Mr. Justice Brandeis delivered the opinion of the court:

profits of the company are derived principally from intangible property, the tax is imposed upon such proportion of the whole net income as the gross receipts within the state bear to the total gross receipts of the company. A corporation aggrieved because of a tax assessed upon it may, after paying the tax, apply for relief to the superior court for the county of Hartford. There it may show cause why it is not subject to the tax, or why the tax should have been less. If the whole tax assessed is found by the court to be proper, it enters judgment confirming the same. If the tax is found to be for any reason unauthorized in whole or in part, the court enters judgment for the company in the amount, with interest, which it is entitled to recover; and the state treasurer is directed to pay the same. The decision of the superior court is subject to review by the supreme court of errors, as in other cases. Laws 1915, chap. 292, part 4, §§ 19-29; Underwood Typewriter Co. v. Chamberlain, 92 Conn. 199, 102 Atl. 600.

This action was brought by the Underwood Typewriter Company, a Delaware corporation, in the superior court for the county of Hartford, Connecticut, to recover the amount of a tax assessed upon it by the latter state, and paid under protest. The company contended that, as applied to it, the taxing act violated rights guaranteed by the Federal Constitution. The constitutional questions involved were reserved by that court for consideration and advice by the supreme court of errors. The answers to these questions being favorable to the state (94 Conn. 47, 108 Atl. 154), judgment was entered by the superior court, confirming the validity of the tax. The case comes here on writ of error to that court. Connecticut established in 1915 a comprehensive system of taxation applicable alike to all foreign and domestic corporations carrying on business within the state. This system prescribes practically the only method by which such corporations are taxed, other than the general property tax to which all property locat- The Underwood Typewriter Company ed within the state, whether the owner is engaged in the business of manufacbe a resident or a nonresident, an indi- turing typewriters and kindred articles; vidual or a corporation, is subject. The in selling its product and also certain act divides business corporations into accessories and supplies which it purfour classes, and the several classes are chases; and in repairing and [119] taxed by somewhat different methods. renting such machines. Its main office The fourth class, "miscellaneous corpo- is in New York city. All its manrations," includes, among others, manufacturing is done in Connecticut. ufacturing and trading companies, and It has branch offices in other states with these alone are we concerned here. for the sale, lease, and repair of maUpon their net income earned during the chines and the sale of supplies; and preceding year from business carried on it has one such branch office in Conwithin the state a tax of 2 per cent is necticut. All articles made by itimposed annually. The amount of the and some which it purchases-are net income is ascertained by reference stored in Connecticut until shipped dito the income upon which the corpora- rect to the branch offices, purchasers, or tion [118] is required to pay a tax to lessees. In its return to the tax comthe United States. If the company car- missioner of Connecticut, made in 1916, ries on business also outside the state of under the above law, the company deConnecticut, the proportion of its net in-clared that its net profits during the precome earned from business carried on ceding year had been derived principalwithin the state is ascertained by ap-ly from tangible personal property; that portionment in the following manner: these profits amounted to $1,336,586.13; The corporation is required to state in that the fair cash value of the real esits annual return to the tax commission- tate and tangible personal property in er from what general source its profits Connecticut was $2,977,827.67, and the are principally derived. If the com- fair cash value of the real estate and pany's net profits are derived principally tangible personal property outside that from ownership, sale, or rental of real state was $3,343,155.11. The proportion property, or from the sale or use of of the real estate and tangible personal tangible personal property, the tax is property within the state was thus 47 imposed on such proportion of the whole per cent. The tax commissioner appornet income as the fair cash value of the tioned that percentage of the net profits, real and the tangible personal property namely, $629,668.50, as having been within the state bears to the fair cash earned from the business done within value of all the real and tangible person- the state, and assessed thereon a tax of al property of the company. If the net $12,593.37, being at the rate of 2 per

cent. The company, having paid the tax, under protest, brought this action in the superior court for the county of Hartford, to recover the whole amount.

