#470 is to put a restraint upon a power that has | so, it avoids discrimination. In other words, practical justifications. it is the effect of the statute that its requirement applies as well to citizens of the state of South Carolina as to citizens of other states, residence and citizenship being different things. The illegality of the act is, however, earnestly urged and that it is a "trade regulation" and recognizes "the business, trade or occupation of an insurance broker as proper and legitimate," and yet denies to La Tourette, a citizen of New York, the right to engage in it and thereby abridges the privileges and immunities that he has as a citizen. The contention is expressed and illustrated in a number of ways, and the privilege of a citizen is defined to be "the right to pursue and obtain happiness and safety" and "to pursue any lawful business or vocation, in any manner not inconsistent with the equal rights of others," and that whatever rights a state grants to its own citizens are the measure within its jurisdiction of the rights of the citizens of other states, and for these propositions the Slaughterhouse Cases, 16 Wall. 36, 21 L. Ed. 394, and Butchers' Union v. Crescent City Co., 111 U. S. 746, 4 Sup. Ct. 652, 28 L. Ed. 585, are cited. Other cases are also cited in illustration. We do not dispute the propositions, and to see if they determine against the act under review we must turn to its words, as did the Supreme Court of the state, whose interpretation of them we must accept. It said, speaking by Mr. Justice Hydrick: "A citizen of any state of the Union who is a resident of this state and has been a licensed insurance agent of this state for at least two years may obtain a broker's license; on the other hand, a citizen of this state, who is not a resident of the state and has not been a licensed insurance agent of this state for two years, may not be licensed. No discrimination is made *on account of citizenship. It rests alone on residence in the state and experience in the business." And the court further said: "Citizenship and residence are not the same thing, nor does one include the other. Cummings v. Wingo, 31 S. C. 427, 435, 10 S. E. 107, and authorities cited. But our conclusion is not rested upon the mere use of the word 'residents'; for no doubt it might appear from the purpose and scope of an act that 'residents' was used in the sense of citizens.' If so, the court would so construe it; and in no event would the court sanction an evasion of the purpose and intent of this wise and wholesome provision of the Constitution based on mere verbiage. But there is nothing in the act to suggest any such intention. On the contrary, the words 'residents' and 'citizens' are both used, and each apparently in its ordinary legal sense, which is well defined and understood, making a distinction which is substantial in its purpose and one that is sanctioned by the highest judicial authority." The court thus distinguishes between citizens and residents and decides that it is the purpose of the statute to do so and, by doing of the act to regulate commerce (Comp. St. 8563), by bringing telegraph, telephone, and cable companies within the act, with a proviso that nothing in the act shall be construed to prevent such companies from entering into contracts with common carriers, for the exchange of service, allows "exchange," which is barter, and carries with it no implication of reduction to money, as a common denominator, of services off the line as well as on it. Act June 18, 1910, § 7, amending section 1 and Phrases, First and Second Series, Ex[Ed. Note.-For other definitions, see Words change.] In Error to the Supreme Court, Appellate Division, First Department of the State of New York. Appeal from the United States Circuit Court of Appeals for the Second Circuit. Appeal from the United States Circuit Court of Appeals for the Seventh Circuit. Three cases-one an action by the Postal Telegraph-Cable Company against the Tonopah & Tidewater Railroad Company, in which there was judgment for defendant, affirmed by the Supreme Court of New York (176 App. Div. 910, 162 N. Y. Supp. 1140), and plaintiff brings error; another a suit by the Baltimore & Ohio Railroad Company against the Western Union Telegraph Company, in which decree for plaintiff (241 Fed. 162) was affirmed by the Circuit Court of Appeals (242 Fed. 914, 155 C. C. A. 502), and defendant appeals; and the third a suit by the Chicago Great Western Railroad against the Postal Telegraph-Cable Company, in which decree for defendant (245 Fed. 592) was reversed by the Circuit Court of Appeals (249 Fed. 664), and defendant appeals. Affirmed. For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes Messrs. Jacob E. Dittus and Ode L. Rankin, both of Chicago, Ill., and Bynum E. Hinton, of Washington, D. C., for Postal Telegraph-Cable Co. vision of expenses between the railroad and telegraph, for the use by the telegraph of the railroad's right of way for its poles, for monthly payment of a certain sum by the *Mr. Rush Taggart, of New York City, for telegraph, and then agree, this being the Western Union Telegraph Co. Mr. Ralph M. Shaw, of Chicago, Ill., for Chicago Great Western R. R. Messrs. J. Du Pratt White and Roberts Walker, both of New York City, for Baltimore & O. R. Co. Mr. Charles W. Needham, of Washington, D. C., for Interstate Commerce Commission (by leave). point now material, that up to a certain amount calculated at the regular day rates of the telegraph, it should deliver free of charge messages pertaining to the railroad business to any points on its system on or beyond the railroad lines, and that up to an amount calculated