This is an appeal under section 240 of the Judicial Code (28 USCA § 347) from a judgment of the Circuit Court of Appeals for the Third Circuit affirming, on the opinion of the court below (In re Thermiodyne Radio Corp., 26 F.(2d) 713), an order of the District Court for Delaware, expunging the claim in bankruptcy of appellant, the state of New York, for unpaid taxes assessed by it against the bankrupt corporation.
Section 181, article 9, of the Tax Law of New York (Consol. Laws N. Y. c. 60), chapter 62, Laws 1909, as amended, imposes on every foreign corporation doing business in that state a tax computed upon the basis of the capital stock employed by it within the state during the first year it does business there; the amount of its stock so employed being that proportion of its total issued capital stock which its gross assets employed within the state bear to its gross assets wherever employed. In the case of stock having a par value, the tax is fixed at one-eighth of 1 per cent. of the par value of its stock so employed; for stock of no par value the fee is 6 cents per share. The tax, denominated a 'license fee,' is paid but once, purports to be imposed on the corporation 'for the privilege of exercising its corporate franchises or carrying on its business in such corporate or organized capacity of this state,' and the obligation to pay it is made a prerequisite to obtaining a certificate of authority from the state and to the continuance of business there. People ex rel. Griffith v. Loughman, 249 N. Y. 369, 164 N. E. 253. But the foreign corporation is permitted to transact business and make valid contracts within the state prior to payment of the tax, which of necessity cannot be computed or paid until after the first year has elapsed. The tax is evidently the complement of the organization fee, computed in like fashion on the authorized capital stock of domestic corporations by chapter 143 of the Laws of 1886. See People ex rel. Elliott-Fischer Co. v. Sohmer, 148 App. Div. 514, 132 N. Y. S. 789, affirmed 206 N. Y. 634, 99 N. E. 1115.
The bankrupt is a Delaware corporation, whose authorized capital stock consists of 250,000 shares without par value, all of which has been issued at an average price of $2.32 per share. It commenced doing business in New York in November, 1924, and its total assets were used in its business in that state during the following year. The value of its tangible assets are alleged to have been but $280,000, or about $1.12 per share, and its intangible property to have been of no value. A tax of $15,000, computed at 6 cents per share, was assessed against it, and is the basis of the present claim.
The rejection of the claim by the referee was upheld by the District Court on the sole ground that the tax on the bankrupt's nonpar stock at the fixed rate of 6 cents per share, without regard to its true value or the amount paid into the corporation upon its issue, infringed the equal protection clause of the Fourteenth Amendment. The court thought that, as the tax could not be regarded as a true admission fee imposed as a condition of entrance into the state, and the corporation was thus in a position to invoke the equal protection clause, see Hanover Ins. Co. v. Harding, 272 U.S. 494, 510, 47 S.C.t. 179, 71 L. Ed. 372, 49 A. L. R. 713, the invalidity of the taxing statute was established by the decision of this court in Air-Way Electric Appliance Corp. v. Day, 266 U.S. 71, 83, 45 S.C.t. 12, 69 L. Ed. 169 since foreign corporations having the same amount of business and property, both within and without the state, but with a different number of issued nonpar shares, might be required to pay a tax differing from each other and from other foreign corporations with par value stock having like property within and without the State. The Court of Appeals of New York has since reached the opposite conclusion, both as to the nature of the tax and its constitutionality. People ex rel. Griffith v. Loughman, supra.
For present purposes we need not determine whether the tax may be sustained, because imposed as a condition of entrance into the state, for, assuming that the bankrupt corporation was within the state, and thus entitled to equal protection (Hanover Ins. Co. v. Hardings, supra, Southern Ry. Co. v. Greene, 216 U.S. 400, 417, 30 S.C.t. 287, 54 L. Ed. 536, 17 Ann. Cas. 1247), we do not deem the decision in the Air-Way Case controlling, nor the tax so unreasonable or discriminatory as to deprive the bankrupt of any constitutional immunity.