plication and obtained a patent, but that he tiff have ever since remained in possession gave no notice to plaintiff, or any of its pred-thereof, claiming and holding the same as a ecessors in interest, of the obtaining of the part of the Nine Hour Lode Mining Claim; patent until some time in November, 1889. that at the date of the execution and delivery That when the bond for a deed was exe- of the bond, it was expressly agreed between cuted, plaintiff's predecessors in interest were the parties thereto that all of the ground in possession of the premises, and have ever lying to the east of the westerly line of the since been and are yet in possession thereof, strip should be a portion of the Nine Hour holding and using the same as a part of the Lode Mining Claim; that plaintiff is the sucNine Hour Lode Claim; that by mesne con- cessor in interest of Robinson, Huggins, and veyances the title to this claim, including Sterling, the obligees named in the bond, and the portion in dispute in this suit, had come also of De Camp and Eddy, who were coto plaintiff; that it is entitled to a convey- tenants with said obligees in the premises at ance of the premises from Mayger; that May- the date of the execution of the bond; that ger, on or about June 10, 1893, assumed to the mesne conveyances introduced in eviconvey said piece of ground to the St. Louis dence on the part of plaintiff embraced and Mining & Milling Company, which then had were intended to include the ground in quesfull knowledge and notice of the making, ex- tion, and conveyed to the grantees therein ecution, and delivery of the bond for a deed named all of the interest, legal and equit by Mayger, and and of the rights and able, which the grantor or grantors had equities of the Montana Mining Com-in said premises, covering as well their inpany thereunder; that the St. Louis terest in the ground in dispute as in every Company has instituted a number of suits other part and parcel of the Nine Hour Lode in the Circuit Court of the United States, Mining Claim. in which it claims that it is the owner of the premises described in the complaint, and also the right to recover certain sums of money for ores alleged to have been wrongfully extracted therefrom. The bond referred to was appended to the complaint. The prayer was that the court should decree that defendants should convey to plaintiff a good and sufficient deed to the premises in controversy.

That in July, 1893, plaintiff duly demanded a deed to the ground in dispute from defend-[654] ants, which defendants refused to execute; that in June, 1893, Mayger assumed to convey the controverted ground to the St. Louis Mining & Milling Company, but that at the date of his conveyance the St. Louis Company had full notice and knowledge of plaintiff's equities in and to the disputed strip, and of its possession thereof; that defendants wrongfully asserted title to the ground in controversy, and thereby clouded plaintiff's title thereto, which cloud plaintiff had a right to have removed.

The district court concluded as matter of law that plaintiff was entitled to the conveyance prayed for, and that defendants should be enjoined from asserting any right, title or interest in or to the ground in dispute, and from in any manner interfering with the possession or enjoyment thereof by plaintiff.

The answer denied all the material allegations of the complaint, and affirmatively alleged that the adverse claim interposed to the application of Mayger for a patent was for the purpose of harassing and hindering Mayger in obtaining a patent to his mining claim, and that the bond was given contrary to equity, good conscience, and public policy. The case was tried by the district court without a jury, and the court made and filed findings of fact and conclusions of law. It was found that plaintiff's predecessors in in[653]terest *were at the time mentioned in the complaint the owners of, in possession, and entitled to the possession, of the Nine Hour Lode Mining Claim as described, and that the strip of ground in dispute was at the time and continued to be a part of said claim; that the bond was executed and delivered by Mayger to the parties therein named, binding Mayger to convey to them or their assigns the ground in question when Mayger obtained a patent therefor; that it was given as a compromise and settlement of the controversy as to the land now in dispute, and then in litigation between the parties, and for the purpose of fixing and determining the boundary line beween the Nine Hour Lode Mining Claim and the St. Louis Mining Claim, as alleged in the complaint, and that Mayger thereafterwards did obtain a patent covering the premises in dispute; that plaintiffs in the adverse mining suit, on the execution to them of the bond by Mayger, dismissed their action and performed all the conditions of While it is conceded by plaintiffs in error the contract on their part; that at the time that there is no express prohibition on the of the execution of the bond the predecessors transaction involved in the record, it is conof plaintiff were in actual possession of the tended that the contract was contrary to the ground in dispute, and that they and plain-policy of the law, and that the question thus 171 U. S. U. S., BOOK 43. 21

*Mr. Chief Justice Fuller delivered the [654) opinion of the court:


In accordance with the findings of fact and conclusions of law, a decree was entered for plaintiff, and defendants appealed to the supreme court of the state of Montana, by which it was affirmed. [20 Mont. 394] 51 Pac. 824.

