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KIMBALL v. MILFORD.
the owners, would clearly be a case of double taxation. On this ground, shares in railroad and manufacturing corporations and deposits in savings banks are exempted from taxation to the shareholders and depositors. Is it any the less a double taxation, except only as to the extent to which it is carried, when, the whole property being taxed to the corporation, ten shares representing a proportionate part of the property are taxed to the owner? We submit that there is no way of subjecting shares in a foreign corporation owned here to double taxation here, but by taxing the shares to the owner here, when its property is taxed where it is located; or its shares taxed there and the corporation required to pay, or the tax there made a lien on the shares. In such case, the shares owned here would be subject to two burdens, the double taxation which sec. 7, ch. 49, forbids, — first, the tax there on the corporate property or shares resting equally on resident and non-resident owners; and second, the tax on the shares owned here, from which all owners of shares elsewhere would be exempt. Smith v. Exeter, 37 N. H. 556.
Wadleigh & Wallace, for the defendants. The General Statutes, in clear and unmistakable terms, require the taxation of " stock in corporations located out of the state, which is not assessed and taxed to the individuals owning the same by the towns where the corporations are located. Ch. 49, sec. 6, p.116.
The Act of 1853, which is misquoted in the petitioner's brief, was equally explicit, and required the taxation of all “stocks in corporations located out of this state and owned by persons living in this state, which is not by the towns and cities where such corporations were located, assessed and taxed to the individuals owning the same;" Laws of 1853, ch. 1419, sec. 1; that the petitioner's stock was not assessed and taxed to him in Michigan seems too clear for argument. To contend that it was, requires such ingenuity as proves a horse-chestnut to be a chestnut horse.
The only tax levied upon the Michigan Central Railroad or its stock in the State of Michigan was under the provisions of the Comp. Laws of 1872, vol. 1, ch. 22, which are as follows:
“Sec. 5. Every company heretofore incorporated, or hereafter to be incorporated within this state, for the purpose of constructing or using any railroad, canal, or turnpike therein, shall pay a yearly tax to the state of three fourths of one per cent. on the amount of capital stock of such company paid in or secured to be paid, which tax shall be paid into the state treasury by said corporations respectively on or before the first Monday in October, in the year one thousand eight hundred and fortyseven, and in each year thereafter. Sec. 6. Such tax shall be in lieu of all state, county, township, or other taxes in this state on the capital stock of said corporations, and on the railroad, canal, or turnpike constructed or used by any such corporation, and on the real and personal property in which said capital stock shall be invested, and which shall be used and occupied by any such company in accordance with the provisions of its charter and the laws of this state in the construction or use of such railroad, canal, or turnpike.”
It is clear that the petitioner's shares of stock were never taxed in Michigan at all, and there is no double taxation in this case within the
KIMBALL v. MILFORD.
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meaning of the General Statutes. What is called a tax in Michigan is merely a fixed percentage upon the capital stock of all railroad, canal, and turnpike corporations, without any reference to the value of their shares or property. The petitioner, as a stockholder, has an interest in the accumulated earnings of the corporation, the increase in the value of its property, and any gratuities it may have received. The tax in Michigan is not a tax upon his property as a stockholder. Nay, it is not a tax at all, but rather a sum paid in lieu of a tax. It does not vary with the value of the stock, but has the character of a bonus paid by the corporation for its franchises and for the privilege of exemption from taxation. Savings Bank v. Nashua, 46 N. Ħ. 399.
In Van Allen v. A88e88088, 3 Wall. 583, 584, the court say: “But in addition to this view, the tax on the shares is not a tax on the capital of the bank. The corporation is the legal owner of all the property of the bank, real and personal, and, within the powers conferred upon it by the charter and for the purposes for which it was created, can deal with the corporate property as absolutely as a private individual can deal with his own. A stiking exemplification may be seen in the case of the Queen v. Arnoud, 9 Adol. & Ellis N. S. 806. The question related to the registry of a ship owned by a corporation. Lord Denman : It appears to me that the British corporation is, as such, the sole owner of the ship. The individual members of the corporation are no doubt interested, in one sense, in the property of the corporation, as they may derive individual benefits from its increase, or loss from its decrease; but in no legal sense are the individual members the stockholders.' The interest of the shareholder entitles him to participate in the net profits earned by the bank in the employment of its capital, during the existence of its charter, in proportion to the number of it shares, and, upon its dissolution or termination, to his proportion of the property that may remain of the corporation after the payment of its debts. This is a distinct, independent interest on property held by the shareholder, like any other property that may belong to him.”
