Taxation of franchises

The State which incorporates, and that State only, may tax the franchise of a corporation, that is, its right to be and operate as a corporation.

56

It would seem, however, that the franchise or permission granted a foreign corporation to do business in a State may be taxed as property in that State. Also, of course, a yearly payment by the companies may be required by that State as a condition precedent to doing business in that State, but such payments partake more of the nature of a license fee than of a tax.

As regards a domestic corporation, a State may tax not only its property, and its franchise (valuing that franchise by net or gross receipts), but also may tax, as property, privileges or rights which it may have granted, as, for example the use of the public streets. The fact that, at the time of the granting of this right or privilege, payment was made therefor by the company, either in the form of a lump sum or a continuing annual amount, does not exempt that right from taxation according to its pecuniary value, any more than does the purchase of a piece of land from the State and payment therefor exempt it from future taxation as property.57

That a franchise may be taxed as a piece of property, and that, in estimating the value of this property, the value of the good will of the company may be included, is clearly established in Adams Express Co. v. Ohio.58

v. Washington Co., 177 U. S. 133; 20 Sup. Ct. Rep. 585; 44 L. ed. 701; Blackstone v. Miller, 188 U. S. 189; 23 Sup. Ct. Rep. 277; 47 L. ed. 439; State Board v. Comptoir National, 191 U. S. 388; 24 Sup. Ct. Rep. 109; 48 L. ed. 232; Buck v. Beach, 206 U. S. 392; 27 Sup. Ct. Rep. 712; 51 L. ed. 1106.

56 Louisville, etc., Ferry Co. v. Kentucky, 188 U. S. 385; 23 Sup. Ct. Rep. 463; 47 L. ed. 513.

57 People v. Roberts, 154 N. Y. 101; 159 N. Y. 70.

58 166 U. S. 185; 17 Sup. Ct. Rep. 604; 41 L. ed. 965. See, also,

Double taxation

We have seen that the right of a State to tax depends upon its jurisdiction over the object taxed, and that this jurisdiction is obtained by either actual or constructive presence of the object within the State's territorial limits. This constructive presence applies to personal property and depends upon the principle mobilia sequuntur personam. As to personal property it is thus possible that it may be actually in one State and be there taxed, and constructively in another State and there also taxed. The fact that one State has exercised its jurisdiction with reference to a matter, whether of taxation or otherwise, clearly can impose no obligation upon another State not to exercise such jurisdiction as it may have. This the Supreme Court of the United States has repeatedly recognized.59

The double taxation of a piece of property by the same State that is, its taxation twice viewed in the same aspect, is however, forbidden not only by the several constitutions of most of the States, but by the Fourteenth Amendment.

Metropolitan Ry. Co. v. Tax Commissioners, 199 U. S. 1; 25 Sup. Ct. Rep. 705; 50 L. ed. 65.

59 Coe v. Errol, 116 U. S. 517; 6 Sup. Ct. Rep. 475; 29 L. ed. 715; Blackstone v. Miller, 188 U. S. 189; 23 Sup. Ct. Rep. 277; 47 L. ed. 439.

CHAPTER XL

THE FEDERAL JUDICIARY: ITS ORGANIZATION

Constitutional provisions

The Constitution provides that there shall be a Supreme Court of the United States, and such inferior courts as Congress may from time to time ordain and establish. It is also provided that "the judges both of the supreme and inferior courts shall hold their offices during good behavior, and shall, at stated times, receive for their services a compensation which shall not be diminished during their continuance in office;" and that the judges of the Supreme Court shall be nominated by the President and appointed by and with the advice and consent of the Senate. All the other Federal justices are similarly appointed, but it is in the power of Congress to vest their appointment, "in the President alone, in the courts of law, or in the heads of departments."2

With the exception then of the tenure of office,3 and the constitutional provision regarding the appointment of the justices of the Supreme Court, the form of organization, the number of justices, etc., the Federal courts, including the Supreme Court, are wholly within the control of Congress.

The practice and procedure to be followed in these courts is also within the control of Congress except as to

1 Art. III, § 1.

2 Art. II, § 2, cl. 2.

3 This exception does not apply to territorial courts, and to such quasi judicial bodies as the Interstate Commerce Commission, these being rather congressional agencies than parts of the Federal ju diciary. See Clinton v. Englebrecht, 13 Wall. 434; 20 L. ed. 659.

certain mandatory provisions with reference to jury trial, second jeopardy, speedy and public trial, etc., contained principally in the first eight Amendments of the Constitution. These constitutional rights, immunities, and privileges guaranteed to the individual are considered elsewhere.

Inferior Federal courts

By the original Judiciary Act of 1789 provision was made for inferior Federal courts to be known as District and Circuit Courts. The territory of the Union was divided into districts composed of a State or portions of a State, for each of which a District Court was provided; and these dis-. tricts were grouped into circuits for each of which circuit courts were provided and a Justice of the Supreme Court assigned as Circuit Judge. With the exception of minor changes, as for example, the creation of new districts and circuits and making provision for Circuit Judges in addition to the Justices of the Supreme Court, the system thus established remained undisturbed for over one hundred years. In 1891, Congress created a new class of Federal tribunals known as the Circuit Courts of Appeals, one of these being assigned to each of the existing nine circuits; and in 1911 the circuit courts were abolished. 1909 a Court of Customs Appeals, and in 1910 a Commerce Court were created.

Also in

As at present constituted, therefore, the Federal judicial machinery consists of a Supreme Court, Circuit Courts of Appeals, District Courts, a Court of Customs Appeals, and a Commerce Court. In addition to these there are also a Court of Claims, and the Judiciary of the District of Columbia.

The Supreme Court-Its organization

The Supreme Court is at present composed of nine justices-eight associate justices and one chief justice.

It sits at Washington, D. C., and holds annual terms beginning in October and lasting until the end of May.

Each justice of the Supreme Court is assigned to a circuit where, in addition to certain administrative functions with reference to the assigning of judges to particular courts, he may sit in the Circuit Court of Appeals.

Circuit Courts of Appeals-Organization

The Circuit Courts of Appeals created by the act of 1891 are each held by three justices. These may be the Supreme Court Justice of the circuit, the circuit judges, or one or more of the district judges. Two judges constitute a quorum.

District Courts-Organization

There are now about eighty District Courts, nine of which are in the territories. In a few instances two districts are assigned to one judge. For each district a United States district attorney is appointed to represent the interests of the Federal Government. Marshals and other court officers are also provided. District judges must reside within their respective districts. They may, when assigned by the circuit judge or justice or the Chief Justice of the Supreme Court, hold the District or Circuit Court for any other district of the circuit within which. their districts lie, and any one of them may upon the designation of the Chief Justice hold the District and Circuit Court of any District in a Circuit contiguous to his own.

Court of Customs Appeals

This court consists of five judges, of whom three constitute a quorum, but the concurrence of three judges is necessary for a decision. The clerk of the court has his office at Washington, D. C., but the court may be held in any one of the judicial circuits.