it worse than the mischief itself? Must courts and counsel struggle with the intricacies of a case when only questions of law are to be reviewed and the facts are stated by the judge in accordance with section 1022 in a short decision? What can be plainer than that exceptions may be filed to the short decision the same as to findings and that no case need be made? sections 998 and 1022, and it amounts to a judicial repeal of section 998, a forced and strained application of section 1022, and a virtual emasculation of the short decision, making it a burden to suitors and judges alike, rather than the benefit and boon it was designed to prove. The effect, too, of such a construction will be far reaching, as decisions in the short form have come to be the rule rather than the exception. Nor can the meaning and effect of the provisions be ignored or frittered away by likening the short decision to a jury's verdict. If the illustration that both verdict and short decision are presumably sustained by the evidence means anything, it must mean that the judge's statement of facts is thus supported. For how could the appellate court assume the correctness of the trial judge's conclusions of law, if the facts as stated by the judge himself made it apparent that he had improperly applied the law. The supposition would lead to manifest absurdity. Why, too, should a distinction be drawn as to the respective force of facts expressed in the findings and of those in narrative form, merely on account of the form into which they are cast? The Court of Appeals makes no such distinction, saying in People ex rel. Manhattan v. Barker (152 N. Y., 417, 435) "the phrase, a finding of fact, may mean simply "a finding expressed in words, or also a finding implied from the nature of the decision." If the decision did not state the facts the contention of the learned judges might apply, but such a decision would not be a compliance with section 1022. Again it is useless to argue that the grounds of the decision are merely the reasons which actuate a court's decision, and that these reasons are "merely inserted for the assistance of the appellate court and that they may be "argumentative suggestions, or mere statements of the trial judge's view of the law (Health Department v. Weekes, supra.)" The decision may contain all of such things, and UNITED STATES CIRCUIT COURT especiany must it contain the judge's view of the law as applied to the facts. This argument of the learned judge is not even superficially specious, for what in fact are the judge's reasons for the judgment he renders? Why that he found the facts to be so and so. The judge necessarily states the facts of the case as the reasons for his legal conclusions. Does his failure to put the facts in the form of findings change anything of their substance? Can a mere difference of form make facts reasons, or reasons facts? What substantial difference is there between formal findings labeled as such and a narrative of the facts in the short form? Grounds are here synonymous with reasons, for both plainly mean a statement of the facts. How much more simple and logical it would be to harmonize these sections as the Third Department has done in Delaney v. Valentine (11 App. Div., 316), in which it relies on the reasoning of the Rochester Lantern Co. v. Parker & Stiles Co. (supra), and accepts the short decision as a substitute in all respects for the old findings, as the Court of Appeals has fairly said it is in the Bomeisler and Bement cases? For if the short decision is a substitute for the old findings it is fair to assume that it is intended to be its equivalent, and if it is its equivalent, the rules laid down in the Rochester Lantern case and in Schwartz v. Weber (supra) govern the practice under the short decision as well as under the old system of findings. It is to be hoped that the Court of Appeals when it comes to consider the short decision in all its bearings will logically follow its own dicta, the reason of the thing, and above all the plain meaning of the Code of Civil Procedure; and reading sections 998 and 1022 together, in pari materia, make perfect harmony between them. It is incredible that section 998 can be deprived of its meaning and application. If the BarrettBartlett decision stands it is impossible to reconcile ROBERT L. CUTTING, L.L. B. NEW YORK, Feb. 25, 1902. WAR REVENUE ACT-FEDERAL STAMP TAXES. - SOUTHERN DIS TRICT OF NEW YORK. JANUARY, 1902. UNITED STATES V. GEORGE C. THOMAS. The defendant was indicted for omitting to attach the required revenue stamps, provided by the War Revenue Act of 1898, upon memorandums of sale of certain shares of railroad stock, with intent to evade the provisions of section 25, Schedule A (entitled Stamp Taxes), of such Act of Congress. The indictment was demurred to on the ground that the Act of Congress mentioned is unconstitutional, the defendant's contention being that a tax on sales of shares or certificates of stock is a direct tax," and that it has not been laid in proportion to the census or enumeration, nor apportioned among the several States according to their respective numbers. Held, 66 that the tax is not a direct tax, not being a tax upon the property itself, but upon a business, occupation or transaction, and the burden being upon the person who engages in the business of selling shares of stock. Henry L. Burnett, United States Attorney, and William S. Ball, Assistant Attorney, for the United States; Pavey & Moore (Frank D. Pavey of counsel), for defendant. THOMAS, J.