in similar manner the railroad should transport the materials, supplies and employés of the telegraph, needed for the construction, maintenance or renewal of Mr. Justice HOLMES delivered the opinion the telegraph lines whether on or off the of the Court. lines of the road. The latest ruling of the Interstate Commerce Commission is that these contracts for an exchange of service while *valid for services on the line are invalid as to services off the line, which last, it is held, must be charged for by the railroad upon the basis of its published rates and by the telegraph upon that of its charges reasonably charged to other customers for similar services. The Commission construes in this way a proviso added to section 1 of the act to regulate commerce (Act Feb. 4, 1887, c. 104, 24 Stat. 379) by an amendment of June 18, 1910, c. 309, § 7, 36 Stat. 544 (Comp. St. § 8563). This amendment panies within the act but also inserted a proviso "that nothing in this Act shall be construed to prevent telephone, telegraph, and cable companies from entering into contracts, with common carriers, for the exchange of services." The question more specifically stated is whether the construction adopted by the Commission is right. The first of these cases, Postal TelegraphCable Co. v. Tonopah & Tidewater Railroad Co., was a suit in the Municipal Court of the City of New York for services rendered to the Railroad Company. The defendant set up that the services consisted of the sending of telegrams relating to the defendant's business and were covered by a contract such as usually is made between railroads and telegraphs, under which such telegrams were to be sent free of specific charge. The question raised was the validity of the agreement. The Court decided that it was valid and judgment for the defendant was affirmed on appeal, 176 App. Div. 910, 162 N. Y. Supp. | brought telegraph, telephone and cable com1140. The next case in number, The Western Union Telegraph Co. v. The Baltimore & Ohio Railroad Co., was brought by the Railroad Company in the District Court of the United States for the Southern District of New York and sets up a similar contract, which the Telegraph Company *now refuses to perform in consequence of a ruling of the Interstate Commerce Commission. It prays a declaration of the validity of the contract and specific performance. The plaintiff obtained a decree in the District Court, 241 Fed. 162, which was affirmed by the Circuit Court of Appeals, 242 Fed. 914. The last of the three cases, Postal Telegraph-Cable Co. v. Chicago Great Western Railroad, was another bill in equity, brought by the Railroad Company in the District Court of the United States for the Northern District of Illinois upon a similar contract, to prevent a multiplicity of suits by the Telegraph Company like that first above mentioned, to have the validity of the contract declared, and to obtain a decree that it be performed. The defendant prevailed in the District Court, 245 Fed. 592, but the decision was reversed by the Circuit Court of Appeals, and there the plaintiff obtained a decree, 249 Fed. 664. The only question upon which our decision is sought is the validity of the agreements, which are so far alike as to present a single issue here. The contracts elaborately provide for the reciprocal rights of the companies, for a di We do not see how that construction can be got from the words of the act. The words are general and as certainly allow services off the line as services on it to be exchanged. In fact they do so almost in terms by allowing common carriers to exchange with cable companies. This being obvious, it is said that while the abstinence of the act from preventing exchanges covers the whole ground, the exchange of services off the line must be on the terms that we have stated, which makes the act as to them merely a superfluous permission to settle accounts periodically instead of paying for each transaction in cash. But "exchange" is barter and carries with it no implication of reduction to money as a common denominator. It contemplates simply an estimate, determined by self interest, of the relative value and importance of the services rendered and those received. This is admitted with regard to serv ices on the line, and if so whatever services can be exchanged can be exchanged in the same way. We cannot follow the argument from Santa Fé, Prescott & Phoenix Ry. Co. v. Grant Brothers Construction Co., 228 U. S. 177, 33 Sup. Ct. 474, 57 L. Ed. 787, that the exchange properly *so called should be confined to cases where the common carrier is not acting as such. That seems to us a perverse conclusion from a proviso permitting "common carriers" to exchange. it then stood contracts for services off the line were unlawful. 12 I. C. C. 10, 12. Then the Amendment of 1910 was passed, and passed, we must suppose, having the opinion of the Commission and the notorious longstanding form of existing contracts in view. The contracts are complex, as we have said, and entire. We cannot believe that an act which purported to allow them meant to break them up. The Commission seems not to have believed it in its first ruling upon the amended act. Our opinion is confirmed by a consideration of the further additions to section 1, in 1910, allowing free passes to *be given to the employés of telegraph, telephone and cable lines, and by some further matters of detail referred to in the judgments of the Courts below of which we have cited the reports. The interdependence of the companies is very intimate, and the trouble that would be caus Nothing is gained by referring to the provisions in other sections or to those of the section