property of the company situated within the State. That is a different thing. But may it tax franchises which are the grant of the United States? In our judgment, it cannot." § 48. State Taxation of Patent Rights. In conformity with the foregoing doctrine it has been held that while the States may tax the capital employed in the manufacture of copyrighted or patented articles, as well as the tangible property embodied in these articles, they may not exact a fee as a condition precedent to the exercise of these federally granted rights, nor can they tax the intangible rights themselves as property.1 10 In Patterson v. Kentucky the court held that a state statute regulating the inspection and gauging of oils was a mere police regulation and did not violate a patent right under which a certain oil was manufactured. A similar conclusion was reached in Webber v. Virginia.12 In Allen v. Riley13 was held valid a state law which required one selling a patent right in any county in the State, to file with the clerk of such county an authenticated copy of the letters patent, together with an affidavit of the genuineness of the letters patent, and that any written obligation given for the purchase price of a patent right should contain the words "given for a patent right." These, it was held, were proper police requirements. The court say: "We think the State has the power (certainly until Congress legislates upon the subject) with regard to the provision which shall accompany the sale or assignment of rights arising under a patent, to make reasonable regulations concerning the subject, calculated to protect its citizens from fraud. 10 Crown Cork and Seal Co. v. Maryland (87 Md. 687); People v. Assessors (156 N. Y. 417); People v. Roberts (159 N. Y. 70). In these cases it is held that if the tax is upon the corporate property, or even upon the shares of stock evidencing that property, the value of the patent rights must be deducted. If, however, the tax be upon the shares of stock to the holders, or is upon the franchise of the corporation, the fact that patent rights are included within the assets of the company is not material. Cf. Judson, Taration, § 33. 11 97 U. S. 501; 24 L. ed. 1115. 12 103 U. S. 334; 26 L. ed. 565. 13 203 U. S. 347; 27 Sup. Ct. Rep. 95; 51 L. ed. 216. The act must be a reasonable and fair exercise of the power of the State for the purpose of checking a well-known evil, and to prevent, so far as possible, fraud and imposition in regard to the sales of rights under patents. Possibly Congress might enact a statute which would take away from the States any power to legislate upon the subject, but it has not as yet done so." 14 Of course no State may, in the exercise of its police or other powers, in any way discriminate against patented articles.15 § 49. State Taxation of Federally Licensed Occupations. 66 Where, by federal license, an occupation has been authorized by the United States, enjoyment and employment of the license may not be restrained by a State. Thus in Moran v. New Orleans" was held void an ordinance of the city of New Orleans imposing a license tax on certain vessels engaged in foreign commerce and duly enrolled and licensed under act of Congress. The court say: The sole occupation sought to be subjected to the tax is that of using and enjoying the license of the United States to employ these particular vessels in the coasting trade; and the State thus seeks to burden with an exaction, fixed at its own pleasure, the very right to which the plaintiff in error is entitled under and which he derives from the constitution and laws of the United States. The Louisiana statute declares expressly that if he refuses or neglects to pay the license tax imposed upon him, for using his boat in this way, he shall not be permitted to act under and avail himself of the license granted by the United States, but may be enjoined from so doing by judicial process. The conflict between the two authorities is direct and express. In such an opposition, the only question is which is the superior authority; and reduced to that it furnishes its own answer." In Harman v. Chicago1 this doctrine is approved and again applied. 14 Justices White and Day dissented. 15 Ozan Lumber Co. v. Union Co. Nat. Bank (145 Fed. 344). 16 112 U. S. 69; 5 Sup. Ct. Rep. 38; 28 L. ed. 653. 17 147 U. S. 396; 13 Sup. Ct. Rep. 306; 37 L. ed. 216. § 50. State Taxation of Federal Salaries. 66 That the salary or other emoluments of office of federal officials may not be taxed by the States has not been questioned since the doctrine was first declared in Dobbins v. Commissioners.18 "The powers of the National Government," the court say, can only be executed by officers whose services must be compensated by Congress. The allowance is in its discretion. The presumption is that the compensation given by law is no more than the services are worth, and only such in amount as will secure from the officer the diligent performance of his duties. The compensation of an officer of the United States is fixed by a law made by Congress. It is in its exclusive discretion to determine what shall be given. Does not a tax, then, by a State upon the office, diminishing the recompense, conflict with the law of the United States, which secures it to the officer in its entireness? It certainly has such an effect." 19 § 51. State Taxation of Federal Property. The principle that property belonging to the United States is not taxable by the States in which it is situated did not receive final judicial affirmation until 1885 in Van Brocklin v. Tennessee. 