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APPEAL by defendant from a judgment

of the Circuit Court for Franklin County convicting it of wilfully failing to file with the auditor a statement for purposes of taxation, as required by the Kentucky statutes. Reversed.

Defendant contended that it was a private corporation, and that it was not included within the meaning of the statute requiring the filing of such statements. The court of appeals on the first hearing of the case handed down an opinion December 13, 1898, in which it was held that defendant was within the terms of the statute. A petition for rehearing was subsequently granted, after which the opinion printed herewith was handed down.

Further facts appear in the opinion. Messrs. D. W. Lindsey and Humphrey & Davie for appellant.

I. Proem.

a. Scope of note.

This note is a commentary, within bounds referred to in the body, upon five classes of taxes upon corporations in the United States, namely: (1) Organization taxes, or taxes exacted of domestic corporations for the grant of corporate powers; (2) franchise taxes, or taxes in the nature of royalties annexed to the grant and levied periodically, usually annually, upon domestic corporations; (3) license taxes. not licenses under the police power, or taxes charged by a state to foreign corporations for leave to enter and do business in its territory; (4) privilege taxes, or taxes imposed upon foreign corporations on account of exercising their corporate franchises within the limits of the taxing state; and (5) taxes upon franchises, eo nomine.

Of these, the first four classes are essentially, howsoever designated in the statutes and decisions, capitation taxes upon artificial entities, and the fifth class, true franchise taxes. The classes, however, are seldom carefully discriminated.

Religious, benevolent, charitable, fraternal, educational, and scientific associations, whether incorporated or not, have not been included. Neither have building and loan associations, cemetery companies, and like organizations for profit. And national banks are so plainly separated from corporations generally that they, too, have been omitted.

b. Definitions of terms employed.

Throughout this note corporations are called domestic in the state of their origin and foreign in all other jurisdictions. Thus, a corporation organized under the laws of New York is called a domestic one in that state alone; if it does business in any other state of the Union it is there deemed a foreign corporation; and, conversely, in New York a corporation organized under the laws of any other state or of the United States is a foreign corporation.

II. Power and jurisdiction of a state to tax.

Mr. Robert B. Franklin for the Commonwealth.

Du Relle, J., delivered the opinion of the court:

Most of the questions presented by the briefs in this case have been settled by the opinion recently delivered at this term in the case of Louisville & J. Ferry Co. v. Com. 104 Ky. 726, 47 S. W. 877. The sole question remaining for decision is whether a private trading corporation is required to make a report to the auditor, as a basis for the ascertainment of a tax upon its franchise.

The statute (Ky. Stat. § 4077) provides: "Every railway company or corporation and every incorporated bank, trust company. guaranty or security company, gas company, water company, ferry company, existence of a state, the power, save when restrained by constitutions or the fundamental principles of natural justice, is supreme. Coite v. Society for Savings, 32 Conn. 173.

All subjects over which the sovereign power of the state extends are objects of taxation. McCulloch v. Maryland, 4 Wheat. 316, 4 L. ed.

579.

Resting as it does in necessity, the right to tax is inherent in every government, and in the United States is vested in the state legislatures, which possess, when unrestrained by nationai or state constitutions, plenary power over the subject; hence, he who denies the constitutionality of a taxing statute assumes the burden of showing clearly wherein it violates the fundamental law. Porter v. Rockford, R. I. & St. L. R. Co. 76 Ill. 561.

The power of the state, unless constitutionally restricted, as to the mode, form, and extent of taxation, is without limit where the subject to which it applies is within her jurisdiction. State Tax on Foreign-held Bonds, 15 Wall. 300, sub nom. Cleveland, P. & A. R. Co. v. Pennsylvania, 21 L. ed. 179; State, Central R. Co. Prosecutor, v. State Bd. of Assessors, 48 N. J. L. 1, 57 Am. Rep. 516, 2 Atl. 789.

But those subjects over which sovereignty does not extend are upon the plainest principles exempt from taxation. McCulloch Maryland, 4 Wheat. 316, 4 L. ed. 579.

Except as constitutionally limited, the power of the legislature over the subject of taxation is unbounded. Re McPherson, 104 N. Y. 306, 58 Am. Rep. 502, 10 N. E. 685.