within the state, or a direct tax upon that income; for "the argument upon analysis resolves itself into a mere question of definitions, and has no legitimate First. It is contended that the tax bearing upon any question raised under burdens interstate commerce, and hence the Federal Constitution." Shaffer v. is void under § 8 of article 1 of the Fed- Carter, 252 U. S. 37, 55, 64 L. ed. 445, eral Constitution. Payment of the tax 458, 40 Sup. Ct. Rep. 221. In support is not made a condition precedent to the of its objection that business outside the right of the corporation to carry on state is taxed, plaintiff rests solely upon business, including interstate business. the showing that, of its net profits, $1,Its enforcement is left to the ordinary 293,643.95 was received in other states means of collecting taxes. St. Louis and $42,942.18 in Connecticut; while, Southwestern R. Co. v. Arkansas, 235 under the method of apportionment of U. S. 350, 364, 59 L. ed. 265, 272, 35 Sup. net income required by the statute, 47 Ct. Rep. 99; Atlantic & P. Teleg. Co. v. per cent of its net income is attributable Philadelphia, 190 U. S. 160, 163, 47 L. to operations in Connecticut. But this ed. 995, 999, 23 Sup. Ct. Rep. 817. The showing wholly fails to sustain the obstatute is, therefore, not open to the ob- jection. The profits of the corporation jection that it compels the company to were largely earned by a series of transpay for the privileges of engaging in in- actions beginning with manufacture in terstate commerce. A [120] tax is not Connecticut, and ending with sale in obnoxious to the commerce clause merely other states. In this it was typical of a because imposed upon property used in large part of the manufacturing business interstate commerce, even if it takes the conducted in the state. The legislature, form of a tax for the privilege of exer- in [121] attempting to put upon this cising its franchise within the state. business its fair share of the burden Postal Teleg. Cable Co. v. Adams, 155 U. of taxation, was faced with the imS. 688, 695, 39 L. ed. 311, 315, 5 Inters. possibility of allocating specifically the Com. Rep. 1, 15 Sup. Ct. Rep. 268, 360. profits earned by the processes conThis tax is based upon the net profits ducted within its borders. It thereearned within the state. That a tax fore adopted a method of apportionmeasured by net profits is valid, although ment which, for all that appears in these profits may have been derived in this record, reached, and was meant part, or indeed mainly, from interstate to reach, only the profits earned withcommerce, is settled. United States in the state. "The plaintiff's argu

Glue Co. v. Oak Creek, 247 U. S. 321, 62 L. ed. 1135, 38 Sup. Ct. Rep. 499, Ann. Cas. 1918E, 748; Shaffer v. Carter, 252 U. S. 37, 57, 64 L. ed. 445, 458, 40 Sup. Ct. Rep. 221; compare William E. Peck & Co. v. Lowe, 247 U. S. 165, 62 L. ed. 1049, 38 Sup. Ct. Rep. 432. Whether it be deemed a property tax or a franchise tax, it is not obnoxious to the commerce

clause.

Second. It is contended that the tax violates the 14th Amendment because, directly or indirectly, it is imposed on income arising from business conducted beyond the boundaries of the state. In considering this objection, we may lay on one side the question whether this is an excise tax purporting to be measured by the income accruing from business 1 Compare Western U. Teleg. Co. v. Atty., Gen. 125 U. S. 530, 552, 31 L. ed. 790, 794, 8 Sup. Ct. Rep. 961; Pittsburgh, C. C. & St. L. R. Co. v. Backus, 154 U. S. 421, 430, 38 L. ed. 1031, 1037, 14 Sup. Ct. Rep. 1114; Cleveland, C. C. & St. L. R. Co. v. Backus, 154 U. S. 439, 445, 38 L. ed. 1041, 1046, 4 Inters. Com. Rep. 677, 14 Sup. Ct. Rep. 1122; Western U. Teleg. Co. v. Taggart, 163 U. S. 1, 14, 41 L. ed. 49, 54, 16 Sup. Ct. Rep. 1054; Adams Exp. Co. v. Ohio State

