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& C. 1151), was considered in Stephan, Treas. v. Daniels et al. 27 Ohio St. 527, and in Baker v. Cincinnati, 11 Obio St. 536.

In the light of those decisions, we are agreed that upon the facts stated in the petition the payment of these taxes was not voluntary.

An examination of the several provisions of this act (S. & S. 769–771) discloses the fact, that seven penalties and disabilities were incurred for making default in payment, amounting to a total exclusion of the company from transacting business within the state. The act provided no mode of redress nor gave the plaintiff a day in court.

The payment was made under protest, and with notice of this action, to avoid these penalties and disabilities. If the tax is illegal, we think this action may be maintained.

II. Is this act in contravention of the Constitution of the United States ?

The petition states that the gro88 receipts, which the company was bound to return and upon which it was taxed, amounted to $172,297, of which $153,850.99 was for business " which originated or terminated at a point or points outside of the State of Ohio ;” and it is alleged that these messages to or from different states pertained to commerce between the several states, and that a larger portion of said receipts were earned on the company's lines outside of the State of Ohio.

It is claimed that a tax on these gro88 receipts for the past year is the same as a tax on the messages themselves, and that a tax on messages between citizens of different states pertaining to commercial transactions is a state interference with the freedom of commerce among the states, and in conflict with the Constitution of the United States.

By section 8 of article 1 of this Constitution, the Congress possesses power“ to regulate commerce with foreign nations, and among the several states, and with the Indian tribes.”

In Brown v. Maryland, 12 Wheat. 448, Marshall, C. J., in speaking of the power of the states, in view of these provisions, says : “ That the taxing power of the state must have some limits. It cannot reach and restrain the action of the national government within its proper sphere. It cannot interfere with any regulation of commerce. If the states may tax all persons and property found on their territory, what will restrain them from taxing goods in their transit throught the state, from one port to another, for the purpose of re-exportation? Or what would restrain a state from taxing any article passing through it, from one state to another, for the purpose of traffic? Or from taxing the transportation of articles passing from the state itself to another state for commercial purposes

From this it was held, that a state law requiring an importer to take out license before he should be permitted to sell a bale of imported goods is void, and so is a state law requiring the master of a vessel engaged in foreign commerce to pay a certain sum on account of each passenger brought from a foreign country. Passenger Cases, 7 Howard, 273.

But a state may, in the exercise of its police power, forbid the sale by retail of spirituous liquors imported from abroad, or from another state. License Cases, 5 Howard, 504.

So “ a special tax on railroad and stage companies, for every passenger carried out of the state by them, is a tax on the passenger for the privi

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lege of passing through the state by the ordinary modes of travel, and is not a simple tax on the business of the corporation.” Crandall v. Nevada, 6 Wall. 35.

Clifford, J., in Gilman v. Philadelphia, 3 Wall. 737, says: “ Right of intercourse between state and state was a common law right, and, as such, was fully recognized and respected before the Constitution was formed, Those who framed the instrument found it an existing right, and regarding the right as one of high national interest, they gave to Congress the power to regulate it," &c.

The United States supreme court set aside an act of the legislature of Pennsylvania (Erie R. R. v. Penn. 15 Wallace, 282), holding that

“A statute imposing a tax upon freight taken up within the state and carried out of it, or taken up without the state and brought into it, was repugnant to that clause of the federal Constitution giving to Congress the power to regulate commerce between the states."

This decision was founded on the case of the State Freight Tax, 16 Wallace, 232, which arose on a law of the State of Pennsylvania, to provide additional revenue for the commonwealth.

This act required certain transportation companies doing business within the state to report the number of tons of freight carried, and compelled them to pay a tax of 80 much per ton on the amount carried.

The whole subject underwent a thorough discussion, and the conclusion was reached as above stated.

This conclusion rests on the ground carefully stated by the court, that it was a tax on the freight carried, and not on the aggregate business, nor franchises, nor property of the transportation companies. It was, in the view the court took of the law, a tax on the thing carried, and for that reason was a tax on commerce.