to which the proviso is attached, for the provision is that nothing in the act, in whatever section it may occur, shall be twisted into preventing the exchange. The passion for equality sometimes leads to hollow formulas and the attempt to bring these arrangements under the head of undue preferences and the like hardly seems a natural result of the statute. No one knows which of the two would be found to be preferred as having the best of a very complex bargain. All the great benefits derived on one side are the consideration for all those conferred upon the other. The railroad and the telegraphed by a narrow construction of the act we behave grown together in mutual dependence and we are told that contracts of this sort for long terms have been nearly universal for fifty years. The contracts had been called to the attention of Congress repeatedly by the Commission, which, in December, 1906, stated that, so far as it could see, the full performance of them by the carriers would not affect any public or private interest adversely. It held however that under the law as lieve would be great, with no advantage so far as we can see to any other users of the lines or roads. We do not go into more minute discussion because the result reached must stand on the plain words of the act, the meaning of which is confirmed rather than made doubtful by the circumstances in which the proviso was enacted and the events that had gone before. Judgment and decrees affirmed. *476 *480 (248 U. S. 476) (Submitted Oct. 14, 1918. able resources of banks for the purposes of taxation are reached under the law of California, not by an immediate levy on the banks as the owner, but by annual assessment Decided Jan. 27, and tax thereon made by the State Board of Equalization against the stockholders of banks. The state law places the duty upon the banks to pay the tax assessed against their stockholders, with the obligation on the 10- NATIONAL STATE AUTHORITY. BANKS Rev. St. § 5219 (Comp. St. § 9784), furnishes the exclusive rule governing state taxation as to national banks. 11-NATIONAL BANKSSTOCK IN OTHER NATIONAL BANK AS ASSETS. Rev. St. § 5219 (Comp. St. § 9784), merely authorizing states to tax stock of national banks to the owners of the shares, does not allow stock of one national bank owned by another such bank, and so taxed to it, to be considered as assets of the owner bank for purpose of taxing its stockholders on their shares. 4. TAXATION 10- NATIONAL STOCK OWNED IN STATE BANK. BANKS A national bank, being subject to state taxation as a federal agency only to the extent authorized by Rev. St. § 5219 (Comp. St. § 9784), is not taxable as a stockholder of a state bank. 5. TAXATION 11- NATIONAL BANKS STOCK OWNED IN STATE BANK AS ASSETS. Stock of a state bank owned by a national bank, but not taxable to it, is to be considered an asset of it, in determining the value of stock in it taxable under Rev. St. § 5219 (Comp. St. $9784), to its stockholders. stockholders to repay, sanctioned by a right conferred upon the banks to sell the stock of any stockholder failing to refund. The Bank of California, organized under the National Banking Law (Act June 3, 1864, c. 106, 13 Stat. 99) and established in San Francisco, commenced this suit to recover the amount of a tax, levied against its stockholders in 1915 under the law previously *stated, which it had paid under protest claiming that the tax was not only unlawful under the state law but illegal under the law of the United States governing the right of a state to tax national banks and their stockholders. The case is here to review a judgment denying the right to recover, on the ground that the tax had been lawfully exacted under both the law of the state and that of the United States. The decision below, in so far as it rested upon the state law, is binding and we put that subject out of view. To understand the contentions as to the law of the United States requires a brief statement of the tax levied and the particulars in which it is complained of. The capital of the bank was $8,500,000, evidenced by 85,000 shares of the par value of $100 each. D. O. Mills & Company was a national bank established at Sacramento and the California Bank was a stockholder in that bank to the extent of 2,501 shares. The California Bank was also the owner of 1,001 Mr. Justice Pitney, Mr. Justice Brandeis, and shares of stock in the Mission Bank, a bankMr. Justice Clarke, dissenting. ing corporation organized under the state law In Error to the Supreme Court of the State and doing business in San Francisco. The of California. Board of Equalization in 1915 fixed the value of all the assets of the California Bank at the sum of $15,775,252.67. The Board includ Action by the Bank of California, National Association, against Friend William Richard-ed in the assets making up this amount the son, State Treasurer of California. Judgment for defendant was affirmed by the Supreme Court of California (175 Cal. 813, 165 Pac. 152), and plaintiff brings error. Reversed and remanded. Mr. E S. Pillsbury, Mr. F. D. Madison, Mr. Oscar Sutro, and Mr. Alfred Sutro, all of San Francisco, Cal., for plaintiff in error. Mr. U. S. Webb and Mr. Raymond Benjamin, bou of San Francisco, Cal., for fendant in error. stock standing in the name of the California Bank, both in the D. O. Mills National Bank and in the Mission State Bank; the first, the Mills National Bank stock, being computed as worth $625,546.30, and the second, the Mission State Bank stock, as worth $121,916.50. Upon these valuations, the Board assessed the California Bank as a stockholder in the D. O. Mills National Bank and as a stockholddeer in the Mission