tax now in question valid, is to decide that a franchise can be taxed, when there is no franchise on which to levy the tax. This can only be escaped by contending that the right of the express company to do interstate commerce business in Kentucky, resulted from the assent of the State, and therefore the doing of such business was equivalent to accepting a franchise from the State. But to announce this proposition would overthrow the settled rule so necessary for the perpetuity of our institutions and the free intercourse between the States, that the right to transact interstate commerce business by a person or corporation is protected by the Constitution of the United States, and does not depend upon the mere grace of one of the States of the Union.
In addition to the clear distinctions, already noted, between Adams Express Co. v. Ohio and this case, there are others resulting from the difference between the Ohio and the Kentucky statutes. The Ohio statute considered in Adams Express Co. v. Ohio purported only to tax the tangible property within the State, but empowered the assessing board to consider its value as augmented by the use to which such property might be put. In other words, the Ohio law, as construed by the Supreme Court of the State, taxed only tangible property