text:
      Court of Common Pleas, Dauphin County,

      February 23d, 1867.
    The Commonwealth of Pennsylvania v. The Girard Bank.
    The Congress of the United States has the power under the Federal Constitution, by an act creating national banks, to authorize the States to impose taxes upon them, but the mode prescribed in the statute must be strictly followed by the State legislatures, as they have no power independent of the act of Congress.
    The act of 22d of August, 1864, does not take from the State the power to impose future taxes upon banks complying with its provisions.
   By the Court.

The Girard Bank of Philadelphia was incorporated under a law of this State, and continued to do business under its charter until the 21st day of November, 1864, when, having fully complied with the provisions of the enabling act of August 22d, 1864, it was regularly converted into a national bank, under the acts of Congress. All of the taxes due by this institution, so long as it remained a State bank, were regularly paid. On the 23d of January, 1866, the accounting department of this commonwealth settled an account against the Girard National Bank, charging it with a tax of three per cent, on its net earnings, from November 30th, 1864, till November 1st, 1865, amounting to $6727.97, from which settlement the bank has entered an appeal. The State officers claim the right to impose this tax on all of the national banks within the commonwealth, under the provisions of the 2d section of the act of April 30th, 1864, “ imposing additional taxes for State purposes,” etc.

That section provides, among other things, “that every incorporated and unincorporated banking and saving institution, and deposit and trust company,” and after enumerating many others, adds, “ and all other companies and corporations doing business in this commonwealth, except those specified in the first section of this act, not paying a tax to the State under existing laws, shall annually, on the first day of November of each year, make report to the auditor-general of the amount of net earnings or income received by said individuals or corporations, from all sources during the preceding year, and upon such net earnings or income, the said individuals or corporations shall pay to the treasurer, for the use of the State, within sixty days thereafter, three per cent-um upon such annual net earnings or income, in addition to the taxes now imposed by existing laws.” It is very clear that this bank comes within the letter of the law, provided it applies to corporations created infutwro, as well as to those then existing. It is “ an incorporated banking company,” and “ a corporation doing business in this commonwealth,” and “ not paying a tax on its dividends to the State.” Does it come within the spirit and intention of the act, and had the legislature the constitutional power to impose such a tax, in that form, on this national bank ? It must be borne in mind that, at the time of enacting this law, the Girard Bank was a State institution, paying a tax on its dividends under the various acts'of Assembly, and therefore did not come within the provisions of the statute. If liable for the tax, it is because it surrendered its charter under the enabling act, and became a national bank.

The defendant objects to.this taxation for various reasons. It contends that it is exempt from all State taxes under the Constitution of the United States. If any can be imposed, it must, be in strict accordance with the act of Congress, which it avers this is not; that it paid full consideration to the commonwealth for relief from future taxation under the enabling act, and that it was not the intention of the legislature to impose a tax on it, or any other national bank, under this statute; that if within the letter, it is not within the spirit of the act of Assembly.

If the Congress of the United States has the power to incorporate a bank or create any other corporation, it is because such institution is essential, or at least very convenient, as a fiscal agent of the Federal government, and that it has clearly settled in McCullough v. The State of Maryland (4 Wheaton, 316), and Osburn v. The Bank of the United States (9 Wheaton, 378), each of which cases have been recognized as sound law in numerous decisions since, both in the Federal and State courts. If required to transact the business of the nation, there is no authority in the States to impose any tax whatever on the agent so created and employed. If the States could tax, they could exclude the institution from their borders; for the power to tax ad libitum, is virtually the power to destroy. All subjects over which the sovereign power of a State extends, are objects of taxation, but those to which it does not extend, are exempt from taxation. The sovereignty of a State extends to everything which exists by its own authority, or is introduced by its permission, but not to those means which are employed by Congress to carry into execution powers conferred on that body by the people of the United States. The attempt to use the power of taxation on the means employed by the government of the Union in pursuance of the Constitution, is itself an abuse, because it is the usurpation of a power which the people of a single State cannot give (see 4 Wheaton, 316, and 9 Wheaton, 378, already cited). The principle of immunity from State taxation has been applied to all the means devised by Congress, or under the laws thereof, to carry on the Federal government. The bonds or loans thereof cannot be taxed under State laws (Weston and others v. The City Council of Charleston, 2 Peters, 449). If a State can tax, it may substantially destroy the power of the General Government to borrow, a power essential to the very existence of the nation in time of war, the safety of which may depend on its exercise. The salaries of United States officers, whether in the army, the navy, or the civil service, cannot be taxed in the States where they may chance to be stationed, but the emoluments of such officers are exempt from all State taxation (Dobbins v. The County of Erie, 16 Peters, 435). The ground held by the United States for national purposes, such as forts, dockyards, barracks, hospitals, or other objects of that character, cannot be taxed by the States within which they are situated, nor is it necessary that Congress should prohibit State taxation; it follows as a consequence of creating the institution or the office (9 Wheaton, 865, 866, and 867). The case of the Barracks at Carlisle (2 Wallace, Jr., P- 72). #

# The Congress of the United States, for reasons which it must have considered essential to the well-being of the nation, thought proper to authorize the creation of banks in every State of the Union then adhering to the Federal compact. They were intended as fiscal agents of the government, and were also devised as a means of raising money on national securities at a time of great depression in the finances, when the funds were most essential in the struggle for national existence, and the maintenance of the war waged in suppressing the rebellion. The banks are substantially founded on the bonds and other moneyed securities of the United States, as- each institution was obliged to procure and pledge with the government a sum exceeding the amount of its whole circulation, to secure the same from loss or depreciation. "We cannot doubt the power of Congress to create these banks for the purposes indicated, and their general utility has never been questioned by any business man; they have substantially equalized the paper currency throughout our extended borders, making that which is good in Kansas or Missouri equally good in New York or Boston.

The banks thus purchasing and holding the bonds of the United States could properly rely on their immunity from State taxation, both on the strength of the cases already cited and the express provisions of the laws under which they were issued. It could not be supposed that the States would ever be permitted to tax the national loans in their hands. In accepting their charters they had the same guarantee that the institutions, when created, should be no further subject to State taxation than is provided for in the statute establishing them as fiscal agents, and that the taxes should be imposed as provided in the organic law. It has often been contended that it transcends even the power of Congress to permit agents of this character, created for national purposes, to be in any manner subjected to the power of the States; that they were protected by the Constitution. This might be the case were it attempted by a subsequent act, but when it is a condition of the grant, made part of the law of their existence, I am well satisfied that, if accepted by the banks on the terms held forth, it is binding and valid, is a voluntary contract, and cannot be gainsayed by the institution. Congress can best judge how far the interest of the nation requires it to be protected from State action, and when a charter is accepted the bank cannot complain that it is oppressed; volenti non fit injuria.

The forty-first section of the act of 1864 provides that nothing in this act shall be construed to prevent all the shares in any of the said associations, held by any person or body corporate; from being included in the valuation of the personal property of such person or corporation, in the assessment of taxes imposed by or under State authority, at the place where such bank is located, and not elsewhere; but not at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such State. Provided further, that the tax so imposed under the laws of any State, upon the shares of any of the associations authorized by this act, shall not exceed the rate imposed upon the shares of any of the banks organized under the authority of the State where such association is located.” We have already said, that if a tax can be imposed upon any national bank by a State, it is by virtue of the authority conferred by this act, and we are also of the opinion that it must be done substantially in the manner, and to no greater amount than the statute authorizes. The State law of April 30th, 1864, does not conform in any particular to the act of Congress. It requires no valuation of the stock held in the institution by the owner thereof, but assesses a gross sum of three per centum upon the annual net earnings or income of tbe corporation, in addition to the other taxes imposed by law. If it approximates to the act of Congress, it must be in not exeeedign the rate imposed upon the shares of the State banks; but they, it has been already shown, do not come within this tax law, are not embraced in its provisions, as they pay a tax on their dividened. Whether this three per centum would or would not exceed the tax imposed on the dividends and capital stock of the State banks, we are not prepared to say, but it is manifest that no valuation has been made of the shares or stock of this national bank in the manner required, as to the personal property of individuals.

