kind was taxable to the corporation.31 On the other hand, the predominant owner, for instance the mortgagor, may be taxed not on the value of his interest, but on the entire value of the land;32 the person to whom the land is taxed is immaterial, so far as the validity of the tax lien is concerned.33

A franchise appurtenant to land may be taxed as an interest in the land, and is taxable where the land lies to which it is appurtenant. Thus a franchise to construct a bridge may be taxed as appurtenant to the shore from which the bridge is allowed to be extended.34 A ferry franchise is taxable by the state from whose shore the ferry is allowed to run,35 and cannot be taxed by another state, for instance, the state which controls the opposite bank but has not granted the franchise.36 It follows that in the case of an interstate bridge or ferry, which is in fact attached to two opposite shores, the sovereign of either shore might grant and tax a franchise. Land outside the boundaries of the state is of course not subject to taxation.37 It has therefore been held that in taxing an aggregate mass of property, such as the capital of a corporation, foreign real estate must be omitted.3

38

An apparent difference of opinion has developed on the taxation of a debt secured by a mortgage of land.

It is usually held that the debt, being the principal thing, fixes the nature of the thing to be taxed; that it has no situs where the security is, and is taxable only through power over the owner. It is therefore not subject to taxation in the state where the mortgaged land lies, if the owner is a nonresident of the state; 39 and

31 Mt. Sterling O. & G. Co. v. Ratliff, 127 Ky. 1, 104 S. W. 993 (1907).

32 Faxton v. McCosh, 12 Ia. 527 (1861); Paddell v. New York, 211 U. S. 446 (1908). 33 Witherspoon v. Duncan, 4 Wall. (U. S.) 210 (1866).

34 Henderson Bridge Co. v. Kentucky, 166 U. S. 150 (1897).

35 Conway v. Taylor, 1 Black (U. S.) 603 (1861).

36 Louisville & J. F. Co. v. Kentucky, 188 U. S. 385 (1903).

37 Winnipiseogee, L. C. & W. M. Co. v. Gilford, 64 N. H. 337, 10 Atl. 849 (1887). 38 People v. Barker, 23 N. Y. Misc. 188, 51 N. Y. Supp. 102 (1897); Commonwealth v. American Dredging Co., 122 Pa. 386, 15 Atl. 443 (1888).

39 Territory v. Gila County Delinquent Tax List, 3 Ariz. 179, 24 Pac. 182 (1890); People v. Eastman, 25 Cal. 601 (1864); Arapahoe County v. Cutter, 3 Colo. 349 (1877); Foresman v. Byrns, 68 Ind. 247 (1879); Senour v. Ruth (Ind.), 39 N. E. 946 (1895); Theobald v. Clapp, 43 Ind. App. 191, 87 N. E. 100 (1909); Faxton v. McCosh, 12 Ia. 527 (1861); Davenport v. Mississippi & Mo. R. R., 12 Ia. 539 (1861); State . Smith, 68 Miss. 79, 8 So. 294 (1890); Adams v. Colonial & U. S. Mortgage Co., 82 Miss. 263, 34 So. 482 (1903); Holland v. Commissioners of Silver Bow County,

conversely notwithstanding the situs of the land, it may be taxed at the domicile of the owner.40

Yet the conveyance of the land in mortgage is the creation of an interest in land, whether we call that interest the legal ownership, subject to an equity of redemption, or a mere lien on the land for security. The land itself being within the taxing power of the sovereign of situs, it is doubtless within his power to tax each interest in the land, if he prefers this to taxing the entire body of such interests once for all in the name of the owner of the predominant interest. A tax on the interest of the mortgagee is therefore within the jurisdiction of the sovereign of situs.41

In Kinney v. Treasurer & Receiver General 42 Knowlton, C. J., said:

"Under the laws of Massachusetts a mortgagee takes not merely a lien upon the land as security, but he holds the legal title to it, subject to a right of redemption in the mortgagor. The interest of the mortgagee is made subject to taxation by our statutes, and the property taxable to the mortgagor is diminished by a deduction of the value of the interest held by the mortgagee. . . . While, for general purposes the interest of the mortgagee is treated as personal property, it has a local situs, and carries with it an ownership of the land until it is redeemed by the payment of the debt in performance of the condition. The debt, which is the obligation of the debtor to pay, and the land, which is the security for the payment of the debt, are individual parts of a single valuable property in the mortgagee, which may be made available in different ways. The same doctrine has been held in States where the mortgagee has only a lien upon real estate. . . . The fact that the

15 Mont. 460, 39 Pac. 575 (1895); State v. Earl, 1 Nev. 394 (1865); Crispin v. Vansyckle, 49 N. J. L. 366, 8 Atl. 120 (1887); People v. Smith, 88 N. Y. 576 (1882); Matter of Preston, 75 App. Div. 250, 78 N. Y. Supp. 91 (1902); Grant v. Jones, 39 Ohio St. 506 (1883); Myers v. Seaberger, 45 Ohio St. 232, 12 N. E. 796 (1887).