— The defendant demurs to an indictment which charges that he, being a broker in the city of New York, sold certain shares of Atchison preferred stock and omitted the required revenue stamps from the memorandum of sale, with intent to evade the War Revenue Act of 1898. The act provides: "ADHESIVE STAMPS. "Section 6. That on and after the first day of July, eighteen hundred and ninety-eight, there shall be levied, collected and paid, for and in respect of the several bonds, debentures or certificates of stock and of indebtedness, and other documents, instruments, matters and things mentioned and described in Schedule A of this act, or for or in respect of the vellum, parchment or paper upon which such instrument, matters or things, or any of them, shall be written or printed by any person or persons, or party who shall make, sign or issue the same, or for whose use or benefit the same shall be made, signed or issued, the several taxes or sums of money set down in figures against the same, respectively, or otherwise specified or set forth in the said schedule." sale, where the evidence of transfer is shown only by the books of the company, the stamp shall be placed upon such books; and where the change of ownership is by transfer certificate the stamp shall be placed upon the certificate; and in cases of an agreement to sell, or where the transfer is by delivery of the certificate assigned in blank, there shall be made and delivered by the seller to the buyer a bill or memorandum of such sale, to which the stamp shall be affixed; and every bill or memorandum of sale or agreement to sell before mentioned shall show the date thereof, the name of the seller, the amount of the sale, and the matter or thing to which it refers. And any person or persons liable to pay the tax as herein provided, or any one who acts in the matter as agent or broker for such person or persons, who shall make any such sale, or who shall, in pursuance of any such sale, deliver any such stock, or evidence of the sale of any such stock or bill or memorandum thereof, as herein required, without having the proper stamps affixed thereto, with intent to evade the foregoing provisions, shall be deemed guilty of a misdemeanor." The defendant urges that the statute, so far as here involved, is unconstitutional. He premises that a certificate of stock is property; that a tax on the sale of property is a tax on the property itself; and from this he concludes that the act provides for levying, without apportionment, a direct, and hence invalid, tax on such property. The statute lays a stamp duty (1) on the bonds, debentures or certificates of indebtedness issued by any association, company or corporation, (2) on original certificates of stock issued by any such body, (3) on all subsequent sales or agreements to sell, or memoranda of sales or deliveries or trans "SCHEDULE A.- STAMP TAXES. "Bonds, debentures or certificates of indebtedness issued after the first day of July, Anno Domini eighteen hundred and ninety-eight, by any associa-fers of such certificates. tion, company or corporation, on each hundred dollars of face value or fraction thereof, five cents, and on each original issue, whether on organization or reorganization, of certificates of stock by any such association, company or corporation, on each hundred dollars of face value or fraction thereof, five cents, and on all sales, or agreements to sell, or memoranda of sales or deliveries or transfers of shares or certificates of stock in any association, company or corporation, whether made upon or shown by the books of the association, company or corporation, or by any assignment in blank, or by any delivery, or by any paper or agreement or memorandum or other evidence of transfer or sale, whether entitling the holder in any manner to the benefit of such stock, or to secure the future payment of money or for the future transfer of any stock, on cach hundred dollars of face value or fraction thereof, two cents; provided that in case of The present inquiry relates to a tax on a memorandum or contract of sale of a certificate of stock. What is such a certificate? It is the evidence of the holder's title to shares in the property and franchises of a corporation. The sale of the certificate is a transfer of such shares to another person. The State furnishes facilities whereby persons may form a corporation, which may designate the individual interests of its members by certificates, transferable upon its books, so as to permit the holders to manage or direct the business of the corporation, with such liability, privileges and immunity as the charter and the law provide. Congress has declared that every person who holds such a certificate in such artificial body and shall transfer by sale to another the right to participate in such corporation, and to become a member thereof, with the accompanying property rights and benefits, shall pay a tax on the contract or transaction whereby the transmission is effected. It is not intended at this time to emphasize the benefits and protection afforded by the law to the members of such bodies, and the enhanced value of their property rights by reason of the facilities afforded them. In a matter of less importance such privilege would deserve at least consideration, but the present discussion will pursue broader views and inquiries. The defendant relies upon certain decisions of the Supreme Court and judicial expressions in the opinions, to wit, that congress may not levy a stamp tax on bills of lading of goods exported (Fairbanks v. United States, 181 U. S., 283); nor levy a license tax upon an importer (Brown v. Maryland, 12 Wheat. 