This writ of error was then sued out, and defendants in error now move to dismiss the writ, or that the decree be affirmed.

Messrs. Charles J. Hughes, Jr., and W. E. Cullen for defendant in error in favor of motion to dismiss or affirm.

Messrs. W. W. Dixon, Edwin W. Toole,
McConnell, Clayberg, & Gunn, and Thomas
C. Bach for plaintiffs in error in opposition
to motion.

The supreme court of Montana ruled that, in the absence of statutory prohibition, there was no reason in law or equity why the contract sought to be enforced should be held illegal, and we concur in this disposition of the Federal question suggested.

raised is necessarily a Federal question. sideration was passed on in a suit brought [655] Granting that this is so, and that the mo- to enforce its specific performance, and it tion to dismiss must therefore be overruled, was assumed that the contract was not void we are of opinion that there was color for the as in contravention of any statute of the motion, and that the case may properly be United States, or contrary to public policy. disposed of on the motion to affirm. In Myers v. Croft, 13 Wall. 291 [20: 562], this court was asked to hold that the prohi bition against alienation found in the last clause of the 12th section of the pre-emption act of 1841 extended from the date of entry to the actual issue of patent. This the court declined to do, and decided that the object of the act was attained when the pre-emptor went with clean hands to the land office and proved up and paid for his land. And the court said: "Restrictions upon the power of alienation after this would injure the preemptor, and would serve no important purpose of public policy. It is well known that The proposition of plaintiffs in error is patents do not issue in the usual course of that where an application to enter a mining business in the general land office until sevclaim is made, and there is embraced therein eral years after the certificate of entry is land claimed by another, it is the duty of given, and equally well known that nearly the latter to file an adverse claim and there- all the valuable lands in the new states adafter bring in some court of competent juris-mitted since 1841 have been taken up under diction an action to determine the right to the pre-emption laws, and the right to sell the area in conflict, which action must be them freely exercised after the claim was prosecuted to a final judgment or dismissed; proved up, the land paid for, and the certifiand that no valid settlement can be made by cate of entry received. In view of these which such adverse claimant can acquire any facts we cannot suppose, in the absence of an interest in the ground when thereafter pat- express declaration to that effect, that Conented by the applicant. We are not aware gress intended to tie up these lands in the of any public policy of the government which hands of the original owners until the gov sustains this proposition. ernment should choose to issue the patent."

The public policy of the government is to be found in the Constitution and the laws, and the course of administration and decision. License Tax Cases, 5 Wall. 462 [18: 497]; United States V. Trans-Missouri Freight Association, 166 U. S. 340 [41: 1027].

Where there is a valid location of a mining claim, the area becomes segregated from the public domain and the property of the locator. There is no inhibition in the mineral lands act against alienation, and he may sell it, mortgage it, or part with the whole or any portion of it as he may see fit. Forbes v. Gracey, 94 U. S. 766 [24: 314]; Manuel v. Wulff, 152 U. S. 510 [38: 534]; Black v. Elkhorn Mining Company, 163 U. S. 449 [41: 223].

*In Davenport v. Lamb, 13 Wall. 418 [20: [657] 655], a covenant made by certain grantors "that if they obtain the fee simple to said property from the government of the United States, they would convey the same to the grantee, his heirs or assigns, by deed of general warranty," made with reference to a tract of land taken up under what was known as the Oregon donation act, was upheld although the point that the covenant was against public policy was distinctly made.

The location of the Nine Hour Lode was in all respects sufficient and valid. When the dispute afterwards arose between Robinson and Mayger as to a portion of it, there was nothing to compel the filing of an adverse claim. The settlement made gave Robinson an equitable title immediately, and ultimately he was to have the complete legal title, to a piece of ground which, it seems, rightfully belonged to him. The government was not [656]defrauded in any way, nor was there any legal or moral fraud involved in the transaction. The settlement and adjustment of the dispute with reference to the right of possession appears upon its face to have been satisfactory to the parties when made, and should be upheld unless contravening some statute or some fundamental principle of law recognized as the basis of public policy. There was no such statute, and settlements of matters in litigation, or in dispute, without recourse to litigation, are generally favored, and are apparently of frequent occurrence in regard to mining land claims; nor is there anything in the decisions of this court to throw doubt on their validity.