ment on this branch of the case," as stated by the supreme court of errors, "carries the burden of showing that 47 per cent of its net income is not reasonably attributable, for purposes of taxation, to the manufacture of products from the sale of which 80 per cent of its gross earnings was derived after paying manufacturing costs." 94 Conn. 47, 108 Atl. 159. The corporation has not even attempted to show this; and, for aught that appears, the percentage of net profits earned in Connecticut may have been much larger than 47 per cent. There is, consequently, nothing in this record to show that the method of apportionment adopted by the state was inherently arbitrary, or that its applicaAuditor, 165 U. S. 194, 221, 41 L. ed. 683, 695, 17 Sup. Ct. Rep. 305, 166 U. S. 185, 41 L. ed. 965, 17 Sup. Ct. Rep. 604; American Refrigerator Transit Co. v. Hall, 174 U. S. 70, 75, 43 L. ed. 899, 901, 19 Sup. Ct. Rep. 599; Union Refrigerator Transit Co. v. Lynch, 177 U. S. 149, 152, 44 L. ed. 708, 710, 20 Sup. Ct. Rep. 631; St. Louis Southwestern R. Co. v. Arkansas, 235 U. S. 350, 365, 59 L. ed. 265, 272, 35 Sup. Ct. Rep. 99.

169

tion to this corporation produced an unreasonable result.

death, upon which neither the general property tax nor an optional stamp tax had been paid for a fixed period, does not deny the equal protection of the laws.

[For other cases, see Constitutional Law, IV. a, 4, in Digest Sup. Ct. 1908.]

We have no occasion to consider whether the rule prescribed, if applied under different conditions, might be obnoxious to the Constitution. Adams Taxes-inheritance tax- property tax Exp. Co. v. Ohio State Auditor, 166 U. - penalty. S. 185, 222, 41 L. ed. 965, 978, 17 Sup. Ct. Rep. 604. Nor need we consider the contention made on behalf of the state, that the statute is necessarily valid, because the prescribed rule of apportionment is not rigid, and provision is made for rectifying, by proceedings in the superior court, any injustice resulting from its application.

[122] Third. It is stated in the brief, doubtless inadvertently, that the assignment of errors includes the objection that the tax was void under the 14th Amendment; also on the ground that the company, a foreign corporation, had made large permanent investments in Connecticut before the Statute of 1915 was enacted. No such

3. A property tax cannot be said to be imposed by a state statute exacting an adand other obligations held by a resident ditional transfer tax upon certain bonds decedent at his death, upon which neither the general property tax nor an optional stamp tax has been paid for a fixed period, merely because the existence of the statute may induce the owners of such property to present it for taxation, nor can the law be deemed to impose a penalty merely because the decedent's estate may, under it, be required to pay more for taxes than the deceased would have paid if he had presented his property for taxation.

[For other cases, see Taxes, IV. in Digest Sup. Ct. 1908.]

Ν

[No. 266.]

ber 15, 1920.

IN ERROR to the Surrogate's Court of

error appears to have been specifically Argued October 13, 1920. Decided Novemassigned, and the objection was not pressed in brief or oral argument. It is clearly unsound. To the facts presented here the principle discussed in Southern R. Co. v. Greene, 216 U. S. 400, 414, 54 L. ed. 536, 540, 30 Sup. Ct. Rep. 287, 17 Ann. Cas. 1247, has no application.

Affirmed.

ANNA H. WATSON and Frederick Watson, as Executors of the Last Will and Testament of Charles W. Watson, Deceased, Plffs. in Err.,

V.

New York County, in the State of New York, to review a judgment enforc ing a transfer tax, entered pursuant to the mandate of the Court of Appeals of that state, which reversed a judgment of the Appellate Division of the Supreme Court, First Department, affirming an order of the Surrogate's Court. Affirmed. See same case below, 226 N. Y. 384, 123 N. E. 758.

The facts are stated in the opinion.

Mr. Harold W. Bissell argued the cause, and, with Messrs. Edward R.

STATE COMPTROLLER OF THE STATE Greene and William C. Cannon, filed a

OF NEW YORK.

(See S. C. Reporter's ed. 122-125.)

Constitution law - equal protection of

the laws classification - taxation.

1. A classification of property for tax. ation does not offend against the equal protection of the laws clause of the Federal Constitution if it has a reasonable relation to some permitted end of governmental action. It is not necessary that the basis of the classification be deducible from the nature of the things classified. [For other cases, see Constitutional Law. IV.

a, 4, in Digest Sup. Ct. 1908.] Constitutional law — equal protection | of the laws-discrimination - classification inheritance tax.

2. The additional transfer tax of 5 per cent imposed by § 221b of the New York Tax Law, upon certain bonds and other obligations held by a resident decedent at his

brief for plaintiffs in error:

Section 221b of the New York Tax

Note. As to constitutional equality of privileges, immunities, and protection, generally-see note to Louisville Safety Vault & T. Co. v. Louisville & N. R. Co. 14 L.R.A. 579.