419); nor tax sales of auctioneers of imported goods in the original packages (Cook v. Pennsylvania, 97 U. S., 566); nor lay a license tax upon goods not the product of the State but brought therein for sale (Welton v. Missouri, 91 U. S., 279); nor tax a bill of lading for metal shipped from a point within to a point without the State (Almy v. California, 24 How., 169, 174); nor lay a license tax on drummers selling or offering for sale goods by sample and having no licensed house of business in the taxing district (Robbins v. Shelby Co. Taxing District, 120 U. S., 489). These cases involve attempts on the part of the United States to tax exports, or of States to tax imports or exports, or to lay taxes on subjects of interstate commerce. They contain statements or holdings that a tax on the occupation of importer or exporter is a tax on the goods imported or exported; that a tax on a bill of lading of export goods is a tax on the goods; that a tax on a vendor of foreign goods is a tax on what he sells; that a tax upon sales of imported goods in the original packages, payment whereof is obligatory upon the auctioneer, is a tax on the goods; and that a tax on the sale of an article, imported only for sale, is a tax on the article itself (Brown v. Maryland, 12 Wheat., 444). It will be observed that in each instance the subject-matter of the tax was not within the taxing power. Hence no tax, direct or indirect, could be paid thereon, under any disguise whatso ever. The taxation of property, other than exports, is within the power of congress, although the tax must be raised in the manner pointed out by the Constitution, that is "direct taxes by the rule of apportionment, and indirect taxes by the rule of uniformity." The defendant quotes with some special urgency from the opinion of Nicol v. Ames (173 U. S., 519), where the following portion of the War Revenue Act of 1898 is construed: "Upon each sale, agreement of sale or agreement to sell any products or merchandise at any exchange or board of trade, or other similar place, either for present or future delivery, for each one hundred dollars in value of said sale, or agreement of sale or agreement to sell, one cent, and for each additional one hundred dollars or fractional part thereof in excess of one hundred dollars, one cent." It was held that the tax was laid upon the facilities of the exchange and was valid. Mr. Justice Peckham, in the course of the opinion, said: "A tax upon the privilege of selling property at the exchange and of thus using the facilities there offered in accomplishing the sale differs radically from a tax upon every sale made in any place. The latter tax is really and practically upon property. It takes no notice of any kind of privilege or facility, and the fact of a sale is alone regarded.” The defendant infers from this excerpt that a tax upon sales of property is a direct tax and invalid unless apportioned. The defendant's argument, so fas as based on the decisions, other than the last cited, may be tested. It is that, inasmuch as the tax on an importer, bill of lading of export goods, sales by auctioneers of imported goods for the importer, vendors of goods from beyond the taxing State, is a tax upon the goods themselves, and invalid, so a tax on transfers of property is a direct tax upon the property itself. The fallacy of this method of argument quickly appears. Thus, a license tax on the importer of tobacco is a tax on the goods imported; hence a tax on a dealer in domestic tobacco is a direct tax on his commodity. A license tax by a State upon foreign salesmen is a tax on the subjects of their sales; hence a Federal tax on the occupation of a salesman, in the State where he resides, is a direct tax on the goods sold by him in that State. A tax on a bill of lading of goods for export is a tax on the goods; hence a federal tax on a domestic bill of lading is a direct tax on the goods. Therefore, the occupations of tobacco dealers, salesmen and transportation companies are not subjects of an unapportioned federal tax, and the taxes laid upon occupations, the selling of property and trades, found in the act of 1898 and earlier acts, are invalid. But the power of congress to tax occupations, business, trades, transfers of property and contracts has long since been recognized. (Railroad Co. v. Collector, 100 U. S., 593, 598; Pollock v. Farmers' Loan & Trust Co., 157 U. S., 575, 577.) To such consequence does the defendant's reasoning lead. Syllogisms should not be fashioned upon judicial expressions detached from the particular inquiry at some former time under consideration. The present question is whether a statute providing for a tax on contracts for the sale and delivery of certificates of stock lays a direct tax upon property within the meaning of the Constitution. It is a mere truism that a tax, whatever its form, falls primarily on the taxpayer's property, for how otherwise could it be paid? If a farmer actually pay a tax for the privilege of following his vocation, is not something exacted from his farm, stock or other property? The same is the case if the tax be laid on the sale of the products of the farm. If