
    Express Company v. The State.
    
      Excise tax — Express companies— Validity of act of May 14,1894— Joint stock company may be served, as corporation, when — Contitutional law.
    
    1. The tax authorized by the act of May 14, 1894 (91 Ohio Laws, 237), is an excise tax imposed for the privilege of carrying on the express business in this state, and said act is a valid law. Telegraph Co. v. Mayer, 28 Ohio St., 521, approved and followed.
    2. The amount paid to the railroads for transportation of freight, as mentioned in the seventh subdivision of^ the second section of said act, is the amount paid for transportation of freight on business done wholly within this state.
    3. A joint stock company, organized under the laws of the state of New York, and having substantially the character and power of a corporation, may be served with summons in this state in the same manner as corporations are served.
    (Decided June 23, 1896.)
    Error to the Circuit Court of Franklin county. The action below was brought by the state against the express company to recover an excise tax and penalty assessed against the company under the act of May 14th, 1894, 91 O. L., 237. In the court of common pleas judgment was rendered against the company for the full amount of the tax and penalty. This judgment was affirmed by the circuit court. Thereupon the Express Company filed its petition in error in this court, to reverse both judgments below.
    Ramsey, Maxivell d¡ Ramsey, for plaintiff in error.
    I. The defendant is not a corporation, and the court of common pleas therefore erred in overruling its motion to set aside the return of the summons and to dismiss the action for want of jurisdiction over the defendant.
    Unless the defendant is a corporation it must be conceded that the court of common pleas erred in overruling this motion, because the defendant was served as only corporations can be served, under Rev. Stat. section 5034. Assuming that the defendant might be sued as a copartnership in its firm name under Rev. Stat. section 5011, it is necessary that the petition should contain averments to bring the defendant within that section. Haskins v. Alcott, 13 Ohio St. 210, 216; Smith v. Hoover, 39 Ohio St., 249. And the service must be by leaving a copy of the summons “at its usual place of business. ” Revised Statutes sec. 5042. Chapman v. Barney, 129 U. S., 677; Platt v. Colvin, 50 Ohio St., 703; Taft v. Ward, 106 Mass., 518; Gott v. Dinsmore, 111 Mass., 45; Railroad Co. v. Pearson, 128 Mass., 445; Hoadly v. County Commissioners, 105 Mass., 519; Sanford v. Board of Supervisors, 15 How., Prac. Rep., 182; Bell, President v. Streeter, 1 N. Y. Trans. N. S., 6; The people on the relation of Winchester as Treasurer of the National Express Company v. Coleman et al. York, 24 St., Rep., 970; 37 St. Rep., 120; 59 Hun., 624; People ex rel. v. Coleman, 133 N. Y., 279; Gregg v. Sandford, 65 Fed. Rep., 151.
    It is true that District Judge Gresham, in Fargo, Prest., v. L. N. A. & C. Ry. Co., 6 Fed. Rep. 70, and District Judge Brown, in Maltz v. American Express Company, 1 Flip. 611, Fed. Case No. 9,002, held that these associations were corporations, but their decisions must be deemed overruled by the decision of the supreme court of the United States in Chapman v. Barney, 129 U. S. 677, and the decision of the circuit court of appeals in Gregg v. Sandford.
    
    The distinction between the associations at bar and the Liverpool, London & Globe Insurance Co., is obvious, as is shown from the fact that the same court which held the Liverpool company to be a corporation has decided that these express companies are not corp orations. Williams v. Bank of Michigan, 7 Wend., 539.
    II. The statute is unconstitutional. We concede that the legislature may tax a foreign corporation for the privilege of exercising its corporate powers and of carrying on its business (other than interstate commerce), within this state (Western Union Telegraph Co., v. Mayer, 28 Ohio St., 521). The tax there involved was directed against foreign corporations alone. State v. Reinmund 45 Ohio. St., 214.
    The discriminating character of the tax is shown-not only in the fact that it applies to express companies alone, and to no other business or class of persons, but in the method of assessment, which is an arbitrary percentage of the gross earnings of the company, wholly without reference to its net earnings, or losses, profits or capital.
    Surely what this court in State v. Ferris, 41 N. E. Rep. 579, calls the principle of “equality in taxation,” imposed by the second section of our bill of rights forbids such a system. State v. Express Co., 60 N. H. 219 (1880). Gleason v. McKay, 134 Mass., 419; Attorney General v. Winnebago, 11 Wis., 135.
    We admit that the state may exact a consideration for a charter which it grants, and which the corporation is at liberty to accept on the terms proposed, or to reject, as in Ashley v. Ryan, 49 Ohio St., 504; to impose a license for special benefits received, as in Marmet v. State, 45 Ohio St., 63; to exact a fee for a special service, as in Cincinnati Gaslight and Coke Co. v. State, 18 Ohio St. 238, to impose a license as a regulation of theatrical performances, as in Baker v. Cincinnati, 11 Ohio St., 534; to lay a tax by way of regulation of a business injurious to the public welfare, as in the case of the liquor traffic or the cigarette traffic; or to impose an excise as a condition of permitting’ a foreign corporation to exercise its franchises within this state. But express companies enjoy no public franchise. They are engaged in ordinary, legitimate business.
    
