| PRINCIPLES OF TAXATION. |
By DAVID A. WELLS, LL. D., D. C. L.,
CORRESPONDANT DE L'INSTITUT DE FRANCE, ETC.
XVI.—TAXATION OF CHOSES IN ACTION.
IN addition to the review of the celebrated Foreign-held Bond Case (see Popular Science Monthly, vol. lii, No. 3, pages 354373), decided by the United States Supreme Court in 1893, it is proposed to call attention here to additional and interesting features of this case which have not been hitherto noticed in this connection.
The court having decided the situs for taxation of negotiable instruments—railroad bonds, etc.—took occasion also to affirm the taxable situs of such other personal property, or evidence of indebtedness, as is generally included under the term of choses in action, using in so doing the following language:
"But other personal property, consisting of bonds, mortgages, and debts generally, has no situs independent of the domicile of the owner, and certainly can have none where the instruments, constituting the evidence of debt, are not separated from the possession of the owner."
As thus expressed, the reasons given by the court for separating for taxation the situs of the two classes of personal property under consideration are so clear, and so in accordance with common sense, as hardly to require any further explanation; and, therefore, it seems only necessary to assist the reader, who, if a taxpayer, is certainly interested in knowing the tax liability of his property, by recalling that while, in the case of negotiable instruments, the title to the property runs with the instrument and passes by delivery, in the case of bonds, mortgages, and sales made to particular persons, and thus non-negotiable, the title, on the other hand, does not run with the instrument, but exclusively with the person of the owner; so much so, that the attachment of a mortgage, or the possession by theft or finding of a note payable to a person, does not in any degree alienate or impair its original and legitimate ownership. The decision of the court, therefore, brings all classes of personal property under one harmonious and consistent rule for the purpose of taxation, legal attachment, and protection, by affirming that their situs as property is only where they are; which in the case of visible and tangible objects and negotiable instruments, is dependent, from the very nature of things, upon actual and not constructive presence, and in the case of choses in action upon the domicile of the owner;