a railroad company be taxed on bills of lading, the tax, when paid, is charged to operating expenses, and the result is precisely the same as if the tax were laid upon roadbed and equipment. Yet in no one of the three cases is the tax assessed on the property, nor is the property specifically subjected to the tax. The law commands that when the owner shall do an act, for instance, the act of selling property, he, personally, in the first instance, shall pay a tax. So, if a tax, measured by the proceeds of sale, be laid on the privilege of selling articles in an exchange, the vendor, in case of sale, will have the precise amount of money at night as if the tax had been paid upon the sale of property, or upon the property itself. In short, the tax, however paid, when paid burdens the taxpayer's property. But all this does not prove that the tax is direct. A system of taxation upon the sale of property is in essential elements different from a system that lays the tax directly upon property. The latter system is certain, because the tax is sure to arise and to be paid in any event. There is but a single condition requisite to the existence and payment of such tax, and that is the existence of the property. The statute is direct in its application, and, in theory, payment is inevitable, and to such payment principal and income alike are pledged. But a tax, payable on the sale of property is contingent upon, and is laid upon, an event that may never arise, and the tax, in the meantime, is non-existent. For example, a statute providing for a direct tax on a parcel of land is, save as delayed by the acts of assessment and levy, instant in its operation, and the tax attaches as a lien upon the land, from which it may be dissociated only by payment. A statute directing a tax on contracts of sale of land is entirely executory, and may never be executed, and the estate continues in the hands of the owner, without burden or incumbrance. In the case at bar the affixing of the stamp awaits the sale, and even then the certificate passes without disability to the transferee. Hence no burden is laid on the certificate, nor does it ever become liable for the payment of the tax. The law simply says to the vendor: "When you do an act you shall pay a tax." Morever, a provision for a direct tax on land at once decreases its beneficial value, whether it be kept or sold, while a tax on an instrument of conveyance, or transfer, leaves the enjoyment intact. The present owner and his heirs forever may hold the property without diminution of profit. In the one case the State, in effect, seizes the land by the force of the statute, and there is no latitude, no escape from the compulsory tribute; in the other, nothing is taken away from the enjoyment of rights of ownership, save that in the event of the owner engaging in the business transaction of selling or exchanging his property a tax must be paid thereon, taking the form of a stamp duty on the indenture, or, if it be personal property, on a bill of sale or contract. It is simply a tax upon transactions in business activities, or forms of commercial dealings, and may be sustained on several grounds. In the first place, the statute may rest upon the power of congress to declare that any person who shall engage in the business—that is, occupation of buying or selling certificates of stock, shall pay a tax measured by the price realized. Is not such a statute lawful? The buying and selling of stocks, not by brokers alone, but by a large number of persons in every community who profess some other main vocation, is an occupation more or less constant. This has become a business, a vocation, and is amenable to federal taxation as such. These persons, maybe, could not be so well reached if the statute laid a gross duty in the form of a license tax on the individual trade in stocks. But, in any case, congress has the power to distribute such tax upon each item of business falling under the traffic. For, if it may lay a tax of $100 on the vocation of buying and selling stocks, it may lay a tax on the sale of stocks at the rate of two cents "on each $100" sold. The principle that justifies an impost of $10 per annum on a baker supports the right to lay a tax of a fraction of a mill on each loaf of his bread. The principle that underlies the power, and not the peculiar form of its exercise, is regarded. Therefore it is not an answer that the instance charged may have been the only transaction of the dealer. How many sales of certificates are necessary to constitute the business of a vendor of certificate, five, ten, twenty or one, and at what state of his sales will his business be sufficiently apparent to compel the dealer to stamp his transactions? At what point in his business career does the statute become constitutional? The act of 1898, like that of 1862, provides for a tax on many and varied occupations. How many items of business may a person do under each vocation, and so far forth escape the tax? How many instances of sales must the government show against a defendant to establish the validity of the statute as to him? A tax is laid upon retail vendors of tobacco. May a person sell tobacco now and then without paying a tax? So a tax is placed upon the vendors of liquor, but may a person escape compliance with this tax upon the plea that the transaction was his first, second, or some other in numerical order, and that he did not sell liquor for a business? Is