Mayor of Baltimore v. Hussey

Robinson, J., delivered the opinion of the Court. The appellee, a resident of the State of New York, is the owner of $119,000 of the debt of the City of Baltimore, commonly called City Stock; and the question is, whether this stock is liable to taxation in this State ? Were this a question of first impression, it would seem to be clear on general principles, that the stock thus held by the appellee, could not be subjected to taxation by the laws of this State. The taxing powers of a State must be necessarily limited to the taxation of persons and property within and subject to its jurisdiction.

And if.so, this State can acquire no jurisdiction over the person of the appellee for the purpose of taxation, because she is a nonresident. And as to the certificates of stock owned by her, they are mere evidences of indebtedness on the part of the city, by which it promises to pay to the owner a certain sum of money with interest thereon. As such, they are unquestionably personal property in the hands of the creditor and have their taxable situs at the domicil of the owner. The mere right to receive of the city the principal or interest within the State, is a right personal to the creditor as owner of the debt, and is not therefore subject to taxation in this State.

But this can no longer be considered an open question, because it was fully -considered and discussed by the Supreme Court in the cases of State Tax on Foreign-Held Bonds, 15 Wall., 317 , and Murray vs. Charleston, 96 U. S., 432 . In the former case bonds issued by a railroad company, and owned by non-residents, were held' not to be liable to taxation by the State in which the company had its domicil. “ Debts owing by a corporation,” say the ¹¹⁵ ■Court, “like debts owing by individuals, are not property of the debtors in any sense; they are obligations of the ■debtor and only possess value in the hands of the creditor. With them they are property, and in their hands may be taxed. The bonds issued by the railroad company in this ■case are undoubtedly property, but property in the hands of the holders, not property of the obligors.

So far as they are held by non-residents of the State, they are property beyond the jurisdiction of the State.” In the later case of Murray vs. Charleston, where the plaintiff,- a non-resident, was the owner of certificates of ■stock issued by the City of Charleston, and the city subsequently imposed a tax of two per cent, on the value of all- property within its limits, and treating its stock as part of such property, directed that the tax assessed upon it should be retained by the city treasurer, the Court held that the stock owned by the appellee, a non-resident, was not liable to taxation by the city; and [further, that the exaction of the tax as against the plaintiff, was an impairment of its obligation upon the contract, inhibited by the Federal Constitution. The city