ment for the amount of the taxes which were unpaid, and which were not barred by the statute of limitations of the State. In its opinion it cites a decision of the Supreme Court of Minnesota, which had held that this property was taxable in the State. The latter court in its opinion said: "Corporeal personal property is conceded to be taxable at the place where it is actually situated. A credit, which cannot be regarded as situated in a place merely because the debtor resides there, must usually be considered as having its situs where it is owned, — at the domicile of the creditor. The creditor, however, may give it a business situs elsewhere; as where he places it in the hands of an agent for collection or renewal, with a view to reloaning the money and keeping it invested as a permanent business."2

So clearly established is this right to tax such property at the place of its actual investment and employment, that it was said by the New York Court of Appeals: 3___

3

"It is clear from the statutes referred to and the authorities cited and from the understanding of business men in commercial transactions, as well as of jurists and legislators, that mortgages, bonds, bills and notes have for many purposes come to be regarded as property and not as the mere evidences of debts, and that they may thus have a situs at the place where they are found like other visible tangible chattels."

1 In re Jefferson, 35 Minn. 215.

2 To the same effect are State ex rel. Taylor v. St. Louis County Court, 47 Mo. 594; People v. Trustees, etc., 48 N. Y. 390; Wilcox v. Ellis, 14 Kansas 588; Board of Supervisors v. Davenport, 40 Ill. 197. In the last case the decision is apparently placed on the ground that the owner of the property had a business residence in Illinois. But it appears to have been a case of actual employment of the property in the State where taxed, and is therefore clearly in line with the other cases cited. 3 People ex rel. Jefferson v. Smith, 88 N. Y. 576, decided in 1882.

The court held that under the New York statute, which taxed "all lands and all personal estate within " that State, a citizen of New York could not be taxed on money invested in notes and mortgages held by his agents in another State. They said, in reference to the case of Kirtland v. Hotchkiss, that, while the State could have authorized the taxation of these securities at the domicile of the owner, according to their construction of the statute the legislature did not intend to do so, and that a more accurate statement of the doctrine of that case would be to say that a debt may have its situs at the residence of the creditor and may be there taxed.

§ 396. Jurisdiction for taxation of credits not dependent upon residence of agent or of debtors.

While the presence of a resident agent is of service in enabling the State to exercise its power of taxation, its jurisdiction does not depend upon that fact, but upon the actual situation of the property in the State. It may be difficult to localize the property for taxation where there is no resident agent, but that does not affect the question of the jurisdiction of the State when the locality is fixed.

Thus it was said by the Supreme Court of Indiana,2 that the test as to where the right to tax property exists is the place of its location and use. If property is held, owned and used in Indiana, it is taxable there, and this is true whether the business in which it is used is conducted by the owner in person or by some one else for him. It is accordingly quite immaterial whether the notes or other obligations subjected to the taxing power of the State have been executed by citizens of the State or non-residents.3

1 § 421.

2 Buck v. Miller, 147 Ind. 586, and 37 L. R. A. 384.

3 The court said that the contrary contention suggests a most excellent plan by which the holders of this class of property might es

§ 397. Credits must be localized in jurisdiction for taxation.

The principle therefore established in the construction of State statutes, taxing all property within the scope of their operation, is that the State can tax whatever personal property it can localize within its jurisdiction. In the language of the Supreme Court of Pennsylvania, "there is nothing poetical in tax laws. Wherever they find property they claim a contribution for its protection, without any special respect to the owner or his occupation." Credits owing from citizens of the State to parties outside of it obviously cannot be localized in the State of the debtor, and for this reason they were not included in the tax law of Louisiana, as construed by its Supreme Court in New Orleans v. Stempel, supra, § 394. It seems that, in order for the debt to be subject to the taxing power of the State, it must be reduced to a concrete form and evidenced in some tangible shape, as in a note or other written obligation, and must be actually in the State in the hands of an agent, or otherwise localized within its confines for permanent, as distinguished from temporary, use.1

§ 398. Enforcement of taxes against non-resident owners of property in State.

Taxes are not debts, as they are not created by contracts,

cape taxation altogether. "For example, let those in Ohio convert all their means into bonds, stocks, notes and mortgages issued and executed by residents of Ohio, and let those in Indiana invest likewise in bonds, stocks, notes and mortgages, issued and executed by residents of Indiana; and then let the holders of the Ohio securities move to Indiana, and the holders of the Indiana securities move into Ohio, and it is done. Those wealth-movers must, however, be careful not to bring their domicil along with them. They may, of course, indeed they must, live and do business in the State into which they move; but they should be cautious to have their residence and domicil elsewhere."

1 As to the power of the State, where the creditor is domiciled therein, to tax credits and other personal property located in other states, see infra, § 420 et seq.

but are based upon the power of the State to enforce contribution from persons and property within its jurisdiction for the support of its government. The point was raised in the case of Bristol v. Washington County, supra, § 395,1 that, as the domicil of the testatrix against whose estate the claim of the State for taxes was proven, and also the domicil of her executor, were in the State of New York, the power to tax could be exercised only against the very property taxed; that the assessments did not constitute judgments in personam, and that judgment on these assessments could not therefore be recovered against the ancillary administrator in Minnesota.

The Supreme Court, following the Supreme Court of Minnesota, decided that under the statute of that State for the purpose of proof and payment out of an estate in probate, a personal tax was a debt, though not a debt in the usual acceptation of the term, saying: "the obligation to contribute to the support of government in return for the protection and advantages afforded by government is not dependent on contract, but on the exercise of the public will as demanded by the public welfare." The claims were therefore properly allowed against the estate. The case of Dewey v. Des Moines,2 was distinguished, as there the assessment was levied on real estate for a local improvement without service upon the non-resident or his voluntary appearance or any consent on his part to the jurisdiction.

But in a recent New York case it was held that, while the State had the power to levy a tax upon the personal property of a non-resident, in this case national bank stock in a New York City bank, situated within its boundaries and subject to its jurisdiction, and for that purpose to separate the situs of the owner from the actual situs of

1 § 394.

2 Supra, § 360.

3 City of New York v. McLean, 57 App. Div. 601.

the property within the State, and to subject it to taxation because it was within the State limits, yet it could only enforce payment of the tax by virtue of its jurisdiction over the property. It had not therefore by virtue of that jurisdiction any power to subject the non-resident owner of the property to a personal liability for the tax, although nothing appears to indicate that there was not personal service upon the defendant.' The court based its decision upon the doctrine of Pennoyer v. Neff,2 and Dewey v. Des Moines, supra, § 360.

It will be observed that in the Bristol case, supra, the State of Minnesota overcame the difficulty of securing service of process in enforcing personal tax claims against a non-resident, through the ancillary administration in Minnesota of the estate of the deceased non-resident owner.

§ 399. Power of State in taxing corporation bondholders through corporation.

The practical difficulty of reaching individual personal property like choses in action, notes and mortgages, for taxation, has led to attempts to reach so much of said property as was represented by bonds of corporations. This was done by compelling all corporations, having offices in the State which issued bonds, to pay the tax on such bonds and deduct the amount from the interest on the bonds paid to the holder. But it was held by the Supreme Court that

1 Justices Van Brunt and O'Brien dissented, saying: "The right to tax would not be of much value if there were no power to collect. The tax bears the same relation to a non-resident as to a resident, and as a tax is a debt due from a resident and is collectible by suit, it would seem to follow that a tax against a non-resident would be collectible in the same manner when the court can get jurisdiction of the non-resident by the service of process." It was also suggested that a lien could not be enforced against the stock, as the owner had the certificate and could give title to it by transfer through the proper power of attorney.

295 U. S. 714.