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decided: March 15, 1897.



Author: Fuller

[ 166 U.S. Page 179]

 MR. CHIEF JUSTICE FULLER, after stating the case, delivered the opinion of the court.

Section 4077 of the compilation of the Kentucky statutes of 1894 provides that each of the enumerated companies or corporations; "every other like company, corporation or association"; and also "every other corporation, company or association having or exercising any special or exclusive privilege or franchise not allowed by law to natural persons, or performing any public service, shall, in addition to the other taxes imposed on it by law, annually pay a tax on its franchise

[ 166 U.S. Page 180]

     to the State, and a local tax thereon to the county, incorporated city, town and taxing district, where its franchise may be exercised"; and in the succeeding sections the words "franchise," "franchises" and "corporate franchise" are used. But taking the whole act together, and in view of the provisions of sections 4078, 4079, 4080 and 4081, we agree with the Circuit Court that it is evident that the word "franchise" was not employed in a technical sense, and that the legislative intention is plain that the entire property, tangible and intangible, of all foreign and domestic corporations, and all foreign and domestic companies possessing no franchise, should be valued as an entirety, the value of the tangible property be deducted, and the value of the intangible property thus ascertained by taxed under these provisions; and as to railroad, telegraph, telephone, express, sleeping car, etc., companies, whose lines extend beyond the limits of the State, that their intangible property should be assessed on the basis of the mileage of their lines within and without the State.

But from the valuation on the mileage basis the value of all tangible property is deducted before the taxation is applied.

So far as the commerce clause and the Fourteenth Amendment of the Federal Constitution are concerned, this scheme of taxation is not in contravention thereof, as already determined in Adams Express Co. v. Ohio State Auditor, 165 U.S. 194, and cases cited.

And considered as a property tax, as in our opinion the prescribed exaction must be held to be, we regard it as in harmony with the provisions of the constitution of the Commonwealth of Kentucky. The property, tangible and intangible, owned by corporations is subjected to like taxation, and so is the tangible and intangible property of individuals associated together in companies, and while the provisions of sections 4077 and 4078 do not apply to all individual taxpayers, yet reference to section 4020 and the schedule which must be returned by each taxpayer, as required by section 4058, demonstrates that individual taxpayers are also subjected to taxation on all their intangible property, whatever that may be, as well as on all their tangible property. As pointed out by

[ 166 U.S. Page 181]

     the Circuit Court, the mode of the assessment of the intangible property of companies, corporations and associations mentioned in section 4077 and that of individual taxpayers is different, and the intangible property of such corporations, companies and associations may in some respects differ from the intangible property belonging to individual taxpayers, but there is nothing in the statute which exempts any intangible property owned by any corporation, company or individual taxpayer from taxation, or discriminates between them.

Section 174 of the constitution of Kentucky provides that "all property, whether owned by natural persons or corporations, shall be taxed in proportion to its value, unless exempted by this constitution; and all corporate property shall pay the same rate of taxation paid by individual property. Nothing in this constitution shall be construed to prevent the general assembly from providing for taxation based on income, licenses or franchises."

But this does not prevent intangible property from being taxed, and the tax mentioned in section 4077 is not an additional tax upon the same property, but on intangible property which has not been taxes as tangible property.

We concur with the views of the Circuit Court that neither section 172 of the constitution nor any other section confines "the levy of an ad valorem tax to tangible property; but, as decided by the Kentucky Court of Appeals in Levi v. Louisville, 30 S.W. Rep. 973, it does require the levy of an ad valorem tax upon personal property as well as upon real estate, and this case decides that a license tax which is not a property tax cannot be substituted for an ad valorem tax upon personal property engaged in certain commercial pursuits in the city of Louisville. It does not decide that section 171 of the constitution, which declares that taxation shall be uniform upon all property subject to taxation within the territorial limits of the authority levying the tax, applies to taxation based upon income, license or franchise. If ...

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