Eo die. The Court. When the government elects to resort to the aid of the court, it must abide by the legality of the tax.
The defendant may show that it was not, at the time for which the assessment was made, doing business as a bank, within the definition in section 3407, Rev. St., and that the assessment was therefore illegal.
Rule absolute.
Oral opinion by McKennan, J.; Butler, J., concurring.
A corporation whose business is confined to the investment of its capital in bonds secured by mortgage on real estate, and to the negotiation, side, and guaranty of them, is riot a bank or banker within the meaning of section 3407 of the Revised Statutes. Selden v. Eq. Trust Co. 94 U. S. 419. Whether the mere business of buying, carrying, and selling stocks for others, on the deposit of money or property as a margin for their security, would come within the definition “bankers,” quare. Clark v. Bailey, 12 Blatchf. 156. See Northrup v. Shook, 10 Blatchf. 243. Under the section taxing deposits in banks, an entry made in the depositor’s pass-book of a deposit or payment is a “ certificate of deposit ” or “ check” or “draft,” within the meaning of the section. Oulton v. Savings Institution, 17 Wall. 109. Under the proviso of section 3408 of the Revised Statutes, savings banks are not exempt from taxation if they have a capital stock, or if they do any other business than receiving deposits to be lent or invested for the sole benefit of the depositor. Id. A construction of a proviso which makes it plainly repugnant to the act is inadmissible. Savings Bank v, U. S. 19 Wall. 228. If, after paying expenses, the bank sets apart a portion of the net earnings for a reserve fund, the moneys paid to depositors are dividends, within the meaning of this section, and not interest, within the meaning of the proviso. San Francisco, S. & L. Soc. v. Cary, 2 Sawy. 333; affirmed, 22 Wall. 38.—[Ed.