      State v. Frame, Auditor, 39 Ohio St. 399; State v. Hipp, 38 Ohio St., 199; Adler v. Whitbeck, 44 Ohio St., 539; Railway Co., v. State, 49 Ohio St., 189.
    III. The act (which was passed May 14,1894) should not be construed, and cannot constitutionally be construed, as authorizing an assessment on the gross receipts for the year ending May 1, 1894; a year which had wholly expired before the act was passed. Bernier v. Becker, 37 Ohio St., 72; Drexel v. Commomoealth, 46 Pa. St., 31.
    IV. The state board refused to deduct from our gross receipts the amounts paid by us “to the railroad companies within this state, for the transportation of our freight within this state,” as required by the language of section 2, item 7, but limted the deduction to the amount that we paid railroads for the transportation of such of our freight as began and ended in the state.
    V. In no event should penalties have been assessed.
    
      
      J. K. Richards, Attorney General, for the defendant in error.
    I. An excise tax upon the gross receipts of express companies, derived from Ohio business, has been sustained as a valid enactment, both by this court and the supreme court of the United States. Western Union Telegraph Co. v. Mayer, 28 Ohio St., 521; Ratterman v. The Western Union Telegraph Co., 127 U. S., 411; Ratterman, Treas. v. Express Co., 49 Ohio St., 608.
    The present act was framed upon the law sustained by the supreme court of the United States in Pacific Express Company v. Seibert, 142 U. S., 339; 49 Ohio St., 504; 153 U. S., 436; State, ex rel. v. Reinmund , 45 Ohio St., 218; Commonwealth v. United States Express Co., 157 Pa. St., 584.
    II. In charging the tax for 1894, no retro-active operation was given the act. Prospective effect alone was given the law; Maine v. Railway Co. 142 U. S., 217.
    III. The deduction allowed the express companies from gross receipts was and is the amount paid railroads for transporting the business from which the gross receipts were derived; that is, Ohio business. Express Co. v. Seibert, 142 U. S., 339.
    IV. The act- provides for due process of law, and no fraud being charged, the action of the'taxing tribunal in ascertaining and fixing the gross receipts was and is final.
    Upon the point that in the absence of an allegation of fraud, the action of the taxing tribunal will be regarded as final. State Railroad tax cases, 92 U. S., 575; Kimball v. National Bank, 103 U. S., 732; Kelly v. Pittsburg, 104 U. S., 78; Stanley v. Supervisors, 121 U. S., 535; Albuquerque Bank 
      v. Perea, 147 U. S., 87.; Indiana Railroad Cases, 154 U. S., 421; Wagoner v. Loomis, 37 O. S., 571.
    V. The penalty was rightfully imposed and should be collected.
    VI. The proof on the motion to quash the service showed that the express companies have been and are acting in Ohio as corporations and hence are suable as such.
    The answer filed by the state raises, we‘ claim, an issue of faót, and there being no proof introduced in support of the averments of the motion, the finding upon these disputed facts must be in favor of the state. Adams Express Co. v. Hill, 43 Indiana, 157; Same v. Harris, 120 Indiana, 173; U. S. Express Co. v. Bedbury, 34 Illinois, 459.
    These express companies have not only been contracting and doing business as corporations, but they have been suing and being sued as corporations, and having been using the courts of Ohio and other states as corporations alone could use them. Adams Express Co. v. McDonough, 6 C. C., 539; American Express Co. v. Johnson 17 O. S., 641; American Express Co. v. Smith, 33 O. S., 512; Ratterman, Treas., v. American Express Co., 49 O. S., 608.
    VII. The text books and decisions make it plain that express companies enjoy franchises and privileges for which an excise tax may be levied upon them as quasi corporations. If such tax can be so levied they may be sued as corporations to collect it.
    Under section 3161a, et seq., a partnership association may be formed in Ohio for conducting any lawful business, by acknowledging certain articles setting out the purpose of the association, the amount of the capital stock, the principle office, etc.
    