As to taxes on succession and collateral inheritances-see notes to Re Howe, 2 L.R.A. 825; Wallace v. Myers, 4 L.R.A. 171; Com. v. Ferguson, 10 L.R.A. 240; Re Romaine, 12 L.R.A. 401; Rodman v. Com. 33 L.R.A. (N.S.) 592; State ex rel. Ise v. Cline, 50 L.R.A. (N.S.) 991; and Magoun v. Illinois Trust & Sav. Bank, 42 L. ed. U. S. 1037.

As to nature of inheritance tax-see note to Re McKennan, 33 L.R.A. (N.S.) 606.

254 U. S.

Law must be construed as a succession Bank, 170 U. S. 283, 42 L. ed. 1037, 18 tax.

Griffith, 245 Ill. 532, 92 N. E. 313;, Keokee Consol. Coke Co. v. Taylor, 234 U. S. 224, 227, 58 L. ed. 1288, 1289, 34 Sup. Ct. Rep. 856; Central Lumber Co. v. South Dakota, 226 U. S. 157, 57 L. ed. 164, 33 Sup. Ct. Rep. 66; Tanner v. Little, 240 U. S. 369, 382, 60 L. ed. 691, 701, 36 Sup. Ct. Rep. 379; Cook v. Marshall County, 196 U. S. 261, 273, 49 L. ed. 471, 475, 25 Sup. Ct. Rep. 233; Ozan Lumber Co. v. Union County Bank, 207 U. S. 251, 52 L. ed. 195, 28 Sup. Ct. Rep. 89; Flint v. Stone Tracy Co. 220 U. S. 107, 55 L. ed. 389, 31 Sup. Ct. Rep. 342, Ann. Cas. 1912B, 1312; Magoun v. Illinois Trust & Sav. Bank, 170 U. S. 283, 299, 42 L. ed. 1037, 1044, 18 Sup. Ct. Rep. 594; American Sugar Ref. Co. v. Louisiana, 179 U. S. 89, 45 L. ed. 102, 21 Sup. Ct. Rep. 43; Connolly v. Union Sewer Pipe Co. 184 U. S. 540, 561, 46 L. ed. 679, 690, 22 Sup. Ct. Rep. 431; Board of Education v. Illinois, 203 U. S. 553, 560, 562, 51 L. ed. 314, 318, 319, 27 Sup. Ct. Rep. 171; 8 Ann. Cas. 157; Clement Nat. Bank v. Vermont, 231 U. S. 120, 142, 58 L. ed. 147, 158, 34 Sup. Ct. Rep. 31; Farmers' & M. Sav. Bank v. Minnesota, 232 U. S. 516, 531, 58 L. ed. 706, 713, 34 Sup. Ct. Rep. 354; Miller v. Strahl, 239 U. S. 426, 434, 60 L. ed. 364, 368, 36 Sup. Ct. Rep. 147; Northwestern Mut. L. Ins. Co. v. Wisconsin, 247 U. S. 132, 140, 62 L. ed. 1025, 1037, 38 Sup. Ct. Rep. 444.

The operation is equal.

Re Ramsdill, 190 N. Y. 492, 18 L.R.A. (N.S.) 946, 83 N. E. 584; Magoun v. Illinois Trust & Sav. Bank, 170 U. S. 283, 300, 42 L. ed. 1037, 1045, 18 Sup. Ct. Rep. 594; Maxwell v. Bugbee, 250 U. S. 525, 543, 63 L. ed. 1124, 1132, 40 Sup. Ct. Rep. 2.