In one particular it is very evident that the system of taxation prescribed by the act of Assembly is more onerous on the national than on the State hanks, or corporations, or individuals. The capital stock of tire national hanks is mainly composed of United States bonds; from the interest paid on these moneyed securities a large portion of their net profits is made. These bonds, when held by a State bank, a corporation, or individual, are free from taxation; no charge can be made against them by any State government, either directly or indirectly; it would operate as a restriction on the power of the Federal government to borrow money, consequently it must be excluded from the valuation of the capital stock of the bank as much as if in the hands of an individual or an insurance company; a State law taxing it is void (Bank of Commerce v. The City of New York, 2 Black, 620). And again, where a law of New York required a tax to be imposed on a valuation equal to the amount of the capital stock paid in or secured to he paid, and a large portion of that capital consisted'of United States securities, and the tax was imposed on the whole, according to the valuation, it was held that the law was unconstitutional and void, as it was in effect a tax on the government bonds in the hands of the State banks (The Bank Tax Cases, 2 Wallace, 200). But where a State law imposed a similar tax on the national banlss within its limits, it was held by the same court that no deduction was to be made on account of the government securities held by them; that they were to be valued and taxed as other capital (Van Allen v. The Assessors, 3 Wallace, 573). This is, in our opinion, most clearly directing a different mode of valuation and taxation on national from that imposed on State banks, or moneyed capital in the hands of individuals. But perhaps our reasoning on this subject is fallacious, as the court declares it was not the intention of the law to require a like valuer tion, but the same rate of tax. It comes to this: If a State bank has a capital of one hundred' thousand dollars and invests the whole of it in United States bonds, from which it receives an interest of six thousánd dollars, and on its other business derives a profit of six thousand dollars — twelve thousand in all — and a national bank has a like capital invested in the same securities, draws the same interest, and makes a similar profit from its other business, the State may lay a uniform tax on the net profits of each, say three per centum, and oblige the former to pay a tax of eighteen hundred dollars by deducting the government securities, and the latter to pay thirty-six hundred dollars by making no deductions, and yet this is called a like rate of taxation. The principle is reiterated in two subsequent cases (Duer v. The Tax Commissioners, and Mead v. The Tax Commissioners, not yet reported), and must now be taken and held as the settled law of the country.

However unsatisfactory we may consider the reasoning of the court, we must receive it as a matter of faith; but we are unable, after the most careful consideration of this statute, to discover even an intimation that Congress, in its enactment, intended to depart from the long-settled policy of the nation, prohibiting the ¡States from taxing the national securities in any form; it is not so declared by the law, and there is nothing showing an intended distinction between these banks and private persons purchasing- and holding the bonds; the immunity is not claimed from this statute, but from the laws creating the loans, and the general system of national jurisprudence on the subject; the banks are not told, if you buy these securities they shall be subject to State taxation in your hands. It is not to be found in the fortieth section of the act, which is merely designed to furnish a means of assessing taxes on individual stockholders and the general business of the bank. But this is beside our case, which turns not on the amount, but whether the State law does or does not impose the tax in a manner that can be sustained.

We have already mentioned that at the time the act of April 30th, 1864, was passed, this and most other of the national banks were not in existence, and over those which were, the legislature had no control, no power of taxation having been conferred by the act of 1863. It could not, therefore, have been intended to be taxed by that law. There are other matters which prove that national corporations were not included. The governor, is empowered by the second section to declare the rights and privileges of the corporations, which failed to make a return of their business, forfeited by his proclamation. It cannot be supposed that he could abrogate the charters of national banks by any act or proceedings; the legislature could confer no such power, as they are not institutions of State creation. The enabling act, of the 22d of August, 1864, bargained with the State banks that if they would surrender their specie certificates they should be entitled to the privileges of the act, but if any one held no such certificates for coin, then it was to be taxed on its dividends and surplus fund, and all were to pay taxes up to the time they became national associations. Taking the whole scope of these two laws into consideration, we do not believe that the legislature intended to tax the national banks at that time in the manner now proposed ; but there is nothing in the enabling act which has the appearance of a contract on the part of the State to exempt them from future taxation. To take away this power on the part of the State, there must be express words or a clear and manifest design declared by the law; and the mere imposition of a present bounty, in the surrender of the specie certificates, is not such a manifestation. The opinion expressed by Justice McLean, in Bank of Ohio v. Knoop (16 Howard, 369), has never been acquiesced in. All we decide is, that the act of April 30th, 1864, was not intended to impose a tax on any of the national banks, but it may be done at any time by the legislature in the method pointed out by the act of Congress; and perhaps the remedy by appraisement is merely modal, and the object can be effected, in other forms, provided the tax does not exceed that imposed on State banks or moneyed capital in the hands of individuals. We are of the opinion that the tax cannot be imposed by mere implication, but should be done directly; and in assessing it, the whole value of the assets, including the national bonds, may be embraced, according to the decisions cited. This should be done by the legislature without delay, so as to bring all the national banks within the commonwealth under our tax laws. Judgment must be rendered in favor of the defendant on the case stated.


source: Caselaw Access Project

author: By the Court.

license: Public Domain

text:
      Court of Common Pleas, Dauphin County,

      June 3, 1867.
    The Commonwealth of Pennsylvania v. The Central Petroleum Company.
    A corporation chartered under the laws of another State, and owning oil wells in Pennsylvania, is not exempt from taxation under the acts of 21st of April, 1854, and 1st of April, 1863. A corporation which paid a tax on its dividends, is also liable to pay one on its net earnings, under the act of 30th of April, 1864.
    A law of the State of Pennsylvania imposing a tax on a foreign corporation doing business within its borders, is not contrary to the Constitution of the United States.
   By the Court.

This suit is brought to recover the amount of taxes clue by the defendant to the commonwealth, as settled at the accounting department of the State, on February 20th, 1866, amounting to $9000. It is conceded that the defendant is a company engaged in obtaining or preparing mineral oil, incorporated under the laws of New York, and having its principal office in that State, but holding its oil lands -and carrying on business in Pennsylvania. It made its return to the auditor-general, as required by our laws, showing that during the year 1865, down to November 1st, it had made net earnings amounting to $300,000, on which it was charged a tax of three per cent, under the act of 30th of April, 1864. The settlement was unappealed from, and is of course conclusive as to amount, provided our officers had jurisdiction over the subject-matter, and authority to assess the tax. It is contended for the defendant, First, That it possesses immunity from taxation under section 6 of the act of 21st of April, 1854, relative to manufacturing corporations. We are of the opinion that it does not come within that law, which appliés solely to corporations created by the courts of this commonwealth fo,r mining purposes, extended by section 1 of the act of 1st of April, 1863, to those engaged in the manufacture or preparation of lubricating oils, etc. This company never was so created, but is a foreign corporation. Besides, the tax thus referred to, is merely in the nature of a bonus, such as is very generally required by the legislature, leaving the corporation still subject to the ordinary taxation. The sole power of this company to hold land in Pennsylvania is derived from section 2 of the act of 22d July, 1863, which enables foreign corporations, created for mining purposes, to hold not exceding three hundred acres of land in this State. That section is repealed by the act of 23d of March, 1865, leaving the right to land already vested under the former law unimpaired, but making it the duty of the foreign corporation doing business in this State, to render the same returns and pay the same taxes, under like penalties, as is required of corporations chartered under the laws of this State. If the question were before us, it might admit of serious doubt whether this company, chartered by another State, could hold any land here for an oil well under the grant of power to hold for mining purposes, boring a hole in the ground to extract oil having little more resemblance to mining, than would one made to obtain salt water, or water for domestic uses. If this company is tolerated to hold land and transact business in Pennsylvania, it is by the terms of the act of 23d of March, 1865, made its imperative duty to pay its taxes. Second, It is contended that this company is not subject to the tax of three per cent, on net earnings, because it pays a tax on its dividends, and section 2 of the act of 30th of April, 1864, only imposes it on such corporations as do not. By the act of 29th of April, 1844, a tax was imposed on th&dividends of nearly all corporations within the commonwealth, and also on the value- of the capital stock, in many cases to be computed by the amount of dividends. These were distinct taxes. The Bank Act of 1850 and its supplements imposed this double tax on the banks of issue. The act of 12th of April, 1859, in attempting to equalize taxation on corporations, repealed the tax on dividends as to everything but banks either of issue or deposit, leaving the one as before, and subjecting the other for the first time to the same burden. The defendant as a corporation was exempted from any fax on its dividends by the act of 1859, and therefore comes within the very words of tne act of 1864, as a corporation doing business in this commonwealth,” is clearly covered by the statute, which is made doubly clear by the act of 1865, already cited. These questions scarcely arise in the present case, as they are not before us on appeal, the statute making the settlement of the account conclusive. We have thought proper, on the earnest solicitation of the defendant’s counsel, to give instructions on every point raised on the argument. There is one other presented, as to the constitutional power of the legislature to tax corporations not created by or under the laws of this State, but that will come up on the point reserved. You are instructed to render a verdict in favor of the commonwealth for $9000.

It is scarcely possible to raise a question on the point reserved in this case. The principles laid down by Woodward, C. J., in Maltby v. The Reading R. R. Co. (5 Am. Law. Reg., N. S. 479), fully covers it, and the same have been enunciated in many other cases in this State. If Pennsylvania chooses by statute to authorize a foreign corporation to hold land and carry on its business within her borders, it does not relieve that property or the profits made from the payment of the same taxes as our own corporations. The company in question was only permitted to hold land for mining purposes by our law of 1863, which was repealed by the act of 23d of March, 1865, but the company was suffered to hold the property acquired, and carry on its business on the express condition that it should make annual returns and pay the same taxes as provided by law for corporations chartered under our own laws. If it did not like the terms, it should not have pursued the business. The case is entirely unlike that of Olive v. The Washington Mills (11 Allen), or the one decided in Tennessee, reported in — Yerger. All of the profits taxed in the case of this company were made after the passage of the act of 1865, if made at all; and the corporation or its stockholders have no cause to complain. The tax imposed by our law is not on tire foreign stockholder, btit on the corporation itself.

Meredith, for plaintiff.