      The name of the association is to have the word “limited” added. Members of such partnership association are only liable to the extent of the capital contributed. By • section 3161Í the real estate is to be owned and held in the name of the association, and the association is to sue and be sued in the association name. Service to be made upon the chairman, secretary or treasurer of the association.
    By section 2744 joint stock companies are treated in Ohip, for purposes of taxation, as any other corporation. This section enumerates a number of companies ending with the words “or other joint stock company,” excepting banking and other corporations whose taxation is specifically provided for.
    There is no provision in Ohio for the organization of a joint stock association, other than the section cited. The statutes of Ohio recognize joint stock companies as corporations; they act in Ohio as corporations and can be sued as corporations. And in point of fact, the express companies have always exercised in this state the right to sue in the name of the company, and have repeatedly been sued in the name of the company without objection. Platt v. Colvin et al., 50 Ohio St., 703; State ex rel. v. Ackerman et al., 51 Ohio St., 163; Potter on Corp. section 621; 1 Morawetz oh Private Corps, sections 6, 18 and 989; Sanford, President etc. v. Board of Supervisors of New York, 15 How’s. Prac., 172; Fargo, President v. McVicker, 55 Barb. 437; People ex rel. v. Wemple, 117 N. Y., 136; Oliver v. The Liverpool & London Life and Fire Ins. Co., 100 Mass., 531; Westcott v. Fargo, President, 61 N. Y., 543; Waterbury v. Merchants Union Express Co., 50 Barb., 157; Liverpool Insurance Co. v. Massachusetts, 10 Wall., 566; Maltz et al. v. The American Express Co., 1 Flippin C. C. Rep. Express Co. v. Kountze Bros., 8 Wall. 343; Fargo, President v. Railway Co., 6 Fed. Rep., 787; Railroad Co., et al. v. Adams Express Co., 22 Fed. Rep., 404; Chapman v. Barney, 129 U. S., 677; Crutcher v. Kentucky, 141 U. S., 47; American Express Co. v. Haire, 21 Ind., 5; Adams Express Co., v. Hill, 43 Ind. 157; Adams Express Co. v. Harris, 120 Ind., 73 ; United Express Co., v. Bedbury, 34 Ill., 459; Adams Express Co. v. Trego, 35 Md., 62; T. Rosenfield v. Adams Express Co., 21 La. Ann., 233; Mather v. American Express Co., 138 Mass., 55; State ex rel. v. The State Board of Assessment and Equalization, 53 N. W. Rep., 192; Commonwealth v. United Express Co., 157 Pa., 579; Insurance Co. v. Massachusetts, 10 Wall., 566; Railroad Co. v. Orton, 32 Fed. Rep., 458; Taft v. Ward, 106 Mass., 518; Wetzel et al. v. Fargo, 61 N. Y., 542; People v. Platt, President, 117 N. Y., 136.
   Burket, J.:

The title and first section of the act are as follows: “An act providing for an Excise Tax on Express Companies. Section 1. Be .it enacted by the general assembly of the s'tate of Ohio, That any person or persons, joint stock association or corporation, wherever organized or incorporated, engaged in the business of conveying to, from or through this state, or any part thereof, money, packages, gold, silver, plate or other article, by express, not including the ordinary lines of transportation of merchandise and property in this state, shall be deemed to be an express company.”

By the second section every express company doing business in this state, is required to make under oath and file with the auditor of state, between the first and thirty-first days of May in each year, a statement of its business for the preeeeding year. The auditor of state, treasurer of state and attorney general are by the fourth section constituted a board of appraisers and assessors, to ascertain the gross receipts of such express company for business done in Ohio, during the year next preceeding.

Part of section six is as follows: “It shall be the duty of the auditor of state, in the month of November, annually, to charge and collect from each express company doing business in this state, a sum, in the nature of an excise tax, to be computed by taking two per cent, of the amount fixed by the state board of appraisers and assessors as the gross receipts of such company for business done within the state of Ohio for the year next preceeding the first day of May, and certified to the auditor of state; provided, nothing contained in this act shall exempt or release express companies from the assessment and taxation of their tangible property in the manner authorized and provided by law. All taxes collected by the auditor of state under the provisions of this act, shall be paid into the state treasury, and be credited to the general revenue fund.”

The petition avers that the company is a joint stock association and corporation, organized under the laws of the state of New York, engaged in the express business in this state. Service of summons was made in the same manner as is required in actions against a corporation.

A motion duly sworn to was filed to set aside and quash the service, upon the ground that the company is not a corporation but a copartnership.

To this motion the state answered, denying that the company is a copartnership, and averring that it is in effect a corporation.

Upon the hearing the court of common pleas sustained the service, and the company excepted, and filed a bill of exceptions containing all the evidence heard on the motion. The ruling- on this motion is one of the assignments of error.

