Transp. Co. v. Wheeling, 99 U.S. 273

Transportation Company v. Wheeling.

Steamboats which ply between different ports on a navigable river may, under a State statute, be taxed as personal property by the city where the company owning them has its principal office, and which is their home port, although they are duly enrolled and licensed as coasting vessels under the laws of the United States, and all fees and charges thereon, demandable under those laws, have been duly paid.

Error to the Supreme Court of Appeals of the State of West Virginia.

This was an action of assumpsit brought for the recovery of the tax paid under protest to the city of Wheeling, by the * Wheeling, Parkersburg, and Cincinnati Transportation Company, the owner of certain steamboats used by it in navigating the Ohio between that city and Parkersburg and the intermediate places on both sides of the river, in the States of West Virginia and Ohio. The vessels were of greater burden than twenty tons, and were duly enrolled and licensed under the act of Congress. The company was incorporated under the laws of West Virginia, and its stock was partly owned in that State and partly in Ohio. Its principal office was in Wheeling. The vessels started from that city on their voyages, and when not running were laid up there. They were assessed according to their value as personal property of the company, and the tax was collected under the laws of West Virginia, authorizing the city to ‘assess, levy, and collect an annual tax for the use of the city on personal property in the city.” The right of the tate to impose a tax on such vessels was denied by the comPany, as in violation of art. 1, sect. 10, par. 3, of the Constituon, which declares that “ no State shall, without the consent o ongress, lay any duty of tonnage,” and of art. 1, sect. 8, ul f * ^'oh provides that Congress shall have power “ to reg-commerce with foreign nations and among the several West'v’0 ^n^an tribes.” The Court of Appeals of prov* ' held the tax in question not to be within these favor Hh '^e Constitution, and affirmed the judgment in tv 6 rendered by the court of original jurisdiction. he comPany sued out this writ.

Mr. Montgomery Blair for the plaintiff in error.

National vessels, or vessels duly enrolled and licensed under the laws of the United States to carry on inter-state commerce, are not subject to State taxation. The residence of the owners is immaterial. State Tonnage Tax Cases, 12 Wall. 204. And in view of that and other decided cases, it must be conceded that if the tax in question had been measured by the carrying capacity or tonnage of the vessels, it would be illegal; but it is contended that the constitutional prohibition is avoided, by taxing them according to their value. The company denies this, and maintains that the doctrine is contrary to the principles established by the rulings of this court in respect to the provisions of the Constitution bearing upon the question involved.

In Cooley v. Board of Wardens, ^c. (12 How. 299), it was held, in effect, that any tax operating as a charge on such vessels, even if indirectly imposed, would be a tonnage duty, although levied under the name of pilot duties or penalties, and “ that it is the thing, and not the name, which is to be considered.” To the same effect is Steamship Company n. Port-

/ wardens, 6 Wall. 31. In that case, Louisiana imposed a tax \ of five dollars upon each vessel, without reference to its ton nage. This court held that the tax was void as a tonnage duty and as a regulation of commerce. A duty imposed on a ship by a State was declared to be within the constitutiona prohibition. ,

It is contended by the city that this tax is not a duty on.

ship, because not so eo nomine; and that the Constituti excepts shipping from taxation only when the law attempts tax it by its description as shipping. Now, the vessels in question are just as much within the description of things by the West Virginia statute as if it had specifically taxed them by name ; for it is as ships that they are assesse »a as so much timber and iron. As the thing is pro i i e not the name, the prohibition certainly applies here.

In support of the decision of the State court there are cited dicta of Mr. Justice McLean in Passenger Cases (1 H _ 287), of Mr. Justice Clifford in State Tonnage„ (supra), and certain expressions in Hays n. The acific

Steamship Co., 17 How. 596, and in Morgan v. Parkham, 16 Wall. 473.

These dicta tend to sustain the views of the State court; but the question now involved is presented here for the first time, and they are in conflict with the principles actually decided by the court.