40 Mackay v. San Francisco, 113 Cal. 392, 45 Pac. 696 (1896); Kirtland v. Hotchkiss, 42 Conn. 426 (1875), 100 U. S. 491 (1879); Darcy v. Darcy, 51 N. J. L. 140, 16 Atl. 160 (1888); Bullock v. Guilford, 59 Vt. 516, 9 Atl. 360 (1887).

41 Savings & Loan Society v. Multnomah County, 169 U. S. 421 (1898); Frankfort v. Fidelity T. & S. V. Co., 111 Ky. 667, 64 S. W. 470 (1901) (semble); Allen v. National State Bank, 92 Md. 509, 48 Atl. 78 (1901); Kinney v. Treasurer and Receiver General, 207 Mass. 368, 93 N. E. 586 (1911); Common Council of Detroit v. Assessors, 91 Mich. 78, 51 N. W. 978 (1892); In re Merriam, 147 Mich. 630, 111 N. W. 196 (1907); Susquehanna Canal Co. v. Commonwealth, 72 Pa. 72 (1872); Mumford v. Sewall, 11 Ore. 67, 4 Pac. 585 (1883).

laws of the State and the jurisdiction of its courts must be invoked for the preservation and enforcement of rights under the mortgage is an important consideration leading to this result."

The reconciliation of these cases must be sought in the form of the taxing statute. If there is no special statute, only the ordinary provision for taxing all real and personal property within the state, the courts, following the ordinary practice and the provisions of the common law, will tax the land at its full value as the property of the mortgagor, since he owns the predominant, though not necessarily the largest, interest in it. The land having been once taxed at its full value, there is nothing left to tax except the debt it secures; and if the debt is due to a nonresident it is not within the jurisdiction. But by an express statutory provision dividing the land for purposes of taxation between the mortgagor and mortgagee, it is possible for the sovereign to tax the interest of the nonresident mortgagee in the land, though the debt itself cannot be reached. This doctrine is very clearly set out in the opinion of Mr. Justice Gray in Savings & Loan Society v. Multnomah County.43 In that case a statute of Oregon provided that a mortgage, whereby land was made security for a debt, should be taxed as land. In several decisions in the state and federal courts a tax levied under this statute had been held valid;" and these decisions were followed in the Supreme Court. Mr. Justice Gray said:

"The State may tax real estate mortgaged, as it may all other property within its jurisdiction, at its full value. It may do this either by taxing the whole to the mortgagor, or by taxing to the mortgagee the interest therein represented by the mortgage, and to the mortgagor the remaining interest in the land. And it may, for the purposes of taxation, either treat the mortgage debt as personal property, to be taxed, like other choses in action, to the creditor at his domicil; or treat the mortgagee's interest in the land as real estate, to be taxed to him, like other real property, at its situs."

43 169 U. S. 421, 427 (1898), disapproving a dictum to the contrary effect in State Tax on Foreign-Held Bonds, 15 Wall. (U. S.) 300 (1872).

44 Mumford v. Sewall, 11 Ore. 67, 4 Pac. 585 (1883); Dundee Mortgage Co. v. School District, 10 Sawyer (U. S.) 52 (1884); Crawford v. Linn County, 11 Ore. 482, 5 Pac. 738 (1884); Dundee Mortgage Co. v. Parrish, 11 Sawy. (U. S.) 92 (1885); Poppleton v. Yamhill County, 18 Ore. 377, 23 Pac. 253 (1890); Savings & Loan Society v. Multnomah County, 60 Fed. 31 (1894).

In many other cases cited by the appellant there was no statute expressly taxing mortgages at the situs of the land; and although the opinions in some of them took a wider range, the only question in judgment in any of them was one of the construction, not of the constitutionality, of a statute of the intention, not of the power, of the legislature.

Since in taxing the mortgage the state is taxing an interest in the land, it seems clear that the mortgagor's tax can only cover the value of the equity of redemption; the sum of the taxes assessed against the interests of the two cannot exceed the amount of the tax on the land itself. This is in most of the cases insisted upon as a condition of validity; 45 and a contrary intimation 46 must be regarded as unsound.

III. TAX ON CHATTELS

A sovereign has jurisdiction over every chattel situated within his territory, and may therefore lay a tax upon it although the owner is not domiciled within the territory,47 and even though it is in the hands of a lessee.48 The jurisdiction is based on the power over the res; and though it may as a matter of form be assessed "to the owner" it is collectible only out of the assets,49 and will not support a personal action against the nonresident owner.