20 Prior to this decision it had quite generally been taken for granted that federal property was thus exempt froin state taxation, but in a number of cases Congress would seem to have implied that it was not confident upon this point since it incorporated into enabling acts for the admission of territories into the Union as States, the requirement that after admission the property of the United 18 16 Pet. 435; 10 L. ed. 1022. 19 It is probable that an act of Congress imposing a tax upon salaries of the president and federal judges would be held void as in violation of the constitutional provision that the compensation of these officials shall not be diminished during the period for which they are elected or appointed. See Sen. Mis. Doc., No. 214, 53rd Cong., 2nd Sess. In W. U. Telegraph Co. v. Texas (105 U. S. 460; 26 L. ed. 1067) the court held that a state tax upon telegraph messages could not be collected upon messages sent by officers of the United States on public business. 20 117 U. S. 151; 6 Sup. Ct. Rep. 670; 29 L. ed. 845. States should be exempt from state taxation. The effect of the decision in Van Brocklin v. Tennessee was, of course, to hold that these provisions were declaratory merely, and, therefore, superfluous. The fact that the lands concerned in this Tennessee case were acquired by the United States through sales for direct taxes levied by act of Congress and not expressly ceded by the States, was held immaterial. In Wisconsin C. R. Co. v. Price County21 the doctrine of Van Brocklin v. Tennessee reappeared and was broadened so as to include taxation not only by the State but by any of its administrative subdivisions.22 § 52. State Taxation of Federal Securities. United States securities, it has been held, may not be taxed by the States for the reason that to admit this power would give to the State the authority to impair the borrowing power of the National Government. This was early decided in Weston v. Charleston.23 "The tax on government stock," said Marshall, who rendered the opinion in the case, "is thought by this court to be a tax on the contract, a tax on the power to borrow money on the credit of the United States, and consequently to be repugnant to the Constitution." Distinguishing such a state tax from one on land after it has been sold by the Federal Government a tax which it was conceded the States might lay-Marshall said: "The lands pur 21 133 U. S. 496; 10 Sup. Ct. Rep. 341: 33 L. ed. 687. 22" It is familiar law that a State has no power to tax property of the United States within its limits. This exemption of their property from state taxation and by state taxation we mean any taxation by authority of the State, whether it be strictly for state purposes or for more local and special objects is founded upon that principle which inheres in every independent government, that it must be free from any such interference of another government as may tend to destroy its powers or impair their efficiency." As to the inability of the States to tax lands allotted in severalty to the Indians under the act of 1881, the improvements on them and the cattle or other property furnished the allottees, see chapter XX of this work, and especially the case of U. S. v. Reckert (188 U. S. 432; 23 Sup. Ct. Rep. 478; 47 L. ed. 532). 23 2 Pet. 449; 7 L. ed. 481. chased become a part of the mass of property in the country with no implied exemption from common burdens. All lands are derived from the general or particular government and all lands are subject to taxation. Lands sold are in the condition of money borrowed and repaid. Its liability to taxation in any form it may then assume is not questioned. The connection between the borrower and the lender is dissolved. It is no burden on loans, and it is no impediment to the power of borrowing that the money, when repaid, loses its exemption from taxation. But a tax upon debts due from the government, stands, we think, on very different principles from a tax on lands which the government has sold." In Banks v. The Mayor24 the attempt to make a distinction letween the bonds of the government issued for loans of money and certificates of indebtedness given in payment for supplies puchased, and to hold the latter subject to taxation by the States, was defeated by the court. So also in Bank v. Supervisors United States notes issued under the acts of 1862 and 1863 were held exempt from state taxation. In Bank of Commerce v. Commissioners26 stock of the United States constituting a part or the whole of the capital stock of a state bank was held not subject to state taxation, the fact that the tax was on the aggregate of the taxpayer's property and not upon the stock by name being held immaterial. So also in the Bank Tax Case a state tax on a valuation equal to the amount of the capital stock paid in, and surplus, of a state bank was held to be a tax on the property of the institution and, therefore, invalid, in so far as that property consisted of stocks of the United States. In Home Savings Bank v. Des Moiness it was held that a state statute directing that shares of stock of state banks should be assessed to such banks, and not to individual shareholders, operated as a tax on the property of the bank and, therefore, in so far as 24 7 Wall. 16; 19 L. ed. 57. 27 2 Wall. 200; 17 L. ed. 793. 28 205 U. S. 503; 27 Sup. Ct. Rep. 571; 51 L. ed. 901. |