MoCalmont and Alrichs, for defendant.

Judgment must be rendered in favor of the commonwealth on the reserved point.


text:
      Court of Common Pleas, Dauphin County,

      December 17th, 1867.
    The Commonwealth of Pennsylvania v. The Baltimore Coal Company.
    A corporation exempted from a tax on its dividends by the act of 12th April, 1859, is liable to pay one on its net earnings under the act of 30th April, 1864.
    A particular mode of imposing taxes on a corporation provided by an act authorizing it to do business within the State of Pennsylvania is changed by a general tax law, although no mention is made of that particular company.
   By the Court.

The defendant was in the first instance incorporated by the legislature of Maryland. It afterwards, by the act of 23d of April, 1841, obtained permission to carry on business and hold real property within the State of Pennsylvania; and it may well be questioned whether by that statute our legislature did not also create it a corporation of Pennsylvania, as the common and apt words for that purpose are used in the act of Assembly. But that point need not be decided in this case. In accepting the provisions of the law this company agree to pay a'tax of eight per cent, on all dividends made of six per cent, per annum or upwards, and the power was reserved for the legislature “to alter, revoke, or annul the privileges granted by the act.” There is not even an intimation given that the franchises of this company shall not be subject to future taxation, should such be imposed by law. At that time nearly all of the corporations of Pennsylvania paid a tax on their dividends; and on 20th April, 1844, a tax on their capital stock was also imposed.

By the act of 12th April, 1859, the tax on dividends was taken off all institutions or companies except banks, as therein described, and a tax on their capital stock, regulated in part by the amount of dividends, was alone imposed. Whether this company did or did not avail itself of the provisions of that act, or whether it ever paid a tax on its capital stock under the act of 1844, is not in proof. On the 30th of April, 1864, an act was passed imposing an additional tax of three per centum per annum on the net earning of every company or corporation doing business within this commonwealth, except those paying a tax on dividends; and as this law is very general in its terms, embracing all companies or corporations, it includes the present defendant, unless it continued to pay a tax on its dividends, or was liable to make such payment. There is no doubt of the power of the legislature to tax this company, authorized by our laws to carry on business within the State, in the same manner that it could one incorporated by Pennsylvania alone; and we are of the opinion that it was relieved of the tax on its dividends by the act of 1859 already cited. That law absolves all institutions- or companies within the State from a tax on dividends, whether incorporated by Pennsylvania or some other State, except the banks, as therein excepted; and consequently, they come within the very letter and intention of the act of 1864, imposing a tax on .their net profits. It has been urged that no alteration was designed in the charter of this company by a general law, which did not in terms embrace or mention it; that no private charter should be construed to be changed by a general law applying to corporations at large. Such must be conceded to be the principle heretofore applied in the construction of statutes; but in Pennsylvania tax laws appear from several recent decisions to form an exception to the general rule. In The Iron City Bank v. The City of Pittsburg (37 Penna. 340), it was held that a bank was subject to taxation under a general law, although by the terms of its charter it was entitled to a special exemption until a certain event. In The Commonwealth v. The Nailroad Company, a provision that the corporation should pay no tax to the commonwealth until certain dividends were made to the stockholders, was overridden by a general law taxing railroad companies within the State. This was claimed to be valid on the ground that the charter could be changed by the legislature; and it must have been presumed to be the intention of the general law, although there was no special reference to the charter of this company. The present case is infinitely stronger than either against this coal company, which has by the accounting department been very properly subjected to a tax on its net earnings under a general law, and has been exonerated from a tax on its dividends under a like statute.

Meredith, for plaintiff.

AlrioJcs, for defendant.

Your verdict must be rendered in favor of the commonwealth for $2226.72, without interest.


text:
      Court of Common Pleas, Dauphin County,

      December 19th, 1867.
    The Commonwealth of Pennsylvania v. The Columbia Oil Company.
    A corporation was chartered prior to the act of 30th April, 1864, and exempted from paying any tax on its dividends on condition of paying a bonus into the State treasury; after its passage the company was authorized to increase its capital stock. Held, that it was liable to a tay under the act of 30th April, 1864, upon the amount of the net earnings of its increased, but not of its original capital.
   By the Court.

The Columbia Oil Company was incorporated by the act of May 1st, 1861, with a capital stock of $200,000. It was required to pay into the State treasury a bonus of two and a half per cent, on its capital thus created in lieu of any and all taxes on dividends. The quantity of land authorized to be held was limited to five hundred acres. By a supplement to its charter law, passed 4th June, 1864, the capital stock was increased to $2,500,000, and the .quantity of land to be held fixed at one thousand acres. The increased capital was subject to a bonus of one-half of one per cent, to be paid in four equal instalments. The act of 30th April, 1864, requires all corporations of a certain description, including this company, to make an annual report of their net earnings or income, and pay a tax thereon into the State treasury of three per cent, in addition to the taxes then imposed by law. This includes all companies not paying a tax on their dividends; which this did not, as all taxes of that character were abolished by the act of 12th April, 1859, and in lieu thereof one was imposed on the capital stock alone, to be measured by the amount of dividends, where any were made. Prior to that time very many companies within the State were required to pay a tax both on dividends and capital stock, to be computed in the same way. Subsequent to the act of 1859 it is believed that no corporation paid a tax both on dividends and capital stock, excepting banks, saving institutions, etc. When this oil company was created, it is quite probable that the person who drew the law, and the legislature which enacted it, did not advert to the fact that the tax on dividends was abolished as to this kind of corporation, else the commutation provided for would probably have been in lieu of the tax on capital stock; but certain it is that it was exonerated from a tax on dividends as to the then authorized capital. Strictly construed the act of 1864 imposed a tax on this company, as it paid no tax on its dividends, but a commutation therefor as to its capital stock of $200,000; but it would be bad faith in the State to exact it; would be keeping the promise to the ear, but breaking it to the hope; and the State officers have never required it to be paid. The increased capital of $2,300,000, authorized by the act of 4th June, 1864, stands in a different situation. There was no commutation of its tax on those dividends. The company was subject to none. The bonus of one-half of one per cent, imposed on the increased capital is the usual one exacted from all corporations of this character, and notwithstanding this they are all required to pay a tax on their capital stock under the acts of 1844 and 1859. We have no doubt that this company is subject to a tax on its increased capital, both as to its capital stock and its net earnings. The tax has never been exonerated or commuted in any way, as was the case as to dividends on the first $200,000. No construction of the law, either strict or equitable, can be tortured into a relief of this corporation from the common burden as to the $2,300,000 of its capital. The same ground is assumed in regard to this, as is advanced in .relation to many other corporations, that they do pay a tax on their dividends, because the tax on capital stock is measured in proportion to their dividends but we must declare here as in the other cases that the whole history of our taxation since 1844 shows that the legislature always treated them as distinct taxes; both being imposed on some, others being subject to the one only. This, as already said, is abolished by the act of 1859 as to all but banlts of various kinds, and their net earnings do not come within the act of 1864. The department has correctly charged this company with a tax on its capital stock for the year 1866 on $2,300,000, of seven mills on the dividends of fourteen per. cent, for the year 1866, amounting to $16,000. This must bear interest from June 7th, 1867, amounting in all to $16,-609.83. Also with a tax on net earnings of $9289.73, amounting with interest after three months from the date of settlement to $9707.76, for each of which sums the jury will render their several verdicts in the two cases.

Meredith, for plaintiff.

Lcmberton, for defendant.

Affirmed by the Supreme Court, July 7th, 1868. Not reported.


text:
      Court of Common Pleas, Dauphin County,

      December 17th, 1867.
    The Commonwealth of Pennsylvania v. The Philadelphia and Reading Railroad Company.
    An act of Assembly imposing a tax upon freight sent from this State into any other State or foreign country is contrary to the Constitution of the United States, and is void.
    The fact that Congress has never enacted any law regulating commerce between the States does not give the State legislatures power to do so.
    Pennsylvania Kailroad Company v. The Commonwealth, 3 Grant, 129, distinguished.
   By the Court.

The Philadelphia and Beading Bailroad is used for the transportation of coal, etc., from Schuylkill county and other localities to the city of Philadelphia. It neither owns mines nor carries on the business of mining, but is merely a carrier. In the first two quarters of the year 1866, the company transported over its road, of the three classes described in the act of April 30th, 1864, 3,815,390 tons of freight. Of this it is conceded that--were taken up and delivered within the State of Pennsylvania, whilst--were carried on the road for the original purpose, as is claimed, of being sent abroad to other States or foreign countries, and was directly transferred from the cars to vessels for shipment, and was so transported. It is conceded that all of the taxes on articles received and delivered within the State has been paid, but the State claims to charge the company with a tax on all of its tonnage carried over the road, without regard to its original place of destination, amounting, in the aggregate, to $46,520. The account has been so settled at the treasury department, from which the company has appealed.

