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Keywords

plaintiffdefendantstatuteappealdiscriminationcorporation

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 the principal defendant 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 defendants demurred, arguing that the statutes were unconstitutional under the commerce clause and the 14th Amendment. The lower court ruled in favor of the state, leading to the appeal.

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 principles from previous cases, establishing that states can tax shares of foreign corporations owned by their residents, provided there is no discrimination against out-of-state corporations.

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

Analysis

The court analyzed the statutes in light of previous rulings, particularly Kidd v. Alabama, which addressed similar taxation issues. It concluded that the Indiana statutes did not discriminate against foreign corporations since they also taxed domestic corporations. The court noted that the plaintiffs failed to show that they belonged to a class entitled to constitutional protection against the tax.

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 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 foreign corporation shares was constitutional and did not discriminate against out-of-state entities.

the state taxes the property of domestic corporations and the stock of foreign ones in similar cases.

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Related Cases

Di Santo v. Commonwealth of Pennsylvania, 273 U.S. 34, 47 S.Ct. 267, 71 L.Ed. 524, 1927 A.M.C. 378

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Midwestern Press, Inc. v. Commissioner of Taxation, 295 Minn. 59, 203 N.W.2d 344

West v. Kansas Natural Gas Co., 221 U.S. 229, 31 S.Ct. 564, 55 L.Ed. 716, 35 L.R.A.N.S. 1193