In Ducie v. Ford, 138 U. S. 587 [34: 1091], a contract of the character of that under con

In Lamb v. Davenport, 18 Wall. 307 [21: 759], Mr. Justice Miller, speaking of claims under that act, said: "They were the subjects of bargain and sale, and, as among the parties to such contracts, they were valid. The right of the United States to dispose of their own property is undisputed, and to make rules by which the lands of the government may be sold or given away is acknowledged; but, subject to these well-known principles, parties in possession of the soil might make valid contracts, even concerning the title, predicated upon the hypothesis that they might thereafter lawfully acquire the title, except in cases where Congress has imposed restrictions on such contracts."

And to the same effect see Gaines v. Molen, 30 Fed. Rep. 27, where the subject was considered by Mr. Justice Brewer, then circuit judge.

Anderson v. Carkins, 135 U. S. 483 [34: 272], involved a contract made by a homesteader to convey a portion of a tract when he should acquire title thereto from the United States, and was disposed of on different grounds. It was stated in the opinion that "the theory of the homestead law is

[No. 21.]

ber 31, 1898.

that the homestead shall be for the exclusive benefit of the homesteader. Section 2290 of the Revised Statutes provides that a person applying for the entry of a homestead claim shall make affidavit that, among other things, such application is made for his ex- Argued April 20, 21, 1898. Decided Octoclusive use and benefit, and that his entry is made for the purpose of actual settlement and cultivation, and not either directly or indirectly for the use or benefit of any other person.' And section 2291, which prescribes the time and manner of final proof, requires that the applicant make 'affidavit that no part of such land has been alienated, except [658]*as provided in section twenty-two hundred and eighty-eight,' which section provides for alienation for church, cemetery, or school purposes, or for the right of way of railroads.' The law contemplates five years' continuous occupation by the homesteader, with no alienation except for the named purposes. It is true that the sections contain *Parke, Davis, & Company in the name of[659] no express prohibition of alienation, and no forfeiture in case of alienation; yet under the state of Michigan for the manufacture and a corporation organized under the laws of them the homestead right cannot be per-sale of chemical and pharmaceutical prepafected in case of alienation, or contract for rations. The factory is situated in the city alienation, without perjury by the home of Detroit. The corporation has a warehouse steader. There can be no question and depot in the city of New York, and there that this contract contemplated perjury on keeps on hand varying quantities of its manthe part of Anderson, and was designed to ufactured products, which are there sold at thwart the policy of the government in the wholesale in original packages. The concern homestead laws, to secure for the benefit of is represented in New York by John Clay as the homesteader the exclusive benefit of his manager, who is paid a salary. The busihomestead right." carried on in all respects like the ordinary ness of selling the manufactured articles is sales of consigned goods. Clay, in his own ports crude drugs from foreign countries at name, but for the use of the company, imthe port of New York. Such crude drugs are, in large part, sent to the Detroit factory for use, but some portions are sold in the original packages in the city of New York.

Statement by Mr. Justice Shiras:

The corporation pays an annual rental for its place of business in New York of $12,500, employs there a force of over fifty persons,

State of New York.

JAMES A. ROBERTS, Comptroller of the and expended for the New York branch annually, for the years 1890 to 1894, inclusive, from $102,000 to $172,000. The property owned in New York, in the way of business fixtures, is valued at $15,000; the average stock of goods sent from Michigan and carried in New York during those years was $50,000. It also employed in New York during that period a continuing capital, used in the purchase and sale of crude drugs, of from $23,000 to $62,000 per year.

[ocr errors]

In the case at bar there was no statute which, in express terms, or by any fair implication, forbade the making of such a contract as that proceeded on here. Decree af firmed.



(See S. C. Reporter's ed. 658–683.) Tax on capital of a corporation-Federal question-question of fact-tax valid.