The first section of the act of April 30th, 1864, with its supplement, passed on the 25th of August, 1864, as we understand if, imposes a tax of two, three, and five cents per ton on each ton of certain described articles transported by any company doing business within this commonwealth, whether over a railroad, canal, slack-water, or natural navigation, or which is permitted to be transported over the works of such company for toll, except turnpike, plank-road, or bridge companies. This embraces every kind of transportation in steamboats on our lakes and rivers, on railroads, or canal, etc., provided either the carrier is a company, or the road or canal belongs to one, and includes all goods carried from one State, through Pennsylvania, .to another beyond our borders, or from a foreign country, through our State, to one in the interior.

The meaning of the act is very clear, and the only question raised is as to its constitutionality. The first case in which the validity of this statute was presented for our consideration was that of The Commonwealth v. The Erie Railway Company (1 Pearson, 345), a corporation created by the State of New York, but which passed for a few miles within the State of Pennsylvania. This court then held that the tax imposed on that comKfor carrying goods through our State, from and to points ad our borders, was in plain violation of the Constitution of the United States, and that the tax could not be collected.

No other point was there raised, except the right to tax the commodities of other States in transit through this State, or to tax the railroad company which carried them. Soon after, another question was presented in an appeal taken by the Delaware, Lackawanna and Western Railroad Company (1 Pearson, 356), on account of a tax imposed under the same statute, on its tonnage, for goods taken up within the State of Pennsylvania and transported directly into other States, such being the original design of the carriers. We then decided that the tax thus attempted to be collected was illegal, as interfering with and restricting the free commerce and intercourse between the States, and that the statute, as thus applied, was in conflict with the Federal Constitution. Full and elaborate opinions were delivered in both cases, and we shall not now repeat our reasons there given, but refer to them as our exposition of the law. Writs of error were taken in both cases, but never argued, as they were, considered correctly decided by the then attorney-general, Mr. Meredith. Some new positions have been assumed by the counsel for the commonwealth, supposed not to have been sufficiently considered and investigated in our former opinions. First. That as Congress has never enacted any law regulating the commerce between the States, there is nothing in the way of State action on the subject. Second. The tax imposed by the Pennsylvania statute is not on the goods transported into other States or foreign countries, but on the company itself as a carrier. There is no lien on the articles transported, but the claim is against the corporation through whose means they are transported. Third. The act does not impose a tax on the goods, but on the profits or income of a corporation created by our own laws and transacting its business within our borders. Expressions to be found in some of the decided cases or dicta used in the opinions of some of the United States judges, might lead to the belief that, until Congress had exercised its power to regulate the commerce between the States, it might be done by the States themselves. We consider it now settled that no State can impose a burden or duty on any commodity coming from another State within its borders, or passing beyond its boundaries into another State. It certainly could not upon foreign imports or exports, and the power to regulate the foreign commerce of the country is to be found in the same section as that between the States. No jurist will pretend that a State could impose a duty on the imports from foreign countries, although Congress hás failed to impose any. It would be an evidence that none was proper, as lias been repeatedly said in regard to the regulating of commerce between the States. The failure to act proves that Congress considered no regulation was called for, and that the trade should be free and untrammelled. Judge McLean, in 7 Howard, 394, 395, and 398, 399, 400, declares that it is the same as with foreign nations, and is necessarily exclusive.

Such is the opinion of Judge Baldwin, in Groves v. Slaughter (15 Peters, 511), of Judge Story, in New York v. Miller (11 Peters, 158). To lay an export duty on the commodities of any State even transcends the power of Congress, see No. 5, sect. 9 of the first article of the Constitution of the United States. This contest would seem to be put at rest by the unanimous opinions of the Supreme Court of the United States, in Almy v. California (24 Howard, 169), where there was an attempt to tax the bill of lading of gold exported. The power of the State was denied, and Chief Justice Taney says that if this was an attempt to tax the gold itself, it would be seen at once, and conceded by all to be inadmissible. We are unable to see any distinction between taxing the exportation of gold, or coal, timber or other products. Although the inability of the State to impose a tax on passengers coming into the State was decided by a divided court, in 7 Howard, yet we find a more modern case settled by the same tribunal with great unanimity, in Crandal v. The State of Nevada, where it was held that the State could not impose a tax on a stage company for each passenger carried into or out of the State in their coaches. That, too, like the present, was not a tax on the passenger, but on the carrier. These decisions also answer and overturn the second position assumed on the part of the commonwealth. Third, this is not a tax on the income of the company, but on each ton of coal transported.

There is no doubt but that a tax on the income of the company created under the laws, and carrying on business within the State of Pennsylvania, would be valid. So also might be one on the net profits of the business, but this does not purport to be a tax on the business, but on the tonnage transported, whether carried at a profit or a loss. The tax, though nominally on the carrier, is really on the commodity carried, is such an impost or duty as might prevent its transportation abroad, for, if the State can tax the company two cents per ton, it may tax it two dollars. It is no more a tax on the mere business than was that imposed on the gold manifest or on the stage company, for each passenger carried. It is said in the argument that many of the cases were decided, because the legislature discriminated between the internal and external trade of the State. That is not the general ground of decision ; for, whilst it is conceded that a State may impose any amount of tax on their intra-territorial trade, it can levy nothing on that which comes to, goes from, or passes through its borders, as thereby the burden is imposed on citizens of other States. We are, it is contended, bound by what is said by our own Supreme Court, in The Pennsylvania Railroad Company v. The Commonwealth of Pennsylvania (3 Grant’s Cases, 129).

In the first place, that was, in our opinion, no question of taxation, and, in the second place, it is not binding on this court. When the contest arises under the Constitution of the United States, we must be governed by the decisions of the Federal judiciary alone. They are paramount. Some of the questions then open are since settled. This court decided the Tonnage Tax Case, as it was called, on the ground that it was not a tax, but a contract. The corporation, as a bonus for its charter, agreed to pay the State, as a bonus, a certain sum per ton for freight transported on its road. This was not a regulation of commerce, but an agreement between the parties, and had no greater effect than if the proposed artificial person had contracted to pay a gross sum of money, or a certain annual sum, for leave to construct its road through the State. It was not proved that any addition was made to the freight by reason of the tax; on the contrary, the company carried freight brought from beyond our borders at a lower rate than that imposed on the domestic trade of the same character. It clearly appeared that the charge, called a tax, fell on the corporation itself, as it was designed it .should, and not on the outside transporters. We cannot doubt the power of the parties to enter into such a contract, which is a mutual agreement between them, whilst a tax is in the nature of a command proceeding from the sovereign to the subject. By taxation commerce may be regulated, burdened, or entirely interdicted.

We instruct you that all freight transported on the defendant’s road which was designed and intended to seek a market within the State, is subject to the tax imposed by the first section of the act of April 30th, 1864. That it will be presumed to be so intended until the contrary is shown. Therefore, where freight is loaded on the cars of the company, and brought to Richmond, or any other point, for sale, it is subject to the tax, although it may be sold to be shipped abroad. When the article is sold for foreign shipment, before being loaded on the defendant’s cars, is then placed thereon and carried directly to the point of transshipment, loaded on vessels, and actually sent into other States or foreign countries, the railroad company is not bound to pay any tax on such tonnage. To apply tlie act of Assembly to such tonnage, would be a burden on the commerce of .the State to which it is to be carried, and thus far a regulation of commerce between the States in violation of the Federal compact, and the statute cannot be so construed without rendering it unconstitutional. You will, therefore, render your verdict in favor of the defendant for all taxes charged on the tonnage carried on the road originally destined for other States or foreign countries, and so sent, and in favor of the commonwealth for all other taxes thereon, if not already paid.

Brewster and Smith, for plaintiff.

Qowen, Krnikel, and Lamberton, for defendant.

Note — This case was reversed by the Supreme Court of Pennsylvania (12 P. F. Smith, 28G). The opinion of that court was reversed by the Supreme Court of the United States, and the decision of the Court of Common Pleas affirmed (15 Wallace, 232).


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      Court of Common Pleas, Dauphin County,

      January 2d, 1868.
    The Commonwealth of Pennsylvania v. The Phœnix Iron Company.
    A corporation paying a tax on its capital stock, to be measured by the amount of its dividends, under the act of. 29th April, 1844, is liable to a tax on its net earnings, under the act of 30th April, 1864; and it must be charged with interest at the rate of 12 per cent, per annum upon the sum due until it is paid.
   By the Court.

