but which should be reserved for public control and administration, either by the Government directly or by public agents acting under such conditions and regulations as the Government may impose in the public interest and for the public security."[1] A necessary condition, then, is a public interest in the occupation or privileges to be followed. The good will of a person or individual trader is not a franchise in this sense, though a franchise may be enjoyed by an individual as well as by a corporation, and good will may rest upon the privilege implied in the franchise.
The recognition of franchises, a species of property "as invisible and intangible as the soul in a man's body," as a proper object for taxation is now beyond any dispute. It is peculiarly appropriate as a source of revenue for the exclusive use of the State, inasmuch as the grant of franchises emanates from the State in its sovereign capacity. In the case of Morgan vs. the State of Louisiana, Justice Field, of the Supreme Court of the United States, said: "The franchises of a railroad corporation are rights or privileges which are essential to the operation of the corporation and without which its roads and works would be of little value, such as the franchise to run cars, to take tolls, to appropriate earth and gravel for the bed of its road, or water for its engines, and the like. They are positive rights or privileges, without the possession of which the road or company could not be successfully worked. Immunity from taxation is not one of them."[2] Further, the extent to which this taxation of franchises may be carried rests entirely in the discretion of the taxing power, subject only to constitutional restrictions.
The great difficulty in applying such a tax lies in the methods of reaching an understanding on the value of the franchise. How can this indefinite something be made visible on the tax books? In many instances the franchise may be regarded as inseparable from the real property of the corporation. The rails of a tramway, the poles and wires of a telegraph company, the pipes and conduits of a gas company, are real and tangible things, necessary to a proper conduct to the respective functions of the corporations. But the right to lay tracks in the public streets, to sink pipes under the streets, or to string wires overhead is as necessary a possession and as essential to the performance of what the corporation was created to accomplish. Whether this permits the franchise to be regarded as "real estate" and so offers it for taxation is a question of some theoretical interest, but of little practical importance.[3] Unless the
- ↑ California vs. Southern Pacific Railroad, 127 U. S., 40.
- ↑ 98 U. S. Reports, pp. 217. 224.
- ↑ A recent law of New York is very full on this point:
"The terms 'land,' 'real estate,' and 'real property,' as used in this chapter, include the land itself above and under the water, all buildings and other articles and structures,