The difference between a direct tax on an article of commerce, and a tax on the company carrying, by taxing its property, franchises, or business, is clearly shown by the case of The Reading R. R. Co. v. Pennsylvania, 15 Wall. 284, where it was held, that " a statute of a state imposing a tax upon the gross receipts of railroad companies is not repugnant to the Constitution of the United States, though the gross receipts are made up in part from freights received for transportation of merchandise from the state to another state, or into the state from another. Such a tax is not a regulation of inter-state commerce.” The court say:

“ It is not everything that affects commerce that amounts to a regulation of it, within the meaning of the Constitution.” “We think it may safely be asserted that the states have authority to tax the estate, real or personal, of all their corporations, including carrying companies, precisely as they may tax similar property which belongs to natural persons, and to the same extent. We think also that such taxation may be laid upon a valuation, or may be an excise ; and that in exacting an excise tax from their corporations, the states are not obliged to impose a fixed sum upon the franchises, or upon the value of them, but they may demand a graduated contribution, proportioned either to the value of the privileges granted, or to the extent of their exercise, or to the results of such exercise."

Again : “ If the tax be upon the instrument, such as a stage-coach, a

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court say :

railroad car, or a canal or a steamboat, its tendency is to increase the cost of transportation; still it is not a tax upon transportation or upon commerce, and it has never been seriously doubted that such a tax may be laid.”

For these reasons it was said a tax on gross receipts for transportation was not a tax on articles of commerce, but upon the fruits of commerce after they had reached the treasury of the company.

To the same effect is the case of The Delaware R. R. Tax, 18 Wallace, 206, and Erie Railway Co. v. Pennsylvania, 21 Wall. 492. In the case of The Delaware Railroad Tax, 18 Wall. 231, the supreme

“ A tax upon a corporation may be proportioned to the income received, as well as to the value of the franchise granted or the property possessed.” And in Erie Railway Co. v. Pennsylvania, 21 Wall. 492, the court sustained the validity of the law of Pennsylvania, imposing a tax of three fourths of one per cent. upon the gross receipts of the Erie Railway, although but forty-two miles of its whole line of four hundred and fifty-five miles lay within the state.

By a statute of Massachusetts, a tax of four per cent. upon all premiums charged or received on contracts for insurance of property was imposed upon all companies foreign to the United States ; à tax of two per cent. upon corporations organized under the laws of any other state than Massachusetts, while only one per cent. was imposed upon corporations organized under the laws of Massachusetts.

The supreme court of the United States held that this “ law of Massachusetts is no violation of the federal Constitution." Liverpool Ins. Co. v. Massachusetts, 10 How. 573.

In this case it was held that the business of insurance was not commerce, though carried on between citizens of different states, and therefore such business might be taxed by the states.

This subject has recently been before the supreme court in Welton v. State of Missouri, 1 Otto, 275; Henderson et al. v. Mayor of New York, 2 Otto, 259, and Chy Lung v. Freeman et al. 2 Otto, 275.

Welton v. Missouri involved the validity of a license tax on peddlers, dealing in articles not the product or growth of the state.

It was held that such a tax was in effect a tax on goods, wares, and merchandise of other states brought into the state for sale, and therefore was a discrimination that interfered with freedom of commerce between the states.

It was further held in that case, that the non-action of Congress on the subject of commerce between the states was equivalent to saying that it should be free, and that state legislation, of a restrictive character, against articles of trade and traffic between the states, by reason of their foreign origin, is an interference with that freedom, and therefore unconstitutional. Commerce between the states relates to trade in articles of property. Telegrams or correspondence by any other method, although between citizens of different states, and although it may relate to commercial transactions, are not commerce.

They are instruments or aids to facilitate commerce. Like the vehicle on which goods or persons are transported from state to state, they may be indispensable to a successful prosecution of trade. These instruments of commerce håve always been subject to state taxation.

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Whether, if Congress should legislate on this subject and make the telegraph lines part of the postal system, or declare them indispensable to trade and commerce between the states, and so exempt messages relating to commerce from state taxation, such a tax will be valid, we will not here inquire.

This law does not impose a tax on messages, but on the gross receipts of a previous period of time, and so within The Delaware Ř. R. Tax, 18 Wall., cited above.

III. Is this statute (S. & S. 769–771) in conflict with the Constitution of the state ?

This plaintiff is a foreign corporation, doing business within the state, with its principal office in another state. Its property within the state is taxed as other property.

The right of the state over such corporations, and its power to impose upon them terms and conditions upon which they may transact business within the state, as well as the general power of taxation, is involved in this inquiry.

