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7th instant, wherein it is stated that "the terms of the new revenue law are such that any person who buys a note, township warrant, or any other variety of negotiable instrument, even though he purchases but a single warrant, and that for a very small amount, becomes in the meaning of the law a broker, and as such is required to take out a license," and that "every person who has purchased a township warrant is, strictly speaking, a violator of the law, and subject to a heavy fine."

The statement is completely erroneous. No person is required to pay special tax as a broker under the war-revenue act unless it is his "business * * * to negotiate purchases or sales" of securities. Under the decision of the Supreme Court the word "business" is to be regarded as the controlling word in this definition; and a single instance of the purchase or sale of securities (or rare or occasional transactions of this kind) is not sufficient to constitute the business contemplated by the statute.

It is further set forth in this newspaper clipping, that "public warrants drawn on a public treasurer are not required to bear revenue stamps when presented by the drawee; but if the warrant is transferred before payment, it becomes a negotiable instrument, and must have revenue stamp affixed."

This statement is also erroneous. It is held that internal-revenue stamps are not required on these public warrants, even when transferred before payment.

Respectfully,

ROBT. WILLIAMS, Jr., Acting Commissioner.

Mr. D. LEWIS, President Jansen Bank, Jansen, Nebr.

(112.)
Special tax-Broker.

Mileage books are not "securities" within the meaning of paragraph 2, section 2, act of June 13, 1898, defining brokers, and special tax of a broker is not required to be paid for their purchase and sale.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., April 25, 1900.

SIR: In reply to the inquiry addressed to you by a merchant, Mr. A. P. Russell, of Buckhannon, W. Va., which you referred to me in your letter of the 21st instant, you will please inform him that if he should as he contemplates, "engage in buying and selling mileage books for the accommodation of his customers, making a small advance of one half of one per cent in the transaction," he would not thereby involve himself in special-tax liability as a broker, as "mileage books" are not "securities" such as are referred to in the definition of a broker in the second paragraph of section 2 of the act of June 13, 1898. G. W. WILSON, Commissioner. Mr. A. B. WHITE, Collector Internal Revenue, Parkersburg, W. Va.

Respectfully,

(128.)

Express companies-Sales of money orders and travelers' checks.

Brokerage is not the business of the express companies; they are carriers, and the issuing of money orders and travelers' checks is a mere incident to the business of carriers, the companies for a consideration issuing their own orders, upon themselves, for the payment of money upon presentation to their authorized agents.

They are not liable on this account for special tax as brokers under the second paragraph of section 2, act of June 13, 1898.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., May 15, 1900.

To collectors of internal revenue and others:

The appended opinion of the Attorney-General on the question of the special-tax liability of express companies as brokers on account of their issuance of money orders and travelers' checks is published for the information of all concerned.

G. W. WILSON, Commissioner.

DEPARTMENT OF JUSTICE, Washington, D. C., May 14, 1900.

The SECRETARY OF THE TREASURY.

SIR: I have the honor to acknowledge the receipt of yours of the 7th of November, 1899, requesting my opinion as to whether certain express companies are liable to tax as brokers under the provisions of the act of June 13, 1898, known as the war revenue act.

These companies, through their agents at various offices, issue what are known as "money orders" and "travelers' checks.” The money orders issued by the several companies differ somewhat in form, but are substantially to the effect that the company issuing the same will transmit and pay to the order of the person named in the face of the order the highest printed marginal amount (not exceeding dollars) as

per conditions thereon. The order then contains the name of the place at which the same is issued, the date, the name of the officer or agent of the company who issues the same, the name of the place at which payable, and also the name of the remitter. These orders are so drawn that they will be cashed, upon presentation, by the officers or agents of the company issuing the same at the designated place of payment, and it also appears that, in some instances, the banks cash them.

What are called "travelers' checks" differ from the money orders in that they are more simple in form, do not name a place of payment, being in substance as follows: "The Express Company will pay to the order of (name of payee) - dollars," and are dated and signed by the treasurer or other authorized agent of the company issuing the same. These checks are paid upon presentation to the agents of the company by which they are issued, in this country or in foreign countries, to suit the convenience of the holders, and are also cashed by the banks in the ordinary course of business.