When justice requires the exercise of the unlimited (except by the Constitution) power of the legislature to levy taxes, neither the statute of limitations, nor laches, will bar its exercise. State v. Kings County, 125 N. Y. 312, 26 N. E. 272, per Ruger, Ch. J.

ing alone to the state, and which is and only The power to tax is a sovereign right belongcan be exercised pursuant to laws enacted for the purpose. State ex rel. Clinton County v. Hannibal & St. J. R. Co. 87 Mo. 236.

The power of taxation possessed by the state is a very broad and comprehensive one, and may, with some exceptions imposed by the Federal Constitution and laws passed in pursuThe right of taxation is an Incident of sovance thereof, be exercised upon all objects withereignty and coextensive with in sovereignty. its jurisdiction. Persons and property McCulloch v. Maryland, 4 Wheat. 316, 4 L. ed. within the state, and trades, avocations, and 579: Jones v. Page, 44 Ala. 657. other business carried on therein under the protection of its laws, whether by citizens or nonresidents, may be taxed. But nonresidents, property having no legal situs there, and business not carried on there, are beyond the juris

And where there is no constitutional restriction upon it, the power to tax is absolute. Citizens' Mut. Ins. Co. v. Lott, 45 Ala. 185.

The right to tax being necessary to the very

bridge company, street railway company, mentioned in the next preceding section, the express company, electric light company, corporations, companies, and associations electric power company, telegraph com- mentioned in the next preceding section, expany, press despatch company, telephone company, turnpike company, palace-car company, dining-car company, sleeping-car company, chair-car company, and every other like company, corporation, or association, 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 to the state, and a local tax thereon to the county, incorporated city, town and taxing district where its franchise may be exercised," etc. By the next section it is provided: "In order to determine the value of the franchises diction of a state, and are not the subjects of taxation there. People v. Equitable Trust Co. 96 N. Y. 387, 393, per Earl, J.

The taxing power passes to a territory under a general grant of legislative power in the organizing act without other limitations than those contained in the act itself, or in the United States Constitution. Northern P. R. Co. v. Barnes, 2 N. D. 310, 51 N. W. 386.

Whether a state statute is an exercise of the taxing power, or the police power, or any other state power, it must still be subordinate to the Federal Constitution, and, if plainly in conflict with any provision thereof, cannot stand. Henderson v. New York, 92 U. S. 259, sub nom. Henderson v. Wickham, 23 L. ed. 543.

But, as McLean, J., well says: In a system of government so complex as ours it may be difficult, perhaps impracticable, to prescribe the exact limit in particular cases to Federal and state powers. License Cases, 5 How. 504, 588, 12 L. ed. 256, 294.

If, says Marshall, Ch. J., we measure the power of taxation residing in a sovereignty which the people of a single state possess and can confer on its government, we have an intelligible standard applicable to every case to which the power may be applied. We have a principle which leaves the power of taxing the people and property unimpaired, which leaves to a state the command of all its resources, and which places beyond its reach all those powers which are conferred by the people of the United States on the government of the Union, and all those means which are given for the purpose of carrying those powers into execution. We have a principle which is safe for the states, and safe for the Union. McCulloch v. Maryland, 4 Wheat. 316, 429, 4 L. ed. 579, 607.

III. Some general principles.

Private corporations may be taxed by the state for the support of the state government. Their privileges and franchises, unless exempted in terms which amount to a contract, are legitimate subjects of taxation,-as much so, as any other property of the citizen which enjoys the protection and is within the control of the sovereign power of the state. The state power to tax such franchises and privileges is independent of the Federal government. And the taxation of corporate franchises and privileges rests in the discretion of the legislature of the taxing state, which may decide whether the sum to be levied be a fixed one, and, if not, in what manner and by what means the amount shall be determined. Society for

cept banks and trust companies, whose
statements shall be filed as hereinafter re-
quired by § 4092 of this article, shall annu-
ally, between the fifteenth day of Septem-
ber and first day of October, make and de-
liver to the auditor of public accounts of
this state a statement verified by its presi-
dent, cashier, secretary, treasurer, manager,
or other chief officer or agent, in such form
as the auditor may prescribe, showing the
following facts," etc. By § 4079, it is pro-
vided that the auditor, secretary of state,
and treasurer, constituting the board of
valuation, shall, "from said statement [of
the corporation], and from such other evi-
dence as it may have,
fix the val-
ue of the capital stock of the corporation;
Savings v. Coite, 6 Wall. 594, 18 L. ed. 897;
Provident Inst. for Savings v. Massachusetts,
6 Wall. 611, 18 L. ed. 907; Hamilton Mfg. Co.
v. Massachusetts, 6 Wall. 632, 18 L. ed. 904.

