Show It TAXONA X PRIVILEGE Exchange and Boards of Trade C Cannot Escape t WAR REVENUE DECISION C i CHICAGO PEcTO S MUST PAY TKE TAX T TAt TA-t Supreme Court Holds That ItIs Not a DireCt T But a DJt or E dse Upon the Board of Trade rvneg Te Powers of Con gressStocki Yard Case c I 1 Washington April 3In the United States supreme cur today in opinIon was handed down by Justice Peckham in several cases involving the validity of the war revenue act The c seer se-er those of Jaes Nicol vs James Ames United Etatesmarshal petition for habeas corpus by George R Nlch ols pet Uoneri Ed wIn S Skien appel lat vs te marshal and Charles Hinsorsc plantf in error vsthe Uited States The case all came from the Chicago federal court These cases involve especially the validity of the tax provided pro-vided by the war revenue act upon ss and contracts to sell merchandIse upon exchange boards of trade or similar places The war revenue act requires a mom oradum to be made of the transaction transac-tion and a stamp affixed the amount of which is measured by the standard I of value The cases of George R Nichol appellant of Nichols petitioner and of SidUen appellant present aU the phases involved In stock transac I tons on the boa of trade in Chicago Thecase of G W Hingeson Involve the question whether Ute Union stockyards stock-yards of ChIcago Js an exchange or similar place making sales taxable The court in its opinion sustained the validity of the tax and held l also that the stockyards is a place similar to an its transactions I exchange snaking is trasac I tons liable to the taxI tax-I The case was argued by exSecretar Carlisle and 11 Robins of Chicago for the petitioners and by Mr J K Richards Rich-ards solicitor general for the govern meat Mr Carlisle contended that the tax upon sales of exchange is a direct I tax frt because i is virtually a tax I upon the prpery sol and send because thc tax cannot be shifted but must be paid by the seller on the exchange ex-change I was also insisted that if the tax Is an indirect tax It lacks uniformity i because not imposed upon aU sales whenever made The point was also made that if a Indirect tax it is a stamp tax on documents and that congress con-gress had 10 power to require a written writ-ten memorandum to be mae upon transactions with a stated purpose of taxing memorandum COURTS DECISION I The court in its opinion carefully discusses aU thee objections and overrules over-rules tem I holds that it is not a direct ta but a duty or excise laId upon the privilege opportunity or fa duty offered at boards of trade or ex chan6c for the prosecution of the business mentioned in the act te fI is the court fu her says not a tax upon the members of the exchange ex-change nor upon the membership therein nor is it a tax upon sales generally gen-erally The act limits the tax to sale atany exchange or boar of trade or other similar place and its fair mean ing is to impose a duty upon those i privileges or facilities there found and I made use of The exceptional facilities offered at such place affords the cur says a just ground for classification for jus gound clasifcaton purposes pur-poses of taxation by congress of transactions trans-actions there Te fexIble character of the taxing and taing power the possibility of adapting it to changing conditions is described by the curt it distinctly hdldlng that In order to tax a privilege or fadiiity enjoyed it is not necessary that i should be ctate ily the gay eiftent The requirement of a memorandum I mem-orandum Is upheld because It is nees sars for the collectionof a ta The tax IS pronounced uniform because it a1ples to all who enjoy the special i privileges or facilities incident to the transaction of habeas corpus of boars I otrade and similar place Referring to the stockyards case Justice Peck ham said A perusal of the facts contained in the record of the case shows that tee yards answer all the purposes of an I exchange or a boar of trade and they amount in substance to the same thIng The differences existing between them are insubstantial in so far as this pont is concerned POWERS OF CONGRESS II speadn of the general powers of cong s as to taxation Justice Peck ham sid In searching fOr proper sUbjects of taxation to raise moneys for the support sup-port pf the government congress must have the right to recognize the manner in whIch the busIness In the country is i1 actually transacted how among other I things Use exchange of commodities is r effected what facilities for the conduct I of business exist what is their nature and how they operate and what if a1y practicable and recognizable distinction dIs-tinction there may be between a transaction I trans-action which is effected by means of using certain facilities and one where such facilities are not availed of by the partes to the same kind of a I transaction Having the to power recognize these various facts it must also follow that congress is justified if not compelled In framing a statute relating to taxation I taxa-tion to legislate with dIrect reference to the existing conditions of trade and busIness throughout the country and to the manner In which they are car ned on The Chicago board of trade is treated treat-ed in the opinion as a type of boards of trade all over the countr the size of the chIef Institution only Insttuton serving to emphasize its importance I Is common knowledge that these exchanges encourage and promote hones hon-es and far dealing among their mem hers that they provIde penalties for the violation of their rules In that regard re-gard and that contracts between member mem-ber relating to business on the exchange ex-change have the advantage of the sanction provided by the exchange for such purposes Nor is there any doubt that these exchanges facilitate transactions of purchase and sale and It would seem hat such facilities or privileges even though not granted by the government or by a state ought nevertheless to be reCognlzed as existing facts and to be subject to the jUdgment of congress a fit mater for taxation NOT A DIRECT TAX The tax he said is not a dIrect tax within the meaning of the const tuition but is In the nature of a duty or excise The amount of such tax when Imposed in a case like this may be increased or dImInished by the extent ex-tent to which the privilege or facility Is used and i is fixed In thI9 act by the value of the property transferred by means of using such privilege or facility but thIs docs not make the tax a direct one t a We do not see that any material difference exIsts when the attic is for future delivery The thing agreed to be sold is the same whether for immediate I Imme-diate or future delivery IOn I-On the point of discrimination It was remarked that a purchase occurs whenever a sale is effected and to say that a purchaser at an exchange sale must be taxed for the facilities made use of In making the purchase or else that the t 01 the seller Is voId is Imply to In ist upon doubling the ta Nor is it neesar to tax the use of the prllege under all cIrcumstances in order to render the tax valid upon its use in particular cases W see no reason why It should be ne < essnry to I tax a prIviege whenever it is use for any purpose or else not to tax it at aU II It Js not in It nature indivisible 9a holding that the tax under consideration con-sideration is a tax on the privilege used Ii making sales at an exchange we thereby hold that it is not a tax upon the memorndum required by the statute upon whIch the stamp is to be placed The act does not assume in any manner to Interfere wit the laws of the state in relation to the contract I of sale Tough congress might have adopted adopt-ed some other means for coJetngthe I tax whIch wiJnd prove less troublesome some or annoying tQ the taxpayer there can surely be no reason for holding j hold-ing that the method set forth lr the act render the tax invalid The means must be a question for congress alone In the matter of the petition for writ O habeas corpus the pettIon was tIe ned while in the other cards the judgments judg-ments were affirmed of the district and circuit court |