Šmith v. Exeter is not in point. In that case, all the property of the corporation paid a full tax in Illinois. Besides, the case was so slightly considered by the court that the decision was based upon the Comp. Laws of 1853, instead of the Act of June, 1853, under which the case arose.
In this case, the petitioner's claim of double taxation is absurd. No tax upon his interest in the corporation was levied in Michigan. Here he is only taxed for the actual value of his shares, subject to the specific tax upon the corporation in Michigan and the tax here, and taking both into account in estimating such value. So far as the specific tax tends to lessen his receipts and thereby diminish the value of his shares, he has received the full benefit of it in their appraisal. Both the letter and the spirit of our law require him to pay here this just and equal tax upon the actual value of his shares; and the statutes should not be wrested from their plain meaning, to enable him to escape the burdens of taxation, upon the plea that the corporation has paid the mere pittance imposed upon it by the State of Michigan for the purpose of enticing capital there to escape taxation.
KIMBALL v. MILFORD.
SARGENT, C. J. No question is raised but that the quotations from the statutes of the State of Michigan, by the counsel upon both sides, are correctly cited.
From these it appears that this stock is taxed in the State of Michigan, under the laws of that state, paying a specific tax of three fourths of one per cent. upon all its capital stock paid in, including two millions of dollars purchase money paid to the state, and also upon all loans made to said company for the purpose of constructing its road, or purchasing, constructing, chartering, or hiring steamboats; and it is provided that this specific tax shall be in full for all taxes, charges, or exactions, by virtue of any law of the state.
This stock is in that way once taxed in Michigan. If it was owned in the State of Michigan, it clearly could not be taxed again to such stockholder in that state. The rate of taxation being three fourths of one per cent. on the whole amount invested in the railroad, whether paid to the state, or for construction, or for steamboats, &c., whether represented by capital stock, or bonds, or debts of any kind, regardless of fluctuations and of depreciations in the market value of the stock, would probably be fully equal to the average rate of taxation in that state, or in our own, from the year 1840 to 1863.
But it is claimed that sec. 5, par. 3, ch. 49, General Statutes, in terms, requires that this stock be taxed in this state to the individuals owning the same, because the stock has not been taxed to them “by the towns where such corporations are located.” But in this case the specific tax is, by special provision of the statute of Michigan, to be “in lieu of all state, county, township, or other taxes in this state, on the capital stock of said corporations, and on the railroad, canal, or turnpike, constructed or used by any such corporation, and on the real and personal property in which said capital stock shall be invested,” &c.
This corporation pays a tax on all its capital expended, whether represented by the shares of stock, or the debts of the corporation, and this tax is to be in lieu of all other taxation. If this plaintiff owned bank stock in the State of Michigan, and the stock was all taxed in that state in the town where said bank is located, and, though taxed to the individual stockholders, the bank should pay all such taxes before declaring dividends, then he should not be taxed again upon the same stock in this state. But a railroad is not generally located in any one town, for the purposes of taxation, as a bank is, but is taxed by the state, as in this case; and when that state tax is declared to be in lieu of all other taxes, whether imposed by the towns, or in any other way, it is thus made a substitute for such town taxes, which would excuse the stockholder in that state from any town tax on such stock.
And the question is, whether this substitute for the town taxes comes within the spirit of our statute, and answers the requirement of our law. It is held, substantially, that it does so, in Smith v. Exeter, 37 N. H. 556. But if there were any doubt upon that point, sec. 7 of the same chapter would seem to settle the matter, which provides that “no statute provision shall be so construed as to subject any stock to double taxation.” And see Savings Bank v. Nashua, 46 N. H. 389, and Savings Bank v. Portsmouth, 52 N. H. 17. If there could be any doubt as to the construction of sec.
corporatsuch corporatio be invested, on all its capitof the corpo
CONSOLIDATED FRUIT JAR Co. v. DORFLINGER.
5, after the decision in Smith v. Exeter, supra, it would seem to be removed by the provision of sec. 7, ch. 49, General Statutes.
But it is suggested that this three fourths of one per cent. is not to be considered as a tax, but rather a bonus, or royalty paid to the state for the privilege of constructing and operating a railroad in that state. If this were so, and in consequence of this bonus paid to the state it was the real understanding that the property was to be exempted from all taxation in that state, then the stock should be taxed here. But if the property is really taxed there, and all of it is thus taxed, then it should not be taxed again. By the charter of this corporation, granted in 1846, it was required to pay a certain “specific tax to the state, and in consideration thereof, the property and effects of the company were to be exempt from all and any tax . . ... by virtue of any law of this state.” This was a provision that the property, by paying one tax, should be exempt from all other taxes. But by the Act of 1855 (see Compiled Statutes of 1872), it was provided that said specific tax to the state shall be in lieu of all ” other taxes, or a substitute for all other taxes on the capital stock of said corporation, and upon the railroad constructed or used by the corporation.
