The evening telegraph. [volume] (Philadelphia [Pa.]) 1864-1918, 1866-07-19
LEGAL INTELLIGENCE.
Bankers, and brokers, Tax,

attendants who are the assessors and collectors
sf the Thirty-seeond Collection District OF New
York, under the Internal Revenue laws, for the
purpose OF restraining them from the assessment
and collection OF q tax claimed TO have accrued
against the plaintiffs as bankers doing business
as brokers, within said district, under the fol-
lowing circuns stances:-
The plaintiffs have license as bankers and
have IRON time to time received at their banking
house stocks, bonds, and bullion Tor sale; and
also nave during the same tine received bills
OF exchange and promls.ory notes for discount
and sale; and did discount aud sell the same on
ana Tor the account OF the parues from whom
received aud charged the customary compensa.
tiOn as bankers and also during the time afore-
saio did, at their banking house, lend and ad-
vance moneys TO various parties on stocks, bonds,
and bullion, and tier such advances and loans
did sell SAID stocks, bonds ana bullion on ac-
count OF the parties from whom the same
were received, and TO wnom the moneys
sales the moneys so loaned and advanced, with
the interest and customary charges as bankers:
and also boueht and sold stocks, bonds, etc.. on
for others. The tax claimed as having accrued
out of the above dealings Is one-tWentieth of
one per centum monthly on all the sales of the
stocks, bonds, etc., under the niuety.nlnth sec
tion Of the act (l3 U. s. st. p. 273), which i'm
poses the tax on brokers, and "oankers doing
business as brokers'" The question in the case is
whether or not the plaintiffs in carrying on the
Aforesaid business under bankers license are to
The first subdivision OF the seventy ty-nlnth section
(p. 251) enaols that bankers employing capital
not exceeding $50,000 shall pay Sl00 tor
license, and two dollars for every thousand
over this amount, and then defines the term
banker:-"Every person, firm, company, etc.,
having q place OF business-(D where credits
are opened by the deposit or collection of
money or currency, subject to be paid or
Iemltted upon draft, check, or order; (2D where
money is advanced ol loaned on stocks, bonds,
bullion, bills OF exchange, or promissory notes:
(2) where stocks, bonds, bullion, bills of ex-
change or promissory notes are received for dis
count or sale, shall be regarded banker under
this actn Besides the license fee exacted, the
banker, under the one hundred and tenth Sec
tion (page 277) pays tax OF one-tweDty-iourth
OF one per centum monthly upon the average
amount OF sits-Onetwenty-ourtn OF one
per centum monthly upon the average amount
of the capital of his bank beyond the amount
invested In the United States bonds--one.t yeIlGh
Of one per cenrum monthly on the average
amount OF circulation, If issued by any bank
and in addition one-slXth of one per centum
monthly on the amount OF circulation beyond
ninety per centum of the capital. The license
fee and the above tax are the burdens imposed
on the banker Tor the privileges conferred
Now, among these is the privilege of dong the
business set forth in the bill OF complaint, and
to which we have referred at large; and
yet it is claimed the plaintiffs are liable
TO the additional tax as brokers' spe-
ci6ed in the ninety-nnth section of the
act According to this construction the
license or privilege OF the banker would be of
little value. He might, indeed, receive deposits
and pay them out, advance or lend money on
stocks, bonds, etc., but III case OF delault of
repayment he must not sell the pledge to
reimburse himself = he may receive stocks,
bonds, ETC., for discount or sale, but is not at
liberty to, SELL If he does, it Is insisted ne
instantly becomes broker, and liable TO the
brokers' monthly tax, in addition to the bankers,
which he has already paid. We cannot
agree to this view OF the act. On the
contrary, we are satisfied the banker is,
both by express terms as Dy necessary
Implication, empowered to carry on the busi
ness authorized under his license, 10 its practl-
cal aud useful results. That, when he is autho-
rized to lend or advance money ON stocks,
bonds etc., he has the right in case of default
in the repayment, to convert the security into
money by way of reimbursement-and, when
authorized 10 receive stocks, bonds, etc., for
sale, be may sell the same without, in either
instance, making himself broker. The United
States vs.. Fisk ct al, decided at the last term,
carried the privileges of the banker far
beyond the present ease; for it was there
held that he could purchase and sell stocks
bonds, etc., tor himself, and on his own account,
under his license-a business not specified in the
definition of banker. That case, in effect
decided that any business which banker could
carry on, such, did not fall within the ninety
ninth section OF the act. The case Of the plain
tifs, as set forth i'll the fourth paragraph of the
bill, s. In substance, as follows:-That IN carry
ing on their business as bankers they purchase
purchases in their own name, and advance their
own money, and take the transfers in their own
name, and hold the stocks az security for re-
payment by the person for whom purchased:
and on receiving such repayment interest, and
customary charges, deliver the stocks bonds
etc., as per agreement; or, In default OF repay.
ment they sell the same to reimburse them
selves. This business is not only outside of the
business OF banker as defined by the act but
comes directly within that of a broker and
subject to the tax under the ninety-ninth sec
tion. But 1t is urged that If the plaintiffs.
in any of their dealings in stocks, bonds, etc.
are brought within the category of bankers
doing business as brokers, their whole bust
ness as bankers is thereby brought within
it, and subjected to the brokers' tax;
and this extraordinary proposition is supposed
to be decided in the case above referred TO. The
ninth subdivision (page 252), declaring who
shall be broker is as tollows:-"Every
person, firm, or company, etc. Except such as
hold license as a banker), whose business it is
as a broker TO negotiate purchases or sales of
stocks bonds, ETC., shall be regarded as a
broker" The exception takes the banker out of
the category o broker, and to make it more clear
what was intended by the exception, a provisoi is
added, that any person holding a license as
banker shall not be required to take out license
as broker" meaning, obviously that he NAV
no business as a broker under his license as a
banker. But surely there is nothing in the pro.
vision which thus permits the business both of
banker and broker to be carried on under the
bankers license that suggests the idea, or gives
any counlenance to 1T, that dealing in both
capacities merges the banker into the broker SO
as 10 subject all his dealings to the brokers' tax
The fair and natural inference would seem to be
the other way, namely. that the broker Is
merged in the banker But we suppose the rea-
soDable and proper conclusion ls, that
although the license Of the banker
a broker without further payment Of
money, vet, so far AS he may do that business