and an interference with, commerce. The court held,1 opinion by Bradley, J., that it was not a tax upon commerce, but was rather a bonus charged by the State in the charter as a consideration for the grant, and was not repugnant to the Constitution. The State itself could have built the road and charged any rate it chose, and it made no difference, from a Constitutional point of view, that it authorized its citizens to build it and reserved for its own use a portion of the earnings. It was simply the exercise by the State of absolute control over its own property and prerogatives. In answer to the suggestion that the public should have a remedy against exorbitant fares and freight exacted by the State lines of transportation, for the bonus would necessarily affect the charge upon the public which the donee of the franchise would be obliged to impose, the court said that the same difficulty is found in exorbitant charges by steamship lines, but that the only remedy is in competition.

§ 220. Taxation of rolling stock.

The taxation of railroad cars, which are continually in transit from State to State, presented a perplexing problem, because it was claimed that they had no taxable situs in any of the States wherein they were employed and through which they passed as instruments of interstate commerce. The taxation of the privilege of operating the cars was sought to be enforced for this reason, but was adjudged invalid as a direct interference with interstate commerce.2 It was claimed that such property had no taxable situs except at the terminus of the line, although the cars were continually in transit through that and other States.

The difficulty was finally solved by adopting definitely the principle of taxing the average number of cars in habitual use in the State during the year.

§ 221. Rule of average of habitual use adopted.

The subject of the taxation of rolling stock was first considered by the Supreme Court in the case of the Baltimore & Ohio Railroad, where the judgment of the lower court enjoining the sale of certain engines and cars levied upon by a taxing officer of the State of Virginia was affirmed. The court, although holding that the statute of Virginia did not authorize the particular tax sought to be levied, said, page 123:

"If the Baltimore and Ohio Railroad Company is permitted by the State of Virginia to bring into its territory and there habitually to use and employ a portion of its movable personal property, and the railroad company chooses so to do, it would certainly be competent and legitimate for the State to impose upon such property, thus used and employed, its fair share of the burdens of taxation imposed upon other similar property used in the like way by its own citizens. And such a tax might be properly assessed and collected in cases like the present where the specific and individual items of property so used and employed were not continuously the same, but were constantly changing, according to the exigencies of the business. In such cases the tax might be fixed by an appraisement and valuation of the average amount of the property thus habitually used, and collected by distraint upon any portion that might at any time be found. Of course, the lawfulness of a tax upon vehicles of transportation used by com

mon carriers might have to be considered in particular instances with reference to its operation as a regulation of commerce among the States, but the mere fact that they were employed as vehicles of transportation in the interchange of interstate commerce would not render their taxation invalid."

The principle thus recognized by the court has been applied in a number of cases, particularly with reference to sleeping cars, refrigerator cars and the like, owned by independent companies and leased to railroads.

The State of Pennsylvania imposed a tax on the Pullman Palace Car Company, taking as the basis of the assessment such proportion of the capital of the company as the number of miles of railroad, over which the cars passed in the State of Pennsylvania, bore to the whole number of miles in that and other States over which its cars were run. It was strongly contended that the cars could be taxed only in the State of Illinois, where the car company was organized and had its principal place of business. But the tax was sustained both by the Supreme Court of Pennsylvanial and by the Supreme Court of the United States. The latter court said, at page 22:

"No general principles of law are better settled, or more fundamental, than that the legislative power of every State extends to all property within its borders, and that only so far as the comity of that State allows can such property be affected by the law of any other State. The old rule, expressed in the maxim mobilia sequuntur personam, by which personal property was regarded as subject to the law of the owner's domicil, grew up in the Middle Ages, when movable property consisted chiefly of gold and jewels, which could be easily carried by the owner from place to place, or secreted in spots known only to himself. In modern times, since the great increase in the amount and variety of personal property, not immediately connected with the person of the owner, that rule has yielded more and more to the lex situs, the law of the place where the property is kept and used."

§ 222. Supreme Court on taxable situs of railroad cars.

In answer to the argument that the rule ought to be the same as that applicable to vessels, which are only taxable at the home port, the court replied that there is an obvious distinction between the case of vessels, and that of cars which have no fixed situs and traverse the land only, continuing at page. 24:

"No doubt commerce by water was principally in the minds of those who framed and adopted the Constitution, although both its language and spirit embrace commerce by land as well. Maritime transportation requires no artificial roadway. Nature has prepared to hand that portion of the instrumentality employed. The navigable waters of the earth are recognized public highways of trade and intercourse. No franchise is needed to enable the navigator to use them. Again, the vehicles of commerce by water being instruments of intercommunication with other nations, the regulation of them is assumed by the national legislature. So that State interference with trans portation by water, and especially by sea, is at once clearly marked and distinctly discernible. But it is different with transportation by land."

The court said, after reviewing the cases, that this was neither a license nor a privilege tax, nor a tax on the business or occupation, nor yet a tax on, or because of, the transportation or the right of transit of persons or property through the State to other States or countries. It was imposed equally on foreign and domestic companies. A tax on the capital of a corporation, on account of its property within the State, is, in substance and effect, a tax on that property. The court added, with reference to the jurisdiction of the State in taxation, pp. 25, 26:

"The cars of this company within the State of Pennsylvania are employed in interstate commerce; but their being so employed does not exempt them from taxation by the State; and the State has not taxed them because of their being so employed, but because of their being within its territory and jurisdiction. The cars were continuously and permanently employed in going to and fro upon certain routes of travel. If they had never passed beyond the limits of Pennsylvania, it could not be doubted that the State could tax them, like other property within its borders, notwithstanding they were employed in interstate commerce. The fact that, instead of stopping at the State boundary, they cross that boundary in going out and coming back, cannot affect the power of the State to levy a tax upon them. The State, having the right, for the purposes of taxation, to tax any personal property found within its jurisdiction, without regard to the place of the owner's domicil, could tax the specific cars which at a given moment were within it borders. The route over which the cars traveled extending beyond the limits of the State, particular cars may not remain within the State; but the company has at all times substantially the same number of ears within the State, and continuously and constantly uses there a portion of its property; and it is distinctly found, as matter of fact, that the company continuously, throughout the periods for which these taxes were levied, carried on business in Pennsylvania, and had about one hundred cars within the State.

"The mode which the State of Pennsylvania adopted, to ascertain the proportion of the company's property upon