What is denominated " a call" in the language of New York
stockbrokers is an agreement to sell, and as the statutes of the
United States in force in May, 1899, required stamps to be affixed
on all sales or agreements to sell, the calls were within its
provisions.
On September 18, 1899, S. V. White brought an action in the
Supreme Court of the State of New York against Charles H. Treat,
United States collector of internal revenue, to recover the sum of
$604, alleged to have been unlawfully exacted by such collector.
The action was removed to the United States Circuit Court for the
Southern District of New York, and a judgment there rendered in
favor of the plaintiff. 100 F. 290. The case was taken to the
United States Court of Appeals for the Second Circuit, which,
before any decision, certified a question to this Court. The
statement of facts and question are as follows:
"From the 1st day of July, 1898, until the date of the
commencement of this action, the defendant in error, Stephen v.
White, was doing business as a stockbroker on the New York Stock
Exchange. In the course of his business, White sold 'calls' upon
30,200 shares of stock, the said 'calls' being of the same effect
and tenor as Exhibit A, hereinafter set forth, and only varying in
the names of the stock, the date, and the price at which they were
offered."
"
EXHIBIT A"
"New York, May 18th, 1899"
"For value received, the bearer may call on me on one day's
notice, except last day, when notice is not required. One hundred
shares of the common stock of the American Sugar Refining
Page 181 U. S. 265
Company at one hundred and seventy-five percent at any time in
fifteen days from date. All dividends, for which transfer books
close during said time, go with the stock. Expires June 2, 1899 at
3 P.M."
"(Signed) S. V. White"
"These 30,200 shares of stock, for which 'calls' at various
times had been in existence, were, as matter of fact, never
actually 'called,' and no stamp was put upon the same. That the
plaintiff in error, Charles H. Treat, United States collector of
internal revenue, demanded of the defendant in error, Stephen v.
White, the sum of six hundred and four dollars, which sum was the
value of 30,200 internal revenue stamps of the denomination of two
cents each."
"This sum of six hundred and four dollars was paid by the
defendant in error, Stephen v. White, under protest. Subsequently
the defendant in error demanded the return of the said six hundred
and four dollars, but the demand was refused."
"Upon the facts set forth the question of law concerning which
this Court desires the instruction of the Supreme Court for its
proper decision, is:"
"Is the above memorandum in writing, designated as Exhibit A, an
'agreement to sell' under the provisions of section 25, Schedule A,
Act of Congress approved June 13, 1898, and, as such, taxable?"
The collector acted under the provision of section 25, Schedule
"A" of the War Revenue Act of June 13, 1898, 30 Stat. 448, which
reads as follows:
"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 each hundred dollars of face value or
fraction thereof, two cents:
Provided, That in
Page 181 U. S. 266
case of 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."
MR. JUSTICE BREWER delivered the opinion of the Court.
The question before us is simply one of statutory construction.
Is a "call" (a copy of which is incorporated in the statement of
facts) an agreement to sell, within the meaning of Schedule A? In
reference to this, the learned circuit judge, in delivering his
opinion, said:
"It is an agreement, and manifestly an 'agreement to sell.' It
may be referred to as an 'offer,' or an 'option,' or a 'call,' or
what not, but it is susceptible of no more exact definition than
'an agreement to sell.' Inasmuch, therefore, as the statute
requires stamps to be affixed 'on all sales or agreements to sell,'
it would seem that these 'calls' are within its provision."
We fully agree with this definition. "Calls" are not distributed
as mere advertisements of what the owner of the property described
therein is willing to do. They are sold, and in parting with them
the vendor receives what to him is satisfactory consideration.
Having parted for value received with that promise, it is a
contract binding on him, and such a contract is neither more nor
less than an agreement to sell and deliver at the time named the
property described in the instrument. It
Page 181 U. S. 267
may be a unilateral contract. So are many contracts. On the face
of this instrument, there is an absolute promise on the part of the
promisor and a promise to sell. We cannot doubt the conclusion of
the circuit judge that this is, in its terms, its essence, and its
nature an agreement to sell. Therefore it comes within the letter
of the statute.
