The opinion of the court was delivered by: GANEY
This is an action for monies had and received under Section 24(20) of the Judicial Code, as amended by Section 1122(c) of the Revenue Act of 1926, c. 27, 44 Stat. 9, U.S.C.A., Title 28, Sec. 41.
The case was submitted to the court on a stipulation of facts and concerns itself with the attempt of the plaintiff to recover thirty-six hundred twenty-one and 77/100 dollars (3,621.77) together with interest by reason of its having paid the same under protest for internal revenue stamps, particularly documentary stamps, which the Collector of Internal Revenue required it to attach to Certificates of Interest. The amount in suit concerns itself with two periods of time, one from August 15, 1933, to June 30, 1937, and the other from June 30, 1937, to March 23, 1939, during which the plaintiff held, as trustee for sundry trusts, numerous bonds and accompanying mortgages secured upon real estate. Each bond and mortgage secured thereby was held by the plaintiff under a separate Declaration of Trust, consisting of a printed pamphlet form identical in all cases except as to the names of the holders, amounts, and description of the subject matter, and none of the bonds and mortgages were pooled; they were all straight Pennsylvania mortgages accompanied by a single bond. The plaintiff, as trustee under each Declaration of Trust, issued Certificates of Interest as evidence of a participating interest in the underlying bond and mortgage. The certificates were registered in form, assignable, but payment of neither principal or interest was guaranteed by the trustee, nor were there any interest bearing coupons attached to the certificates; the trustee was merely to collect the interest and principal of the mortgage as and when it became due, and to pay the same over to the holders of the Certificates of Interest; further, the plaintiff was not liable or responsible for anything connected with the trust, except for its own wilful or intentional breach thereof. The plaintiff placed no documentary stamps upon any of the certificates when they were issued or when they were transferred.
The simple question presented is whether the Certificates of Interest, identified with particular bonds and mortgages, issued by a corporation in registered form, which are assignable and provide for the payment of interest and principal as collected, are subject to the documentary stamp tax statutes. The pertinent statutes involved are:
The Revenue Act of 1926, c. 27, 44 Stat. 9:
"Title VIII. -- Stamp Taxes
"Sec. 800. On and after the expiration of thirty days after the enactment of this Act 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 title, or for or in respect of the vellum, parchment, or paper upon which such instruments, matters, or things, or any of them, are written or printed, by any person who makes, signs, issues, sells, removes, consigns, or ships the same, or for whose use or benefit the same are made, signed, issued, sold, removed, consigned, or shipped, the several taxes specified in such schedule. The taxes imposed by this section shall, in the case of any article upon which a corresponding stamp tax is now imposed by law, be in lieu of such tax." (U.S.C., Title 26, Secs. 900, 908, 26 U.S.C.A. Int.Rev.Acts, page 284.)
"Schedule A. -- Stamp Taxes
"1. Bonds of indebtedness: On all bonds, debentures, or certificates of indebtedness issued by any corporation, and all instruments, however termed, issued by any corporation with interest coupons or in registered form, known generally as corporate securities, on each $100 of face value or fraction thereof, 5 cents * * *." (U.S.C., Title 26, Sec. 901, 26 U.S.C.A. Int.Rev.Acts, page 288.)
Schedule A, subd. 9, of Title VIII of the Revenue Act of 1926, as added by Section 724(a) of the Revenue Act of 1932, c. 209, 47 Stat. 169, 26 U.S.C.A. Int.Rev.Acts, page 297: "9. Bonds, etc., sales or transfers: On all sales, or agreements to sell, or memoranda of sales or deliveries of, or transfers of legal title to any of the instruments mentioned or described in subdivision 1 and of a kind the issue of which is taxable thereunder, whether made 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 instrument or not), on each $100 of face value or fraction thereof, 4 cents * * *."
Treasury Regulations 71 (Revised July, 1932):
"Art. 119. Definitions. -- As used in this chapter, the term 'bonds' includes any of the instruments mentioned or described in Schedule A-1, and of a kind the issue of which is taxable under that schedule; and the term 'sale' or 'transfer' includes any of the transactions or dealings in bonds, which are subject to the tax imposed under Schedule A-9."
The determination of whether Certificates of Interest as here, or certificates somewhat similar in nature as Participation Certificates, Trust Certificates, etc., are taxable under the Stamp Tax Statutes, is not always free from difficulty,since the courts in their interpretation of the same have, in some instances assigned one feature of the certificate as being the reason for holding the same within the purview of the statute and seized upon other features as bringing them outside the statute. By so doing they have given rise to no general rule, although it may be that the circumstances attendant to each particular case preclude any generality concerning the same.
It cannot be doubted that each individual tax case must rest on its own facts and while analogies accordingly are difficult to draw, some help can be found in the considerations which the courts have given to like and similar cases, although as indicated there is a wide diversity of opinion in their construction. For example, one of the earliest cases and one to which most of the cases have recourse for consideration of stamp cases is United States v. Isham, 17 Wall. 496, 21 L. Ed. 728, which laid down the rule, among other things, that the criterion was the form and face of the instrument; others make the test an existence of an obligation to pay, as in Hamilton National Bank v. United States, 6 Cir., 99 F.2d 570; Mortgage Guarantee Co. v. Welch, 9 Cir., 38 F.2d 180; Lederer v. Fidelity Trust Co., 267 U.S. 17, 45 S. Ct. 206, 69 L. Ed. 494, and this liability need not be direct, but conditional and contingent, as in Motter v. Bankers Mortgage Co. of Topeka, ...