NEW ORLEANS V. STEMPEL, 175 U. S. 309 (1899)

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U.S. Supreme Court

New Orleans v. Stempel, 175 U.S. 309 (1899)

New Orleans v. Stempel

No. 65

Argued October 25, 1899

Decided December 4, 1899

175 U.S. 309


Section 7 of Chapter 106 of the Louisiana Statutes of 1890, after declaring "that it is made the duty of the tax assessors throughout the state to place upon the assessment list all property subject to taxation," contained the following provision:

"This shall apply with equal force to any person or persons representing in this state business interests that may claim a domicil elsewhere, the intent and purpose being that no nonresident, either by himself or through any agent, shall transact business here without paying to the state a corresponding tax with that exacted of its own citizens, and all bills receivable, obligations or credits arising from the business done in this state are hereby declared assessable within this state, and at the business domicil of said nonresident, his agent or representative."

The defendant in error who, was domiciled in the City of New York, was the owner of credits which were evidenced by notes largely secured by mortgages on real estate in New Orleans, and these notes and mortgages were in the City of New Orleans, in possession of an agent of the defendant in error, who collected the interest and principal as it became due and deposited the same in a bank in New Orleans to her credit. Held that under the act of 1890, as interpreted by the supreme court of the state, this property in the hands of

Page 175 U. S. 310

the agent was subject to taxation in New Orleans, and that such taxation did not infringe any right secured by the federal Constitution.

Conceding as matter of fact that the assessment in this case was technically in the wrong name, the error is not one that will justify equitable relief by injunction.

Under the issue presented by the pleadings, no question of overvaluation was before the court.

The rule in such a case is that the federal courts follow the construction placed upon the statute by the state courts, and in advance of such construction they should not declare property beyond the scope of the statute and exempt from taxation unless it is clear that such is the fact.

It is well settled that bank bills and municipal bonds are in such a concrete tangible form that they are subject to taxation where found, irrespective of the domicil of the owner; are subject to levy and sale on execution, and to seizure and delivery under replevin; notes and mortgages are of the same nature.

This case comes on appeal from the Circuit Court of the United States for the Eastern District of Louisiana. It is a suit brought by the appellee to restrain the collection of taxes levied upon certain personal property which she claims was exempt from taxation. The important facts are these: the plaintiff, as well as the infants whose guardian she is, and for whose benefit she brings this suit, are residents of the State of New York, in which state she has been duly appointed the guardian of their estates. The infants inherited certain property from their grandfather, a resident of Louisiana, whose estate was duly settled in the proper court of that state. By regular proceedings, these infants had been adjudged his legal heirs, and she, as guardian, had been put in possession of their property thus inherited. The order of the court in this respect was rendered February 14, 1896, and the taxes which were sought to be restrained were those for that year. The assessment, as appears by the assessment roll, was in the name of "the estate of D. C. McCan;" was of $15,000, "money in possession, on deposit, or in hand," and of $800,000,

"money loaned on interest, all credits and all bills receivable, for money loaned or advanced, or for goods sold, and all credits of any and every description."

The principal contentions of the plaintiff were first that included within this personal property was some $228,000 of bonds of the State of Louisiana,

Page 175 U. S. 311

taxation of which by the state or any of its municipalities was void, as impairing the obligation of a contract made by the state. Second, that the situs of the loans and credits was in New York, the place of residence of the guardian and wards, and therefore being loans and credits without the State of Louisiana they were not subject to taxation therein.

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