years earlier, had been expressly pretermitted by the Federal Supreme Court in the following language: "Whether, in the case of corporations organized under state laws, a provision by the state of incorporation fixing the situs of shares for the purpose of taxation, by whomever owned, would exclude the taxation of the shares by other states in which their owners reside is a question which does not arise upon this record and need not be decided."44 Said the Massachusetts court: 45 "If the domiciliary state of the corporation has the right to establish the situs of its shares of stock for purposes of taxation, on principle it would seem that that power may be exercised to declare an entire exemption from taxation and to collect revenue in some other way from the corporation. If the power exists in the state creating the corporation to establish the situs of its shares of stock for the purpose of taxation, and is exercised, it must be absolute and no other state can inquire into the character or extent of that taxation in an effort to tax its own citizen who is a stockholder in such corporation. It hardly seems possible that the Fourteenth Amendment to the Federal Constitution can have such an effect. The theory of taxation is that it is money exacted from the subject in return for the protection afforded by established government. It is the duty of governments to protect persons and property. These rights of the Massachusetts owner of shares of stock in the Vermont corporation pertain to his residence here and receive the protection of our laws. To that extent the shareholder resident here received for the taxation imposed a return in governmental protection for the property rights incident to his ownership. These are incidents of property which necessarily follow the person of the owner of shares in foreign corporations, even though the shares may be taxed at the foreign domicile of the corporation. For these purposes the situs of corporate shares follows the domicile of the owner. This is the general rule. There appears to us to be no ground for the establishment of an exception to that general rule in the instant case. The conclusion in the opinion of a majority of the court is that as matter of constitutional power the legislature can impose a property tax upon the shares of stock in a Vermont corporation owned by a natural person resident in this commonwealth. The exercise of such power does not conflict with constitutional guaranties for equal protection of the

44 Hawley v. Malden, 232 U. S. 1, 58 L. Ed. 477, Ann. Cas. 1916 C 842, aff'g 204 Mass. 138, 90 N. E. 415.

45 Bellows Falls Power Co. v. Com., 222 Mass. 51, Ann. Cas. 1916 C 834, 109 N. E. 891.

laws, full faith and credit to the public acts of other states, nor is it a deprivation of property without due process of law. Of course it does not impair the obligation of any contract, because it is to be inferred that our tax law was in effect long before the acquisition of the stock by the petitioner" corporation.46

Since a municipal corporation is a mere creature of the law, with such powers only as are conferred upon it by law, it has no power to tax shares of stock in a foreign corporation, located or doing business within its limits, except in so far as the power to do so has been conferred upon it by statute.47 The legislature, however, subject to constitutional limitations, may confer upon a municipality the power to tax for municipal purposes any property within its limits, including the property of, and the shares of stock in, foreign corporations.48

§ 4626. National bank shares. The federal statute expressly allows all the shares of stock in a national bank to be taxed by the state in which the bank is located, but requires shares owned by nonresidents to be "in the city or town where the bank is located, and not elsewhere," and thus not only prohibits the taxation of nonresident stockholders by the state in which the bank is located at any other place than the place where the bank is located, but also impliedly prohibits a state from taxing a resident upon shares of stock in a national bank located in another state.49

46 Bellows Falls Power Co. v. Com., 222 Mass. 51, Ann. Cas. 1916 C 834, 109 N. E. 891.

47 See Mayor & Council of Macon v. Macon Const. Co., 94 Ga. 201, 21 S. E. 456; Macon v. Central Railroad & Banking Co., 50 Ga. 620; Augusta v. Walton, 37 Ga. 620; Stetson v. Bangor, 56 Me. 274, 278; Holton v. Bangor, 23 Me. 264; Gordon v. Baltimore, 5 Gill (Md.) 231; Union Bank of Richmond v. Richmond, 94 Va. 316, 26 S. E. 821; Richmond v. Daniel, 14 Gratt. (Va.) 385.

48 Atlantic & P. Tel. Co. v. Philadelphia, 190 U. S. 160, 47 L. Ed. 995; Western U. Tel. Co. v. New Hope Borough, 187 U. S. 419, 47 L. Ed. 240; German Washington Mut. Fire Ins. Co. v. Louisville, 25 Ky. L. Rep. 1697, 78 S. W. 472; Borough of Taylor v.

