The New York herald., 1872-12-13
LIABILITY OF BANKERS AND BRO.
KERS TO PAY SPECIAL TAX.

Important Decision by Judge WoodrufY.
Yesterday in the case Of Hiram NJ. Northrup and
Joseph 9. Chick vs. sheridan Shook, Judge Wood.
run rendered lengthy and important decision in
the United States Circuit Court. The action was
prosecuted for the recovery from the defendant,
who was at the time Of the transaction
In question the Collector OF Internal Revenue
for the Thirty-second district OF the State
Of New York, of the sum of soo,saO 10, alleged to
have been enormously assessed upon the business
OF the plaintfs and paid by them taxes from Sep
tember, 1854, to and including the sums assessed
for July, and paid August 81, 1885, The amount was
assessed upon their sales ofgold stocks bonds bull
lion, bills OF exchange and promissory notes be-
tween the dates stated.
It s not claimed that the amounts Of the sales
upon which the assessments we're made or the rate
Of the tar assessed were in any respect err
roneous the plaintiffs were liable to assessment
ana tar upon the respective kind classes Of
business done BY them as bankers and brokers in
gold, &c.
tins were bankers, doing business as brokers,
within the meaning OF che act of June ID, 1864 and
were liable to tax upon % an their sales o. - s9,d
property OF Others The plaintiffs insist that they
are bankers only, doing business under license
IS bankers and not liable to taxation upon any. of
their sales, and that although they made sale Of
the stocks, &C., belonging to others which were
taxed, they were therein acting as bankers only
The sales In question appear TO have been sales Of
property belonging to she plaintiffs, sales OF gold
stocks, bOnas bullion, &C., transmitted to them by
1heir correspondents and the same or the proceeds
drawn against, in some OF which cases the sales
OF the transmitted property were made immedi-
ately and the proceeds at once applied to
the payment OF drafts so drawn and others OF
which the drafts were accepted or paid, and the
gold, stocks &c, were held for better market or
10 await further orders, and In the meantime
stood as their security for their advances and to
provide reimbursement therefor. In other cases
there were no actual advances, but the property
held for sale, and when sold by order OF the Gus
toner the proceeds were placed to credit subject
10 draft.
Tnere were also sales of stocks made in pursu.
ance OF an arrangement for what Is called carry
Ing stocks on margin, wherever they. upon the
deposit with them OF a percentage on the amount
OF the stock, advanced money and purchased
stock for the dealer or spcculator twho dealt In
tile hope OF making profit by the rise
in the market price, and held the same
sold the same for his account as to
profit and loss. These transactions were con-
Quoted in the name Of the plaintiffs, the name OF
the customer not being disclosed 10 those nom
whom the stocks were finally Sold Upon these
purchases and sales they charged and received
h0m the customers the usual commissions Tor pur-
chasing and selling stocks for account OF others,
on the sales was also charged to such customers.
ii the transaction showed profit ii was paid 10
the customer, with return to him Of the cash or
security held as margin. n the transaction re-
turned to the customer was correspondtngy re-
Judge Woodruff, after adverting TO the views adj
vAnced unOn the trial by counsel upon both sides,
and reviewing them in detail, says:--T cannot
doust that it was the Intention OF Congress TO
yeaeA ana inclrde what presume constitutes very
much the largest part of ell tho saes 0i STOCKS go
ana some other Property made In this country. and