the state may impose upon foreign corporations because of their doing business in that state with its permission given for a valuable consideration any duty in respect to the mode in which they shall perform their obligations in other states.

The New York, Lake Erie and Western Railroad Company is not subject to regulations established by Pennsylvania in respect to the mode in which it shall transact its business in the state of New York. The money in the hands of the company in New York, to be applied by it in the payment of interest, which by the terms of the contract is payable in New York and not elsewhere, is property beyond the jurisdiction of Pennsylvania, and Pennsylvania is without power to say how the corporation holding such money in another state shall apply it, and to inflict a penalty upon it for not applying it as directed by its statutes; especially may not Pennsylvania, directly or indirectly, interpose between the corporation and its creditors and forbid it to perform its contract with creditors according to its terms and according to the law of the place of performance. No principle is better settled than that the power of a state, even its power of taxation, in respect to property, is limited to such as is within its jurisdiction. State Tax on Foreign-Held Bonds, 15 Wall. 300, 319; Railroad Co. v. Jackson, 7 Wall. 263; St. Louis v. Ferry Co., 11 Wall. 423; Delaware Railroad Tax, 18 Wall. 206.

The fallacy of the contrary view is in the assumption that this railroad company, by purchasing from Pennsylvania the privilege of constructing and operating a part of its road through the territory of that state, thereby impliedly agreed to submit to such regulations as that state should, at any subsequent period, adopt in respect to the mode in which it should, in the state of New York, apply money in its hands in discharge of the obligation to pay interest to the holders of its bonds residing in Pennsylvania. But, for the reasons stated, this assumption is unwarranted by any sound principle of law or by the circumstances under which the railroad company obtained the assent of Pennsylvania to build and maintain its road through that state.

It is due to learned counsel who argued this case that something be said before concluding this opinion about certain authorities upon which great reliance was placed.

Reference was made by counsel for the company to the decis

ion of this court in the case of State Tax on Foreign-Held Bonds, 15 Wall. 300, 320, which case involved the validity of a Pennsylvania statute of 1868, requiring corporations, created by and doing business in that state, to deduct from the interest paid on its obligations the tax assessed on such interest by the state. It was attempted to make that statute applicable to interest payable on bonds held by nonresidents of Pennsylvania. This court said: "The tax laws of a state can have no extra-territorial operation, nor can any law of a state inconsistent with the terms of a contract made with, or payable to, parties out of the state, have any effect upon the contract while it is in the hands of such parties or other nonresidents of the state. * * * It is a law which interferes between the company and the bondholder, and, under the pretense of levying a tax, commands the company to withhold a portion of the stipulated interest, and pay it over to the state. It is a law which thus impairs the obligation of the contract between the parties. The obligation of a contract depends upon its terms, and the means which the law in existence at the time affords for its enforcement. A law which alters the terms of a contract by imposing new conditions, or dispensing with those expressed, is a law which impairs its obligation, for, as stated on another occasion, such a law relieves the parties from the moral duty of performing the original stipulations of the contract, and it prevents their legal enforcement. The act of Pennsylvania of May 1, 1868, falls within this description. It directs the treasurer of every incorporated company to retain from the interest stipu lated to its bondholders five per cent upon every dollar, and pay it into the treasury of the commonwealth It thus sanctions and commands a disregard of the express provisions of the contracts between the company and its creditors. It is only one of many cases where, under the name of taxation, an oppressive exaction is made without constitutional warrant, amounting to little less than an arbitrary seizure of private property."

If the present case involved any question as to the authority or duty of the railroad company to deduct anything from the interest paid on its scrip, bonds or certificates of indebtedness, when held by nonresidents of Pennsylvania, the case of State Tax on ForeignHeld Bonds would be decisive against the state. But no such question is here presented. The statute of 1885 only applies to

scrip, bonds or certificates of indebtedness issued to, and held by, residents of Pennsylvania.

Counsel for the state insisted that the present case is controlled by Bell's Gap R. Co. v. Pennsylvania, 134 U. S. 232; 10 Sup. Ct. Rep. 553, reaffirmed in Jennings v. Coal Co., 147 U. S. 147; 13 Sup. Ct. Rep. 282. It is only necessary to observe that the corporations which complained in those cases of the tax assessed, under a Pennsylvania statute, upon their loans held by residents of Pennsylvania, were Pennsylvania corporations. No question arose in either of those cases as to the authority of Pennsylvania to make a corporation of another state an assessor or collector of taxes assessed by or under the authority of Pennsylvania against residents of Pennsylvania. Nor does the case now before us involve any question as to the extent to which the state may tax property within its limits belonging to the railroad company.

The views we have expressed are sufficient for the disposition of the case, without considering other grounds upon which, it is contended, the judgment below was erroneous.

The judgment of the Supreme Court of Pennsylvania is reversed, and the case is remanded for further proceedings not inconsistent with this opinion.

Reversed.*

The decision of the Pennsylvania court in the principal case is reported in 145 Penn. St. 38; 22 Atl. Rep. 212. The validity of the same law was again affirmed, as respects foreign corporations, in Commonwealth v. Delaware & Hudson Canal Co., 150 Penn. St. 245; 24 Atl. Rep. 599. In Jennings v. Coal Ridge Imp. & Coal Co., 147 U. S. 147; 13 Sup. Ct. Rep. 282, the defendant being a Pennsylvania corporation, it was held that the Pennsylvania statute (Act June 30, 1885, § 4) requiring the treasurer of each private corporation doing business in the state, upon the payment of interest on any bond, etc., issued by such corporation, to assess the state tax of three mills upon the "nominal value" of such evidence of debt, deduct the same from the interest paid and turn it into the state treasury, is not in contravention of the fourteenth amendment to the Constitution of the United States, as taking property without due process of law, or as providing for an unjust discrimination in favor of persons owning bonds of foreign corporations, which by the general laws of the state are taxed at their actual value.