the answer that the offender never did it before a defense little reference to their speculations. against the charge of violating the revenue statute? If such be the law, a tax may not be placed upon the occupation, business, or selling of liquors, tobacco, or stock, or any other thing consumable or non-consumable, except under the necessity, in case of attempted enforcement, of proving beyond a reasonable doubt that the vendor had made sufficient sales, so that it may be inferred that it was his.regular vocation, and that he was engaged uniformly in the business. In that case the statute would become valid or invalid as the jury might determine. The law is that he shall not pursue a certain business without paying the tax, and if congress may validly declare that, it may declare that he shall not, untaxed, do any of the business acts that fall within the occupation. A person pursues a business or vocation, whether or not he announces is as his profession. It is what he does, and not what he professes, that determines. seems to be a political rather than a judicial function to determine what shall constitute a business. But it may be answered that an unapportioned tax may not be laid upon sale of property, unless the tax in whole or part, may be shifted to another. Such rule would preclude a tax upon occupations. Aside from that consideration, the ultimate incidence of the tax has been very sparingly employed in the solution of questions similar to the one now before the court. The discussions and opinions of political economists are useful for the instruction of legislators in enacting, rather than for judges in the interpretation of, statutes, and the judgments of the court have often disregarded the conclusions of the systematic writers. It For instance, Mr. McCulloch (McCulloch's Taxation, p. 181) states: "Duties on coaches, carriages * fall wholly on those by whom they are used, and cannot be shifted to anyone else." But the Supreme Court decided that a tax on carriages was indirect in its nature. (Hylton v. U. S., 3 Dall., 171.) In Veazie Bank v. Fenno (8 Wall., 533), it was determined that an act of congress, which provides "that every national banking association, State bank, or State banking association, shall pay a tax of ten per centum on the amounts of the notes of any State bank, or State banking association, paid out by them," did not lay a direct tax within the meaning of the Constitution. Chief Justice Chase said: Mr. "Much diversity of opinion has always prevailed upon the question, What are direct taxes? Attempts to answer it by reference to the definitions of political economists have been frequently made, but without satisfactory results. The enumeration of the different kinds of taxes which congress was authorized to impose was probably made with very The great work of Adam Smith, the first comprehensive treatise on political economy in the English language, had then been recently published, but in this work, though there are passages which refer to the characteristic difference between direct and indirect taxation, there is nothing which affords any valuable light on the use of the words 'direct taxes' in the Constitution. We are obliged, therefore, to resort to historical evidence, and to seek the meaning of the words in the use and in the opinion of those whose relations to the government and means of knowledge warranted them in speaking with authority." After such historical references the learned chief justice adds: "This review shows that personal property, contracts, occupations and the like have never been regarded by congress as proper subjects of a direct tax." In Knowlton v. Moore (178 U. S., 41, 82), Mr. Justice White said: It is true that in the income tax cases the theory of certain economists by which direct and indirect taxes are classified with reference to the ability to shift the same was adverted to. But this disputable theory was not the basis of the conclusion of the court. The constitutional meaning of the word direct was the matter decided. Considering that the constitutional rule of apportionment had its origin in the purpose to prevent taxes on persons solely because of their general ownership of property from being levied by any other rule than that of apportionment, two things were decided by the court: First, That no sound distinction existed between a tax levied on a person solely because of his general ownership of real property and the same tax imposed solely because of his general ownership of personal property. Secondly, That the tax on the income derived from such property, real or personal, was the legal equivalent of a direct tax on the property from which said income was derived, and hence must be apportioned. These conclusions, however, lend no support to the contention that it was decided that duties, imposts and excises, which are not the essential equivalent of a tax on property generally, real or personal, solely because of its ownership, must be converted into direct taxes, because it is conceived that it would be demonstrated by a close analysis that they could not be shifted from the person upon whom they first fall." In Nicoll v. Ames (173 U. S., 519), the tax was measured precisely by the sum realized on the sale, and fell on the vendor or vendee, under the same economic law that would govern in the case at bar, for the law does not change accordingly as the same shares may be sold within or without an ex |