whole; and so construing the charter of a railroad company which provided that the capital stock of the company should be forever exempt from taxation and that the company's road with all of its fixtures and appurtenances, including workshops, machinery and rolling stock should be exempt for a period of twenty years from the completion of the road and no longer, it has been held that that portion of the road, etc., paid for with the company's capital was not perpetually exempt as being a part of the company's capital stock.' Certainly, where the charter of a corporation exempts its stock from taxation, but contains an express provision against the exemption of its property, the property is taxable.9

In South Carolina it was held that an exemption of the "stock" of a railroad company exempted its gross income, as the income was only an accessory of the stock, which was an aggregate of the property and effects of the company.10 And in Connecticut it was held that an exemption of the "stock and income" of a corporation exempted from all taxes including one of a franchise character.11 In New Jersey it has been held that a charter exemption of the real and personal property of the corporation, not actually and in fact within the state, and of the stock of the corporation, owned or held by any of its stockholders, from any tax or impost whatsoever, pre

7 Memphis & C. R. Co. v. Gaines, 97 U. S. 697, 24 L. Ed. 1091.

"Whenever property is exempted by reason of the exemption of capital stock, it is because, taking the whole charter together, such appears to have been the intention of the legislature." St. Louis, I. M. & S. R. Co. v. Loftin, 98 U. S. 559, 25 L. Ed. 222.

8 Memphis & C. R. Co. v. Gaines, 97 U. S. 697, 24 L. Ed. 1091.

Lands granted by Congress to a state to aid in the construction of the road of a certain railroad company and granted by the state to the company held not within the perpetual exemption of the company's capital stock and dividends. St. Louis, I. M. & S. R. Co. v. Loftin, 98 U. S. 559, 25 L. Ed. 222. See also Memphis & St. L. R. Co. v. Loftin, 105 U. S. 258, 26 L. Ed. 1042.

9 Central Railroad & Banking Co. v. Wright, 164 U. S. 327, 41 L. Ed. 454.

10 State v. Hood, 15 Rich. L. (S. C.)

177.

11 Nichols v. New Haven & N. Co., 42 Conn. 103.

"It might be claimed with truth that the value of the franchise of a corporation enters into and forms a part of the value of the stock of the corporation. The franchise is valuable in proportion to the yearly net income which the corporation receives and is likely to receive in carrying on its business. The stock of the corporation derives its value, to a great extent, from the franchise and in come together; and in some cases, these sources of value double and treble its nominal value. Hence the value of the stock of a corporation embraces the value of its franchise; and conse quently, if the stock is exempt from taxation, so must the franchise like. wise be exempt." Nichols v. New Haven & N. Co., 42 Conn. 103, 125.

cludes the imposition upon the corporation of a "franchise" tax based upon the amount of its capital stock, less the assessed value of its personalty and realty in the state.12

§ 4644. Exemption of shares of stock as exemption of capital stock, franchises and property of corporation. By the weight of authority, a charter or statutory provision exempting the shares of stock of a corporation from taxation, or imposing a particular tax upon each share of stock, and declaring that it shall be in lieu of all other taxes, exempts, not only the shares of stock in the hands of the stockholders, but also, by implication, the capital stock in the hands of the corporation, and its franchises and tangible property, unless there is something to show an intention to the contrary.18 The de

cisions to this effect are based upon the theory that the shares of stock in the hands of the stockholders, while in contemplation of law distinct from the capital stock, franchises and property of the corporation, in fact merely represent the equitable and beneficial interest therein of the stockholders, and that to tax the property of the corporation is to indirectly tax the stockholders on their shares.14

§ 4645. Exemption of property or capital stock as exemption of shares of stock. Although there has been some conflict in the decisions on the question, the better opinion and the decided weight of authority is to the effect that, in the absence of anything to show a contrary intention on the part of the legislature, an exemption in terms of the property and capital stock of a corporation, or of either, in the hands of the corporation, exempts by implication the shares of the capital stock in the hands of the stockholders, for, while the shares of stock are in contemplation of law distinct from the property of the corporation in its hands, they represent the property of the corporation, or, rather, the equitable interest of the stockholders therein.15

On rehearing, in the case of Bank of Commerce v. Tennessee, supra, the judgment was modified so as to allow taxation of holders of new stock issued under the authority conferred by the charter of the corporation after the adoption of a constitutional prohibition against exemptions from taxation; but it was still held that the holders of old stock could not be taxed. Bank of Commerce v. Tennessee, 163 U. S. 416, 41 L. Ed. 211.

In North Carolina it has been held that the franchise of a corporation is not exempt from taxation under an exemption of the shares of its capital stock. Wilmington & W. R. Co. v. Reid, 64 N. C. 226; Raleigh & G. R. Co. v. Reid, 64 N. C. 155. It was held, however, that a charter provision that a tax of twenty-five cents on each share of stock owned by individuals in a bank should be annually paid into the treasury of the state by the bank, and that it should not be liable to any further tax, exempted the bank from

taxation on the land owned and occupied by it for its business. Bank of Cape Fear v. Edwards, 5 Ired. (N. C.)

516.

14 Anne Arundel County Com 'rs v. Annapolis & E. R. R. Co., 47 Md. 592.

*

"The identity of the thing doubly taxed," said the court, "is not af fected by the fact that in one case the tax is to be paid vicariously by the [corporation] and in the other by the owner of the share himself. The thing thus taxed is still the same." Farrington v. Tennes see, 95 U. S. 679, 24 L. Ed. 558. 15 United States. Tennessee Whitworth, 117 U. S. 129, 29 L. Ed. 830, 22 Fed. 75; Farrington v. Tennes see, 95 U. S. 679, 24 L. Ed. 558; don v. Appeal Tax Court, 3 How. 133,

11 L. Ed. 529.

48.

V.

Gor

Indiana. King v. Madison, 17 Ind.

A tax upon shares of stock in the hands of the stockholders, which the corporation is required to pay irrespective of any dividends or profits payable to the stockholders, is substantially a tax upon the

corporation, and cannot be imposed where the corporation is exempt from taxation.16

§ 4646. Taxes included in exemption. An exemption from all taxation, or from all taxation other than a specified tax, exempts a corporation from local or municipal as well as state taxation.17 It in is well settled, however, that exemption from taxation merely, general terms, or from county taxes, etc., does not exempt from municipal assessments for public improvements, as for street improvements, sewers and the like.18 It is otherwise where the exemption

A general exemption of a railroad from company 480. "state and county taxes' exempts the company from a tax levied by a county to pay bonds given by it for stock in a railroad company. State v. Hannibal & St. J. R. Co., 101 Mo. 136, 13 S. W. 505.