BONAPARTE V. TAX COURT, 104 U. S. 592 (1881)

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U.S. Supreme Court

Bonaparte v. Tax Court, 104 U.S. 592 (1881)

Bonaparte v. Tax Court

104 U.S. 592




The Constitution does not prohibit a state from including in the taxable property of her citizens so much of the registered public debt of another state as they respectively hold, although the debtor state may exempt it from taxation or actually tax it.

Mrs. Elizabeth Patterson, a resident of Baltimore, Md., returned, in accordance with the law of that state, to the proper board of assessors, the following property: City of New York stock, six percent; City of New York stock, seven percent; County of New York stock, seven percent; County of New York stock, six percent; State of New York stock, six percent; State of Pennsylvania stock, six percent; State of Ohio stock, six percent; and City of Philadelphia stock, six percent. She stated their several amounts and claimed their exemption from taxation because they were of a public character and, except a portion of the City of Philadelphia stock, were exempt from taxation by the laws of the states respectively authorizing their issue, while that portion had always been subjected by Pennsylvania to a tax which she had paid to that state. They were of the character known as "registered" -- i.e., transferable only on the public record books of the states and municipalities issuing them, and the interest was paid only at places provided by the laws of those states, and beyond the boundaries of Maryland. The board of control and review, by which this return was revised, disallowed her claim for exemption. She thereupon filed a petition in the Baltimore City Court, praying that the above-described property should be stricken from the lists. The order of the court granting the relief prayed was reversed by the Court of Appeals, whereupon she sued out this writ of error. She died during its pendency, and her executor was substituted in her stead.

Page 104 U. S. 594

MR. CHIEF JUSTICE WAITE delivered the opinion of the Court.

The question we are asked to decide in this case is whether the registered public debt of one state, exempt from taxation by the debtor state or actually taxed there, is taxable by another state when owned by a resident of the latter state. We know of no provision of the Constitution of the United States which prohibits such taxation. It is conceded that no obligation of the contract of the debtor state is impaired. The only agreement as to taxation was that the debt should not be taxed by the state which created it.

It is insisted, however, that the immunity asked for arises from art. 4, sec. 1, of the Constitution, which provides that full faith and credit shall be given in each state to the public acts of every other state. We are enabled to give such an effect to this provision. No state can legislate except with reference to its own jurisdiction. One state cannot exempt property from taxation in another. Each state is independent of all the others in this particular. We are referred to no statute of the debtor state which attempts to separate the situs of the debt from the person of the owner, even if that is within the scope of the legislative power of the state. The debt was registered, but that did not prevent it from following the person of its owner. The debt still remained a chose in action, with all the incidents which pertain to that species of property. It was "movable" like other debts, and had none of the attributes of "immovability." The owner may be compelled to go to the debtor state to get what is owing

Page 104 U. S. 595

to him, but that does not affect his citizenship or his domicile. The debtor state is in no respect his sovereign; neither has it any of the attributes of sovereignty as to the debt it owes, except such as belong to it as a debtor. All the obligations which rest on the holder of the debt as a resident of the state in which he dwells still remain, and as a member of society, he must contribute his just share towards supporting the government whose protection he claims and to whose control he has submitted himself.

It is true, if a state could protect its securities from taxation everywhere, it might succeed in borrowing money at reduced interest; but inasmuch as it cannot secure such exemption outside of its own jurisdiction, it is compelled to go into the market as a borrower, subject to the same disabilities in this particular as individuals. While the Constitution of the United States might have been so framed as to afford relief against such a disability, it has not been, and the states are left free to extend the comity which is sought, or not, as they please.

Taxation of the debt within the debtor state does not change the legal situs of the debt for any other purpose than that of the tax which is imposed. Neither does exemption from taxation.

As the only federal question involved was decided right in the court below, we cannot look into the other errors which have been assigned. Murdock v. City of Memphis, 20 Wall. 590.

Judgment affirmed.

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