The case presented two legal questions. First. Is the company liable to a tax on its net earnings or income, nnder the second section of the act of April 30th, 1864 ? And, second. Must it be charged with interest on the balance due to the commonwealth, at the rate of 12 per cent, per annum, from thirty days after the date of the settlement by the accounting department until tire same is paid, as provided in the third section of the act of April 9th, 1867 ? The act of1864 clearly embraces this corporation in its general terms, ’unless it pays a tax on its dividends. This is conceded. But its counsel assumes that it does pay a tax on its dividends, under the act of 1844 and other laws of this commonwealth, whilst the State contends that it is exempt from all such taxes, and merely pays upon its capital stock, although measured by the amount of dividends. In order to properly understand and construe our tax laws, we are obliged to look into their origin and history, as many of the statutes, if standing isolated and alone, are obscurely worded and difficult of solution. A tax upon the dividends made by corporations of various kinds, has been common for a long time under our statutes. Certainly, as early as 1824, and probably as far back as 1814, a tax was imposed upon those made by the banks of the commonwealth. That has been continued from time to time as long as we had any in the State, and prevails against those of deposit and savings institutions. The tenth section of the act of June 16th, 1836, requires a like tax to be paid by Ron manufacturing companies (P. L. 802). A similar tax is imposed upon manufacturing companies generally, by the fifteenth section of the act of April 7th, 1849 (P. L. 567). A vast number of private corporations of various kinds throughout the commonwealth have similar provisions in their charters, some ■ of which have come under our immediate consideration. The wants of the commonwealth calling for the imposition of additional taxes, led to the passage of the act of April 29th, 1844, which requires a tax to be paid on the capital stock of all banks, institutions, and companies incorporated by or under any law of this commonwealth, although that tax was to be measured by the amount of dividends declared when they exceeded six per cent., and by an appraisement of the stock when they fell short of that sum. Yet it was well known and understood to be a different and additional tax to that imposed upon the dividends, and the State uniformly exacted, and the corporations paid, the tax, both on their dividends and capital stock, so far as the tax on dividends had been imposed, which was not universally the case, as some had escaped the imposition of that tax. It is believed that the tax on capital stock fell upon all, unless specially exempted in their charters. What still more clearly demonstrates the legislative understanding is shown by the act of June 11th, 1840 (P. L. 612), which was the first law imposing a tax on capital stock, and requires it to be paid at the same time, in the same manner, and subject to like penalties, as the tax on dividends. The act of 1850 still requires the banks to pay a certain tax on dividends, therein prescribed, notwithstanding the tax on capital stock, under the act of 1844. It may be safely said that the taxes collected on corporation’s dividends, and on their capital stock, or measured by their dividends under the act of 1844 and various other statutes, amounts to millions of dollars; and at the accounting department the distinction has always been kept up, and was well lenown and understood. The finances of the State justifying the obligation of a portion of the taxes, and great inequalities existing as to those imposed on different corporations of the same character —some being subject to taxes on dividends and also on capital stock, whilst others escaped the former tax — the legislature enacted the act of April 12th, 1859, “ to equalize taxation.” This has exempted all corporations from a tax on dividends, excepting banks, as therein described, and required all to pay a tax on their capital stock in proportion to the amount of-dividends, provided any was made, and if not, on a valuation, as provided by the act of 1844; thus clearly keeping up the distinction well known to exist between the two taxes. The expenses of the war created a necessity for additional taxation, and led to the passage of the act of April 30th, 1864, under which the tax in the present case is imposed.

B. H. Brewster, for plaintiff.

Kwrikd,for defendant.

The law requires all the persons and corporations therein named, not paying a tax on dividends, to pay three per centum of their net earnings jnto the State treasury. This company, even if subject to a tax on its dividends, which is not shown, was exonerated therefrom by the act of 1859, already cited, and comes within the very letter and intention of the present law. For us to hold that all of the corporations taxed on their capital stock, to be computed according to the dividends, were paying a tax on dividends, would be to render entirely nugatory the act of 1864, as there is not a corporation in the State but what would be absolved from the tax on its net earnings. The law would be emasculated and but a dead letter. We are, therefore, clearly of the opinion that this company pays no tax on its dividends, but on its capital stock only, and must consequently pay the tax charged against it. in the settlement from which it has taken an appeal. Although we do not wish or desire the provisions of the act of April 9th, 1867 (P. L. p. 58), imposing interest at the rate of twelve per centum on diligent tax-payers, yet there is no misunderstanding the enactment. The object of the legislature was to compel punctuality, and for that purpose interest, at double the ordinary rates, is directed to be charged on all of those failing to pay as required by law. This, by the second section, is to be charged by the officers in the settlement, and on the balances found due the third section inflicts a like rate of interest, to be computed at the expiration of one month, instead of the charge of six per cent, after three months, as required by the act of 1811. Such a provision is within the law-making power, is clearly expressed, and must be carried into effect by the courts. You are, therefore, instructed to render a verdict in favor of the commonwealth for the tax of $1836.45, with interest thereon at the rate of twelve per centum per annum, after thirty days from the date of settlement.

Affirmed by the Supreme Court (9 P. F. Smith, 404).


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      Court of Common Pleas, Dauphin County,

      January 18th, 1868.

    The Commonwealth of Pennsylvania v. The Central Petroleum Company.
    A corporation which has paid a bonus for its charter is not exempt from future taxation. One paying a tax on its capital stock, to be measured by the amount of its dividends, is also liable to a tax on its net earnings.
    A foreign corporation doing business within Pennsylvania is bound to pay a tax on its net earnings, and the fact that it also pays one to the State by which it is chartered does not relieve it.
   By the Court.

The defendant, a corporation created by the laws of New York for mining purposes, carried on business in the State of Pennsylvania by boring for and obtaining mineral oil. It claims to hold land in this State under the provisions of the act of April 21st, 1854, and its various supplements, especially ' the second section of the act of July 22d, 1863, and to transact-its business here under the authority of our laws. A report was made to the department of the net earnings of this company for the year ending November 1st, 1866, amounting to $400,000, on wbich it was taxed under the second section of the act of April 30th, 1864, at the rate of three per centum. From this settlement of the auditor-general and State treasurer it has taken an appeal.

Several questions have been raised by way of defence.

First. That this company has paid a tax of one-half of one per cent, on its capital stock, as provided in the sixth section of the act of April 24th, 1854, which is in lieu of all other taxes. This provision, as we understand it, is not in lieu of any taxes, but is a bonus paid for its charter, the same as required from almost every money corporation within the commonwealth, and has no effect on the powers of taxation, which cannot be taken away unless by clear words. It is a power incident to every State, and cannot be presumed to have been surrendered, unless clearly so expressed and for a valuable consideration.

Second. It has paid, or is bound to pay a tax of one-half per cent, on each one per cent, of its dividends, under the act of 1859.

There is no tax imposed on dividends under that act. On the contrary, it is repealed thereby as to all corporations, excepting those connected with banking, and a tax is imposed on capital stock in lieu thereof. True, that tax is measured generally by the amount of dividends; but the law distinguishes between the two, and in terms repeals the tax on dividends. For our views in full on this subject, we refer to our charge delivered at the present term in the case of The Commonwealth v. The Phœnix Iron Company (1 Pearson, 383).

This company has failed to show that it ever paid a penny of tax, either on dividends or capital stock, except that paid by way of bonus on. its capital, if it even paid that into the Slate treasury, which is questionable.

Third. This being a corporation created under the laws of another State, and its capital stock principally held by the citizens thereof, cannot be taxed by this State because it carries on its business therein, as such stock is subject to taxation in the State where created and located.

The act of Assembly which imposes a tax on the net earnings or income of a corporation does not confine its provisions to those created by our laws, but applies to all “ companies or corporations doing business in this commonioecdth.” The defendant comes clearly within the letter and, we conceive, within the intention of the act. All of its business is transacted within this commonwealth. Plere it has its land, carries on its mining (if pumping oil from the earth can be called mining), holds its land by virtue of our laws, and receives protection to its property therefrom. The'business done in New York is merely financial; all of its. mining is done in Pennsylvania. Its net earnings are made here, and there is no good reason why it should escape the payment of taxes into our treasury.

If anything were wanting to make the intention of the legislature to tax the foreign corporations more manifest, we have it in the first section of the act of March 23d, 1865, which makes it the duty of all such doing business in this State to make the same returns and pay the same taxes as is required from those chartered under our laws.

It is said, however, that we have no power to impose a tax on the stock or business of any corporation not created by the laws of this State; that it has no connection with us except that of holding not exceeding three hundred acres of land,” under the second section of the act of July 22d, 1863. It is very true that this company holds its whole mining property and carries on its business here by virtue of that act and of that alone; for without its provisions, no land in Pennsylvania could be lawfully held by it, nor could it transact any business here. But it knew, or was bound to know, when accepting the conveyance and putting its works into operation, that it was subjecting itself to our tax laws, and cannot complain if it is obliged to bear the same burdens as our own companies of like character. There would be more plausible ground to complain if the tax had been charged against its capital stock, as that was held by non-residents ; but this is on the profits of its business made out of Pennsylvania land, and carried on within our borders. The case of Maltby v. The Reading & C. R. R. Co. (2 Smith, 140), was much more favorable for the non-resident than this; yet the Supreme Court, through a very able opinion delivered by Chief Justice 'Woodward, decided that a foreigner was obliged to pay a tax on the bonds held on the company, and that the same could be deducted from his coupons.

B. FT. Brewster, for plaintiff.

M. Air idles, for defendant.

Fourth. It is complained that this is a case of double taxation, the defendant being subjected to the payment of a tax by the laws of New York, also on its capital stock in Pennsylvania, on the land held here, and now on its annual net earnings.

