purpose of being transmitted by check to the owner. So in Matter of Leopold,107 money of a non-resident was on deposit in a New York bank for the purpose of making a particular immediate investment; the depositor died before the investment could be made. The deposit was held not to have a permanent situs in New York for the purpose of an inheritance tax. In the case of Blackstone v. Miller,108 however, where a sum of money was deposited in a New York bank by a resident of Illinois, and had so remained for more than a year, presumably awaiting investment, but with no particular investment in mind, the deposit was held to have a taxable situs in the state, and not to be merely in transitu.

V. TAXATION OF BUSINESS CAPITAL AND INCOME

A piece of property may consist of an aggregate mass made up of units which from to time vary. A typical example of such an aggregate is the stock in trade of a business which is constantly being diminished by sales and increased by purchases, yet at all times constituting a single stock and, roughly speaking, having a tolerably constant value. In spite of the fact that the units are constantly changing and that it may not be possible to fix a situs for any one unit in the mass, it is quite possible that the entire mass regarded as an entity should be assigned to a situs. Upon this ground it has been held that a merchant's stock in trade is taxable at its assessed value in the place where the business is being carried on, though the owner may be a nonresident,109 because it is "permanently located" there. In the language of Boyd, J., "the articles are changing from day to day, but the stock, which represents the aggregate of the goods and chattels remains about the same." 110 For the same reason accounts receivable for business carried on are taxable at the place of the business. Thus where a fraternal organization carried on its business in Fulton, but its

107 35 N. Y. Misc. 369, 71 N. Y. Supp. 1032 (1901).

108 188 U. S. 189 (1903).

109 People v. Roberts, 171 U. S. 658 (1898); Shaw v. Hartford, 56 Conn. 351, 15 Atl. 742 (1888); Leonard v. New Bedford, 16 Gray (Mass.) 292 (1860); Hilliard v. Fells Ice Co., 200 Mass. 331, 86 N. E. 773 (1909); People v. Barker, 141 N. Y. 118, 36 N. E. 1073 (1894); People v. Roberts, 151 N. Y. 652, 46 N. E. 1150 (1897). 110 Hopkins v. Baker, 78 Md. 363, 28 Atl. 284 (1894).

111 People v. Barker, 157 N. Y. 159, 51 N. E. 1043 (1898).

funds were held by its treasurer in Ottawa, it was held that it was taxable on its "funds and credits" in Fulton.112

So it is with profits or proceeds of the business in the form of accounts due to the business; they are taxable where the business is carried on. Thus where a foreign corporation carried on a warehouse in Kentucky, storage charges due to the corporation are taxable in Kentucky.113

The commonest application of this principle is the case where a fund is invested in a foreign state, through an agent, in local loans, new investments being constantly made as income is received from the fund or as old investments are paid. The leading case on this point is the case of Catlin v. Hull.114 In that case one Hammond, a resident of New York, who owned a large number of promissory notes against residents of the town of Orwell, in Vermont, placed these notes in the hands of a resident of Orwell as his agent. The agent was to manage the business of collecting and reloaning interest and principal in the interest of the owner. A tax was imposed upon the notes. It was argued that the tax was invalid on the ground that the debts being personal property had no situs, apart from the domicile of the owner. The court, however, held that where the property in fact was, the law had power to tax it. The court did not discuss at length the question of whether the notes really had a situs in the state, assuming that question. The case was at once generally followed.115