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The right of corporate existence being by nature indivisible, a license tax therefor is of necessity entire regardless of the manner of employing the corporate capital or the location of the corporate property. Lumberville Delaware Bridge Co. v. State Bd. of Assessors, 55 N. J. L. 529, sub nom. State, Lumberville Delaware Bridge Co., Prosecutors v. State Bd. of Assessors, 25 L. R. A. 134, 26 Atl. 711.

A legislature having a legal right to impose a privilege tax has a discretion to fix its amount. Knoxville & O. R. Co. v. Harris, 99 Tenn. 684, 53 L. R. A. 921, 43 S. W. 115.

The extent of the tax is entirely within the discretion of the taxing power. Southern Car & Foundry Co. v. State (Ala.) 32 So. 235.

Beside a franchise tax upon a domestic corporation for a right of life and continued existence and the powers that go therewith, or upon a foreign corporation for the privilege of doing business in the state, an excise tax may also be laid upon corporations for the additional burden sustained by the state and the people by reason of property being held by artificial bodies, the persons composing such bodies being exempt, to a great extent, from liability for the debts thereof. Southern Gum Co. v. Laylin (Ohio) 64 N. E. 564.

IV. What are franchises?

a. In general.

The lexicographers agree in defining franchises as privileges granted by the sovereign power in a state to individuals, and in them vesting. Blackstone (4 Com. 159) defines a franchise as a royal privilege or branch of the Crown's prerogative subsisting in the hands of a subject. Bouvier (Law Dict. 545) as a certain privilege conferred by grant from the gov ernment and vested in individuals, adding that corporations or bodies politic are the most us, ual franchises known to our law.

Clifford, J., says that it was, inter alia, decided in the case of Society for Savings v. Coite, 6 Wall. 594, 18 L. ed. 897, that corporate franchises are legal estates, and not mere naked powers, but powers coupled with an interest, which vest in the corporation by virtue of its charter. Provident Inst. for Savings v. Massachusetts, 6 Wall. 611, 18 L. ed. 907.

Taney, Ch. J., speaks of franchises as special privileges conferred by government upon individuals, and which do not belong to the

and from the amount thus fixed | Court said: shall deduct the assessed value of all tangi- court that it ble property assessed in this state, or in the counties where situated. The remainder thus found shall be the value of its corporate franchise subject to taxation as aforesaid." From these provisions it is manifest that the so-called franchise tax is in reality a property tax upon all the intangible property of the corporations named in the act. And so, in Henderson Bridge Co. v. Kentucky, 166 U. S. 154, 41 L. ed. 954, 17 Sup. Ct. Rep. 534, the Supreme Court, in considering this statute, said: "The tax in controversy was nothing more than a tax on the intangible property of the company in Kentucky, and was sustained as such by the court of appeals." And in Adams Exp. Co. v. Kentucky, 166 U. S. 180, 41 L. ed. 963, 17 Sup. Ct. Rep. 530, the Supreme

"We agree with the circuit is evident that the word 'franchise' was not employed in a technical sense; and that the legislative intention is plain that the entire property, tangible and intangible, of all foreign and domestic corporations, and all foreign and domestic companies, possessing no franchise, should be valued as an entirety, the value of the tangible property be deducted, and the value of the intangible property thus ascertained be taxed under these provisions." And so this court in Henderson Bridge Co. v. Com. 99 Ky. 639, 29 L. R. A. 73, 31 S. W. 486, held that the term "intangible property" was used as synonymous with "franchises." The sections we have referred to show conclusively that their object was to obtain a valuation of property for the purpose of taxation. The corporate property sought by citizens of a country generally of common right. | Co. v. Deehan, 153 N. Y. 528, 47 N. E. 787; And he declares it essential to the character San José Gas Co. v. January, 57 Cal. 614. of a franchise that it should be a grant from the sovereign authority, and that in this country no franchise can be held which is not derived from a law of the state. Bank of Augusta v. Earle, 13 Pet. 519, 10 L. ed. 274.

