US SUPREME COURT DECISIONS

1. Questions not decided in the state court because not raised and presented by the complaining party will not be reexamined in this Court on a writ of error under the twenty-fifth section of the Judiciary Act.

2. It is not sufficient that such a question might have arisen and been applicable to the case unless it appears in the record that it did arise and was applied by the state court in disposing of the controversy.

3. A statute of Massachusetts which requires corporations having a capital stock divided into shares, to pay a tax of a certain percentage (one-sixth of one percent) upon "the excess of the market value" of all such stock over the value of its real estate and machinery is, under the settled course of decision in the State of Massachusetts on its constitution and laws, a statute which imposes a franchise tax.

4. The tax is lawful.

5. Provident Institution v. Massachusetts (last preceding case) affirmed.

This case, which was one agreed on and stated in the court chanrobles.com-red

Page 73 U. S. 633

below, raised, under some circumstantial variety -- the defendant in it there being a manufacturing company having capital stock -- the same substantial question raised in the two preceding cases of saving fund societies. It was thus:

A statute of Massachusetts provides:

"SEC. 1. That the assessors of the several towns shall annually return to the treasurer of the commonwealth the names of all corporations 'having a capital stock divided into shares,' &c., and the value of the real estate and machinery for which each is taxed in such towns."

"SEC. 2. That every such corporation shall annually return of the same officer 'the amount of the capital stock of the corporation, and the par value and the cash market value of the shares, on the 1st day of May.'"

"SEC. 5. That a board of commissioners shall ascertain the excess of the market value of all the capital stock of each corporation over the value of its real estate and machinery, and that the corporation shall annually pay to the commonwealth 'a tax of one and one-sixth percent upon such excess.'"

With this statute in force, a return from the Hamilton Manufacturing Company, a corporation of the sort described, and incorporated by Massachusetts, showed that the cash market value of its capital stock did not exceed by more than $263,997 the value of its real estate, machinery, and of its other property, provided that from this last were excluded securities of the United States held by the company, and which, by the act of Congress authorizing their issue, were declared to be exempt from taxation by state authority, "whether held by individuals, corporations, or associations." But that with those securities included, the capital stock did exceed by a greater sum than that named the value of such real estate and machinery.

A tax being demanded by the State of Massachusetts on more than the $263,997 (supposing that the tax was laid at the rate prescribed), it necessarily fell -- and of course unlawfully -- on the exempted federal securities if the tax laid by the statute was one on property. chanrobles.com-red

Page 73 U. S. 634

If, on the other hand, the tax was one on the franchise and privileges of the corporation, and such a tax, when operating as in this case, was lawful, then it was rightly demanded, even insofar as it might affect the securities of the United States. The Hamilton Company refused to pay the tax demanded, and suit was brought accordingly. The court below gave judgment for the whole sum demanded. The case was now here under the twenty-fifth section of the Judiciary Act.

Excepting therefore a matter apparently suggested in that court but not pressed there or here, as to whether the company could, under its charter, rightly hold federal securities, the questions now were:

1. Whether the tax imposed by the state was to be regarded as a tax on property or as a tax on the franchise and privileges of the corporation?

2. Whether, if the last and when operating as it did here, it was lawful so far as affecting the federal securities?