7

112 People v. Mystic Workers of the World, 270 Ill. 496, 110 N. E. 907 (1915).

113 Commonwealth v. Kentucky D. & W. Co., 143 Ky. 314, 136 S. W. 1032 (1911). 114 21 Vt. 152 (1849).

115 Bristol v. Washington County, 177 U. S. 133 (1899); M'Cutcheon v. Rice County, Fed. 558 (1881); Walker v. Jack, 88 Fed. 576 (1898); Battle v. Mobile, 9 Ala. 234, (1846); People v. Home Ins. Co., 29 Cal. 533 (1866); Board of Supervisors v. Davenport, 40 Ill. 197 (1866); Goldgart v. People, 106 Ill. 25 (1883); People v. Davis, 112 Ill. 272 (1884); Hayward v. Board of Review, 189 Ill. 234, 59 N. E. 601 (1901); New Albany v. Meekin, 3 Ind. 481 (1852); Foresman v. Byrns, 68 Ind. 247 (1879) (semble); Hathaway v. Edwards, 42 Ind. App. 22, 85 N. E. 28 (1908); Hunter v. Board of Supervisors, 33 Ia. 376 (1871) (semble); Hutchinson v. Board of Supervisors, 66 Ia. 35, 23 N. W. 249 (1885); Buck v. Miami County (Kan.), 173 Pac. 344 (1918); Wilcox v. Ellis, 14 Kan. 588 (1875); Fisher v. Rush County, 19 Kan. 414 (1877); In re Jefferson, 35 Minn. 215, 28 N. W. 256 (1886); State v. London & N. W. A. Mtg. Co., 80 Minn. 277, 83 N. W. 339 (1900); State v. St. Louis County Court, 47 Mo. 594 (1871) (semble); Finch . York County, 19 Neb. 50, 26 N. W. 589 (1886); Bowman v. Boyd, 21 Nev. 281, 30 Pac. 823 (1892); People v. Gardner, 51 Barb. (N. Y.) 352 (1868); Williams v. Wayne County, 78 N. Y. 561 (1879); Boardman v. Tompkins County, 85 N. Y. 359 (1881); Redmond v. Commissioners, 87 N. C. 122 (1882); Poppleton v. Yamhill County,

The decisions with regard to the taxation of notes and other securities in the hands of a local agent were sometimes based upon the theory that the securities had an actual physical situs within the state.116 But these cases are exceptional; the power cannot be rested solely upon this ground, since it is almost universally applied as well to debts and other intangible property as to notes and bonds. Credits acquired in the course of business are taxable as business capital, situated at the place of business.117 The received doctrine is well stated by Chief Justice Whitfield in Adams v. Colonial & United States Mortgage Co.118

"Wherever the money of a lender in one state is by the principal intrusted to the control of an agent in another state for the purpose of being kept in the latter state, and loaned out, collected, and reloaned, or habitually kept on deposit, for safety merely, . . . so as thus to remain, through a course of dealing, so long as to become localized as a part of the whole mass of personal property in the latter state, such money acquires what is known as a 'business situs' for the purpose of taxation."

The assets constitute, as it were, the subject matter or stock in trade of such business.119 Thus, in Metropolitan Life Insurance Co. v. New Orleans 120 Mr. Justice Moody said:

"We are not dealing here merely with a single credit or a series of separate credits, but with a business. The insurance company chose to enter into the business of lending money within the State of Louisiana, and employed a local agent to conduct that business. It was conducted under the laws of the State. The State undertook to tax the capital employed in the business precisely as it taxed the capital of its own citizens in like situation. For the purpose of arriving at the amount of capital actually employed, it caused the credits arising out of the business to be assessed. We think the State had the power to do this, and that the foreigner doing business cannot escape taxation upon his capital

18 Ore. 377, 23 Pac. 253 (1890); Billinghurst v. Spink County, 5 S. D. 84, 58 N. W. 272 (1894).

116 New Orleans v. Stempel, 175 U. S. 309 (1889).

117 See most of the cases cited above, note 115, as well as the following: People v. Willis, 133 N. Y. 383, 31 N. E. 225 (1892); People v. Barker, 157 N. Y. 159, 51 N. E. 1043 (1898); Matter of McMahon, 66 How. Pr. (N. Y.) 190 (1883); Marshall-Wells Hardware Co. v. Multnomah County, 58 Ore. 469, 115 Pac. 150 (1911).

118 82 Miss. 263, 392, 34 So. 482 (1903).

119 Boggs, J., in Matzenbaugh v. People, 194 Ill. 108, 116, 62 N. E. 546 (1902). 120 205 U. S. 395, 402 (1907).

by removing temporarily from the State evidence of credits in the form of notes. Under such circumstances, they have a taxable situs in the State of their origin."