* Reported in 153 U. S. 628; 14 Sup. Ct. Rep. 952.

CUMBERLAND TELEPHONE & TELEGRAPH Co. v. UNITED ELEOTRIC R. Co.

(Supreme Court of Tennessee, March 10, 1894.)

1. INJURY TO TELEPHONE LINES AND PLANT BY ELECTRIC RAILWAY ON SAME STREET. AN ELECTRIC STREET RAILWAY AN ORDINARY STREET USE. An electric street railway, operated by the trolley system, and for the transportation of passengers only, whose tracks conform to the surface of the street, is not an additional servitude upon the fee of the street, but it is a legitimate and ordinary use of the street within the meaning of a statute, granting to a telephone company the right to use the streets with its lines of poles and wires, but so as not to obstruct the ordinary use thereof.

2. RELATIVE RIGHTS OF TELEPHONE COMPANY AND ELECTRIC RAILWAY COMPANY OCCUPYING SAME STREET. An electric railway company was authorized to occupy a street upon which a telephone line had been previously constructed under authority of law, with a proviso that it should not obstruct the ordinary use of the street. Held, that each must exercise its rights with that careful and prudent regard for the rights of the other which the law enjoins, and which is embodied in the maxim, sic utere tuo ut alienum non lædas. Both being authorized by the legislature, their right to occupy and use the streets are co-ordinate; each, within its own sphere, is independent of the other, and the right of neither is subordinate to the other, except as made so by the legislature.

3. INJURY TO TELEPHONE COMPANY BY THE PHYSICAL OBSTRUCTION CAUSED BY THE POLES AND WIRES. Where the poles and wires of an electric railway company were erected on both sides of a street and so as to interfere with the poles and wires of a telephone company previously erected on one side of the same street, in consequence of which the latter company was obliged to put in higher poles, it was held that, as the railway company might reasonably have avoided such interference, by using a single line of poles in the middle or on one side of the street, the latter company was liable for the injury caused by such interference, and a recovery for the expense incurred in repairing such injury was allowed.

4. INJURY BY INDUCTION. In the case stated the operation of the telephone plant was interfered with by induction caused by the proximity and parallelism of the wires and the varying intensity of the current in the railway wires. The only remedy for this was to destroy the parallelism of the wires, which the telephone company did. Held, that, as the railway company could not exercise its right without creating this induction, and as its use of the street was an ordinary use, which the telephone company was forbidden to obstruct, the placing of the telephone wires so that induction would necessarily result, amounted to an obstruction of the ordinary use of the street, and that the railway company was not liable for the consequences of such induction.

5. INJURY BY CONDUCTION. Both the telephone and electric railway used the earth as a return circuit. The electricity generated by the railway company escaped through the ground to a distance of half a mile on either side of

its lines, found the telephone lines and almost paralyzed the use of its instruments. It appeared that the only remedy for this interference was for one of the companies to put in a metallic return circuit, which the telephone company proceeded to do. Held, that, as the railway plant might have been constructed and operated, without any unreasonable expense, so as to avoid injury by conduction, the railway company was liable for such injury to the telephone property.

6. A telephone company whose line is in operation is not bound to protect itself from the probable injurious consequences to it, from the building of an electric railway, by making such changes in its existing plant as would obviate the effects of conduction.

7. INJURY BY CONDUCTION AMOUNTS TO A TAKING. The injury to the telephone plant by conduction constitutes such an invasion of the company's property as amounts to a taking for public use, and renders the railway company liable for the damage thereby inflicted.

The law

8. GENERAL DUTY AS TO ELECTRICTY ARTIFICIALLY GENERATED. ful, harmless and accustomed use upon one's own land of electricity cannot be lawfully obstructed or impaired by the injurious act of another, in generating and permitting the escape of electricity, of unusual or unnatural power or volume, so as to disturb the usual and natural electrical conditions upon neighboring property and thereby cause injury and loss to others.

Vertrees & Vertrees, for plaintiff. J. C. Bradford and E. H. East, for defendant.

G. W. PICKLE, Sp. J. This is a suit by a telephone company against an electric street railway company to recover damages inflicted upon the telephone plant by the contiguous railway plant. The plaintiff has appealed from an adverse judgment and assigned errors. The facts are practically undisputed, and so far as they are material or pertinent to the questions to be determined are as follows:

The plaintiff, a Kentucky corporation, had, prior to 1889, established in the city of Nashville, a telephone plant upon the "single wire" plan or system. The earth, under this system, is used as the return conductor to complete the electrical circuit and the overhead "single wire" must have earth connections at both ends, at the "exchange" and at the subscribers. These earth connections of plaintiff's wires were effected upon private property at both ends, upon the company's property at the "exchange," and upon the subscriber's property, by his consent, at the other end. The poles upon which plaintiff's wires were stretched were planted in the public streets by permission of the city council and by authority of a general statute of this state which empowers tele