18 Sup. Ct. Rep. 617; Board of Liquidation v. Louisiana, 179 U. S. 622, 626, 45 L. ed. 347, 349, 21 Sup. Ct. Rep. 263; Gulf & S. I. R. Co. v. Hewes, 183 U. S. 66, 75, 46 L. ed. 86, 90, 22 Sup. Ct. Rep. 26; New York ex rel. Metropolitan Street R. Co. v. New York State Tax Comrs. 199 U. S. 1, 35, 50 L. ed. 65, 74, 25 Sup. Ct. Rep. 705, 4 Ann. Cas. 381; Campbell v. California, 200 U. S. 87, 91, 50 L. ed. 382, 386, 26 Sup. Ct. Rep. 182; Cahen v. Brewster, 203 U. S. 543, 551, 51 L. ed. 310, 313, 27 Sup. Ct. Rep. 174, 8 Ann. Cas. 215; Chanler v. Kelsey, 205 U. S. 466, 477, 478, 51 L. ed. 882, 888, 27 Sup. Ct. Rep. 550; Moffitt v. Kelly, 218 U. S. 400, 405, 54 L. ed. 1086, 1087; 30 L. R. A. (N.S.) 1179, 31 Sup. Ct. Rep. 79; Preston v. Chicago, 226 U. S. 447, 57 L. ed. 293, 33 Sup. Ct. Rep. 177; Old Colony Trust Co. v. Omaha, 230 U. S. 100, 116, 57 L. ed. 1410, 1416, 33 Sup. Ct. Rep. 967; Willoughby v. Chicago, 235 U. S. 45, 50, 59 L. ed. 123, 126, 35 Sup. Ct. Rep. 23; St. Louis & K. C. Land Co. v. Kansas City, 241 U. S. 419, 427, 60 L. ed. 1072, 1078, 36 Sup. Ct. Rep. 647; Enterprise Irrig. Dist. v. Farmers Mut. Canal Co. 243 U. S. 157, 165, 61 L. ed. 644, 649, 37 Sup. Ct. Rep. 318; Crew Levick Co. v. Pennsylvania, 245 U. S. 292, 294, 62 L. ed. 295, 297, 38 Sup. Ct. Rep. 126; Hodge v. Muscatine County, 196 U. S. 276, 279, 49 L. ed. 477, 480, 25 Sup. Ct. Rep. 237; Grenada Lumber Co. v. Mississippi, 217 U. S. 433, 442, 54 L. ed. 826, 831, 30 Sup. Ct. Rep. 535; Brown-Forman Co. v. Kentucky, 217 U. S. 563, 572, 54 L. ed. 883, 886, 30 Sup. Ct. Rep. 578.

The class is definite and calls for diversity of taxation.

State v. Kings County, 125 N. Y. 319, This court will follow the decision of 26 N. E. 272; Gallup v. Schmidt, 183 U. the highest court of New York that § S. 300, 46 L. ed. 207, 22 Sup. Ct. Rep. 221b imposes a transfer tax as an addi- 162; Jackson Lumber Co. v. McCrimtional tax upon the transfer at death of mon, 164 Fed. 759; Hodge v. Muscatine unstamped bonds which have not paid County, 196 U. S. 276, 279, 49 L. ed. their just proportion of taxes; that the 477, 480, 25 Sup. Ct. Rep. 237; Pacific case of the decedent is typical as re- Exp. Co. v. Seibert, 142 U. S. 339, 351, gards a definite class of property escap- 35 L. ed. 1035, 1039, 3 Inters. Com. Rep. ing taxation during the lifetime of the 810, 12 Sup. Ct. Rep. 250; Merchants & owners, although subject to a valid M. Nat. Bank v. Pennsylvania, 167 U. scheme of specific taxation; and that S. 461, 463, 42 L. ed. 236, 237, 17 Sup. this tax is valid and workable in New Ct. Rep. 892; Magoun v. Illinois Trust York as a transfer tax imposed as a & Sav. Bank, 170 U. S. 283, 293, 42 condition precedent to the transfer. L. ed. 1037, 1042, 18 Sup. Ct. Rep. 594; Carpenter v. Pennsylvania, 17 How. 456, 462, 15 L. ed. 127, 129; Scott v. Sandford, 19 How. 393. 452, 15 L. ed. 691, 720; Gulf, C. & S. F. R. Co. v. Texas, 204 U. S. 403, 411, 51 L. ed. 540, 545, 27 Sup. Ct. Rep. 360; Williams v. Eggleston, 170 U. S. 304, 42 L. ed. 1047,

Atchison, T. & S. F. R. Co. v. Matthews, 174 U. S. 96, 106, 43 L. ed. 909, 913, 19 Sup. Ct. Rep. 609; International Harvester Co. v. Missouri, 234 U. S. 199, 210, 58 L. ed. 1276, 1281, 52 L.R.A. (N.S.) 525, 34 Sup. Ct. Rep. 859. Classification of property which has