Upon the law and evidence, the court of common pleas held that such a joint stock company in the state of New York has all the attributes, powers, immunities and liabilities of a corporation, except that the stockholders are each liable for its debts. This liability does not destroy its character as a corporation. In many of the states, stockholders are by statute made personally liable for all debts for labor, and for some other kinds of debts. Unless prohibited by a constitution, stockholders may be made liable by statute for all the debts of the corporation, the same as copartners. In this state, under the constitution, the liability of a stockholder in a corporation, must be at least in a further sum equal to the amount of his stock, and ; fc may be as much more as the general assembly shall prescribe. The express company having- all-the attributes azid powers of a corporation, is none the less a corporation because its. stockholders are individually liable for its debts; and having such attributes and powers, and beizig ! .> ? '' cd and regarded in the state of New York wee-e it was organized, as being substantially a corporation, it should be so held here. People ex rel. Platt v. Wemple, 117 N. Y. 136.

The case of Platt v. Colvin et al. 50 Ohio State, 703, was decided upon the averments of the petition, conceded to-be true by a demurrer, without inquiry upon evidence as to the real character of the company, and the ruling upon that demurrer was not a determination by this court as to the real character of the company. It was only saying that upon the facts there stated' the action could be maintained by the president, for himself and his associates, who were too numerous to bring upon the record. In the case of a partnership, the action must be brought in the firm name,- or by all the partners, and cannot be brought by the president for himself and associates. The case of Platt v. Colvin, supra, is therefore not an authority in favor of plaintiff in error. Such joint stock companies are nearer in character to corporations than to co-partnerships, and as we have no statute prescribing the manner of service on such companies, they cannot be heard to complain, while doing business in this state, because in actions against them they are treated as corporations. There was therefore no error in the manner of service.

It is also urged that the act in question is unconsitutional for the reason, as claimed, that the act does not tax foreign corporations for the privilege of exercising their corporate franchises in-this state, and is not a tax imposed as a police regulation, but expressly in terms for general revenue; Counsel for plaintiff in error in their brief say that the real question is: “Whether it is competent under our constitution for the legislature, in the exercise of the taxing power, and for the sole purpose of raising general revenue, to select a single business, and to impose upon the persons- engaged in that business, and upop none others, an arbitrary discriminating excise tax, in addition to a tax upon their property, for the privilege of carrying on that business.”

But this is not the question. If it was, it might not be difficult to show, by correct reasoning along the lines of the constitution, that the power exists to levy an excise tax upon franchises and privileges. The limitations upon such power need not be here considered, because the real question in this case is the same as that decided in Telegraph Co. v. Mayer, 28 Ohio State, 521.

What is known as the Nichols law, held constitutional in State ex rel. v. Jones, 51 Ohio State 492, imposes a tax upon property only, and does not impose any tax for the privilege of exercising a franchise in this state. Before the passage of the Nichols law express companies were taxed on the property within this state under section 2744, Revised Statutes, the same as other corporations, and they paid a tax under section 2778, for the privilege of doing business in this state. The Nichols law prescribed new rules for ascertaining and valuing the property of express companies, so as to largely increase the valuation of their property for the purposes of taxation, and repealed the tax for the privilege of doing business in this state. The statute in question again enacted the tax for the privilege of doing business in the state, and named it an “excise tax.” This tax is the same as that under the statute in question in Telegraph Co. v. Mayer, 28 Ohio State, 521, and having been held, as we think rightly, constitutional then, it must be held constitutional now.

The plaintiff in error is, in character at least, a foreign corporation, and pays this tax for the privilege of carrying on the express business in Ohio, and it is not concerned in the question as to whether a like excise tax can be constitutionally laid upon domestic corporations for carrying on the. same business. It will be time enough to determine that question when complaint shall be made by some domestic corporation.

The tax is not laid on the gross receipts for the year 1894, but those receipts are taken as the standard by which to determine the amount of the excise tax to be paid for the privilege of doing business in the state for the year 1895.

The statute should be reasonably construed. And as the gross receipts are only those derived from business done wholly in this state, the deductions for payments to railroads should be for the carriage of the same business., The seventh item of the second section requires the company to make a statement of the amounts, ‘ ‘paid to therailroads within this state, for the transportation of its freight within this state.” “Its freight'''1 in the statute, me^ns the freight from which the g'ross receipts are realized, that is, the business done wholly within the state, and it is the amount paid for the transportation of this freight, that is required to be deducted from the gross receipts. The statute is positive in its requirements of a penalty, in case the tax is not paid during the month of November, and the courts below did not err in obeying the statute.

The records in the American Express Company and in the United States Express Company, against The State., being the same as the record in this ease, this opinion will also apply to those cases.

Judgment affirmed.  