This definition is accepted in his own state. State v. Philadelphia, W. & B. R. Co. 45 Md. 361, 24 Am. Rep. 511.

It is, says Strong, J., writing for the court, in Atlantic & G. R. Co. v. Georgia, 98 U. S. 359, 365, 25 L. ed. 185, 187, quite too narrow a definition of the word "franchise" to hold it as meaning only the right to be a corporation. The word is generic, covering all the rights granted by the legislature.

The term "corporate franchise or business," as used in the New York tax laws, means the right or privilege given by the state to two or more persons of being a corporation, that is, of doing business in a corporate capacity; and not the privilege or franchise which, when in corporated, the company may exercise. Home Ins. Co. v. New York, 134 U. S. 594, 33 L. ed. 1025, 10 Sup. Ct. Rep. 593.

A domestic corporation is given life and continued existence by the state, and this life and existence, with their accompanying powers, constitute the franchise. Southern Gum Co. v. Laylin (Ohio) 64 N. E. 564.

b. Within tax laws.
Section 1.

The power to consolidate is the grant of a corporate franchise. Adams v. Yazoo & M. Valley R. Co. 77 Miss. 194, 24 So. 200, 317, 28 So. 956.

The right granted by public authority to a domestic corporation formed for the purpose of establishing and maintaining booms in navigable streams made public highways, and of collecting tolls for logs and timber boomed, is a privilege or franchise, and is taxable as such. although it is not exclusive, and is open and common to every person and corporation to acquire under the same authority. Chehalis Boom Co. v. Chehalis County, 24 Wash. 135, 63 Pac. 1123, Following Commercial Electric Light & P. Co. v. Judson, 21 Wash. 49, 56 Pac. 829; and Edison Electric Illum. Co. v. Spokane County, 22 Wash. 168, 60 Pac. 132.

A right granted by a municipality to an individual to erect on the water front a bulkhead or wharf, and to receive fees or dues from vessels mooring thereat, to receive and discharge cargoes, without title to the soil, constitutes an incorporated hereditament. Boreel v. New York, 2 Sandf. 552.

The right given in a general railroad act to railroads to cross public highways is a franchise or privilege taxable under a law defining special railroad franchises subject to taxation as all franchises, rights, or permission to construct, maintain, or operate a railway in, under, above, on, or through streets, highways, or public places. New York, L. & W. R. Co. v. Roll, 32 Misc. 321, 66 N. Y. Supp. 748.

There are two classes of corporate fran

The word "franchise" in its appropriate and legal sense is confined to such rights and priv-chises, viz.: Those in their nature purely inileges as are conferred upon corporate bodies by legislative grant. Fietsam v. Hay, 122 Ill. 293, 13 N. E. 501.

The privilege or right to be a corporation is a franchise. People v. O'Hair, 128 III. 22, 21 N. E. 211; Bushnell v. Consolidated Ice Mach. Co. 37 Ill. App. 133.

And an excise tax upon the right of a corporation to be is entirely distinct from, and not in lieu of, a tax upon the franchise to do. Chehalis Boom Co. v. Chehalis County, 24 Wash. 135, 63 Pac. 1123.

The franchise of a railroad is the privilege of running it and taking fare and freight. Wilmington & W. R. Co. v. Reid, 13 Wall. 264, 20 L. ed. 568.

A consent of the public authorities to the carrying on of business by a gas company, and to the laying of its mains for conducting and supplying illuminating gas, is a grant of a franchise. People ex rel. Woodhaven Gaslight

corporeal and inalienable, dependent upon the continued existence of the donee, such as the right of corporate life, the exercise of banking, trading, and insurance powers, and similar privileges which die with the corporation, and those requiring for their enjoyment the use of corporeal property, such as railroad, canal, telegraph, gas, water, bridge, and similar companies, which, with the consent of the state, of course, are transferable to the corporate successors and assigns. People v. O'Brien, 111 N. Y. 1, 2 L. R. A. 255, 18 N. E. 692.

Section 2.

