PRINCIPLES OF TAXATION. 367 



residents of Pennsylvania, citizens of other States, and being held by 

 them, the act in question, in authorizing the tax upon the interest 

 stipulated in the bonds, so far as it applied to the bonds thus issued 

 and held, impaired the obligation of the contracts between the bond- 

 holders and the company, and was therefore repugnant to the Con- 

 stitution of the United States and void." 



The several State courts of Pennsylvania, however, affirmed the 

 validity of the tax; but the case having then been carried on writ of 

 error to the Supreme Court of the United States, the latter in De- 

 cember, 1873, reversed the judgment of the State courts, and decided 

 in favor of the plaintiff; the opinions of the court, as expressed by 

 Mr. Justice Field, being substantially as follows: 



I. The power of taxation of a State is limited to persons, prop- 

 erty, and business within her jurisdiction; all taxation must relate 

 to one of these subjects. 



II. The tax laws of a State can have no extra-territorial opera- 

 tion; nor can any law of a State inconsistent with the terms of a 

 contract made with and payable to parties out of the State have any 

 effect upon the contract while it is in the hands of such parties or other 

 non-residents of the State. 



III. Bonds issued by a railroad company are property in the 

 hands of the holders, and when held by non-residents of the State in 

 which the company was incorporated are property beyond the juris- 

 diction of the State. 



It will be observed under the third head (the language above 

 quoted being the official prefatory syllabus of the decision) that the 

 court lays down the rule that negotiable bonds are property, not in 

 the place where issued, as was claimed by the authorities of Pennsyl- 

 vania, and not at the domicile of the owner irrespective of actual 

 presence, as was generally claimed by the State tax officials, but in 

 the hands of the holders at the place where the bonds are actually 

 situated, whether the holders be actual, bona fide owners or other- 

 wise. And the following is the exact language in which the de- 

 cision was expressed: 



" It is undoubtedly true that the actual situs of personal property 

 which has a visible, tangible existence, and not the domicile of its 

 owner, will in many cases determine the State in which it may be 

 taxed. The same theory (i. e., the actual situs determinative) is true 

 of public securities consisting of State bonds, and bonds of municipal 

 bodies, and circulating notes of banking institutions ; the former, by 

 general usage, have acquired the character of, and are treated as, 

 property in the place where they are found, though removed from 

 the domicile of the owner; and the latter are treated and pass as 

 money wherever they are." 