The defendant in error, who has argued in his own behalf with
ability the questions presented, has referred in his brief to this
rule of construction: that the duty of the court
"is to take the words in their ordinary grammatical sense,
unless such a construction would be obviously repugnant to the
intention of the framers of the instrument, or would lead to some
other inconvenience or absurdity."
Sedgwick, Construction of Statutory and Constitutional Law 220.
With that rule of construction we are in entire sympathy, and
approve of it. In the ordinary reading of this instrument, no one
would doubt that there was an agreement on the part of the promisor
to sell at the time named the property therein described. That
being the ordinary, natural, grammatical interpretation of the
language, it is, as the learned circuit judge declared, neither
more nor less than an agreement to sell. Why should not the
ordinary meaning of the language in the statute be enforced in
respect to this particular instrument? Certainly there must be some
satisfactory reason for departing from the general rule of
construction. It is also true, as said by this Court in
United States v.
Isham, 17 Wall. 496,
84 U. S.
504,
"If there is a doubt as to the liability of an instrument to
taxation, the construction is in favor of the exemption, because,
in the language of Pollock, C.B., in
Girr v. Scudds, 11
Exchequer 191, 'a tax cannot be imposed without clear and express
words for that purpose.'"
With that proposition we fully agree. There must be certainty as
to the meaning and scope of language imposing any tax, and doubt in
respect to its meaning is to be resolved in favor of the taxpayer.
But when the language is clear, a different thought arises.
We do not question the fact that there are times when the mere
letter of a statute does not control, and that a fair consideration
of the surroundings may indicate that that which is within the
letter is not within the spirit, and therefore must be
Page 181 U. S. 268
excluded from its scope.
Church of Holy Trinity v. United
States, 143 U. S. 457. But
that proposition implies that there is something which makes clear
an intent on the part of Congress against enforcement according to
the letter. Nothing of that kind exists in this case. There is
nothing to suggest that Congress did not mean that this provision
should be enforced according to its letter and spirit everywhere.
The defendant in error, in the course of his argument, says that
Congress must be assumed to have been familiar with the ordinary
modes of dealing on the stock exchange of New York, and that, if it
intended by its legislation to reach "calls," a term well
understood in that exchange, it would have named them or used some
word which necessarily includes them. But this takes for granted
the question at issue, and assumes that the words used do not
include "calls." It is not to be assumed that Congress legislated
with sole reference to transactions on stock exchanges, but its
action is to be taken as having been exerted for the whole nation,
and if it should so happen that dealings on any stock exchange come
within the purview thereof, the parties so dealing are bound by it,
and cannot claim an immunity from its burden. An isolated agreement
to sell stock, made by an individual in Austin, Texas, is an
agreement to sell subject to the stamp duty imposed. It is
nonetheless an agreement to sell when made in the stock exchange of
New York, as one of a multitude of similar transactions.
That there is a difference between an agreement to sell and an
agreement of sale is clear. The latter may imply not merely an
obligation to sell, but an obligation on the part of the other
party to purchase, while an agreement to sell is simply an
obligation on the part of the vendor or promisor to complete his
promise of sale. That Congress recognized the difference between
these two terms is evident, because, in the very next paragraph of
Schedule A, it provides, in reference to merchandise, for a stamp
"upon each sale, agreement of sale, or agreement to sell." That no
stamp duty was imposed on agreements to buy (or, in the vernacular
of the stock exchange, "puts") furnishes no ground for denying the
validity of the stamp duty on agreements
Page 181 U. S. 269
to sell. The power of Congress in this direction is unlimited.
It does not come within the province of this Court to consider why
agreements to sell shall be subject to stamp duty, and agreements
to buy not. It is enough that Congress, in this legislation, has
imposed a stamp duty upon the one and not upon the other.
In conclusion, we may say that the language of the statute seems
to us clear. It imposes a stamp duty on agreements to sell. "Calls"
are agreements to sell. We see nothing in the surroundings which
justifies us in limiting the power of Congress or denying to its
language its ordinary meaning.
Therefore we answer the question submitted to us by the
circuit court of appeals in the affirmative, and hold that a "call"
is an agreement to sell, and taxable as such.