But we have already seen that this tax paid to the state upon all the capital expended in the construction or purchase of the roads, whether represented by the capital stock, or bonds, or other indebtedness of the company, amounts to a tax as high as the average rate of taxation upon other property in that state or this, from 1840 up to the time of the war; that it was in substance and in fact a tax, and not a bonus or royalty, and was intended to be, so far as we can see, a fair assessment upon the property of the corporation, including its capital stock. This being so, we cannot doubt that this tax should be abated upon the ground that to tax it again here in this way would be a double taxation of the property.
CIRCUIT COURT OF THE UNITED STATES. — EASTERN DIS
TRICT OF PENNSYLVANIA.
TRADE-MARK. — REPRESENTING ARTICLE TO BE PROTECTED BY PATENT
WHEN PATENT HAS BEEN DECLARED VOID.
CONSOLIDATED FRUIT JAR CO. v. DORFLINGER.
Complainants used to distinguish jars the designations “ Mason's Patent, Nov. 30th,
1858," " Mason's Improved,” “ The Mason Jar of 1858.” It appeared that the jars had been protected by a patent that had been adjudged to be invalid. Held, that the designations had a tendency to mislead the public, and could not, therefore, be
protected as trade-marks. In respect of the designation “ The Mason Jar of 1872," the objection held not to be applicable.
THE facts are sufficiently stated in the opinion.
CONSOLIDATED Fruit JAR Co. v. DORFLINGER.
under Mason, who was the patentee of certain alleged improvements in fruit jars. There has been a judicial decision against the validity of bis patent; and they do not now assert its validity. But they claim a trademark in what I think is not sufficiently distinguishable from a claim of exclusive right in the patented privilege. In other words, the alleged trade-mark is either deceptively obscure, or purports to be for the subject of the patent, or to include it. These remarks apply, whether the trademark is claimed in the words “ Mason's patent, November 30th, 1858," or in the words “ Mason's Improved,” or in the words “ The Mason Jar of 1858," or in any substantially similar form of words. If there had not been a patent, a different import might perhaps be attributable to the second and third of the forms of words which have been quoted. But when the question is considered with reference to the preëxistence of a patent to Mason, these expressions are to be understood as applying to it, or as including the subject of it.
The patentee of an alleged invention, in consideration of the exclusive privilege granted to him for a limited period, is bound to disclose fully his secret; and is understood as dedicating the supposed invention to the public, subject to the supposed exclusive privilege. If the privilege is invalid, the dedication is immediate and absolute. It has, therefore, been contended that the rights of the public ought to be protected against any subsequent assertion by the patentee of an independent right under the name of a trade-mark.
This objection to the complainants' alleged right would prevail, if it covered the whole of the question. But it does not. The answer to the objection is, that a tradesman who has an invalid patent may nevertheless rightfully use the subject of the patent himself, and that he ought, in that case, to be protected against injury by others who falsely impose their goods on the public as his own. Upon this view of the subject the case of Sykes v. Sykes (3 Barn. & C. 541; 5 Dowl. & Ryl. 292) was decided in the year 1824. It is a decision apparently in favor of the complainants here. It was hastily considered on a motion for a new trial, a rule to show cause being refused. But there was no defect in the reasoning on the point upon which, alone, it was decided.
Another objection, however, to the complainants' bill, does not admit, in reason, of the same answer. This objection is, that no title can be successfully asserted in a trade-mark, which is of a tendency to mislead or deceive the public. This objection may avail a defendant, notwithstanding what would otherwise be imputable to him as misconduct. The doctrine is, that the complainant must come into a court of equity with clean hands. 4 De G., J. & S. 149. This doctrine, if applicable alike at law, was overlooked in the case of Sykes v. Sykes.
The direct application of the objection appears when we consider that the alleged trade-mark in question tends rationally to induce a belief that the subject of it is a securely patented invention of Mason, whereas, it has been judicially decided that he never had a valid patent for it as an invention.
In cases prior to 1863, before English vice-chancellors, the authority of Sykes v. Sykes, supra, could not be disregarded ; and there was great hesitation in holding directly that a trade-mark representing an article as