We do not know that this company pays one dollar of tax in the State of New York; but if it does, the burdens are'of its own seeking. It was bound to know that when it accepted its charter from one sovereignity and held its property and transacted its business under the laws of another, that it was creating a double allegiance which might bring it into trouble — at least, be obliged to pay, in the form of taxation, for the protection received from each. Should it pay on capital stock, land, and profits, it is precisely what is done by every mining and manufacturing company incorporated under the laws of Pennsylvania. Nor is there anything improper or illegal in double taxation. It has been repeatedly sustained by our courts in similar cases (see The Lackawanna Iron Company v. Luzerne County, 6 Wright, 424, and the cases there cited). If the legislature can lawfully tax, it can do it as often and in as many forms as the exigencies of the State may require. It is a mistake, however, to suppose that this company pays a dollar of tax into the State treasury on its land. That tax was abolished on the twenty-third day of February, 1866.

We instruct you that this company was properly charged with the tax on its net earnings, as reported to the department by its own officers. You will, therefore, render a verdict in favor of the commonwealth for $12,000, with interest at the rate of six per cent., from the 11th of March, 1866, being three months after the date of settlement.

Affirmed by the Supreme Court, May 27th, 1868.


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      Orphans’ Court, Dauphin County,

      June 22d, 1852.
    In the Matter of the Settlement of Seal’s Estate.
    Three hundred dollars cannot be allowed to the widow and children of an intestate under the act of 26th April, 1850, when his estate is insolvent, and the debts were contracted prior to July 4th, 1849.
    The act of 26th April, 1850, must be construed in connection with that of 9th. April, 1849. Any law exempting a greater amount of property from levy and sale on execution than was so exempted at the time of contracting the debt, is unconstitutional and void.
   By the Court.

A single exception has been filed to the administration account in this case, which is to the allowance of $300 for the widow and children of the intestate. It is admitted that the intestate died on- July 14th,T850, leaving a widow and several minor children, who were living with him at the time of his death; also leaving the real and personal estate referred to in the administration account, and no other property or effects; that the estate is insolvent, whether the $300 claimed for the widow and children be taken by them or not. That there is due by the decedent to creditors, whose debts were contracted prior to July, 1849, a sum greatly exceeding $300; and their debts will not be paid in full, even if the widow and children are not allowed to take that sum out of the property and effects of the decedent. Those creditors are the objectors in the present case. The administrator claims the right to pay over to the widow and children the sum of $300 under section 25 of the act of 26th April, 1850. The creditors object: First. Because their debts, being contracted prior to July 4th, 1849, the act does not exempt the property as to them; that it must be construed in connection with the act of 9th April, 1849, to which it refers, and is in a measure supplemental. Second. If the law is not so construed, but is an absolute discharge of the goods of an insolvent decedent without regard to the time of contracting the debt, it is unconstitutional and void, so far as it tends to impair the obligation of contracts. The right to modify the remedy has, to some extent, been recognized, provided it does not substantially impair the obligation, or materially affect the interests of the contracting parties. It has been held by the court of last resort under the Federal Constitution, that a law discharging the person of the debtor from arrest and imprisonment, did not impair the obligation, as the remedy against the property remained, and the confinement of the person was at last but a method of obliging payment, by compeling the delivery of the property and effects. Yet even those decisions have been greatly lamented by the judges who made them, and their sound-' ness doubted. If, in addition to relieving the person of the debtor, you also exempt his property from seizure, the contract has become an empty name, of no efficacy to the holder, as he has not the means of enforcing its performance. When the parties enter into a contract, it is clearly implied that they shall have all the means which the laws then in force afford to compel its consummation, and that the creditor shall not by law be deprived of any portion of the security he has in the effects of his debtor. This, however, it is also understood, is not to interfere with the ordinary rights of an owner to part with his property, but the interference by the legislature is alone forbidden by the Constitution. If, at the time of making the contract, the creditor has a remedy by execution against the whole property of the debtor to compel its performance, the legislature cannot say that his remedy shall be confined to one-half or one-third of his effects. It even transcends the power of the States to so modify the remedy, as to require a sale for two-thirds of the appraised value (2 Howard, 608; 1 Howard, 311). For the contract to remain intact, the creditor must have all the means of enforcing its performance which existed when it was made. Pie must have the unrestrained means of selling all the property of his debtor which he then had; no part can be relieved from sale by State legislation, nor can the sale be clogged with conditions. If the legislature can say that three hundred dollars’ worth of the debtor’s effects shall be relieved from the payment of his debts, and be retained from his creditors, they can say that $3000 or the whole shall be thus leaving the contract a dead letter without beneficial vitality. I am aware of the dictum of Taney, C. J., in 1 Howard, 315, that the legislature “may, if it thinks proper, direct that the necessary implements of agriculture, the tools of the mechanic, or articles of necessity in household furniture shall not be liable to execution on judgments and that this same dictum is followed by Gibson, C. J., in Chadwick v. Moore (8 W. & S. 51), although he does not say whether he approves or disapproves of the principle. Pie admits that it affects the contracts, at least in an inconsiderable degree. If the declarations of Taney, C. J., had been the point of the case, they would have been binding upon every judicial tribunal throughout this broad Union in every case arising under the Constitution of the United States; but that question not only did not arise at that time, but the dictum was entirely without the case under consideration. It yields the whole constitutional principle, and permits the State legislatures to exempt any and all the property of the debtor from execution. The moment we concede that the legislature may j udge of what articles are necessary for a man’s convenience or comfort, or for that of his family, and declare that they shall not be taken to enforce performance of his contract, we are at sea without chart or compass. If the implements, of agriculture are discharged, it must embrace not only the hoe, the plough, and the harrow, but the team; and as these are useless without the ground to cultivate, the farm can be exempted also. The shop is often as necessary to the mechanic as his tools. If the legislature can exempt the one, it can the other. If the necessities of one man’s family or business demand the exemption of thirty dollars’ worth of household effects, those of another may require to the amount of $300; and thus under the plea of necessity — the tyrant’s plea, and in the name of humanity to the poor, the argument of the demagogue— the constitutional security of contracts be frittered away. Whilst you permit the poor debtor to retain property to the amount of $300, you may deprive the poorer creditor of the bread for his family, which is his just due by his contract guaranteed to him by the Constitution. It seems to be taken for granted that the debtor is poor and necessitous, and the creditor in better circumstances; blit the reverse is very frequently the case. The creditor may not have the half of $300 to retain or leave for the use of his wife and children; and. of a portion of that little he may be deprived by unjust legislation. It may appear presumptuous to thus reason on the opinion of one of the supreme judges of the United States on a great constitutional question; but wé are not without precedent and authority for this course of reasoning. The Supreme Court of New York, in 1 Denio, 128, decided that their act of Assembly, declaring that the team of a person engaged in agriculture should be exempt from levy, was unconstitutional and void, so far as it related to debts previously contracted, and that the legislature possessed no power to create such exemptions. This case is full to the point now under consideration, and the decision was unanimously confirmed by the Court of Appeals, in 3 Denio, 594. The courts of Georgia have decided the same principle (1 H. M. Charlt. 324); where it is declared “ that a law which prohibits a levy on a portion of a debtor’s property previously subject to execution is unconstitutional.”

Laws of the character now under consideration are subject to even greater objections than those which leave the property in the hands of the debtor. It might be reasoned as to such, that the object was beneficial rather than injurious to the creditor, as the debtor would thereby be eventually better able to pay; but these give away the effects forever to persons on whom the creditor has no claim. If the intention of this act of Assembly was to give away $300 worth of the debtor’s property to his widow and children, to the exclusion of creditors existing prior to its passage,, it is unconstitutional and void. Will the law bear that construction and no other? If it can be so interpreted as to bring it within the pale of the Constitution, respect for the legislature requires us so to construe it. The act of 1849, which exempts $300 worth of property from execution or distress, declares “that it shall not take effect until July 4th, 1849, and shall apply only to debts contracted after that date.” The act of 1850 does not contain the necessary details for carrying its own provisions into effect, but refers to the act of 1849 for the modus operandi. The appraisement is to be made according to that act. It was only to come in play when the estate was “ insufficient to pay the debts of the deceased, exclusive of the amount of property which is now by law exempted from levy and sale upon an execution against a debtor,” and consequently can be considered as supplemental to the former act, part of one system, and may fairly be construed to apply to such debts as are or were contracted before July 4th, 1849. Even the words in the proviso do not militate against this construction, as liens might be created against the real estate of the decedent between July 4th, 1849, and the passage of the act under consideration, which it was not intended should be brought against the land, unless they were for purchase-money. If the debt was contracted after July 4th, 1849, the creditor could not complain that his rights were disregarded, for he knew at the time of making the contract that the debtor’s property to the amount of f300 was absolved from its payment, and it could as well be left for the benefit of the widow and children as retained for himself; but it never was intended that the widow should retain where the husband could not. This view is, in our opinion, rather strengthened than weakened by section 5 of the act of 14th of April, 1851, which clearly in terms provides for the retention of the same amount of property for the use of the same persons in all cases, whether the estate be insufficient to pay the debts “exclusive of the amount of property which is now by law exempted from levy and sale on execution against the debtor,” or otherwise. It is probable that the last-named act, which is general in its terms, must be construed to apply to all debts whenever contracted, and therefore will be declared unconstitutional by the courts, so far as it applies to debts contracted before July 4th, 1849; but it has no bearing on the present case, which arises entirely under the act of 1850, and is merely referred to as showing that the legislature considered the law of 1850 only applicable to debts contracted prior to July 4th, 1849. The latter act differs from the earlier in no particular but the one alluded to, and in the provision that the family must be living with tire decedent at the time of his demise, which is probably omitted in the last act by mistake, as we cannot believe the legislature intended to encourage the separation of families. The time was when all of our laws were enacted with a careful regard to the rights of parties under their contracts, but the increasing disregard of the legislature to the constitutional injunction will oblige the judiciary to interpose their authority, and enforce the superior law of the land for the security of the citizen. Therefore we hope that the validity of this kind of legislation may be tested at an early day before the Supreme Courts of the country. No question has been raised in the present case as to the rights of this widow and children to claim the property granted to them by former laws, nor have we any evidence that the decedent held such effects. Therefore we forbear to enter into any examination as to whether these laws are or are not still in force as to cases not coming within the acts of 1850 and 1851.