This exemption is

Postal Tel. Cable Co., 202 Pa. 583, 52 Atl. 128. See also Tappan v. Merchants' Nat. Bank of Chicago, 19 Wall. (U. S.) 490, 499, 22 L. Ed. 189; State Tax on Foreign-held Bonds, 15 Wall. (U. S.) 300, 21 L. Ed. 179; Ohio & M. R. Co. v. Weber, 96 Ill. 443; Louisville Bridge Co. v. Louisville, 23 Ky. L. Rep. 1655, 65 S. W. 814; Jersey City v. North Jersey St. R. Co., 72 N. J. L. 383, 61 Atl. 95; Philadelphia v. Philadelphia Traction Co., 206 Pa. 35, 55 Atl. 762; Com. v. Standard Oil Co., 101 Pa. St. 119.

49 See First Nat. Bank of Louisville v. Kentucky, 9 Wall. (U. S.) 353, 19 L. Ed. 701; People v. Moore, 1 Idaho 504; Flint v. Board of Aldermen of Boston, 99 Mass. 141, 96 Am. Dec. 713; Austin v. Board of Aldermen of Boston, 14 Allen (Mass.) 359;

within the constitutional powers of Congress.50 Resident holders of stock may be taxed at any place within the state which may be constitutionally fixed by the legislature, whether it be where the bank is located, or where the stockholders reside, or elsewhere.51 If no place is fixed, resident shareholders are taxable on their shares at the place where they reside.52

§ 4627. Deposits of bonds, etc., by foreign corporations. By some statutes it is required that certain foreign corporations, usually insurance, investment or trust companies, or business and loan associations shall as a condition of being permitted to transact their business in the state deposit securities of a special quality or a certain sum of money with a designated state official. The question of the liability of such deposit of such securities or sum to taxation in the state has frequently been presented to the courts. It is held that under a statute providing that all property real or personal in the state and all money credits, investments in bonds, stocks or otherwise, of persons residing in the state, shall be subject to taxation, and under correlative statutory provisions requiring every person to list not only the personal property of which he is the owner, but all moneys in his possession, or invested, loaned or otherwise controlled by him

Howell v. Village of Cassopolis, 35
Mich. 471; Kyle v. Commissioners of
Fayetteville, 75 N. C. 445.

Shares of stock in a national banking association cannot be taxed by any state except that within which the bank is located. Tappan v. Merchants' Nat. Bank of Chicago, 19 Wall. (U. S.) 490, 22 L. Ed. 189; State v. Smith, 55 N. J. L. 110, 25 Atl. 277.

50 Flint v. Board of Aldermen of Boston, 99 Mass. 141, 96 Am. Dec. 713.

51 United States. Waite v. Dowley, 94 U. S. 527, 24 L. Ed. 181; Tappan v. Merchants' Nat. Bank of Chicago, 19 Wall. 490, 22 L. Ed. 189; First Nat. Bank of Louisville v. Kentucky, 9 Wall. 353, 19 L. Ed. 701; Austin v. Aldermen, 7 Wall. 694, 698, 19 L. Ed. 224.

Austin v. Board of Aldermen of Boston, 14 Allen 359.

Michigan. Howell v. Village of Cassopolis, 35 Mich. 471.

North Carolina. Kyle v. Commissioners of Fayetteville, 75 N. C. 445. Tennessee. McLaughlin v. Chadwell, 7 Heisk. 389.

Compare First Nat. Bank of Mendota v. Smith, 65 Ill. 44.

Since a state in which a national bank is located may determine where it will tax the shares of resident stockholders, and may tax them where they reside, instead of where the bank is located, it may by statute require the cashiers of national banks to send to officers of the various states or towns in the state the names of stockholders residing therein. Waite v. Dowley, 94 U. S. 527, 24 L. Ed.

181.

52 Howell v. Village of Cassopolis, 35 Mich. 471. See § 4609, supra,

as agent or attorney, or on account of any other person or persons, company or corporation whatsoever, and all moneys deposited to his order, check or draft and all credits due or owing from any person, and all property held by him in trust, it is obvious that the intent and purpose of the legislation is to subject to taxation every form of personal property having a situs in the state, including such forms of personal property as money, credits, bonds and stocks, providing that the latter are held or owned by a person residing in the state, and if they are not owned by a person residing in the state, their taxability is made to depend on their being "held" in the state by someone residing there, who holds and controls the same for the nonresident owner as agent or otherwise, and consequently municipal bonds deposited with the superintendent of insurance by a foreign insurance company under a statute requiring such deposit as a condition precedent to its right to do business in the state and for the protection of resident policyholders, are liable to taxation.53 So it has been held that bonds deposited with the superintendent of insurance under a law requiring foreign insurance companies to deposit the same with him as a condition of their doing business in the state are taxable as an investment of that part of the capital of the company employed in carrying on business in the state, under a constitutional provision that "laws shall be passed, taxing by a uniform rule, all moneys, credits, investments in bonds, stocks, joint stock companies or otherwise, and also all real and personal property according to its true value in money," and a statute enacted to carry out the same providing that "all property whether real or personal in this state, and whether belonging to individuals or corporations; and all moneys, credits, investments in bonds, stocks, or otherwise of persons residing in this state, shall be subject to taxation." 54

