Construing the third plea most strongly against the pleader, the conclusion was that it disclosed no defense in the action. This was purely a local question, and is not assignable as error here.

Whether, aside from the Federal question discussed, the courts of New Jersey should have sustained this action upon principles of comity between the States, was also a question within the exclusive jurisdiction of the state court. Finney v. Guy, 189 U. S. 335.

The writ of error must, therefore, be

Dismissed.

CORRY v. THE MAYOR AND COUNCIL OF BALTIMORE.

ERROR TO THE COURT OF APPEALS OF THE STATE OF MARYLAND.

No. 86. Argued December 8, 1904.-Decided February 20, 1905.

The sovereign that creates a corporation has the incidental right to impose reasonable regulations concerning the ownership of stock therein and it is not an unreasonable regulation to establish the situs of stock for purposes of taxation, at the principal office of the corporation whether owned by residents or non-residents, and to compel the corporation to pay the tax for the stockholders giving it a right of recovery therefor against the stockholders and a lien on the stock.

Where valid according to the laws of the State such a regulation does not deprive the stockholder of his property without due process of law either because it is an exercise of the taxing power of the State over persons and things not within its jurisdiction, or because notice of the assessment is not given to each stockholder, provided notice is given to the corporation and the statute either in terms, or as construed by the state court, constitutes the corporation the agent of the stockholders to receive notice and to represent them in proceedings for the correction of the assessment.

While the liability of non-resident stockholders for taxes on his stock may not be expressed in the charter of the company if it existed in the general laws of the State at the time of the creation of the corporation or the extension of its charter, and the constitution of the State also contained at such times the reserved right to alter, amend and repeal, those provisions of the constitution and general laws of the State are as much a part of the charter as if expressly embodied therein.

J

196 U. S.

Argument for Plaintiff in Error.

THE New York and Baltimore Transportation Line was chartered in 1847 by the general assembly of Maryland, and it still exists by virtue of an extension in 1876 of its charter. At all times the corporation has maintained its principal office in the city of Baltimore.

James C. Corry, a resident and citizen of Pennsylvania, acquired one hundred and fifty shares of the stock of the transportation line, having a face value of twenty dollars per share.

The one hundred and fifty shares standing in Corry's name, as stated, were assessed for the years 1899 and 1900 for state and the municipal taxes of the city of Baltimore, the total taxes being $43.27 for the year 1899 and $36.49 for the year 1900. Conformably to the laws of Maryland, payment of said taxes was demanded of the transportation company. To restrain compliance with this demand Corry commenced the present suit, making defendants to the bill of complaint the mayor and council of Baltimore, the treasurer of the city, the treasurer of the State, and the transportation company. The relief prayed was based on averments that the laws of Maryland under which the taxes were levied were repugnant to the state and Federal Constitutions, upon grounds specified in the bill. A decree was entered sustaining general demurrers, interposed by the various defendants, and dismissing the bill. This was affirmed by the Court of Appeals of Maryland. 96 Maryland, 310.

Mr. William P. Maulsby, with whom Mr. Edwin G. Baetjer was on the brief, for plaintiff in error:

While the sovereign power of taxation extends to persons residing and property situate within its boundaries and includes the right to tax in rem the local property of a nonresident, it does not include the right to impose a tax in personam, or a personal obligation on the non-resident himself. Cooley on Taxation, 3d ed., 249; Louisville Ferry Co. v. Kentucky, 188 U. S. 385, 397; Dewey v. Des Moines, 173 U. S. 193,

204; McCulloch v. Maryland, 4 Wheat. 316, 429; State Tax on Foreign Held Bonds, 19 Wall. 319; Baltimore v. Hussey, 67 Maryland, 112; Coe v. Errol, 116 U. S. 517, 524; Fargo v. Hart, 193 U. S. 490, 500; Commonwealth v. Standard Oil Co., 101 Pa. St. 119; Gloucester Ferry Co. v. Pennsylvania, 114 U. S. 196, 208; St. Louis v. Ferry Co., 11 Wall. 423; New York City v. McLean, 170 N. Y. 374, 387; Tappan v. Bank, 19 Wall. 490, distinguished, and see County v. So. Pac. R. R. Co., 15 Fed. Rep. 753; Cooley on Const. Lim. 3.

A State cannot require a non-resident's personal subjection to its sovereignty. Pennoyer v. Neff, 95 U. S. 733; Paul v. Virginia, 8 Wall. 168, 180; Carfield v. Coryell, 4 Wash. C. C. 380; Slaughter House Cases, 16 Wall. 30, 76.

The capital stock tax is a tax in personam on the stockholder, not a tax in rem on his share.

For distinction between these two classes of taxes see Leigh v. Green, 193 U. S. 79, 90. It is of special importance only as to non-resident stockholders. As to character of its taxes Maryland differs from every State of the Union. 27 Am. & Eng. Ency. Law, 632; Code of Maryland, 1888, 1903, Art. 81, §§ 2, 90, 150-162; Art. 15 Decl. of Rights.

