Selden v. Equitable Trust Company

• Decision Date: 01 October 1876
• Citation: 94 U.S. 419,24 L.Ed. 249
• Parties: SELDEN v. EQUITABLE TRUST COMPANY
• Court: U.S. Supreme Court

94 U.S. 419

24 L.Ed. 249

SELDEN v. EQUITABLE TRUST COMPANY.

October Term, 1876

ERROR to the Circuit Court of the United States for the District of Connecticut.

The facts are stated in the opinion of the court.

Argued by Mr. Assistant Attorney-General Smith for the plaintiff in error, and by Mr. Augustus Brandegee and Mr. Jeremiah Halsey, contra.

MR. JUSTICE STRONG delivered the opinion of the court.

The Equitable Trust Company is a corporation created by the laws of the State of Connecticut, and its principal office or place of business is at New Haven, in that State. Its 'only business has been and is the investing of its own capital in mortgage securities on real estate, and selling such mortgage securities with the company's guaranty. It does not collect or receive, nor has it ever collected or received, any deposit of money subject to be paid, or remitted on draft, check, or order; nor does it receive deposits, issue notes, or make discounts of any description whatsoever, nor do any other business than above stated.' In 'investing said capital in mortgage securities on real estate as aforesaid, the manner adopted by the corporation has been and is as follows: To make loans thereof to individuals, taking from the borrower a bond, . . . and securing the payment of said bond by a mortgage deed of real estate, executed by the borrower in conformity with the laws of the State where such real estate is situated. To the negotiation, sale, and guaranty of such bonds this company is exclusively devoted, and it incurs no obligations except those arising from such guaranty.' That such is the character of the company, and that such is the nature of its business, is stipulated of record; and the only question presented by the case is, whether a corporation doing such a business is a 'banker' within the meaning of sect. 3407 of the Revised Statutes of the United States relative to internal revenue.

Clearly, the company is not a banker in the ordinary acceptation of the word. But Congress has defined who shall be regarded as bankers, for the purposes of taxation under the revenue laws. Sect. 3407 of the Revised Statutes, p. 673, enacts that 'every incorporated or other bank, and every person, firm, or company having a place of business where credits are opened by the deposit or collection of money or currency, subject to be paid, or remitted upon draft, check, or order, or where money is advanced or loaned on stocks, bonds, bullion, bills of exchange, or promissory notes, or where stocks, bonds, bullion, bills of exchange, or promissory notes are received for discount or for sale, shall be regarded as a bank or as a banker.'

The statute describes three classes of artificial and of natural persons, distinguished by the nature of the business transacted by them, and declares that individuals embraced in either of the classes shall be considered bankers. The first class is composed of those who have a place of business where credits are opened by the deposit or collection of mon y or currency, subject to be paid or remitted upon draft, check, or order. It is not claimed the company engaged in that branch of business, or that they are included in this first class. The agreed state of facts expressly repels any such claim.

The second class are those who have a place of business where money is advanced or loaned on stocks, bonds, bullion, bills of exchange, or promissory notes. It is contended on behalf of the plaintiff in error that the company is included in this class, because it advances or loans money on bonds. The case, however, states that all...