The exception is sustained, and the administrator is ordered to account for the sum of $300 claimed by the widow and children.


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      Orphans’ Court, Dauphin County,

      September 10th, 1853.
    In the Matter of Poorman’s Estate.
    When the validity of an assignment through which a person claims a share in an estate is disputed, the Orphans’ Court cannot decide it; an issue must he directed to the Court of Common Pleas.
   By the Court.

The auditor, who made distribution, declined to decide the validity of an alleged assignee’s claim, the assignment being disputed by the heir, Mr. Fishburn. If the validity of this assignment were admitted, the Orphans’ Court might award the money to the assignee; but it is disputed both oía the ground of fraud in obtaining it and the illegality of the instrument. Although section 19 of the act of June 16th, 1836, gives jurisdiction to the Orphans’ Court, to make distribution of the assets of a decedent after the settlement of his estate among creditors and others interested’,” yet the creditors must be taken to be such as have admitted claims, as an adverse controverted account cannot be allowed by, or recovered in the Orphans’ Court, and the others interested are the devisees or heirs, or those claiming by a conceded transfer under them. It has been repeatedly decided that an adverse claim cannot be recovered in the Orphans’ Court against the estate of a decedent, and also that claims in favor of the administrator against the heirs or distributees cannot be allowed if disputed by them. That court is not the proper and legitimate tribunal for trying disputed facts, unless where they necessarily and directly arise within it for adjudication. The estate of the decedent must be directly interested.

Here the claim is more legitimately cognizable in the Court of Common Pleas. It is an adverse claim against one of the heirs, denied by the party interested, whose right regularly comes before us as a distributee. Suppose this transfer had gone through three or four hands, and it was not the original, but some subsequent assessment which was questioned, could the Orphans’ Court determine that controversy? Or should not the parties rather be turned over to the Common Pleas? As we understand the report of the auditor, he merely distributes the money, as though it were all coming to the original heirs, refusing to establish or condemn the assignment; and as that distribution is unexceptionable, it is confirmed. But as we have notice that another person claims the money awarded to Mrs. Fishburn, and has a written assignment thereof, though his right is disputed by her and others, we shall not order the money to be paid to her, but direct that the administrator pay it into the Dauphin Deposit Bank, and place it at interest therein for the use of the person entitled, subject to the control and order of this court, until the parties have a reasonable opportunity to contest the right to said money, which if not done in' a reasonable time, the same will be hereafter awarded to the heirs by descent, or otherwise distributed according to law.


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      Orphans’ Court, Dauphin County,

      January 30th, 1855.
    In the Matter of the Account of Mumma, Guardian of Gotshall.
    An attorney-at-law, acting as a guardian, is entitled to compensation for professional services rendered to his ward’s estate.
   By the Court.

The report of the auditor presents a single question: “Can a guardian, who is an attorney-at-law, charge his ward for professional services rendered ?” The auditor came to the conclusion that he could not, and struck the item from the account. The beneficial character of the service is conceded, but it is said to be against legal policy to sustain the charge, and is contrary to settled principles of jurisprudence. We have no decision on the subject in Pennsylvania that I am aware of; and the auditor therefore has adopted the English rule, and from the law, as there established, has shown by a clear, lucid, and logical argument that the claim must be disallowed. It is clearly settled in England that a trustee is never entitled to compensation, however arduous the duties of the trust, except where there is an express provision found in the instrument creating it; and this rule is applicable to every class of trustees, including executors, administrators and guardians. The doctrine is the same in New York, except where it has been altered by statute (1 John Ch. 27; Ibid. 527; 6 Paige, 213). To cite additional authorities oh this subject would be an affectation of learning. In Pennsylvania, on the other hand, the rule is clearly otherwise, and compensation is allowed in every case, except where the trustee has undertaken to perform the duties gratuitously. There was no decision in England at the time of the American Revolution showing that an attorney-at-law, being a trustee, could not recover for services rendered to the trust estate as an attorney; consequently there is no rule binding on us, as the decisions are not obligatory; but had the subject come before their courts at an antecedent period, I have no doubt that the point would have been settled as now established. The courts, both of law and equity, have long declared that a trustee could recover no compensation; nor is anything allowed to a barrister without an express contract, and probably not to an attorney beyond his legal fees. But every State has a right to establish such a system of jurisprudence as best suits the circumstances of the people, and accords with the interests of the majority; and in Pennsylvania from the first settlement of the province trustees of every character have been entitled to compensation, and attorneys-at-law can recover on a quantum meruit. The objection to this claim most relied on under the English law therefore has no application in this State.

It is said to be contrary to public policy to allow any remuneration for professional services to an attorney when acting in a fiduciary capacity, as thereby he might be tempted to involve the estate in improper litigation. His duty might clash with his interest, and the latter predominate. Such appears to be the reasoning of Lord Lyndhurst, as given by Williams in his treatise on Executors, and all compensation to the attorney was refused (2 You). In Christopher v. White (10 Beavan, 523), the court went even further, and refused it to the other partner of the trustee, as by allowing it the latter would indirectly obtain compensation, which is against public policy. Though it is there said that had another attorney been employed, it Avould have been alloAvable. In the Matter of the Bank of Niagara (6 Paige), the same course of reasoning is adopted by the Chancellor of New York, and nothing was alloAved to the attorney trustee but his legally taxable costs; and as a trustee he must perform his duty Avithout compensation; and as an attorney can recover nothing for services without a contract, and could not bargain with himself. It is stated that there would be great danger in suffering a trustee to employ counsel, Avhen he is himself the person to be employed. On the contrary we have a decision of the Supreme Court of Alabama in Harris v. Martin, 9 Alabama Rep. 895, in which the whole subject is fully and ably examined, and compensation allowed an attorney administrator for attending to suits brought and carried on bond fide. The court declares that for advice or other small acts done in the performance of the trust he cannot be compensated, but for litigation of importance to the estate, publicly conducted, there can be no difficulty in the court determining the propriety of the proceeding and amount of remuneration; and an allowance should be made equal to that ordinarily given to counsel of equal standing for similar services; the court to judge of the necessity. The difference is clearly pointed out between the rule in England and Alabama, both as to compensation to trustees and attorneys; and it is said that there is no reason why an attorney should not be allowed for his services, when necessary, and rendered bond fide, and the inquiry should be, “What would a prudent man, vested with the functions of an administrator, feel authorized to pay an attorney under all the circumstances?” This decision in all its bearings is better adapted to our system of jurisprudence than the rule adopted in England and New York, and I am disposed to follow it.

For one humble member of the legal profession, I never can consent to establish a rule by which it is implied that every lawyer is dishonest and will encourage litigation for the mere purpose of putting money in his own pocket. By a parity of reasoning we must say that, if the guardian chanced to be a physician, he could not charge for professional services rendered to his ward in case of sickness, because he had an interest in creating an imaginary disease, so as to render his services; or, if the sickness were real, in making more visits than the nature of the case required. Or should he chance to be a tailor, shoemaker, or hatter, the bills for articles in his line, furnished the minor, must be rejected, because the interest of the mechanic would lead him to furnish too great an amount of the particular kind of clothing to the ward, and thereby clash with his duty. The court can as well determine as to the propriety and necessity of litigation as it can of the mechanics’ bills, and infinitely better than of the physician’s services.

We feel ourselves fully authorized, on every sound legal principle in force in Pennsylvania, to allow a faff and reasonable compensation for professional services rendered by a trustee, the court always being the judge as to the propriety, necessity, and value of the services. Nor do we believe that such a rule will endanger the interest of the cestui que trust, but on the contrary, will tend to promote it.

By the practice of the English and New York courts, the trustee is tempted to give himself as little trouble as possible in relation to the trust estate. He may know of valid claims, yet fail to search them out and pursue them, as thereby not his compensation but his labor is increased. A vigilant, active, and intelligent lawyer, acting in a fiduciary capacity, may be able to ferret out and recover property of value to those he represents; and, in our opinion, the interest of society is promoted by encouraging him in so doing. We cannot believe that by so deciding we clash with any rule of law or public policy. In England and New York an attorney administrator is justifiable in engaging another attorney to attend to the interests of the estate; and if such attorney happens to be an executor or guardian, he may, in turn, employ his employer in relation to his trust. Why not permit each to attend to the business of his own estate, which he best understands, and not drive the two to an exchange of labor? The litigation, for attending to which the present compensation is . claimed, came under the immediate observation of this court. Therefore we can judge of its propriety and the extent of the services. The guardian, through his knowledge as an attorney, and by his vigilance in the pursuit of his profession, saved the whole amount recovered from the railroad company for his wards, and is, in our opinion, well entitled to the compensation demanded. If we had not the power to allow it in this form, we should in another, by increasing the sum given by the auditor to cover expenses and as compensation for his labor as a guardian. But we prefer meeting and deciding the main question of the case, it being of great importance to the legal profession in Pennsylvania, as they, more than any other class of men, are called on to act in a fiduciary capacity.

