Citizens Nat. Bank of Cincinnati v. Durr

Background

An Ohio resident owned a membership (a “seat”) in the New York Stock Exchange for which he paid $60,000. The membership gives valuable privileges, including the right to trade through other members and to share commissions, and the Exchange itself is a voluntary association holding the building and land in New York. The owner sued Ohio county officials, arguing that Ohio could not tax the membership under the Commerce Clause or the Fourteenth Amendment’s due process and equal protection guarantees. Ohio courts ultimately held the membership taxable, and the case reached this Court.

Reasoning

The Court treated the seat as intangible personal property rather than an interest tied to New York real estate. It explained that the membership carries contractual and business rights that the owner can use from his Cincinnati office through other members in New York, so the membership lacks a fixed situs and may be taxed where the owner lives. The Court rejected arguments that the tax impermissibly burdened interstate commerce and found no valid equal-protection claim on the record, noting that differential taxation of other brokers or memberships could be accidental or have a reasonable explanation.

Real world impact

The ruling allows Ohio to tax the value of a New York Stock Exchange membership held by an Ohio resident as property at the owner’s domicile. It does not bar taxation by New York as well, and the Court emphasized that ordinary property taxes on property used in interstate commerce are often permissible. This decision resolves the dispute in favor of the State’s power to tax such intangible business privileges under the circumstances described.

Dissents or concurrances

Justice Holmes, joined by two colleagues, expressed doubt and thought the core of the right might be localized in New York, suggesting the question was not as clear-cut as the majority made it.