United States v. Thomas
Decision Date | 28 January 1902 |
Citation | 115 F. 207 |
Parties | UNITED STATES v. THOMAS |
Court | U.S. District Court — Southern District of New York |
Henry L. Burnett, U.S. Atty., and William S. Ball, Asst. U.S. Atty.
Pavey & Moore (Frank D. Pavey, of counsel), for defendant.
The defendant demurs to an indictment, which charges that he being a broker in the city of New York, sold certain shares of Atchison preferred stock, and omitted the required revenue stamps from the memorandum of sale, with intent to evade the war revenue act of 1898. The act provides:
The defendant urges that the statute, so far as her involved, is unconstitutional. He premises that a certificate of stock is property; that a tax on the sale of property is a tax on the property itself; and from this he concludes that the act provides for levying, without apportionment, a direct, and hence invalid, tax on such property.
The statute lays a stamp duty (1) on the bonds, debentures, or certificates of indebtedness issued by any association, company, or corporation; (2) on original certificates of stock issued by any such body; (3) on all subsequent sales, or agreements to sell, or memoranda of sales or deliveries or transfers of such certificates.
The present inquiry relates to a tax on a memorandum or contract of sale of a certificate of stock. What is such certificate? It is the evidence of the holder's title to shares in the property and franchises of a corporation. The sale of the certificate is a transfer of such shares to another person. The state furnishes facilities whereby persons may form a corporation, which may designate the individual interests of its members by certificates, transferable upon its books, so as to permit the holders to manage or direct the business of the corporation, with such liability, privileges, and immunity as the charter and the law provide. Congress has declared that every person who holds such a certificate in such artificial body, and shall transfer by sale to another the right to participate in such corporation and to become a member thereof, with the accompanying property rights and benefits, shall pay a tax on the contract or transaction whereby the transmission is effected. It is not intended at this time to emphasize the benefits and protection afforded by the law to the members of such bodies, and the enhanced value of their property rights by reason of the facilities afforded them. In a matter of less importance such privilege would deserve, at least, consideration, but the present discussion will pursue broader views and inquiries.
The defendant relies upon certain decisions of the supreme court, and judicial expressions in the opinions, to wit, that congress may not levy a stamp tax on bills of lading of goods exported (Fairbank v. U.S., 181 U.S. 283, 21 Sup.Ct. 648, 45 L.Ed. 862); nor levy a license tax upon an importer (Brown v. Maryland, 12 Wheat. 419, 6 L.Ed. 678); nor tax sales by auctioneers of imported goods in the original packages (Cook v. Pennsylvania, 97 U.S. 566, 24 L.Ed. 1015); nor lay a license tax upon goods not the product of the state, but brought therein for sale (Welton v. Missouri, 91 U.S. 279, 23 L.Ed. 347); nor tax a bill of lading for metal shipped from a point within, to a point without, the state (Almy v. California, 24 How. 169, 174, 16 L.Ed. 644); nor lay a license tax on drummers selling or offering for sale goods by sample, and having no licensed house of business in the taxing district (Robbins v. Shelby Co. Taxing Dist., 120 U.S. 489, 7 Sup.Ct. 592, 30 L.Ed. 694). These cases involve attempts on the part of the United States to tax exports, or of states to tax imports or exports, or to lay taxes on subjects of interstate commerce. They contain statements or holdings that a tax on the occupation of importer or exporter is a tax on the goods imported or exported; that a tax on a bill of lading of export goods is a tax on the goods; that a tax on a vendor of foreign goods is a tax on what he sells; that a tax upon sales of imported goods in the original packages, payment whereof is obligatory upon the auctioneer, is a tax on the goods; and that a tax on the sale of an article imported only for sale is a tax on the article itself. Brown v. Maryland, 12 Wheat. 444, 6 L.Ed. 678. It will be observed that in each instance the subject-matter of the tax was not within the taxing power. Hence no tax, direct or indirect, could be laid thereon, under any disguise whatsoever. The taxation of property other than exports is within the power of congress, although the tax must be raised in the manner pointed out by the constitution; that is, 'direct taxes by the rule of apportionment, and indirect taxes by the rule of uniformity. ' The defendant quotes with some special urgency from the opinion in Nicol v. Ames, 173 U.S. 513, 19 Sup.Ct. 524, 43 L.Ed. 786, where the following portion of the war revenue act of 1898 is construed:
'Upon each sale, agreement of sale or agreement to sell any products of merchandise at any exchange or board of trade, or other similar place, either for present or future delivery, for each one hundred dollars in value of said sale or agreement of sale or agreement to sell, one cent, and for each additional one hundred dollars or fractional part thereof in excess of one hundred dollars, one cant.'
It was held that the tax was laid upon the facilities of the exchange, and was valid. Mr. Justice Peckham, in the course of the opinion, said:
The defendant infers from this excerpt that a tax upon sales of property is a direct tax, and invalid unless apportioned. The defendant's argument, so far as based on the decisions, other than the last cited, may be tested. It is that inasmuch as the tax on an importer, bill of lading of export goods, sales by auctioneers of imported goods for the importer, vendors of goods from beyond the taxing state, is a tax upon the goods themselves, and invalid, so a tax on transfers of property is a direct tax upon the property itself. The fallacy of this method of argument quickly appears. Thus a license tax on the importer of tobacco is a tax on the goods imported; hence, a tax on a dealer in domestic tobacco is a direct tax on his commodity. A license tax by a state upon foreign salesmen is a tax on the subjects of their sales; hence a federal tax on the occupation of a salesman, in the state where he resides, is a direct tax on the goods sold by him...
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...within the meaning of the prohibition of the Constitution of the United States against the laying of imposts by the states. United States v. Thomas (C. C.) 115 F. 207; Fairbank v. United States, 181 U.S. 283, 21 648, 45 L.Ed. 862; Brown v. Maryland, 12 Wheat. 419, 6 L.Ed. 678; Welton v. Mis......
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