1. The equal protection of the laws is not de

nied to a foreign corporation which manu-
factures goods in other states and sends them
into the state for sale, by a tax on the amount

of capital employed by it within the state,
because of an exemption of corporations
which are wholly engaged in manufacturing
within the state, when the statute makes no
discrimination between foreign and domestic

2. Error in the estimate of the amount of capital employed in a state and subject to tax therein does not present a Federal ques

tion on writ of error to a state court. 8. The relation of a person to the business of a corporation is one of fact, which is not open to inquiry on writ of error to a state court.


A franchise or business tax on the amount of capital stock employed within the state by a foreign corporation organized to conduct

strictly private business is not invalid because a portion of its business is the importa tion and sale of articles in original packages.

IN ERROR to the Supreme Court of the a of that court entered in pursuance of the decision of the Court of Appeals of that state quashing a writ of certiorari and confirming the comptroller's assessment of and tax upon the capital employed within the state, owned by Parke, Davis, & Company, a corporation of Michigan. Affirmed.

See same case below, 91 Hun, 158, 149 N. Y. 608.

Upon this state of facts the comptroller of New York imposed for 1894, and five previous years, an annual tax based upon the sum of $90,000 as "capital employed within

the state."

*At the time of the imposition of this tax[660] the provisions of the statute here drawn in question were as follows (Laws 1880, chap. 542, § 3, as amended by Laws 1881, chap. 361; Laws 1885, chap. 359; Laws 1889, chaps. 193, 353):

"Every corporation, joint-stock company, or association whatever, now or hereafter incorporated, organized or formed under, by or pursuant to law in this state or in any other state or country, and doing business in this state, except only savings banks and in

stitutions for savings, life insurance companies, banks, foreign insurance companies, manufacturing or mining corporations or companies wholly engaged in carrying on manufacture or mining ores within this state, and agricultural and horticultural societies or associations, which exceptions, however, shall not include gas companies, trust companies, electric or steam heating, lighting, and power companies, shall be liable to and shall pay a tax as a tax upon its franchise or business into the state treasury annually, to be computed as follows."

Then come provisions grading the tax according to annual dividends. The tax originally fell upon the entire capital of a corporation, but the statute was amended in 1885 so as to read:

[ocr errors]

"The amount of capital stock which shall be the basis for tax under the provisions of section three (supra) in the case of every corporation, joint-stock company, and association liable to taxation thereunder, shall be the amount of capital stock employed within this state."

Parke, Davis, & Company, through their said manager, filed a petition in the New York supreme court, praying for a writ of certiorari directed to the comptroller, in order to subject his assessment to correction. In the petition it was alleged that the only capital in any proper sense employed by the company within the state of New York in the sale of its products was its leasehold of the warehouse and the office furniture and fixtures, not exceeding in value $15,000; that said company, being a manufacturing corporation, was exempt from taxation under the laws of the state of New York; that the comptroller erred in deciding that goods [661]manufactured by said corporation and stored at its depot in New York are capital employed in said state within the meaning of the statute; that if said statute was correctly interpreted by the comptroller, then said statute was unconstitutional and void as in contravention of the Constitution of the United States and the amendments thereof.

To the certiorari granted upon said petition the comptroller duly made a return, alleging that his acts and proceedings were valid.

The cause was heard at the December term, 1895, of said court, and judgment was entered quashing the writ of certiorari, and confirming the comptroller's assessment. From that judgment an appeal was taken to the court of appeals of the state of New York, and on June 9, 1896, the cause was heard, the order and judgment of the supreme court were affirmed, and the record remitted to the supreme court. 91 Hun, 158, 149 N. Y. 608. Whereupon the cause was brought to this court by a writ of error duly prayed for and allowed.

Tiernan v. Rinker, 102 U. S. 123, 26 L. ed. 103: Walling v. Michigan, 116 U. S. 446, 29 L. ed. 691; Welton v. Missouri, 91 U. S. 275, 23 L. ed. 347; Minnesota v. Barber, 136 U. S. 313, 34 L. ed. 455, 3 Inters. Com. Rep. 185; Brimmer v. Rebman, 138 U. S. 78, 34 L. ed. 862, 3 Inters. Com. Rep. 485; Voight v. Wright, 141 U. S. 62, 35 L. ed. 638; Postal Teleg. Cable Co. v. Adams, 155 U. S. 689, 39 L. ed. 312, 5 Inters. Com. Rep. 1.

