Joseph McKenna

“ A tax upon the leases is a tax upon the power to make them, could be used to destroy the power to make them. If they cannot be taxed as entities they cannot be taxed vicariously by taxing the stock, whose only value is their value, or by taking the stock as an evidence or measure of their value, rather than by directly estimating them as the Board of Equalization and the referee did. The assessment by the Board was of the leases as objects of taxation, having no immunity under Federal law. ”

“ The gas business, he reports, was not 'of itself profitable,' but was 'valuable as an adjunct to the company's oil operations.' He was explicit as to what the stock of the company represented, saying that 'the total value of said company's stock, including all its property, tangible and intangible, on the first day of February, 1911, was $500,000.' It is manifest, therefore, when the court took the stock as evidence of the value of the property of the company the court took it as evidence of the value of the leases, and thereby justified their assessment and taxation. ”

“ It follows from these views that the assessment against the oil company, so far as it included the leases, whether as separate objects of taxation or as represented or valued by the stock of the company, is invalid. ”