But a right common to every citizen, such as the right to acquire and own property,-in this case a billiard table,—cannot be converted into a taxable privilege by first prohibiting its exercise and then permitting its enjoyment by such only as will pay a tax prescribed by the

by imposing severe penalties for failure to report intangible property upon corporations which do not, and in law cannot, possess it. The appellant is an ordinary busilaw, under which no special or exclusive privilege not allowed by law to natural persons can be obtained. It conducts its business with the same rights and privileges, and subject to the same restrictions, as natural persons engaged in the same business.

this statute to be subjected to taxation may be said to be the added value which the exercise by the corporation of any special or exclusive privilege or franchise not allowed by law to natural persons gives to the tan-ness corporation, created under the general gible property. For example, a railroad track, without the right of operating a railroad, would be of small value; with that right, it might be worth millions of dollars. So, in ascertaining what corporations come within the purview of this statute, and are by it required to make report to the auditor, we should keep in mind the ultimate purpose of the statute, which is the taxation of this intangible property, and consider whether all corporations can, in law, possess such intangible property; for surely we are not to stretch the language of the statute beyond its letter, and assume that the legislature intended to require a vain thing, statute. Stevens v. State, 2 Ark. 291, 35 Am. Dec. 72.

And a privilege given by a general county ordinance to any person, firm, association, or corporation engaged in supplying fresh water to any city, town, or county in the state to lay down and maintain pipes as conduits in or through any of the roads and highways of the county, without any right to take tolls or collect water rates therein, or to enjoy any special advantage or prerogative not open to all, confers a mere right of way, and not a franchise taxable as such. Spring Valley Waterworks v. Barber, 99 Cal. 36, 21 L. R. A. 416, 33 Pac. 735.

So, too, a private railroad built upon private lands belonging to a corporation not a railroad company and not used or operated under any franchise, but a mere means of transportation to the owner's grounds of the patrons thereof, is not within a general statute for the taxation of railroads and canals operated or owned under a franchise by individuals or unincorporated associations or companies. State, Monmouth Park Asso., Prosecutor, v. State Bd. of Assessors, 60 N. J. L. 372, 37 Atl. 729.

It is insisted-and appears to have been so decided by the trial court-that the insertion in the articles of incorporation of a proviso that the private property of stock. holders should not be subject to the corporate debts gave to the corporation an exclusive privilege not enjoyed by natural persons, and therefore brought this corpoMonroe County Sav. Bank v. Rochester, 37 N. Y. 367; People ex rel. Panama R. Co. v. New York Tax Comrs. 104 N. Y. 240, 10 N. E. 437; Coney Island, Ft. H. & B. R. Co. v. Kennedy, 15 App. Div. 588, 44 N. Y. Supp. 825; People v. O'Brien, 111 N. Y. 1, 2 L. R. A. 255, 18 N. E. 692; People ex rel. Woodhaven Gaslight Co. v. Deehan, 153 N. Y. 528, 47 N. E. 787; South Nashville Street R. Co. v. Morrow, 87 Tenn. 406, 2 L. R. A. 853, 11 S. W. 348; Knoxville & O. R. Co. v. Harris, 99 Tenn. 684, 53 L. R. A. 921, 43 S. W. 115.

But it is not wholly unanimous. In Exchange Bank v. Hines, 3 Ohio St. 1, Bartley, Ch. J., denies that a corporate franchise is property, although admitting that high authority has declared otherwise. His argument in brief is that while a franchise may be a thing of value, value is not the distinguishing attribute of property. The right of suffrage, a public office and its emoluments, are valuable, but neither is property. The things which constitute property are such as the owner may exercise exclusive dominion over,-may use, enjoy, and dispose of without any control or diminution save by the law of the land. The

A permission given by private individual | right of alienation, of disposal by sale, gift, or owners of the fee is not a franchise, and is not taxable within the New York tax law (§ 2, subd. 3, as amended by chap. 712, Laws 1899), defining as taxable property a franchise, right, authority, or permission to lay pipes or mains in or under a public street. People ex rel. Retsof Min. Co. v. Priest, 77 N. Y. Supp. 382. See, also, The Park Tax Case, 84 Md. 1, sub nom. Baltimore v. Baltimore & E. M. Pass. R. Co. 33 L. R. A. 503, 35 Atl. 17.

e. Nature as subjects of taxation.

