Omaha daily bee. (Omaha [Neb.]) 187?-1922, 1910-06-01
CORPORATION FAX CASE SET
provided that the tax should be paid for the
year ending June 80, 1910 although the law
was not passed until August g. 1909
First Move to Test Law.

year ending June 80, 1910, although the law
was not passed until August 5, 1909.
First Move to Test Law.
Not until shortly before the expiration
of the time for the making of the returns
was the first move made to test the validity
of the tax This movement to test the great
question about corporation law started in
the little town If Windsor, VT,
There Maxwell Evarts, New York
lawyer, son of the late William NJ. Evarts
has a summer home. He had often noticed
the keen competition between the two gen
eral merchandise stores In the town, the
Stone-Tracy company, a corporation and
Dwight Tuxbuly Sc Sons, a partnership con-
Germ. He saw what he believed was dis
elimination against 1.-THE corporation If it
were compelled to pay. the tax and make
public lbs business arrangements, and so
accepted the position of counsel for Stella
p. Flint, general guardian of the prop
erty for Samuel N. Stone. jr,. minor, who
owned stock in the Stone-Tracy Co, Suit
was brought in the federal court by Mr..
Evarts to enjoin the corporation from MAX
ing the returns and paying the tax, on the
ground that the law was unconstitutional.
The corporation filed a demurrer, which
was sustained and the bill dismissed. An
appeal was taken to the supreme court.
The institution of the Flint Stone-Tracy
case was the signal for the bringing of
suits in many sections of the United States.
All were decided in exactly the same way,
and almost invariably appeals were taken
to the supreme court The government was
allowed to Intervene Fifteen cases, headed
by the FlintLStone- Tracy suit were set for
argument on March IA. GN
Besides the Vermont case, those heard
were: ,te''
Wyckoff Van Derhoef against the Coney
Island g. Brooklyn Railroad company.
Francis L. Hine against Home Life In
surance company OF New York.
Fred w. Smith against the Northern
Trust company of Chicago.
William Ii. Miner against the Corn Ex-
change National bank of Chicago.
Cedar Street company against Park
Realty company of New York.
Lewis w. Jared against the American
Multgraph company OF Cleveland.
Joseph e. Gay against the Baltic Mining
| company, Michigan corporation
Percy II. Brundage against Broadway
| Realty company of New York.
Paul Lacroix against Motor Taximeter
| Cab company of New York.
| Arthur Lyman against marlborough
Rapid Transit company of New York.
George Wendell Phillips against fifty as
oscar Mitchell against Clark Iron COM
pany, a Minnesota corporation.
Katherine Cary Cook against Boston
| Wharf company.
Two Days OF Argument.
Two days were consumed in the argu-
ment Of the case in the supreme court.
| William Guthrie of New York, council for
| the Home Life Insurance company, argued
that IL the court would interpret the law so
| as not to include in the net income the in
| come derived directly from federal, state,
county or municipal securities and real
and personal property not used or en-
ployed in business, there would be no
question about the constitutionality Of the
law.
Solicitor General Bowers defended the
constitutionality Of the law without qualifi-
cation. He contended that the tax was
not direct tax upon property, real OF
personal, but on the contrary, was an ex-
else tax. upon 1.-THE carrying on or doing
business" The tax, he continued, was moi
direct tax upon shares of the stock
holders in the companies to the business
of which the tax attaches, or upon the in
come of such stockholders from theil
shares. 1t did not become direct tax, HI
added, because the company engaged
mainly or even solely, in the business o.
handling or dealing in real estate. Thu
various objections to the law was takeI
up in turn by the solicitor.
Mr.. Evarts opened the argument agains
the law. He contended that the law in
vaded the sovereignty OF the state OF Yer
mont; that ii would deprive the corpora
ton OF property without due process o
law. and that its publicity feature woul,
take private property for public use with
out just compensation. Throughout n
emphasized the point that the tax wa
upon franchises OF a state and therefor
unconstitutional Former Senator Forake
Of Ohio argued that II was an income tar
John c. johnson of Philadelphia made
general attack ON the law. Richard v
Lindabury of New York and other counst
, addressed the court In explanation of fea
lures of individual cases
. Il