I dissent, and think that the judgments should be reversed. Assuming, as held in Bank of California v. San Francisco,142 Cal. 276, [75 P. 832 *Page 326 100 Am. St. Rep. 135], — against my views, — that a franchise is assessable property, that the franchises of a corporation may be legally assessed under the general word "franchise" or "franchises" without any other description, and that their value may be ascertained as declared in that case, still a franchise exists only in legal and mental contemplation, has no local situs, is indivisible, and, as said in Spring ValleyWater Works v. Schottler, 62 Cal. 111, is "quite distinct and separate from the property which, by the use of such franchise, the respondent may acquire." The whole of the franchises involved in this case were granted by the state. The right of the municipality to regulate the laying of the pipes, etc., is a mere power of the municipality, not a franchise of the corporation appellant. Those franchises granted by the state being mere intangible ideal things, the state has a perfect right to determine where and how they should be assessed. The state has determined that when they belong to a corporation they shall be assessed at its principal place of business, and, in my opinion, that clearly means the place designated as its principal place of business in the charter of the corporation. Any other rule leads to an interminable division of the franchises, which would not only cause confusion and manifest injustice, but is not warranted by any provision in the law. And if the franchise, for purposes of assessment, is to be distributed through numerous municipalities, I cannot see how the method of ascertaining its value declared in the Bank of California case can possibly be applied. Of course, all tangible property which the corporation may have in any county or city is assessable there. It makes no material difference whether a franchise be considered as real or personal property. I think that for purposes of taxation it is clearly personal property, under section 3617 of the Political Code. But, whether real or personal, the franchise or "privilege to use the streets" of the city is admittedly granted by the state, and not by the city or county. Now, the provision of section 3628 is that franchises "granted by the authorities of a county," etc., must be assessed in the county or city in which they were granted, but "if granted by any other authority they must be assessed in the county in which the corporations . . . holding them have their principal place of business." And, as the franchises here involved were *Page 327 granted by "other authority" than that of the city and county, they must be assessed in the county where the principal place of business of the corporation is; so that the question, from whatever direction we approach it, always is, Where is the principal place of business? And this question is in no way affected by a consideration of the different places where the franchise is being exercised, or the fact that it is not being exercised at all.
The following opinion was prepared some time ago, though not by myself, and I adopt it as clearly and forcibly expressing my views on the questions here involved: —
"These are actions to recover for taxes paid to the tax-collector of San Joaquin County by plaintiff under protest. The taxes were levied and assessed against plaintiff upon its `franchise.' No question is raised that a franchise is property within the meaning of the constitution and revenue laws of the state, and that, as property, it is taxable. The sole question is, Where shall the franchise of a domestic corporation be assessed under the laws of the state? Section 19 of article XI of the constitution prescribes as follows: `In any city where there are no public works owned and controlled by the municipality for supplying the same with water or artificial light, any individual or any company, duly incorporated for such purpose under and by authority of the laws of this state, shall, under the direction of the superintendent of streets, or other officer in control thereof, and under such general regulations as the municipality may prescribe for damages, and indemnity for damages, have the privilege of using the public streets and thoroughfares thereof, and of laying down pipes and conduits therein, and connections therewith, so far as may be necessary for introducing into and supplying such city and its inhabitants, either with gaslight or other illuminating light, or with fresh water for domestic and all other purposes, upon the condition that the municipal government shall have the right to regulate the charges thereof.' The purpose of this constitutional provision, which was not found in our earlier constitution, is well known and appears plainly from the constitutional debates. Formerly, when the granting of such franchises was left to the municipalities, it was thought that the municipalities themselves abused their powers, and by imposing most onerous conditions and restrictions upon *Page 328 applicants for new franchises effectively created monopolies in favor of existing companies. To remedy this the constitution deliberately took away from these municipalities the power to bestow these franchises, and by direct grant conferred upon corporations organized for the indicated purposes not only the franchise to be, but the franchise to do, within the corporate limits of cities which did not own their own works. That this was a direct constitutional grant does not admit of doubt, and in fact has been expressly declared by this court in People v.Stevens, 62 Cal. 209, and in In re Johnston, 137 Cal. 115, [69 P. 973], in which last case it is said that the sole power which a municipality now has in this regard is the power of general regulation which is expressly conferred by terms in the constitution, and that the municipality cannot impose any additional burdens or terms as a condition to the exercise of the franchise so granted.
