Kansas City, Memphis & Birmingham Railroad v. Stiles

Citations

• 242 U.S. 111
• 37 S. Ct. 58
• 61 L. Ed. 176
• 1916 U.S. LEXIS 1535

Syllabus

<p>Three corporations, formed, and ■ operating railways, in Alabama, Tennessee and Mississippi, respectively, consolidated themselves under the laws of each of those States. The consolidated company succeeded to all the property of the constituents and issued its shares in lieu of theirs. As construed by the court below, the law of Alabama, under which the consolidation was there effected, constituted the new company a domestic corporation of that State; and, treating it as such, the State has imposed a franchise tax, not' unreasonable in amount, based upon its entire paid-up capitalization..</p> <p>Held: (1) That, subject to the limitations of the Federal Constitution, the existence and status of the consolidated corporation in Alabama were dependent on the Alabama laws.</p> <p>(2) That the tax being a franchise tax, imposed equally upon all corporations of the State, consolidated or otherwise, and based in each instance on the entire paid-up capitalization, no arbitrary classification emerges either (a) because the consolidated corporation has, and a purely intrastate corporation might not have, property outside of the State; or (b) because foreign corporations are taxed only on the basis of their property within the State. Southern Railway Co. v. Greene, 216 U. S. 400, distinguished.</p> <p>A State may tax foreign corporations for the privilege of doing business within her limits at a different rate than that which she applies to ' her own corporations in taxing the franchises by which she creates them. -•</p> <p>While a State may not tax property beyond her borders, she may measure a franchise tax within her authority by capital stock which stands in part for property beyond her taxing power. Kansas City &c. Railway Co. v. Kansas, 240 U. S. 227, applied; and Western Union Telegraph Co. v. Kansas, 216 U. S. 1, distinguished.</p> <p>Whether a tax is a burden on interstate commerce depends on the nature of the tax; a tax which.in kind is within the state authority