New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1866-06-05


Luther CLARK and others ag The United States and others
The plaintiffs CLARK, Dodge & Co., bring this suit to
eron collectors assessing and collecting the tax on
brokers or their saes They set ont in their complaint that
they are Bankers, keeping Banking. House where moneys
received and collected and also advanced and loaned
stocks bonds baon pnd notes and received them for sale
That they have been duly licensed Bankers and not Brok
They divide their transactions into tour classes First
They received stocks bonds and bullion for sale and bills and
o discount and sale from Others and did sell them and
discount then account of the parties from whom they
ceiyed them Second That they aneed moneys stocks
bonds and bullion and sold them Of the parties from
whom they received Third That they had bought
Of other parties aud not discos
ing the parties for whom they bought bonds stock and bullion
paying for them out Of their moneys and having them
transferred themselves and retaining them security for
toe repayment Of the MONEYS advanced and paid and
receiving the Of their advances with interest and the
usual commissions they transferred such stock 60, to the
parties in case of nonpaymsnt sold such stocks &c to
reimburse themselves the advanced by them Fourth
That they made purchases on their account
They then proceed to that the collector and assessor
have required them 10 make return Of oil their sales incud
ing the fourth class and threaten collect the brokers' tax;
they have under the threats Of the collector and
paid the the first three classes but not the last class
and that the and collector s threaten TO and
collect the tax They that their law remedies
are insufficient pray judgment they may adjudged
not to paw such tax and 10 be reimbursed for the taxes they
have paid and for az Injunction against the collector and as
SCISSOR for collecting or assessing the tax.
The following abstract of the points presented By the
plaintiffs:
The created by the Goth section Of the Internal Reve
Law does include transactions which form part Of
the ordinary business Of BANKERS but only sales made by
IL tho three OF transactions they acted
BANKER and brokers The 10th section OF the act con
rs bankers the right receive stocks for sale and to loan
AID advance money ihron and this necessarily carries with
it the right 10 sell uc stocks &c when received for sale or
collateral security The third class included within this
for there purchases and In such transactions no
the repayment OF the advanced purchase In
either within the category Of section ~ OF
to made The which plaintiff act to
be determined by the Revenue act itself and section ~ de-
cares that persons doing these acts shall % regarded 40
III These transactions do not form any part ofto business
Of broker broker Is defined by the % be one who
nsgOaes sales and purchases He IL distinguished from
S5 q y s ISts1 .s 1g td being With
who receives stocks &o for sale and sells them
money on them not b0ssr but banker ytbir 'be act
and must take out license and peg the bankers duties which
brokers' have not 10 pay The sales OF the th.d class form
part =. bankers business and not such broker
perform beoase they made the bankers respond
bty the payments are made with his money and the
banker into broker any than the sale OF merchandise
consigned 70 commission merchant The Of banking is
In oo1fct with the argument 10 that tie defend
ants were conceded TO be brokers.
engage aud would DO taxable when had by broker this
viii not subject them to tax when bad by The PLAINTIFF II
the plaintiffs license bankers authorizes them engage
free of they be deprived
ther exemption because they may also be made y broker
and when nude would be taxable The Legislature bear
ing mind the heavier license Of the banker and his
capital deposits and profits FROM which tue broker Is
empt may well have considered those payments sufficient
compensation the privileges conferred him received
them IN lieu Of al other taxes The ninth paragraph az
as Ssaksr whose business il is as broker 10 negotiate pur
az banker whose busne.. broker negotiate pur
cs.s' or ss &e as Do ss ann
tbofzed 10 be done by O broker.
the business broker this would not render the plaintiffs
for the classes OF business particular TO bankers The
ssh section Intended 70 reach brokers aud 20 cover Trans
had by
II a all sales made By BROKERS In regard 10
brokers but only sales made by them while setting a.
VI At any this does not authorize the taIaou Of sale.
by plaintiffs their account there they do not act
on commission They were At liberty 70 buy or sell on their
account without ee9se The Law does not impose tax
duty sales made by bankers on their own account The
applies only to brokers or parties doing business
Mr. Laroeque presented the Of Rin,tein Rossn-
field which differs somewhat from the preceding In following
and i'm the fact that all others
through regularly licensed broker who mads his returns
Mr. S G. Courtney District ttorney, behalf OF the
Government read affidavit tina, the FIRST tres classes OF
the plaintiffs the ordinary business Of brokers' The FOL
lowing brief .s;trao, .. as argument 10 the Fish
Hatch ease me R lnS T a%y % Ds
section the upon sales OF Government securities held
ccuntY A defendants character vss declared that
they licensed bankers ADD general dealers IN Gov ernpent
securities and the nature Of such dealing specified TO nave
tousistec n pdyDg selling them opportunity offered
their and for themselves oaers
The entire issue in that therefore whether licensed
banker nv dealing In securities selrsiry on their own sc
count subjected to the brokers' under
This ease therefore did not ass the liability Of bakers
negotiating sales, &c. Tor others.
Tho third class Of the complaint is in fact admission that
the plaintiffs have negotiated account
Of divers parties and charged and received commissions
such dealing.
The Internal act provides that certain businesses
sba not be carried without license These compre
bensves defined In the 7h section in each Tue first
sub section relates TO bankers the ninth 10 brokers'
These dissmle bu, the exception the ninth sub
broker without taking ont brokers license In the epth
section however bankers dealing brokers subjected to
fhaaa ltaHt ifiaaa TIM hFnta
IT admitted that the plaintiffs did from time 10 time pur
chase stocks for and on account divers parties, Brokers
negotiate purchases sales Of stocks &C. for themselves
others The act does not prescribe the which
may may not exercise their business II takes heed OF
custom. II merely fixes test On the face Of the bill tho
and when acting as brokers are liable TO snch
IL tue bankers doing business brokers they liable
brokers the upon personal banker doing
business os broker subjected BY the Goth section to the
liability broker with the exception ha be need not
get separate license The only escaping this
liability is their transactions are done a.
brokers under Section 10 ell within definition Of
ond stock is so far regular
sSf o@ GS Ia 1s1 r s 0SE On
missions &c pay over The balance This k clearly nego
The definition o. banking does not contemplate such dis
position Of the pledges and securities The practice proper
enough but Is test OF banking than Of pavnbroking
In The first class carefully clothed with the language
act, and the question Is one Of construction
ordinary Of brokerage selling for others rapidly
words for themselves or saved II from utter extinction.
That signal for resistance and thers combined
effort the intent Of the law. The present is bu,
another mode of that resistance Let 1t be decided
the plaintiffs here ask and the OF brokers will disappear
with the npdiy Of Jonah goud while bankers will exhibit
corresponding increase and tho cntiro business Of Wa
be reduced the receiving Of stocks &C.. for sale.
Mr. Courtney called the attention Of tho Court TO the fact
that this tax had been collected by the bankers ordinarily from
their He Gained that under the decisions that
every person who dealt broker 10 extent was as
broker liable for his whole transactions Ard thst at least
one II not three OF the classes OF the PLAINTIFF transactions
we're properly brokers' transactions and banking business
He distinguished the case Of Eustein sbere doubt the
krial