Taxation upon the "franchises or business" of importing goods and once selling them is a power unequivocally surrendered by the states to the Federal government.

Brown v. Maryland, 12 Wheat. 419, 6 L. ed. 678.

Mr. James McKeen, for plaintiff in


The New York statute imposes a discriminating tax upon these relators for selling in New York, in the original packages, their products made in Michigan.

The tax upon the franchise or business of selling their own goods in New York, imposed upon the relators, is unconstitutional in the absence of permission from Congress.

Leisy v. Hardin, 135 U. S. 100, 34 L. ed. 128, 3 Inters. Com. Rep. 36; Robbins v. Shelby County Taxing Dist. 120 U. S. 489, 30 L. ed. 694, 1 Inters. Com. Rep. 45; Cooper Mfg. Co. v. Ferguson, 113 U. S. 727, 28 L. ed. 1137.

The tax here in question cannot be maintained as one imposed to reimburse the state for any police supervision over foreign corporations there selling their own goods.

Charlotte, C. & A. Ř. Co. v. Gibbes, 142 U. S. 386, 35 L. ed. 1051.

Where exemptions are so incorporated in a tax law as to result in unconstitutional discrimination the whole law falls.

Spraigue v. Thompson, 118 U. S. 90, 95, 30 L. ed. 115, 117; Yick Wo v. Hopkins, 118 U. S. 356, 30 L. ed. 220.

Messrs. Theodore E. Hancock, Attorney General of New York, and William Henry Dennis, for defendant in error:

It is not sufficient to show that a Federal

question might have arisen or been applicable to the case, unless it is further shown on the record that it did arise and was applied by the state court to the case.

Hagar v. California, 154 U. S. 639, 24 L. ed. 1044; Crowell v. Randell, 10 Pet. 368, 9 L. ed. 458; Edwards v. Elliott, 21 Wall. 532, 22 L. ed. 487; Ocean Ins. Co. v. Polleys, 13 Pet. 157, 10 L. ed. 105; Walker v. Villavaso, 6 Wall. 124, 18 L. ed. 853; Rector v. Ashley, 6 Wall. 142, 18 L. ed. 733; Gibson v. Chouteau, 8 Wall. 314, 19 L. ed. 317; Phoeni Ins. Co. v. The Treasurer, 11 Wall. 204, 20 L. ed. 112; Otis v. Oregon S. S. Co. 116 Ú. S.

548. 29 L. ed. 719.

taken as conclusive as to the facts. The return of the comptroller must be

People, Sims, v. New York Fire Comrs. 73 N. Y. 437; People, Roebling's Sons Co. v. Wemple, 138 N. Y. 582; People, Press Pub. Co., v. Martin, 142 N. Y. 228.

The tax, although upon the franchise or business of a corporation, is measured by the amount of its capital employed in the state.

Horn Silver Min. Co. v. New York, 143 U. S. 305, 36 L. ed. 164, 4 Inters. Com. Rep. 57; Home Ins. Co. v. New York, 119 U. S. 129, 30 L. ed. 350.

Taxation is measured by the amount of capital employed in the state.

People, Seth Thomas Clock Co., v. Wemple, 133 N. Y. 323.

The statute is not an infringement of the interstate commerce clause of the Federal Constitution.

People, American Contracting & D. Co., v. Wemple, 129 N. Y. 558; Woodruff v. Par-York statute, but that all corporations which ham, 8 Wall. 136, 19 L. ed. 386; Postal manufacture their goods wholly in other Teleg. Cable Co. v. Adams, 155 U. S. 688, 39 states and send them for sale in New York L. ed. 311, 5 Inters. Com. Rep. 1; Pembina are discriminated against in favor of such Consol. Silver Min. & Mill. Co. v. Pennsylva- corporations, whether foreign or domestic, as nia, 125 U. S. 181, 31 L. ed. 650, 2 Inters. manufacture their goods within the state of Com. Rep. 24; People, Southern Cotton Oil New York. Co., v. Wemple, 131 N. Y. 64.

A corporation, whether domestic or foreign, cannot claim exemption because of doing a manufacturing business outside of the state of New York.