"Appellant in this case is a corporation organized under the laws of the state of California for many purposes specifically set forth in its articles of incorporation. To manufacture, use, transmit, purchase, and sell gas for illuminating, heating, and other purposes; to manufacture or otherwise dispose of the residual products therefrom; to sink and construct natural gas-wells, and to deal in the products thereof; to produce, generate, transmit, use, purchase, and sell electricity; to purchase, use, and sell water and water-rights, and wells, flumes, ditches, pipes, and conduits in connection therewith; to produce, conduct, use, purchase, and sell steam and steam power, and generally to engage in the business of producing, transmitting, and selling light, heat, and power; to purchase and sell patents and patent rights relating to the purposes above mentioned. The place where the principal business of the corporation is to be transacted is set forth, as required by section 290 of the Civil Code, as the city and county of San Francisco, state of California. We have thus a corporation organized for sundry legitimate purposes, which has declared — as the law compels it to do — the place where the principal business of the corporation is to be transacted. This place of business is declared to be the city and county of San Francisco, and this corporation derives its franchise for the supplying of artificial light to the city of Stockton, and to any or all other cities of the state, by direct grant from the *Page 329 constitution. Where is this franchise to be assessed? This question would seem to find a ready answer in the language of section 3628 of the Political Code, which provides as follows: `The franchise, roadway, roadbed, rails, and rolling-stock of all railroads operated in more than one county in this state shall be assessed by the state board of equalization, as hereinafter provided for. Other franchises, if granted by the authorities of a county, city, or city and county, must be assessed in the county, city, or city and county within which they were granted; if granted by any other authority, they must be assessed in the county in which the corporations, firms, or persons owning or holding them have their principal place of business.' When the Civil Code prescribes that the articles of incorporation must set forth the place where the principal business of the corporation is to be transacted, and when the Political Code declares that the franchise, if granted by any other authority than that of a county, city, or city and county, `must be assessed in the county in which the corporations, firms, or persons owning or holding them have their principal place of business,' there is the foundation of an argument, persuasive, though not of course conclusive, that by the uses of this phrase, `the principal place of business,' the legislature meant one and the same thing. The principal place of business of a corporation means, of course, the principal place for the transaction of the corporation's business, the place where directors' and stockholders' meetings are held, where the offices of the corporation are situated, for the purpose of the transfer of stock, the levying of assessments, the declaration of dividends, and for the performance of all other business strictly corporate in its character. Such, of course, is the well-settled meaning of the phrase.
"But respondent contends that as this corporation is actually engaged in the business of supplying the inhabitants of the city of Stockton with light, and is using the streets of the city for that purpose, and is in Stockton collecting its revenues, for the purposes of taxation of its franchise, this should be considered its principal place of business, within the meaning of section 3628 of the Political Code; and it argues further in support of this view the injustice that results to a municipality when a corporation so exercising the privilege of using its streets pays to that municipality nothing for that intangible *Page 330 but valuable property called its franchise. But to this it may be answered that the revenue laws of the state at best are imperfect, and are frequently unjust, inequitable, and even oppressive. No scheme has yet been devised by man for an absolutely economical, just, and uniform mode of taxation. Primarily, the sovereign power is interested in seeing that all property bears its just proportion of taxation. It is to the state a minor matter whether the tax itself is collected by one or another of its agents and mandatories. We have seen that the power to grant or to refuse such franchises was, for the abuses which had crept in, absolutely taken away from municipal corporations by the constitution itself; and it may well have been that it was this circumstance which prompted the legislature to make provision, as it has done, for the assessment of such franchises at the principal place of business of the corporation. If municipalities had the power to grant such franchises, then of course the question would be a simple one, and would be solved by the very language of section 3628; but when the people saw fit to make these franchises a matter of constitutional grant, the legislature was at once confronted with the problem of fixing alocus for the assessment of these franchises. One corporation might be organized — as was this — for the purpose of supplying any number of cities with artificial light. Its franchise is distinctively one franchise, notwithstanding the fact that its operations might be extended to many municipalities. An obvious and important distinction, and one never to be lost sight of, exists between the franchise itself and the exercise of the franchise. The franchise is the privilege granted by the constitution to a corporation or to a private person to do certain things — not as to one, but as to any number of municipalities. The franchise may be exercised in one or in many municipalities. If a corporation should be exercising its franchise in several municipalities, how, under respondent's contention, and under the present system of fixing a valuation upon such franchise, could it be assessed? Would it be divisible in the different cities? Would it be assessed in the one where the larger business was done, or where the larger profits were received? If the company sustained a loss in one municipality, and made a profit in another, in the assessment of the franchise would it be worth *Page 331 less than nothing in one municipality, or would its loss in that city be set off against the valuation in the city where it made a profit? These, and many more like questions, leading to inextricable entanglement and confusion, are eliminated only by giving the obvious and common-sense meaning to section 3628 of the Political Code. Assessing the franchise not in the many cities or counties where it may be exercised, but assessing it, as the code directs, where the corporation has its principal place of business, affords a simple, plain, and understandable solution of the whole matter; and such, we think, was the clear meaning of the legislature."
Henshaw, J., being disqualified, Justice Cooper, one of the justices of the district court of appeal for the first appellate district, participates herein pro tempore, pursuant to section 4 of article VI of the supplement to the constitution.