It will be noticed that in the case just quoted the notes were from time to time sent by the agent to the owner to be held by him. The court regarded this as a mere temporary absence from the place where they were really and constantly in use, that is, the place where the business was carried on. This fact, of course, accentuates the position taken by the court that the notes were taxable as part of a stock in trade.

The general doctrine is illustrated by a series of decisions in Louisiana, in which legislation has been especially directed to the taxation of business done within the state by nonresidents. In the first case a bank deposit made by a local agent of a nonresident was held not taxable. Clason v. Board of Assessors.121 In Bluefields Banana Co. v. Board of Assessors, 122 this was distinguished as a temporary deposit, and a bank deposit permanently used in carrying on the business was held taxable. The case was followed in Parker v. Strauss.123 These decisions were, however, soon discredited. In Liverpool & London & Globe Insurance Co. v. Board of Assessors, 124 it was held that bills receivable due to a foreign corporation arising out of business done within the state were not taxable; on the ground that debts in non-concrete form, i. e., simple contract debts, have no situs, and can be taxed at the domicile of the creditor. A year later the court in the case of Comptoir National v. Board of Assessors 125 allowed a local tax upon notes received in the course of business by a foreign corporation, though the notes were not negotiable; and the same decision was reached as to due-bills received in the course of business in Monongahela R. C. C. & C. Co. v. Board of Assessors.126

Up to this time the power to tax in this sort of case seems to have been conditioned upon the presence of a concrete debt or specialty within the state. But in two well-reasoned cases, simultaneously decided, the court overruled the earlier case and held

that the state might tax simple contract debts due to a nonresident, arising out of business done within the state. National Fire Insurance Co. v. Board of Assessors, 127 General Electric Co. v. Board of Assessors, 128 soon followed in Travelers' Insurance Co. v. Board of Assessors.129 The general line of reasoning adopted in these cases is that the permanent employment of capital in the carrying on of business within the state gave to all portions of the capital an actual situs within the state, even though it might for the time being take an intangible form.

Several of the decisions of the Supreme Court of Louisiana were carried to the Supreme Court of the United States, and were there affirmed upon the reasoning indicated.130

While the weight of authority in favor of this doctrine is overwhelming, a few exceptional cases must be noted. Thus a statute of 1851 in New York expressly exempted from taxation foreign capital transmitted to agents for investment.131 It was thereupon attempted to tax at the domicile of the owner in New York similar investments in the hands of an agent in another state. The court held, however, that such property had no situs in New York, and was therefore not taxable there under the New York law which, as has been seen, taxes tangible property only at its situs.132 And in State v. Gaylord,133 the court held that foreign investments of this sort could be taxed at the domicile of the owner. Of the numerous cases cited to sustain the contention that the investments were taxable in the state where the agent made them, Cassoday, J., said, "We decline to follow them."

The ordinary cases in this class must be carefully distinguished from a mere deposit of securities with an agent to hold, or even to collect. Neither the deposit of securities for safe keeping in the place nor sending them into that place for collection is enough to fix the situs of the securities there.134 In a rather striking case

127

121 La. 108, 46 So. 117 (1908). 129 122 La. 129, 47 So. 439 (1908).

128

121 La. 116, 46 So. 122 (1908).

130 New Orleans v. Stempel, 175 U. S. 309 (1899); Board of Assessors v. Comptoir National, 191 U. S. 388 (1903); Metropolitan Life Insurance Co. v. New Orleans, 205 U. S. 395 (1907); Liverpool & London & Globe Insurance Co. v. Orleans Assessors, 221 U. S. 346 (1911).

131 People v. Commissioners, 59 N. Y. 40 (1874).

132 People v. Smith, 88 N. Y. 576 (1882).

133 73 Wis. 316, 41 N. W. 521 (1889).

134 Reat v. People, 201 Ill. 469, 66 N. E. 242 (1903); Appeal of Borden, 208 Ill. 369,