People, Tiffany, v. Campbell, 144 N. Y. 166; People, Western Electric Co., v. Campbell, 145 N. Y. 587; Horn Silver Min. Co. v. New York, 143 U. S. 305, 36 L. ed. 164, 4 Inters. Com. Rep. 57; Southern Cotton Oil Co. v. Wemple, 44 Fed. Rep. 24.

A state may discriminate in favor of domestic as against foreign corporations, and may require a franchise or business tax from the latter as a condition of being allowed to do business within the state.

Ducat v. Chicago, 10 Wall. 410, 19 L. ed. 972; Cooper Mfg. Co. v. Ferguson, 113 U. S. 727, 28 L. ed. 1137; People v. Formosa, 131 N. Y. 478; Demarest v. Flack, 128 N. Y. 205, 13 L. R. A. 854; Ashley v. Ryan, 153 U. S. 437, 38 L. ed. 774, 4 Inters. Com. Rep. 664; Lafayette Ins. Co. v. French, 18 How. 404, 21 L. ed. 451.

the state; that such a tax is an unjust discrimination against this corporation, whose place of manufacture is in the state of Michigan. By this contention it is not meant, of course, that this particular corporation is, in terms, discriminated against in the New

To sustain this contention the well-known line of cases is cited, wherein this court has had to deal with state legislation imposing discriminating taxes against the products of other states. Walling v. Michigan, 116 U. S. 446 [29: 691]; Robbins v. Shelby County Taxing Dist. 120 U. S. 489 [30: 694]; Minnesota v. Barber, 136 U. S. 313 [34: 455, 3 Inters. Com. Rep. 185].

If the object of the law in question was to impose a tax upon products of other states while exempting similar domestic goods from taxation, there might be room to contend that such a distinction was constitutionally objectionable as tending to affect or regulate commerce between the states. But we think that, obviously, such is not the purpose of this legislation. "Every corporation, jointstock company or association whatever, now or hereafter incorporated, organized or formed under, by or pursuant to law in this state or in any other state or country and[663] doing business in this state shall be liable to and shall pay a tax as a tax upon its franchise or business into the state treas

[ocr errors]

[661] *Mr. Justice Shiras delivered the opinion

of the court:

The construction put upon the statute of the state of New York by its courts is, of course, binding upon this court, and that portion of the contention which questioned the action of the comptroller on the ground of a misinterpretation of the law is thus disposed


It must be regarded as finally settled by frequent decisions of this court that, subject to certain limitations as respects interstate and foreign commerce, a state may impose such conditions upon permitting a foreign [662]corporation to do business within its limits as it may judge expedient; and that it may make the grant or privilege dependent upon the payment of a specific license tax, or a sum proportioned to the amount of its capital used within the state. Paul v. Virginia, 8 Wall. 168 [19: 357]; Horn Silver Mining Co. v. New York, 143 U. S. 305 [36:164, 4 Inters. Com. Rep. 57].

Accordingly the counsel for the plaintiff in error disavows in his brief any wish to bring those decisions into further review, but his contention is that this Michigan corporation, having come within the jurisdiction of New York by compliance with all the provisions of law imposing conditions for transacting business within the state, is denied the equal protection of the law when subjected to a tax from which are exempted other corporations, foreign and domestic, which wholly manufacture the same class of goods within

ury annually, to be computed as follows."

It will be perceived that the tax is prescribed as well for New York corporations as for those of cther states. It is true that manufacturing or mining corporations whol ly engaged in carrying on manufacture or mining ores within the state of New York are exemptel from this tax; but such exemption is not restricted to New York corporations, but includes corporations of other states as well, when wholly engaged in manufacturing within the state.

In construing this statute it was held in the case of People, Blackinton Co., v. Roberts, 4 App. Div. 388, that a New York corporation which carried on a manufacturing business in another state was liable to this tax; and this decision was affirmed by the New York court of appeals. 151 N. Y. 652.

The tax is graded according to annual dividends, and originally was assessed upon the entire capital of a corporation; but the statute was amended in 1885 so as to read: "The amount of capital stock which shall be the basis for tax under the provisions of section three, in the case of every corporation, jointstock company, and association liable to taxation thereunder, shall be the amount of capital stock employed within this state."

So that it is apparent that there is no purpose disclosed in the statute either to distinguish between New York corporations and those of other states to the detriment of the latter, or to subject property out of the state to taxation.

« ForrigeFortsett »