The evening times. [volume] (Washington, D.C.) 1895-1902, 1902-04-15
Opinion of Commissioner
YerkeS on the Led
yard Appeal.
SHARES OF STOCK AFFECTED
Requirements of Schedule A of the War
Revenue Bill Referred to as Well as
the Mortgage Clause of the Law Of
1898.

Mr.. John W. Yerkes. Commissioner Of
Internal Revenue, made public this morn
ing his letter to Mr.. Lewis Cass Ledyard,
OF New York, attorney for the New York
State Exchange. regarding stamp tax on
securities ander specific conditions. The
decision OF Mr.. Yerkes has been awaited
with deep interest by bankers and brok-
ers throughout the country. Mr. Yerkes'
decision was rendered in reply TO Mr.
Ledyard's argument asking for a recon
sideration and reversal of the ruling
made by the Commissioner il February
last, by which ruling it vas held chat
where certificates of stock were used as
collateral for loans and we're delivered
by the owner thereof to the lender en-
closed in an envelope, upon which enveI-
epe there was a printed memorandum set
ting forth the name of the borrower, the
name Of the lender, the amount borrowed,
date of the transaction, and the name
and value of the securities enclosed in the
envelope. that such transaction was sub
iect to the stamp tax imposed by the first
clause of schedule A Of the war revenue
acts Of June, 1898, and March, 1901
The Commissioner is of opinion that
even without such memorandum the trans
action is taxable, but in the case under
consideration there was both delivery of
the stock to secure the future payment
OF money and furthermore the memoran-
dun above referred TO. The Commits
sioner holds that the language Of Schedule
A does not require the memorandum
IN h. Go 4 h.
that Il must be intended by the parties
or accepted by them as an effective in
strument OF pledge The memorandum
under consideration contained a full
statement OF the transaction between the
parties. It showed the amount OF the
loan, to whom the loan was made by
whom it was made. the rate Of interest
Gate of the loan, the securities delivered
as collateral. and the value Of these Sc
curiLies. The Commissioner further held
that as after the passage Of the act OF
1898 both the then Attorney General and
the then Commissioner OF Internal Rev
enue had held that such transactions we're
taxable under what was called the mort
gage clause OF the law OF 1885 which
clause was repealed under the provisions
of the act OF March 2, 1901 that the
taxes N question would only be enforced
on and after the 1st OF July, 1901.
He held that as long as the mortgage
law had been upon the statute books this
Office had the right assume that the rev
enUe officials had enforced the collection
Of and the borrowers had paid the taxes
due under that section, according 20 the
rulings Of the bureau. but that from the
date OF the repeal of the mortgage clause
he considered it IS duty to enforce the
collection Of the proper taxes where stock
was used as collateral and where any
memorandum Wag made q part OF thg
transaction The Commissioner does not
agree with Mr.. Ledyard that the amounts
involved viii be stupendous or that IN
usual hardship viii result 10 taxpayers
by the enforcement of the law. But what
ever may be the amounts, ne feels il his
dUsy to enforce the law whatever may be
the result Of that enforcement; that his
dufy was 10 find the meaning Of the law
after careful consideration Of its language
and then enforce il.
Mr.. Ledyard had requested that II the
Commissioner could not agree with him Il
his views Of the case under consideration
the opinion of the Attorney General might
be asked The Commissioner, because Of
the large number OF persons interested in
this case. as well as because of the
amounts involved, has agreed 10 comply
-Tfth the request and will today request
the Secretary of the Treasury 10 submit
all papers 20 the Attorney General. with
d request that he give his opinion Of the
question involved