Lee v. Bickell

• Citation: 78 L.Ed. 1337,54 S.Ct. 727,292 U.S. 415
• Decision Date: 21 May 1934
• Docket Number: No. 944,944
• Parties: LEE, Comptroller, v. BICKELL et al
• Court: United States Supreme Court

292 U.S. 415

54 S.Ct. 727

78 L.Ed. 1337

LEE, Comptroller,

v BICKELL et al.

No. 944.

Argued May 10, 1934.

Decided May 21, 1934.

Appeal from the District Court of the United States for the Northern District of Florida.

[Syllabus from 416 intentionally omitted] Messrs. J. V. Keen, H. E. Carter, Cary D. Landis, and Robert J. Pleus, all of Tallahassee, Fla., for appellant.

Mr. Charles A. Carroll, of Miami, Fla., for appellees.

Mr. Justice CARDOZO delivered the opinion of the Court.

The appellees, complainants in the court below, have brought this suit against the appellant, the comptroller of the state of Florida, to restrain the enforcement of a Florida statute for the levy and collection of stamp taxes upon the documents described in the bill of complaint.

Their contention has been and is that the statute, properly construed, does not apply to the transactions stated in the bill, and that, if so applied, it is in conflict with the due process and commerce provisions of the Constitution of the United States. Amendment 14; art. 1, § 8.

A District Court of three judges granted an interlocutory injunction (5 F.Supp. 720), which thereafter was made permanent. The case is in this court upon an appeal by the state comptroller. Judicial Code, § 266, 28 U.S.C. § 380 (28 USCA § 380).

The Florida statute (chapter 15787, Laws of Florida 1931 (Ex. Sess.)) imposes a stamp tax upon all bonds or certificates of indebtedness issued in Florida; upon each original issue of certificates of stock; and upon all sales of stock or certificates of stock, agreements to sell, memoranda of sales or deliveries, or transfers of title, the stamps to be placed upon the certificates if the assignment of the certificate is to a person named therein, and upon a written memorandum which the seller is required to execute and deliver to the buyer if there is either an agreement to sell or a transfer of title by delivery of a certificate assigned in blank. The provisions of the statute so far as material are printed in the margin.¹

The appellees are stockbrokers engaged in business in the city of New York with branch offices in Florida. Orders to buy or sell received from Florida customers are transmitted by the Florida branches, and are executed in New York in accordance with the customs of the Stock Exchange. The comptroller does not contend that any document signed by the brokers in New York is subject to the tax. To the contrary, there is a concession that the stamp taxes applicable to such transactions are those imposed by the New York statute (New York Tax Law (Consol. Laws c. 60), § 270) and by a statute of the United States (26 U.S.C. § 901(3), 26 USCA § 901(3), which are substantially the same as the stamp tax law of Florida. What the comptroller contends is this, that after the transaction is executed in New York, where certificates and memoranda are stamped under the New York and federal statutes, there are certain supplementary papers, copies of the original memoranda, or receipts, or entries in the books, which are signed by the managers or employees of the Florida branches, or on occa- sion by the customers. These, it is said, are memoranda of sales or deliveries within the meaning of the Florida statute. A tax is also claimed where a written order for the sale of shares is signed by a Florida customer and delivered to the Florida agent for transmission to the central office.

The application of the statute to these and similar situations will be determined more easily when the course of business, first in respect of purchases, and next in respect of sales, has been traced in greater detail. What that course of business is appears very clearly from the stipulated facts.