The right accorded to the States by Mr. Chief Justice Marshall, in McCulloch v. Maryland (4 Wheat. 316), to tax the interest of their citizens in the bank of the United States, whilst exempting the bank from such taxation, seems to be the origin of these dicta. But there is no analogy between that case and this. Shipping has not the double character of the bank as a public agency and as private property, and does not owe its exemption to any implications, w’hich, arising from its being a public agency, exempt it only in that character from taxation leaving it subject thereto as private property, according to its value. Whilst recognized, in all respects, as private property, it is exempt by the express terms of the Constitution. This exemption extends to any form or amount of taxation upon a ship enrolled and licensed under the laws of the United States; and the reason therefor given by the court m Steamship Company v. Portwardens (supra), is that “ the prohibition upon the States ' levying duties upon imports and exports would have been insufficient, if it had not been exn ed to ships which serve as vehicles of commerce.” In w ibbons v. Ogden (9 Wheat. 1), the language of the court is, duty of tonnage is as much a tax as a duty on imports exports, and the reason which ensured the prohibition of extends this also.” Hence all the reasoning . 1C t ® court has applied to prevent any State taxation upon . ports y varying the form without varying the substance,”

The fact that the vessels were assessed in their home port is immaterial. A tonnage tax assessed there has been held to be prohibited ; and as the prohibition is not limited to a tonnage tax strictly so called, but extends to any duty, whether imposed directly or indirectly, or in any manner upon a ship, the principle involved here would seem to have been decided for the company.

Nor does it affect the question that vessels are not enumerated in the tax law as subjects of taxation. If exempt at all, they would be equally so by their description as personal property as by their description as ships, — it being held by this court that the prohibition forbids not only “ a duty proportioned to the tonnage of the vessels,” but “ any duty on the ship.” It is, therefore, unrestricted. They are the tools of that foreign and inter-state trade which it was intended to withdraw absolutely from State control, and, like the me chanic’s tools, which the States have exempted from taxation, are as exempt from a general tax on personal property as from a specific duty on the articles.

Whether the vessels be taxed as personal property or specifically, the effect is to tax foreign and inter-state commerce.

If it be urged that as the tax is proportioned to the value« the vessel, and forms a part only of the common bur en im posed upon personal property within the State, commerce can not be injuriously affected by it, we reply in the language o court in Brown v. Maryland, to the suggestion that the might be trusted not to tax imports or exports to its own pre] dice, that the Constitution has not left the question open.

No counsel appeared for the defendant in error.

Taxes levied by a State upon ships or vessels as instruments of commerce and navigation are within the clause of the Constitution which prohibits the States from levying any duty of tonnage without the consent of Congress ; and it makes no difference whether the ships or vessels taxed belong to the citizens of the State which levies the tax or to the citizens of another State, as the prohibition is general, withdrawing altogether from the States the power to lay any duty of tonnage under any circumstances, without the consent of Congress.

Pending the controversy in the subordinate State court, the parties by consent filed in the case an agreed statement of facts, from which and the pleadings it appears that the plaintiffs commenced an action of assumpsit against the defendants to recover ack ceitain sums of money which the latter involuntarily paid to the former as taxes wrongfully assessed, as they allege, upon our certain steamboats which they owned, and which for four years or more they employed in carrying passengers and freight e ween the port of Wheeling and other ports on the Ohio Kiver.

Throughout the whole period each of the steamboats was duly enrolled and licensed as coasting vessels under the laws of the United States, and the agreed statement shows that the plaintiffs paid for each all dues, fees, and charges which were properly demandable under those laws. Payment of the taxes was made under protest and in order to escape the seizure and sale of the steamboats.

Service was made, and the parties having waived a jury and filed an agreed statement of facts as before stated, submitted the case to the court of original jurisdiction. Hearing was had, and the court rendered judgment in favor of the defendants. Exceptions were filed by the plaintiffs, and they removed the case into the supreme court of the State, called the Court of Appeals, where the judgment of the subordinate court was affirmed. Though defeated in both of the State courts, the plaintiffs sued out the present writ of error and removed the cause into this court.

Since the transcript was entered here, the plaintiffs have assigned for error that the State Court of Appeals erred in hold ing that the taxes levied are not within the constitutional pro hibition that no State, without the consent of Congress, sha lay any duty of tonnage.

Ships or vessels of ten or more tons burden, duly enro and licensed, if engaged in commerce on waters which are navigable by such vessels from the sea, are ships and vesse s of the United States, entitled to the privileges secure such vessels by the act for enrolling and licensing ships vessels to be employed in the coasting trade. 1 Stat. » 287

Authorities to show that the States are prohibited fr

Power to tax for the support of the State governments exists in the States independently of the national government; and it may well be assumed that where there is no cession of contradictory or inconsistent jurisdiction in the United States, nor any restraining compact in the Constitution, the power in the States to tax for the support of the State authority reaches all the property within the State which is not properly regarded as the instruments or means of the Federal government. Nathan v. Louisiana, 8 How. 73 ; Brown v. Maryland, 12 Wheat. 419; Weston v. City Council of Charleston, 2 Pet. 449.