The power of the state to collect taxes for public purposes is an inherent and indispensable incident of sovereignty. Without it no civilized state could discharge its functions.

This power would exist without a written Constitution. The object of constitutional provisions is to regulate its exercise by such limitations and restrictions as will protect the people against unjust or arbitrary action of the governing power. McCullough v. Maryland, 4 Wheat. 316; Providence Bank v. Billings, 4 Peters, 519; North M. R. R. v. McGuire, 20 Wall. 46; Debolt v. 0. L. f Trust Co. 1 Ohio St. 563; Cooley on Taxation, 3; Cooley on Const. Law; The Federalist, Nos. 30–35. The Constitution (art. 2, sec. 1) provides, that “the legislative power of the state shall be vested in the general assembly.”

The power to raise revenue for public purposes, being a legislative power, is thus expressly committed to the general assembly.

It is a grant of general power of taxatio

Limitations and restrictions on its exercise are to be found in other provisions of that instrument, and in the federal Constitution.

Thus article 12, which relates to taxation, is not, as seems to be supposed, a delegation of authority to raise revenue, but a limitation of that power as conferred by article 2, section 1.

In Hill v. Higdon, 5 Ohio St. 250, it is said: “In our present Constitution, as well as in the former, the general grant of legislative authority includes the power of taxation in all its form8. Restrictions upon its exercise are to be looked for in other parts of the instruments.”

As a deduction from that proposition, the court sustains the validity of assessments in cities and towns. If article 12 was the source of the taxing power, this assessment, being in effect a tax, would have been invalid.

So in Reeves v. Treasurer of Wood County, 8 Ohio St. 333, it was held, that the power to levy and collect a local assessment was a branch or part of the general authority of the legislation which exists in the state, as well before as after the adoption of the Constitution of 1851, and while it was a species of tax, yet it was not objectionable, because it was assessed in

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proportion to benefits conferred, and not ad valorem, as required by article 12, section 2.

This point was directly considered in Baker v. Cincinnati, 11 Ohio St. 534, under a law of the state which conferred upon cities and towns power to license shows and other performances, and to charge such sums of money as the council may think fit. Under an ordinance for that purpose, Baker was charged $1 for issuing a license to him, and $63.50 for the privilege of running a theatre for six months, which was paid into the city treasury.

It was claimed there, as it is here, that this tax was prohibited by article 12, section 2, which provides for taxation by a uniform rule on all kinds of property, according to its true value in money.

It was argued that property, and property alone, is the sole basis for raising revenue, and that the legislature had no power to collect revenues, or authorize municipal corporations to do so, by a tax on any business, pursuit, or avocation.

A remark, not necessary to the decision, is found in the opinion of the judge, in Exchange Bank v. Hines, 3 Ohio St. 10, and is cited in support of this argument.

In reply, Gholson, J., says: “ The legislative power of the state is found in article 2, section 1, and includes all the power which the objects of the state government may require, and we must look to other provisions of the Constitution to ascertain to what extent legislative discretion is qualified or restricted; that article 12, section 2, is not a grant of power, but a regulation of power already granted in the first section of the second article."

In that case, the court conclude that the power to authorize licenses is untouched by the Constitution, except in case of intoxicating liquors.

How far, and to what extent, this power may be used to raise revenue in that mode, is mooted, but not considered, beyond the case before the court; but it is said : “ It may be admitted that it could not be employed as a mode of taxing property without reference to the uniformity or equality required by section 2, article 12."

It was said the power to collect a tax on a license, the amount of which was in the discretion of the council, was analogous to the power to make assessments in the cases already cited; and the fact that the amount collected was greater than the cost of issuing the license, or that it went into the public treasury as a tax, did not affect its validity.

In speaking of section 2, of article 12, the learned judge says (p. 541): “The things in contemplation were property of every possible description, and an equal and uniform tax on that property, according to its true value in money. If there be a species of taxation, or subject matter of taxation, not embraced in that section, there is nothing in it by which they are prohibited or excluded. Laws taxing property must certainly conform with that section.” “A license cannot be regarded as property ;

and it is added : " Now neither of these sections in terms prohibits the granting of licenses and making a charge therefor, nor the imposition of a tax on a license.”

In Zanesville v. Richards, 5 Ohio St. 590, the court is careful to add to the opinion that while it extended to all laws providing for taxation within

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