DeGanay v. Lederer

delivered the opinion of the court.

The Act of October 3,1913, c. 16, § II, A, subdivision 1, 38 Stat. 166 , provides;

“That there shall be levied, assessed, collected and paid annually upon the entire net income arising or accruing from all sources in the preceding calendar year to every •citizen of the United States, whether residing at home or abroad, and to every person residing in the United States, though not a citizen thereof, a tax of 1 per centum per annum upon such income, except as hereinafter provided; and a like tax shall be assessed, levied, collected, and paid annually upon the entire net income from all property owned and of every business, trade, or profession, carried on in the United States by persons residing elsewhere.”

Under this statutory provision a question arose as to the taxability of income from certain securities of Emily R. DeGanay, a citizen and resident of France. The District Court of the United States for the Eastern District of Pennsylvania held the income from the securities taxable. 239 Fed. Rep. 568 . The case is here upon certificate from the Circuit Court of Appeals,'from which it appears: That Emily R. DeGanay is a citizen of France, and re

The question certified is limited to the net income collected by virtue of the power of attorney from the personal property owned by the plaintiff in her own right.

The power of attorney, which is attached to the certificate, authorizes the agent:

“To sell, assign, transfer any stocks, bonds, loans, or other securities now standing or that may hereafter stand in my name on the books of any and all corporations, national, state, municipal or private, to enter satisfaction upon the record of any indenture or mortgage now or hereafter in my name, or to sell and assign the same and to transfer policies of insurance, and the proceeds,

also any other moneys to invest and reinvest in such securities as they may in their discretion deem safe and judicious to hold for my account;.to collect and receipt fjpr all interest and dividends, loans, stocks, or other securities now or hereafter belonging to me, to endorse checks payable to my order and to make or enter into any agreement or agreements they may deem necessary and best for my interest in the management of my business and affairs, also to represent me and in my behalf, to vote and act for me at all meetings connected with any compány in which I may own stocks or bonds or be interested in any way whatever, with power also as attorney or attorneys under it for that purpose to make and. Substitute, and to do all lawful acts requisite for effecting the premises, hereby ratifying and confirming all that the said attorney or substitute or substitutes shall do therein by virtue of these presents.”

The question certified is: “If an alien non-resident own stocks, bonds, and mortgages secured upon property in the United States or payable by persons or corporations there domiciled; and if the income therefrom is collected for and remitted to such non-resident by an agent domiciled in the United States; and if the agent has physical possession of the certificates of stock, the bonds and the mortgages; is such income subject to an income tax under the Act of October 3d, 1913?”

The question submitted comes to this: Is the income from the stock, bonds and mortgages, held by the Pennsylvania Company, derived from property owned in the United States? A learned argument is made to the effect that the stock certificates, bonds and mortgages are not property, that they are but evidences of the ownership of interests which are property; that the property, in a legal sense, represented by the securities, would exist if the physical evidences thereof were destroyed. But we are of ppinion that.these refinements are not decisive of

The Court of Appeals of New York, recognizing the same principle, treated such instruments as property in People ex. rel. Jefferson v. Smith, 88 N. Y. 576 , 585:

“It is clear from the statutes referred to and the authorities cited and from the understanding, of business men in commercial transactions, as well as of jurists and legislators, that mortgages, bonds, bills and notes have for many purposes come to be regarded as property and not as the mere evidences of debts, and that they may thus have a situs at the place where they are found like other visible, tangible chattels.”

We have no doubt that the securities, herein involved, are property. Are they property within the United States? It is insisted that the maxim mdbilia sequuntur personam

In the case under consideration the. stocks and bonds were those of corporations organized under the laws of the United States, and the bonds and mortgages were secured upon property in Pennsylvania. The certificates of stock, the bonds and mortgages were in the Pennsylvania Company’s offices in Philadelphia. Not only is this so, but the stocks, bonds and mortgages were held under a power of attorney which gave authority to the agent to sell, assign, or transfer any of them, and to invest and reinvest the proceeds of such sales as it might deem best in the pianagement of the business and affairs of the principab a It is "difficult to conceive how property could be more completely localized in the United States. There can be no question of the power of Congress-to tax" the income from such securities. Thus situated and held, and with the authority given to the local agent over them,, we think the income derived is clearly from property

So ordered.

Mr. Justice McReynolds took no part in this case.