William R. Day

“ Conceding the doctrine that the meaning of a statute is a state question, except where rights, the subject of adjudication by the Federal courts, have accrued before its construction by the state court, or the question of contract within the protection of the Federal Constitution is involved, still a state court, while entitled to great consideration, cannot conclusively decide that to be a tax within the meaning of a Federal law providing for the payment of taxes, which is not so in fact. ”

“ In our judgment the 'taxes' owing by a bankrupt to a state-which § 64a of the bankruptcy act [30 Stat. at L. 563, chap. 541, U.S.C.omp. Stat. 2447] provides shall be paid in advance of the payment of dividends to creditors-do not embrace an 'annual license fee or franchise tax' (the words of the New Jersey statute) , which, strictly, is not a property tax, but only an exaction by the state for the privilege given to a corporation to do certain business under its charter. We think the bankruptcy act should be so construed. ”

“ The franchise of the company is the right to hold property and exercise its corporate privileges. The Supreme Court of the United States has decided that where a corporation is exempted from taxation, it is not subject to a tax on its franchise. ”