Beyond question these authorities show that all subjects over which the sovereign power of a State extends are objects of taxation, the rule being that the sovereignty of a State extends to every thing which exists by its own authority or is introduced y its permission, except those means which are employed by ongress to carry into execution the powers given by the people o the Federal government, whose laws, made in pursuance a Constitution, are supreme. McCulloch n. Maryland, 4 Wheat. 429; Savings Society v. Coite, 6 Wall. 604.

Though a ship, when engaged in the transportation of passengers, said Mr. Chie? Justice Taney, is a vehicle of commerce, and within the power of regulation granted to Congress, yet it has always been held that the power to regulate commerce, as conferred, does not give, to Congress the power to tax the ship, nor prohibit the State from taxing it as the property of the owner, when he resides within their own jurisdiction; and he adds, that the authority of Congress to tax ships is derived from the express grant of power in the eighth section of the first article, to lay and collect taxes, duties, imports, and excises; and that the inability of the States to tax the ship as an instrument of commerce arises from the express prohibition contained in the tenth section of the same article. Passenger Cases, 7 How. 283, 479.

Support to that view is also derived from one of the numbers of the Federalist, which has ever been regarded as entitled to weight in any discussion as to the true intent and meaning of the provisions of our fundamental law. It is theie main tained that no right of taxation which the States had previously enjoyed was surrendered, unless expressly prohibite, and that the right of the States to tax was .not impaired by any affirmative grant of power to the general government, that duties on imports were a part of the taxing power, an that the States would have had a right, after the adoption o the Constitution, to lay duties on imports and exports ey had not been expressly prohibited from doing so by t a strument. Federalist, No. 32. Irom which it follows, writer of that publication is correct, that the power g to regulate commerce did not prohibit the States rom import duties upon merchandise imported from °^e1^ . t tries; that the commercial clause does not app y 0 of taxation in either sovereignty, the taxing power ei distinct and separate power from the power to legu merce; and that the right of taxation in the Stat over every subject where it before existed, with the P only of those expressly or impliedly prohibited.

Neither imposts nor duties on imports or exports can be levied by a State, except what may be absolutely necessary for executing its inspection laws, nor can a State levy any duty of tonnage without the consent of Congress. State power of taxation is doubtless very comprehensive; but it is not without limits, as appears from what has already been remarked, to which it may be added, that State tax laws cannot restrain the action of the national authority, nor can they abridge the operation of any law which Congress may constitutionally pass. They may extend to every object of value not excepted as aforesaid, within the sovereignty of the State; but they cannot reach the means and instruments of the Federal government, nor the administration of justice in the Federal courts, nor the collection of the public revenue, nor interfere with any constitutional regulation of Congress.

Power to tax its citizens or subjects in some form is an attribute of every government, residing in it as part of itself; and hence it follows that the power to tax may be exercised at the same time upon the same objects of private property by the State and by the United States, without inconsistency or repugnancy. McCulloch v. Maryland, supra; Providence Bank v. Billings, 4 Pet. 514.

Suoh power exists in the State as one conferred or not pro ibited by the State Constitution, and in the Congress by express grant. Hence 'the existence of such powers is perect y consistent, though the two governments in exercising e same act entirely independent of each other as applied e property of the citizens. toT^ P°yer tax, as a general proposition, extends .. ProPer objects of taxation within the sovereign juris-

Power to levy taxes, said Mr. Chief Justice Marshall, could not be considered as abridging the right of the States on that subject, it being clear that the States might have exercised the power to levy duties on imports or exports had the Constitution contained no prohibition upon the subject; from which he deduces the proposition that the prohibition is an exception from the acknowledged power of the States to levy taxes, and that the prohibition is not derived from the power of Congress to regulate commerce. Gibbons v. Ogden, 9 Wheat. 201.

States, said Mr. Justice McLean, cannot regulate foreign commerce ; but he held in the same case that they may tax a ship or other vessel used in commerce the same as other property owned by its citizens, or they may tax the stages in which the mail is transported, as that does not regulate the conveyance of the mail any more than the taxing the ship regulates commerce, though he admitted that the tax in both instances affected in some degree the use of the property, which undoubtedly is correct. Passenger Cases, supra.