There is almost a consensus of opinion that corporate franchises are property. Gordon v. Appeal Tax Court, 3 How. 133, 11 L. ed. 529; Wilmington & W. R. Co. v. Reid, 13 Wall. 264, 20 L. ed. 568; New Orleans City & L. R. Co. v. New Orleans, 143 U. S. 192, 36 L. ed. 121, 12 Sup. Ct. Rep. 406; San José Gas Co. v. January, 57 Cal. 614; Spring Valley Waterworks v. Schottler, 62 Cal. 69; Stein v. Mobile, 17 Ala. 234; Enfield Toll Bridge Co. v. Hartford & N. H. R. Co. 17 Conn. 40, 41 Am. Dec. 141; Porter v. Rockford, R. I. & St. L. R. Co. 76 Ill. 561; Belleville Nail Co. v. People, 98 Ill. 399; Fietsam v. Hay, 122 Ill. 293, 13 N. E. 501; Baltimore v. Baltimore & O. R. Co. 6 Gill, 288, 48 Am. Dec. 531; Portland Bank v. Apthorp, 12 Mass. 252; Connecticut Mut. L. Ins. Co. v. Com. 133 Mass. 161; State Bd. of Assessors v. Central R. Co. 48 N. J. L. 146, 4 Atl. 578;

abandonment, is an essential incident to property. (Citing 1 Wendell's Blackstone, 138; Rutherforth's Inst. 20; Puffendorf, chap. 9, b. 7; and 2 Kent, Com. 317.) A corporate franchise lacks this essential element. And thereupon in the case coram he concludes that a bank franchise, not being property of any description, is not taxable within a constitutional provision for the taxation of property, effects, or dues of every description without any exception of banks or bankers.

(It may not be amiss to remark here that, whatever may be thought of the conclusion in the particular case, this reasoning, although contrary to the weight of authority, is at least logically consistent with the conclusions SO generally adopted and reached in a less direct way, in the very numerous line of cases that have held statutes imposing taxes upon franchises to be outside of constitutional provisions requiring uniformity and equality of property taxation, ad valorem.)

While there is a general agreement that a corporate franchise is property for the purposes of taxation, there is much less concord as to the kind of property that it is.

In Massachusetts it is a "commodity," because the Constitution of that commonwealth empowers the legislature to impose reasonable duties and excises upon commodities within the state, and unless franchises are brought

99

ration within the purview of the statute. to natural persons." Nor can the appellant This construction would bring every busi- corporation be said to have any intangible ness corporation in the commonwealth property subject to taxation under this within the letter of the statute, and that is statute. Its tangible property-its warethe contention made on behalf of appellee. house, drays, and personal property-is of But this privilege is a privilege, not of the no greater value in the hands of the corpocorporation, but to the stockholder, and a ration than it would bear if owned and manprivilege which every natural person may aged by the natural persons who are its avail himself of by becoming a stockholder stockholders. This is also true of its chosin a corporation. The corporation itself is es in action, etc. The value of its capital a distinct entity, making its own contracts, stock must necessarily be the value of its and responsible for its debts, to the utter- tangible property, choses in action, etc. It most farthing of its assets. It is conceded had no intangible property subject to taxathat a trading corporation has a franchise; tion under the statute, and, as matter of but its franchise is merely a franchise to law, could have none. exist, to have a name, to contract and be contracted with, to sue and be sued, in the same manner as a natural person, and this franchise is not a "special or exclusive privilege or franchise not allowed by law

within that provision they may escape taxation. Portland Bank v. Apthorp, 12 Mass. 252; Provident Inst. for Savings v. Massachusetts, 6 Wall. 611, 18 L. ed. 907; Hamilton Mfg. Co. v. Massachusetts, 6 Wall. 632, 18 L. ed. 904; Connecticut Mut. L. Ins. Co. v. Com. 133 Mass. 161.