A few states do not, unless a statute expressly so provide, tax the chattels of a nonresident owner.50 On the other hand, a few

45 Savings & Loan Society v. Multnomah County, 169 U. S. 421 (1898); Kinney v. Treasurer & Receiver General, 207 Mass. 368, 93 N. E. 586 (1911); Common Council of Detroit v. Assessors, 91 Mich. 78, 51 N. W. 787 (1892).

46 In Allen v. National State Bank, 92 Md. 509, 48 Atl. 78 (1901).

47 Coe v. Errol, 116 U. S. 517 (1886); McCutchen v. Rice County, 2 McCrary (U. S.) 337, 7 Fed. 558 (1881); Mills v. Thornton, 26 Ill. 300 (1861); Rieman v. Shepard, 27 Ind. 288 (1866); Hudson v. Miller, 10 Kan. App. 532, 63 Pac. 21 (1900); Hull v. Johnson, 10 Kan. App. 565, 63 Pac. 455 (1901); Liverpool & L. & G. Ins. Co. v. Board of Assessors, 44 La. Ann. 760, 11 So. 91 (1892); Scollard v. American Felt Co., 194 Mass. 127, 80 N. E. 233 (1907); Tobey v. Kip, 214 Mass. 477, 101 N. E. 998 (1913); McCormick v. Fitch, 14 Minn. 252 (1869); State v. William Deering Co., 56 Minn. 24, 57 N. W. 313 (1893); Winkley v. Newton, 67 N. H. 80, 36 Atl. 610 (1891); John Hancock Ice Co. v. Rose, 67 N. J. L. 86, 50 Atl. 364 (1901); Matter of King, 30 N. Y. Misc.

575, 63 N. Y. Supp. 1100 (1900); People v. Dunckel, 69 N. Y. Misc. 361, 125 N. Y. Supp. 385 (1910).

48 Lamson C. S. S. Co. v. Boston, 170 Mass. 354, 49 N. E. 630 (1898).

49 Scollard v. American Felt Co., 194 Mass. 127, 80 N. E. 233 (1907).

50 Phelps v. Thurston, 47 Conn. 477 (1880); Leonard v. New Bedford, 16 Gray

states, at common law, refuse to tax chattels in other states belonging to residents, but confine taxation of chattels to those actually situated within the state.51

Not every chattel which happens to be within the limits of the sovereign's territory can be regarded as situated there. A chattel merely temporarily within those limits is not, at common law, subject to the ordinary property tax, nor can one of the United States by statute subject such a chattel to taxation, since to do so would contravene due process of law.

The leading case is Hays v. Pacific Mail S. S. Co.,52 where it was held that a vessel, found at a port of call in California on the taxing-day but registered outside the state, was not subject to taxation. This principle has been extended to all kinds of chattels passing through a state.53

The reason is clear. The tax is levied in return for a year's protection; it is known that this particular chattel will require protection only for a short time. To exact a tax based on a year's protection would be unfair; no other tax is provided for by the law. If there were provision for a daily tax this could lawfully be exacted even from property temporarily within the state, for such property is of course within the jurisdiction of the sovereign. Any method provided by statute for exacting a really fair tax from such property is constitutional.54

Promissory notes and bonds, being things of value in themselves, salable in the market and passing freely from hand to hand, have a real situs, and are taxable in any state in which they are permanently located,55 and are not taxable elsewhere in a

(Mass.) 292 (1860); Tobey v. Kip, 214 Mass. 477, 101 N. E. 998 (1913) (semble); Commonwealth v. Pennsylvania Coal Co., 197 Pa. 551, 47 Atl. 740 (1901).

51 Colbert v. Board of Supervisors, 60 Miss. 142 (1882); State v. Rahway, 24 N. J. L.

(4 Zab.) 56 (1853); Hoyt v. Commissioners of Taxes, 23 N. Y. 224 (1861).

53 For a full collection of the cases on this point see an article by the author in the current volume of the YALE LAW JOURNAL.

54 Pullman's Palace-Car Co. v. Pennsylvania, 141 U. S. 18 (1890).

55 Bonaparte v. Tax Court, 104 U. S. 592 (1881); New Orleans v. Stempel, 175 U. S. 309 (1899); Blackstone v. Miller, 188 U. S. 189 (1903), 23 Sup. Ct. Rep. 277, 439; Buck v. Miller, 147 Ind. 586, 45 N. E. 647, 47 N. E. 8 (1897); Callahan v. Woodbridge, 171 Mass. 595, 51 N. E. 176 (1898); State v. St. Louis County Court, 47 Mo. 594 (1871); People v. Ogdensburgh, 48 N. Y. 390 (1872); Matter of Gibbs, 60 N. Y. Misc. 645, 113 N. Y. Supp. 939 (1908); People v. Roberts, 25 App. Div. 16, 49 N. Y. Supp. 10 (1898); Matter of Tiffany, 143 App. Div. 327, 128 N. Y. Supp. 106