Enrolled vessels engaged in conveying passengers and freight, which were owned by citizens of the State of New York, en tered the port of San Francisco, and while there were compelle to pay certain taxes. Payment having been made under protest, the owners of the vessels brought suit to recover back t e amount; and Mr. Justice Nelson, in disposing of the case ere, in behalf of the court, held “that the vessels were not in any proper sense abiding within the limits of California so as become incorporated with the other personal property o State; that they were there but temporarily engage m a ful trade and commerce, with their situs at the home P® where the vessels belonged and where the owners wer to be taxed for the capital invested, and where the tax been paid,” — which shows to a demonstration that the o of ships and vessels are liable to taxation for their in the same upon a valuation as for other personal proper y v. Pacific Mail Steamship Co., 17 How. 596.

Ships, when duly registered or enrolled, are instruments of commerce, and are to be regarded as means employed by the United States in execution of the powers of the Constitution, and therefore they are not subject to State regulations. Sinnot v. Davenport, 22 id. 227.

Such instruments or means are not given by the people of a particular State, but by the people of all the States, and upon principle as well as authority should be subjected to that government only which belongs to all.

Taxation, beyond all doubt, is the exercise of a sovereign power, and it must be admitted that all subjects over which the sovereign power of a State extends are objects of taxation ; but it is equally clear that those objects over which it does not extend are exempt from State taxation, — from which it follows that the means and instruments of the general government are exempt from taxation. McCulloch v. Maryland, supra.

Tonnage duties on ships by the States are expressly prohibited, but taxes levied by a State upon ships or vessels owned by the citizens of the State as property, based on a valuation of the same as property, are not within the prohibition, for the reason that the prohibition, when properly construed, does not extend to the investments of the citizens in such structures.

Duties of tonnage, says Cooley, the States are forbidden to

that the meaning of the prohibition seems e that vessels must not be taxed as vehicles of commerce,

accor ing to capacity, it being admitted that they may be taxed ike other property. Cooley, Const. Lim. (4th id.) 606. h esse^s ^axabie as property,” says the same author; and it a the tax ,may be measured by the capac^y,w en they are taxed only as property and not as vehicles of meice, which may be true if it clearly appears that the

Decided cases of the kind everywhere deny to the States the power to tax ships as the instruments of commerce, but they all admit, expressly or impliedly, that the State may tax the owners of such personal property for their interest in the same. Corresponding views are expressed by Mr. Burroughs in his valuable treatise upon Taxation. He says that vessels of all kinds are liable to taxation as property in the same manner as other personal property owned by citizens of the State; that the prohibition only comes into play where they are not taxed in the same manner as the other property of the citizens, or where the tax is imposed upon the vessel as an instrument of commerce, without reference to the value as property. Burroughs, Taxation, 91; Johnson n. Drummond, 20 Gratt. (Va.) 419.

Property in ships and vessels, say the Court of Appeals of Maryland, before the Federal Constitution was adopted, was within the taxing power of the State; and they held that such property since that time, when belonging to a citizen of t e State living within her territory and subject to her jurisdiction, and protected by her laws, is a part of his capital in, trade, and, like other property, is the subject of State taxation. Howell v. The State, 3 Gill (Md.), 14 ; Perry s. Torrence, 8 Ohio, 522.

Beyond all doubt, the taxes in this case were levied against the owners as property, upon a valuation as in respect to other personal property, nor is it pretended that the taxes were levied as duties of tonnage. Congress has prescribed the ra es of measurement and computation in ascertaining the tonnage of American ships and vessels, and in the light of those regu lations Burroughs says that the word “ tonnage

contents of the vessel expressed in tons, each of one un cubical feet. p. 89. . .

Tested by these definitions and the authorities already cited, it is as clear as any thing in legal decision can be, that the taxes levied in this case are not duties of tonnage, within the meaning of the Federal Constitution. Taken as a whole, the contention of the plaintiffs is not that the taxes in question are duties of tonnage, but their proposition is that ships and vessels, when duly enrolled and licensed for the coasting trade, are not subject to State taxation in any form, and that the owners of the vessels cannot be taxed for the same as property, even when valued as other personal property, as the basis of State or municipal taxation.

Opposed as that theory is to the settled rule of construction, that the commercial clause of the Constitution neither confers, regulates, nor prohibits taxation, it is not deemed necessary to give the theory much further consideration. Gibbons v. Ogden, supra. By that authority it is settled that the power to tax, and the power to regulate and prohibit taxation, are given in t e Constitution by separate clauses, and that those powers are altogether separate and distinct from the power to regulate commerce; from which it follows, as a necessary consequence, t at the enrolment of a ship or vessel does not exempt the owner of the same from taxation for his interest in the ship or vessel as property, upon a valuation of the same, as iii the case of other personal property.