Upon the transmission to New York of an order for the purchase of shares of stock and after the execution of the order upon the floor of the Exchange, the buying and selling brokers sign and exchange what is known as an 'exchange contract.' There is no contention by the comptroller that this is taxable in Florida. When the shares are delivered, the rules call for the exchange of what is known as a 'sales ticket,' a memorandum of the transaction, which bears the stamps required by the Federal Stamp Tax Act and by the statute of New York. 26 U.S.C. § 901(3), 26 USCA § 901(3); New York Tax Law, § 270. There is no contention that the sales ticket is taxable in Florida. After the execution of the order, the New York office reports the transaction by telegraph over its private wire to the Florida branch, where an employee receives the telegram and reduces it to writing. This copy according to the contention of the comptroller is a memorandum of sale within the meaning of the Florida statute, and must be stamped accordingly. Another copy of the telegram is commonly, but not invariably, delivered by the branch office to the customer. This too is claimed by the comptroller to be a taxable memorandum, though a stamp is not required if one has been affixed to the copy retained for the office files. In addition to the telegraphic notice to its Florida representatives, the New York office follows the practice of sending notice of the purchase by mail directly to the customer. No stamp is r quired for this notice, which is signed and transmitted in New York. Finally when the purchase has been completed by delivery, there are times when the New York office, instead of holding the certificates for the account of its Florida customer, forwards them to him by registered mail. When this is done, a form of receipt is inclosed, which the customer is asked to sign. The comptroller contends that this receipt, if signed in Florida, is subject to a stamp tax as a memorandum of delivery.

The course of dealing upon an order for the sale of shares does not differ in essentials, so far as the present subject of inquiry is concerned, from that upon an order to buy. By concession the 'exchange contracts,' and the 'sales tickets' are not taxable in Florida. Taxes are claimed, however, upon the telegraphic report of the sale when written out by employees in the Florida office or by them transmitted in writing to the Florida customer. Taxes are claimed also when the Florida branch delivers a receipt to the customer for certificates to be sold, or receives a written order to sell, the theory being that this last is an agreement to sell within the meaning of the statute.

If stamp taxes due in connection with any of these memoranda are not affixed when payable, they must be affixed, in the view of the comptroller, to the corresponding entry upon the books of account, but the tax is payable only once in respect of the same transaction, duplicate documents or entries being held to be exempt.

The failure to pay the tax by affixing and canceling stamps of the prescribed value is declared to be a crime and is punishable accordingly.

Upon these facts the District Court held that the complainants, who were nonresidents of Florida, were without an adequate remedy at law, and that the threatened acts of the comptroller, if illegal, should be restrained by a court of equity. As to this we are not in doubt, the multiplicity of actions necessary for redress at law being sufficient, without reference to other considerations, to uphold the remedy by injunction. Wilson v. Illinois Southern R. Co., 263 U.S. 574, 44 S.Ct. 203, 68 L.Ed. 456; Hill v. Wallace, 259 U.S. 44, 62, 42 S.Ct. 453, 66 L.Ed. 822. The taxes claimed by the comptroller and resisted by the complainants exceed the amount necessary to sustain the federal jurisdiction. Several hundred transactions are affected every day.

The District Court held also (1) that the writings signed in Florida were not agreements or memoranda of sale or delivery within the meaning of the Florida statute; and (2) that the effect of a different construction would be to bring the statute into conflict with the Fourteenth Amendment. The two grounds are not sharply separated in the opinion of the District Court, the second being brought in to reinforce the first. We propose in what follows to keep them distinct.

First. The evidence drawn from the wording of the statute combines with the administrative interpretation of like statutes in other jurisdictions and with the practical interpretation of this one for nearly two years in Florida to exclude the transactions from the operation of the tax.

The scheme of the statute is to tax the transfer of shares of stock, whether executory or executed, by stamps to be affixed to those writings, and those only, which in a practical sense are the repository of the agreement or the instruments or vehicles for the ensuing change of title. Thus, if a transfer has been made and the only evidence of its making is on the books of the corporation, it is on such books and nowhere else that the stamps are to be placed. The statute does not say or mean that they shall be placed also upon the memoranda of the transaction in the office of the brokers or that there shall be an election to affix them either at one place or the other. Again, 'if the change of ownership is by transfer of the certificate' to a stated assignee, it is on the certificate and nowhere else that the stamps are to be placed. Only in two classes of cases is a different rule prescribed. 'In case of an agreement to sell' (as distinguished from an executed transfer) 'or where the transfer...