This brings us to consider the question whether private business corporations were intended by the legislature to make the report provided for in the statute. The statute enumerates by name twenty different business is carried on. Galveston Co. v. Galveston Wharf Co. 72 Tex. 557, 10 S. W. 587. A franchise once granted cannot be destroyed, taken from the grantee, or impaired by the arbitrary act of the public authorities in refusing a necessary means to its exercise. People ex rel. Woodhaven Gaslight Co. v. Dee

In Connecticut a franchise is declared to be han, 153 N. Y. 528, 47 N. E. 787. an incorporeal hereditament, known as a species of property as well as an estate in lands. It may be bought and sold, will descend to heirs, and may be devised. Enfield Toll Bridge Co. v. Hartford & N. H. R. Co. 17 Conn. 40, 41 Am. Dec. 141.

It cannot be taken away or abridged by statute without compensation. Coney Island, Ft. H. & B. R. Co. v. Kennedy, 15 App. Div. 588, 48 N. Y. Supp. 825.

But in Illinois it does not pass to a general assignee for creditors, although this is said to be because the rights, privileges, powers, and immunities granted to a bank belong, not to it in its corporate capacity, but to the incorporators upon whom they were conferred. Fietsam v. Hay, 122 Ill. 293, 13 N. E. 501.

In New York it was early decided that the powers and privileges constituting the franchises of a corporation were something quite distinct from property which might be acquired by means of them, and that the legislature might classify and tax them as personal property. Monroe County Sav. Bank v. Rochester, 37 N. Y. 367.

Later it was said that these were not for taxing purposes to be reckoned a part of the realty as they were incorporeal rights. People ex rel. Panama R. Co. v. New York Tax Comrs. 104 N. Y. 240, 10 N. E. 437.

Again: That to regard the franchise of a street railway company to use the street in operating its road as a mere license or privi lege enjoyable during the life of the corporation and revocable at the will of the state is not only repugnant to justice and reason, but contrary to the uniform course of authority in the United States. People v. O'Brien, 111 N. Y. 1, 2 L. R. A. 255, 18 N. E. 692.

Even for public use. Wilmington & W. R. Co. v. Reid, 13 Wall. 264, 20 L. ed. 568, Revers ing 64 N. C. 226.

And, equally with rolling stock and real estate, is it within the protection of a charter exemption of the corporate property. Ibid.

But it is not liable to seizure and sale. Stein v. Mobile, 17 Ala. 234.

This is otherwise in New York as to certain franchises, such, for instance, as the right of

a

street railway company to use a street. That is a property right which survives the dissolution of the company and passes to its lawful grantees. The laws of that state have made such franchises taxable, inheritable, alienable, subject to levy and sale under execution, to condemnation under the right of eminent domain, and invested them with the attributes of property generally. People v. O'Brien, 111 N. Y. 1, 2 L. R. A. 255, 18 N. E. 692.

V. Taxability of franchises.

a. When taxable.

In general corporate franchises are taxable. Edison Electric Illum. Co. v. Spokane County, 22 Wash. 168, 60 Pac. 132.

Orleans v. New Orleans City & L. R. Co. 40 La.
As much so as any other property. New

Ann. 587, 4 So. 512; Affirmed in 143 U. S. 192,
36 L. ed. 121, 12 Sup. Ct. Rep. 406, Followed
in New Orleans v. Orleans R. Co. 42 La. Ann.
4, 7 So. 59.

In Tennessee the right possessed by a street railway in the city streets is properly regarded as an easement and, for the purposes of taxaThe franchise to be and continue, with the tion, real estate. South Nashville Street R. accompanying powers given by a state to a Co. v. Morrow, 87 Tenn. 406, 2 L. R. A. 853, domestic corporation, being valuable, are taxa

11 S. W. 348.

In Illinois and Michigan a franchise is taxable as personal property. Belleville Nail Co. v. People, 98 III. 399; Detroit Citizens' Street R. Co. v. Detroit, 125 Mich. 673, 85 N. W. 96, 86 N. W. 809.

Under a Texas general law (Laws 1874, p. 214) wharf privileges are taxable separately as a distinct property from the real and personal property with which the wharfinger's

ble according to the amount of the value thus conferred and continued. Southern Gum Co. v. Laylin (Ohio) 64 N. E. 564.

Corporate franchises are taxable under a statute requiring all property in the state not exempt to be taxed. Fond du Lac Water Co. v. Fond du Lac, 82 Wis. 322, 16 L. R. A. 581, 52 N. W. 439.

And notwithstanding no method of ascertaining their value or levying the tax thereon

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