Charleston, in determining that property of this description, created by her authority and situate within her limits, should, without regard to the domicile of the owner, contribute its just share toward the public expenditure, followed a conspicuous example. By sect. 120 of the act of June 30, 1864 (13 Stat. 283), a tax was levied by the United States on the dividends of corporations, without reference to the citizenship of the owner of the stock; and this section was by the act of March 10, 1866, declared to embrace 'non-residents, whether citizens or aliens.' 14 id. 4. By the act of July 13, 1866, a tax was levied upon the 'gains and profits' of any business or trade carried on in the United States by 'persons residing without the United States, not citizens thereof.' Id. 138.
At all events, Murray's claim that his stock was exempt from taxation by reason of his foreign residence, and that extra-territorial effect was given by the judgment below to a State law does not raise a Federal question.
5. The ordinances are not unconstitutional. When the certificates were issued, the council was vested with power to tax the stock. They were, therefore, purchased with notice that they were subject to the exercise of that power, and they were held in subordination to it. The law touching the liability of the res to taxation entered into the contract, and became one of its essential elements. The ordinances do not engraft a new condition upon it, or modify its stipulations. It is said, however, that its obligation is impaired, because, by reason of them, the holder receives a diminished income from it. This is but another form of asserting that a tax cannot be rightfully assessed against the stock; for, if it can, the mode of collecting it is immaterial. Whether, when sued on a contract, the city can claim, by way of set-off, the taxes due to her from the plaintiff; whether she can enforce the collection of them by suit, or by garnishment of moneys due to him, or by a summary sale of the res,-are matters of local jurisprudence, which have no more relation to the alleged Federal question involved, or to the real merits of the controversy, than has the proposition that taxes are not debts within the meaning of the legal-tender enactments. If the ordinances are valid without the provision for deducting the tax from the accrued interest and retaining it, they are valid with it.
The right of the States to tax their own securities has been judicially affirmed. Champaign County Bank v. Smith, 7 Ohio St. 42; People v. Home Insurance Co., 29 Cal. 533. There is no reported case in conflict with these decisions. Not only does this conform to the settled practice of the British government, but the United States has asserted the same right. By sect. 49 of the act of Aug. 5, 1861 (12 Stat. 309), sect. 90 of the act of July, 1862 (id. 473), sect. 116 of the act of June 30, 1864 (13 id. 281), and by sect. 1 of the act of March 3, 1865 (id. 479), the tax on income includes bonds and other securities of the United States.
It is no answer to say that such a tax is not directly laid upon the thing. If it be a breach of contract or of good faith to tax directly, it is equally so to secure the same result by indirect means. That rule is not sound which makes the thing untaxable when it alone is assessed, and taxable when it is included with the rest of the owner's property of every kind.
MR. JUSTICE STRONG delivered the opinion of the court.