It is ordered by the court that the report of the auditor be reversed .on the exception filed; that the account, as originally filed, be confirmed, and the costs of the audit paid out of the fund in the hands of the guardian, to be equally deducted from the share of each ward.


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      Orphans’ Court, Dauphin County,

      December 17th, 1855.
    In the Matter of Ritterspach’s Estate.
    A widow, being administratrix of the estate of her husband, did not settle it up, but after carrying on his business for some time in her own name, and using his personal property, sold it all, including her own claim for three hundred dollars out of his estate, for a certain sum, and with an agreement that her vendee should pay all her husband’s debts. .Held, That the estate of the administratrix was responsible for all of her decedent’s debts, which her vendee failed to pay.

      Held, further, That not having collected three hundred dollars out of her husband’s estate, but having merely sold her right to it, her estate must be charged with that amount.
   By the Court.

Mabala Bitterspach was administratrix of her husband Charles, and before settling an account on his estate, died. Administration was granted on her estate, and the two accounts are now submitted for final confirmation. It appears that Ma.bn.la. did not proceed according to law in the settlement of her husband’s estate, but after his decease continued to occupy the tavern-house, of which he held a lease, and to use the household furniture until July 1st, 1852, when she entered into an article of agreement, in writing, to sell the effects, real as well as personal; to Michael N. Stoner, for the consideration of $400, and the further consideration that the said Michael should pay all the debts of every nature and kind due or owing by her deceased husband. The article also shows that Mrs. Bitterspach had been carrying on business on her own account after her husband’s death, and with the effects referred to, transferred certain accounts due to her.

This whole proceeding was illegal, as it was her duty to have sold all of the personal property, including the lease of the tavern, at vendue, to have collected the debts due to her husband, and paid so far as she had assets. It is quite probable that entering into the article was as favorable an arrangement for those interested in the estate, whether as heirs or creditors, as a public sale, perhaps more so; and although unauthorized, it does not lie either in her or Stoner’s mouth to aver the illegality. The heirs and creditors have a right to enforce the article, and hold Mrs. Bitterspach’s estate responsible for its performance. If Mr. Stoner failed to pay the debts according to contract, it was the duty of Mrs. Bitterspach to sue on the article, and collect the amount. Failing to do so, she is guilty of a devastavit of her husband’s goods, and the debts must be charged to her. The account must be corrected by charging the administratrix with the unpaid debts of her husband’s estate, if the same have not been discharged by Stoner; and the accounts show that $196.88 remains unpaid. The article does not bind Stoner to pay the expenses of settling the estate, amounting in this case to $59, which is properly allowed as a credit to Mrs. Bitterspach. We come now to another branch of the case. The auditor received parol evidence to show what part of the consideration in the article emanated from Mrs. Bitterspach, and what from her husband’s estate. This evidence was rightly received, as the article is ambiguous on the subject, and yet on its face shows that some part came from her. On looking into the testimony, it appears that besides the goods, the lease and the lot belonging to the husband, Mrs. Bitterspach agreed to give her own services, her own accounts, and her right to take $300 worth of her husband’s goods. In consideration of which Mr. Stoner agreed that she should keep certain enumerated articles; that he would pay all the debts of the decedent’s estate, and pay her $500. From this it is very clear that Mrs. Bitterspach sold her right to the $300 worth of goods granted by law under certain circumstances for the use of herself and family. This sale took place before she had any more than a mere inchoate right. Her interest in the goods, as recognized by law, commences with the appraisement, submitted to, and approved by the court, and when she is not the administratrix, delivery over to her by the administrator. The widow must first select the goods, which, she desires to retain, and they are to be appraised as stated. "Without this she has no right. It is not in the power of the widow or heirs to sell their right to elect; and should they do so, the purchaser would acquire no interest. It is not an assignable or transferable commodity, but a kind 'of charity left by the law in the hands of a widow, not for her own use only, but as a trustee for herself and family and the object is to prevent a household from being stripped, on the death of the head, of those necessary articles in daily use, and required for the comfort and subsistence of all persons living in a civilized state. In this case no selection and appraisement was made, but the whole stock was sold. From what we have already said, it is clear that the widow had nothing to sell, yet she received $300 for an interest in her husband’s goods, which she only held as administratrix, and not as widow; consequently her estate must be charged with that sum.

Therefore, it is ordered that Mrs. Eitterspach be charged with the sum of three hundred dollars received for her husband’s goods, aird his estate credited with a like amount; and the account of Charles Eitterspach’s estate, after receiving the credit of $300, can suffer no deduction for debts except the expenses incident to the settlement thereof. If this disposition of the accounts falls heavily on the estate of Mrs. Eitterspach, it is attributable solely to her own illegal proceeding from first to last, in regard to her husband’s estate.

The two accounts are referred back to Mr. Etter to be stated on the principles indicated.


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    Orphans’ Court, Dauphin County,

      December 17th, 1855.
    In the Matter of Eargood’s Estate.
    The Orphans’ Court -will not make a decree compelling the executors of a decedent to make a deed for land contracted to be sold by him in his lifetime, when the terms of the contract are not fully proved.
    A receipt for a sum of money, part of the price of a piece of land, is not a sufficient writing to take the case out of the statute of frauds, when it does not set forth the terms of the agreement upon which the land is sold.
   By the Court.

The petitioner m the case has commenced a proceeding in the Orphans’ Court, under the act of 1834, to compel the administrator of George Fisher, Esq., deceased, to execute a deed for a lot of land in Portsmouth, pursuant to the terms of a parol contract entered into by Eargood and Fisher, in their respective lifetimes. The administrators of Fisher deny all knowledge of a bargain made by their intestate, and put the other party to the proof. Depositions have been taken, which show that a bargain of some kind was entered into between the parties for the sale of a lot of ground in Portsmouth, probably the one now claimed, as the witnessess all refer to a lot in possession of Eargood at the time. But we are left in total uncertainty as to the amount to be paid, or the time of payment. Two of the witnesses produced by the petitioner fix the price at $100, and the money to be paid whenever it suited the convenience of the pwrchaser; and one of these two fixes the time of that purchase in August, 1846. A third witness, produced by the same party, states that the price to be paid was $150, and fixes the time of sale at the payment of $23.75, when the receipt was given, bearing date July 28th, 1847. This evidence leaves the contract in total uncertainty as to the time of its commencement and the sum to be paid. It would be very difficult to make a decree on such evidence, if there were no other impediments. Sage v. McGuire (4 W. & S. 228) is similar in this feature of the case, and shows that so loose a contract cannot be enforced. All the witnesses agree that at the time of the bargain, and for many years before, Eargood was in possession of the lot as tenant of Eisher. This is also shown by the receipts produced. It is settled in cases too numerous to mention, that to take a parol contract for the sale of lands out of the statute of frauds and perjuries, possession must be delivered and talcen pursuant to the contract; and where the purchaser was in possession before and no change occurs, there is no distinct and unequivocal act of livery, such as the law requires; and therefore the bargain is void, no matter how clearly it may be proved, what was the consideration paid, or the improvements made on the premises by the purchaser (Jones v. Peterson, 3 S. & R. 545; 5 W. 146; 7 Barr, 16; 2 H. 260; 2 Jones, 15). Payment of the purchase-money, in whole or in part, will not take the case out of the operation of the statute (6 Wh. 153; 9 W. 85; Idem, 41; 1 W & S. 383).

The terms of the contract must distinctly appear (10 W. 204; 2 Barr, 815; 9 W. 110; 9 W. & S. 49; 4 W. & S. 228). The written receipts, although signed by the alleged vendor alone, are not sufficient, as they must in themselves show clearly the nature of the contract and define its terms. It must so far describe the property, and set forth the price and terms of payment, as to enable a chancellor to make a decree from the face of the writing alone without the aid of parol evidence, otherwise all the mischiefs intended to be guarded against by the statute would be introduced (Parrish v. Koons, 1 Parsons, 79, and the cases there cited). Here the receipts, neither severally nor all united, show what lot was sold, where situated, the price to be paid, nor when the payments were to be made. They are of no avail in law or equity. It has been questioned in several cases whether the contract must not be signed by both parties, but in our opinion it is quite sufficient if executed by the vendor or party to be charged, provided it is clear and definite in its terms.

We are of the opinion that this contract has not been proved in such a way as to justify the court in making a decree that the administrator of George Fisher shall execute a deed; but the petition must be dismissed, and the representatives of Eargood left to their remedy at law, if any they have, for the recovery of damages.

Petition dismissed at the expense of the applicant.