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plaintiffstatutecorporation

Related Cases

Darnell v. State of Indiana, 226 U.S. 390, 33 S.Ct. 120, 57 L.Ed. 267

Facts

The State of Indiana brought an action for taxes on stock owned by a resident in a Tennessee corporation. Indiana statutes tax shares in foreign corporations owned by state residents, except for national banks, and also tax shares in domestic corporations unless exempt. The plaintiffs argued that the statutes were unconstitutional, claiming they discriminated against stock in corporations from other states and violated the commerce clause and the 14th Amendment.

The Indiana statutes purport to tax all shares in foreign corporations except national banks, owned by inhabitants of the state, and all shares in domestic corporations when the property of such corporations is not exempt or is not taxable to the corporation itself.

Issue

Did the Indiana statutes imposing a tax on shares of stock in a foreign corporation owned by a resident violate the commerce clause and the 14th Amendment of the U.S. Constitution?

the statutes were contrary to the commerce clause, art. 1, § 8, and the 14th Amendment of the Constitution of the United States.

Rule

The court applied the principle that states can tax shares of stock in foreign corporations owned by their residents, provided that the tax does not discriminate against out-of-state corporations in violation of constitutional protections.

the statutes of Indiana do not make allowance if a foreign corporation has property taxed within the state.

Analysis

The court analyzed the plaintiffs' claims against the backdrop of previous rulings, particularly noting that the taxation of stock in foreign corporations does not inherently violate the commerce clause. The court emphasized that the plaintiffs failed to show that they belonged to a class entitled to constitutional protection, as they did not demonstrate that the foreign corporation had property taxed within Indiana.

the plaintiffs in error do not show that it is theirs, and that, as they do not belong to the class for whose sake the constitutional protection would be given, if it would, they cannot complain on that ground.

Conclusion

The court affirmed the judgment of the lower court, upholding the tax imposed by the State of Indiana on the shares of stock in the foreign corporation.

Judgment affirmed.

Who won?

The State of Indiana prevailed in the case because the court found that the tax on the shares of stock was constitutional and did not violate the commerce clause or the 14th Amendment.

the court found that the plaintiffs did not demonstrate that they were entitled to constitutional protection against the tax.

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