The method of ascertaining the taxes on the shares of a corporation is never correct and always errs on the side of the excess. There is no relation between the actual and assessed value of the shares. Bank v. Commonwealth, 9 Wall. 353. Under the method of assessment the tax is not one on the shares but on the owner. Houston v. New Orleans, 119 U. S. 265, 276; Stapleton v. Haggard, 91 Fed. Rep. 93. It is also recoverable in assumpsit and is not a tax on the corporation. The tax is levied without due process of law. It has never been decided what due process requires as to taxation. Turpin v. Lemon, 187 U. S. 51; Glidden v. Harrington, 189 U. S. 255. But see Cooley on Taxation, 363; Railroad Tax Cases, 13 Fed. Rep. 752, under which opportunity to the person taxed to question the validity or amount of the tax is requisite.

196 U. S.

Argument for Defendants in Error.

The notice need not be personal, but it may be by publication, or a statute may give notice by fixing the time and place of hearing. W. & St. Peters L. Co. v. Minnesota, 159 U. S. 526, 536; Merchants' Bank v. Pennsylvania, 167 U. S. 461, 466; Pittsburg Ry. v. Backus, 154 U. S. 421, 425. The time and place for hearing must be in some way prescribed. Railroad Tax Cases, 92 U. S. 575, 610; Plamer v. McMahon, 133 U. S. 669; Hagar v. Reclam. Dist., 111 U. S. 701, 710; Monticello Co. v. Baltimore, 90 Maryland, 416, 428.

The Maryland statute does not afford these opportunities. It only gives the corporation and not the shareholders the right to be heard. Clark Distilling Co. v. Cumberland, 95 Maryland, 468, 475.

The elements of such opportunity or due process, are Federal questions on which the Supreme Court would not consider the decision of the state court conclusive. State Bank v. Knopp, 16 How. 391; Wright v. Nagle, 101 U. S. 793; McCullough v. Virginia, 172 U. S. 109.

The corporation is not really the agent for the stockholder as held by the state court. Cook on Stockholders, § 11. The whole tax is a mere nullity, as ultra vires and void. It is twofold and not provided for by law. Pennoyer v. Neff, 95 U. S. 714.

Whether the State has the right to exercise the powers; or whether the exercise is ultra vires; whether it has the power to so tax a non-resident; whether the tribute exacted by its revenue laws is taxation or spoliation, is a Federal question. Dewey v. Des Moines, 173 U. S. 193, 201; Louisville Ferry Co. v. Kentucky, 188 U. S. 385; Fargo v. Hart, 193 U. S. 490; State Tax on Foreign Held Bonds, 15 Wall. 300; Santa Clara v. So. Pac. R. R., 18 Fed. Rep. 385.

Mr. Albert C. Ritchie, with whom Mr. W. Cabell Bruce was on the brief, for defendants in error:

The tax statute has been construed and upheld by the Maryland courts.

Argument for Defendants in Error.

196 U. S.

A State has the power to fix the situs of shares of stock held in its corporations by non-residents of the State, at the place in the State where the corporation has its principal office, and to provide for the taxation of such non-resident stockholders on account of their shares at such place, and no right granted or secured by the Constitution of the United States is violated thereby.

This court will not set aside the Maryland statutes here in question, unless they encroach upon legitimate national authority or violate some right granted or secured by the Constitution of the United States. Lake Erie R. R. Co. v. Pennsylvania, 153 U. S. 628, 641; Kirtland v. Hotchkiss, 100 U. S. 490, 498.

The only question before this court, is the power and authority of the State to declare that Maryland is the situs for purposes of taxation of stock in Maryland corporations held by non-residents and that such stock shall be there taxed. If the State possesses this power, its right to exercise it is in no way affected by the fact that the non-resident stockholder may or may not be taxed upon his stock in the State of his domicile. Blackstone v. Miller, 188 U. S. 189, 205, and cases cited.

Movable personal property is always subject to taxation in the State where it is situated. Coe v. Errol, 116 U. S. 517; Am. Refrigerator Co. v. Hall, 174 U. S. 70; Union Refrigerator Co. v. Lynch, 177 U. S. 149. Shares of stock, however, are personal property of an intangible nature. They represent property invested in the corporation, which should pay its share of the expenses of the State. The corporation derives its existence from the State creating it. Its shares are authorized to be issued by, and are subject to, the control of the laws of the State and can be subjected to taxation by the State. Bank v. Commonwealth, 9 Wall. 353, 361; Tappan v. Merchants' Bank, 19 Wall. 490; New Orleans v. Stempel, 175 U.S. 309, 320; Bristol v. Washington County, 177 U. S. 133, 144; St. Albans v. National Car Co., 57 Vermont, 68; Pullman Co.