State Bank for the shares of stock which it held in those banks, valuing each at the sum previously stated. Besides, *Mr. Chief Justice WHITE delivered the the stockholders of the California National opinion of the Court. Except as to real estate, which is taxed directly in the name of the owner, all the avail were assessed for the value of the assets of that bank, including in the amount the full value of the shares of stock owned by the For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes $482 *481 #483 bank in the Mills National and Mission State | power in the states to tax the banks, the naBanks. [1] The controversy grows out of the asserted illegality of the twofold tax levied on the assessments of the California Bank as a stockholder in the Mills National Bank and in the Mission State Bank. Its solution depends upon the effect of Rev. St. 5219 (Comp. St. § 9784), the text of which is in the margin.1 Without considering some modifications made by the Act of February 10, 1868 (15 Stat. 34, c. 7 [Comp. St. § 9784]), which are negligible for the purposes of the questions before us, the section is but the reproduction of a provision of section 41 of the Act of June 3, 1864, dealing with the organization of national banks. 13 Stat. 99, 112. The forms of expression used in the section make it certain that in adopting it the legislative mind had in view the subject of how far the banking associations created were or should be made subject to state taxation, which presumably it was deemed necessary to deal with in view of the controversies growing out of the creation of the Bank of the United States and dealt with by decisions of this court. McCulloch v. Maryland, 4 Wheat. 316, 436, 4 L. Ed. 579; Osborn v. Bank, 9 Wheat. 738, 867, 6 L. Ed. 204; Weston v. Charleston, 2 Pet. 449, 7 L. Ed. 481. | tional agencies created, so as to prevent all interference with their operations, the integrity of their assets, or the administrative governmental control over their affairs. Second, preservation of the taxing power of the several states so as to prevent any impairment thereof from arising from the existence of the national agencies created, to the end that the financial resources engaged in their development might not be withdrawn from the reach of state taxation, but on the contrary that every resource possessed by the banks as national agencies might in substance and effect remain liable to state taxation. The first aim was attained by the nonrecognition of any power whatever in the states to tax the federal agencies, the banks, except as to real estate specially provided for, and, therefore, the exclusion of all such powers. The second was reached by a recognition of the fact that, considered from the point of view of ultimate and beneficial interest, every available asset possessed or enjoyed by the banks would be owned by their stockholders and would be, therefore, reached by taxation Full and exof the stockholders as such. press power on that subject was given, accompanied with a limitation preventing its exercise in a discriminatory manner, a power which again *from its very limitation was exclusive of other methods of taxation and left, therefore, no room for taxation of the federal agency or its instrumentalities or essential accessories except as recognized by the provision in question. [2] Let us come to consider whether the taxation in question was sanctioned by the Act of Congress as thus understood. We do *There is also no doubt from the section that it was intended to comprehensively control the subject with which it dealt and thus to furnish the exclusive rule governing state taxation as to the federal agencies created as provided in the section. All possibility of dispute to the contrary is foreclosed by the decisions of this court. People v. Weaver, 100 U. S. 539, 25 L. Ed. 705; Mercantile Na-So, first, from the point of view of the twotional Bank v. New York, 131 U. S. 138, 154, 7 Sup. Ct. 826, 30 L. Ed. 895; Owensboro National Bank v. Owensboro, 173 U. S. 664, 19 Sup. Ct. 537, 43 L. Ed. 850; Covington v. First National Bank, 198 U. S. 100, 25 Sup. Ct. 562, 49 L. Ed. 963. Two provisions in apparent conflict were adopted. First, the absolute exclusion of "Nothing herein shall prevent all the shares in any association from being included in the valuation of the personal property of the owner or holder of such shares, in assessing taxes imposed by authority of the state within which the association is located; but the legislature of each state may fold tax which was based on the ownership by the California Bank of stock in the D. O. Mills National Bank, and, second, as to the taxes which resulted from the ownership by the California Bank of stock in the Mission State Bank. In Bank of Redemption v. Boston, 125 U. S. 60, 8 Sup. Ct. 772, 31 L. Ed. 689, it was determined that the stock held by one national bank in another is governed by the power to tax stockhouers given by the statute. Hence, the circumstance of the ownership of the stock by the California Bank in the D. O. Mills National Bank in no way deflects the operation of the statute. This being the case, as the taxation of the California Bank as a stockholder in the Mills Bank conformed to the grant of power to tax stockholders of national banks, it results that the assessment for taxation made upon that basis was within the state authority and was rightly decided determine and direct the manner and place of tax- as other real property is taxed." [3] But the principle upon which this rests inevitably leads to the further conclusion, that the inclusion of the stock ownership of the California Bank in the Mills Bank as an #484 |