53 Scottish Union & National Ins. Co. v. Bowland, 196 U. S. 611, 49 L. Ed. 619; Western Assur. Co. of Toronto v. Halliday, 127 Fed. 830; Western Assur. Co. of Toronto v. Halliday, 126 Fed. 257, aff'g 110 Fed. 259.

Bonds deposited with the state treasurer by a foreign investment company under such a statute as a condition precedent to its right to do business in the state, and remaining in his custody are liable to taxation, notwithstanding the rendition of a judgment against the corporation depriving it of the right to do business

in the state, as such judgment does not affect the situs of such bonds. Sims v. Best, 25 Ohio Cir. Ct. 149, aff'd Heintz v. Cameron, 70 Ohio St. 491, 72 N. E. 1159.

If the statute requiring the deposit of the securities is repealed, the securities deposited thereunder may be withdrawn, and are no longer liable to taxation, though they remain in the hands of the comptroller. People v. New England Mut. Life Ins. Co., 26 N. Y. 303.

54 Western Assur. Co. of Toronto v. Halliday, 127 Fed. 830.

In a well considered Texas case it was held that where the scheme of taxation by a state contemplates the taxation of intangible property having a taxable situs in the state, even though owned by nonresidents, municipal bonds deposited by a surety and guaranty company under a statute requiring deposit as a condition precedent to its right to do business in the state, acquire a situs in the state for the purpose of and are liable for taxation.55 It was also held that the fact that the securities were also taxed in the state by which the corporation was created imposed no obstacle to their taxation in the state where they were so deposited, as the taxation by two independent sovereigns when each has jurisdiction, does not constitute double taxation within the meaning of the law.56

§ 4628. Assessment and valuation. As a general proposition and unless the constitution or statute provides otherwise, shares of stock in the hands of the stockholders are to be assessed at their actual

Bonds deposited under a similar statute with the comptroller of the state by a foreign insurance company are taxable. British Commercial Life Ins. Co. v. Commissioners of Taxes & Assessments, 18 Abb. Pr. (N. Y.) 118, aff'd 31 N. Y. 32; International Life Assur. Soc. of London v. Commissioners of Taxes, 28 Barb. (N. Y.) 318, 17 How. Pr. 206.

In British Commercial Life Ins. Co. v. Commissioners of Taxes & Assessments, 18 Abb. Pr. (N. Y.) 118, 130, aff'd 31 N. Y. 32, the court said: "The deposit with the controller is necessarily made in connection with the business of the company; without it they can do. no business. It is therefore used in the business of the company, and in fact forms its capital in this state, which is liable to its creditors, and comes within the definition of capital as defined in the Mutual Insurance Company v. Supervisors, 4 Comst. 442. These securities so deposited with the controller form the same kind of capital as that of a domestic corporation for a similar purpose, in which the capital is the security for those who deal with

it. Neither is actually invested in business and used for that purpose, but form the basis on which the business is transacted and the security from which the payment of claims is to be enforced."

Bonds deposited with a banking company as trustee to hold for the protection of the policyholders in the state by a foreign insurance company required to make such a deposit as a condition of doing business in the state, were taxable by the state as a portion of the capital of the corporation employed in its business in the state. People v. Home Ins. Co., 29 Cal. 533; cited with approval in Western Assur. Co. of Toronto v. Halliday, 126 Fed. 257, aff'g 110 Fed. 259.

55 State v. Fidelity & Deposit Co. of Maryland, 35 Tex. Civ. App. 214, 80 S. W. 544, following Western Assur. Co. of Toronto v. Halliday, 126 Fed. 257.

56 State v. Fidelity & Deposit Co. of Maryland, 35 Tex. Civ. App. 214, SO S. W. 544, citing Coe v. Errol, 116 U. S. 517, 29 L. Ed. 715. See also § 4589 et seq., supra.