The express companies charge specified rates for issuing money orders and travelers' checks according to the amounts named severally therein. These rates, together with the amount called for by the orders or

checks are paid by the persons to whom they are issued, to the agents of the company from which the orders or checks are obtained. The question upon these facts is whether or not express companies, by reason of this manner of dealing, are subject to tax as brokers under this provision of the war revenue act :

"Brokers shall pay fifty dollars. Every person, firm, or company, whose business it is to negotiate purchases or sales of stocks, bonds, exchange, bullion, coined money, bank notes, promissory notes, or other securities, for themselves or others, shall be regarded as a broker: Provided, That any person having paid the special tax as a banker shall not be required to pay the special tax as a broker."

From the definition of a broker given in the above statute, it would seem that the only view in which the transactions of the express companies before described can come within the meaning of the law is to hold that, in issuing the orders and checks referred to, the companies negotiate sales of exchange or of promissory notes.

Mr. Daniels defines a bill of exchange to be "an open letter addressed by one person to a second, directing him, in effect, to pay absolutely and at all events a certain sum of money therein named to a third person or to any other to whom the third person may order it to be paid, or it may be payable to bearer or to the drawer himself." Blackstone's definition is: "An open letter of request from one man to another desiring him to pay a sum of money therein named to a third person on his account." Mr. Tiedeman describes a bill of exchange as follows: "A bill of exchange is an uuconditional written order by one person on another, directing him to pay a third person or to his order, or to the bearer, the sum of money therein named.”

It has been held in the case of Merchants' Bank v. State Bank (10 Wall., 604) that "Bank checks are not inland bills of exchange, but have many of the properties of such commercial paper; and many of the rules of the law merchant are alike applicable to both. Each is for a specific sum payable in money. In both cases there is a drawer, a drawee, and a payee. Without acceptance, no action can be maintained by the holder upon either against the drawee. The chief points of difference are that a check is always drawn on a bank or banker. No days of grace are allowed."

The instruments issued by the express companies do not come within the legal definition given of either bills of exchange or checks. They are not bills of exchange, because they are not drawn by one person upon another, directing the payment of a certain sum of money to a third person, nor do they require acceptance before suit can be maintained against the drawee for nonpayment; and they differ from checks in that they are not drawn upon a bank. They are simply the promises or obligations of the companies to pay certain sums of money to the persons therein named, and, therefore, possess more the characteristics of promissory notes than otherwise. This is particularly true of travelers' checks, for they are in the usual form of a promissory note.

I readily conclude, therefore, that in issuing money orders and travelers' checks such as are being considered, the companies do not negotiate sales of exchange either for themselves or others. It then remains to be seen whether or not the companies are liable to tax as brokers on the ground that they negotiate sales of promissory notes.

The broker is understood generally in the law to be an agent and not a principal. He does not have possession of the property and does not Ideal in his own name. The addition of the words "for themselves" in

the act has been construed by the courts so as to make one who buys and sells stocks, bonds, etc., for himself a broker. This decision does not, however, affect the character of the business of broker-that is, the business of negotiating purchases or sales of stocks, bonds, exchange, bullion, coined money, bank notes, promissory notes, and other securities. To constitute a broker the corporation or person must negotiate purchases or sales, or both purchases and sales, of one or all of the classes of property named. Now, do the express companies negotiate sales or make sales of promissory notes? I think not. A sale of property for a consideration and the subsequent transfer of ownership is one thing, and the delivery of a contract for the payment of money by the maker to the payee is another. The latter transaction is not a sale.

It appears from the facts and exhibits in this case that money orders and travelers' checks issued by express companies are practically a substitute for the actual transmission of money from one point to another. Formerly the plan in use was to ship the money delivered to the carrier by the shipper to the consignee at the point of destination. As a more convenient method, in case the proposed shippers desire it, the companies have adopted this system of money orders payable at the place to which, and to the person to whom, the amount is to be sent. This business since its inception has greatly enlarged, and, in addition to the money orders, travelers' checks are also issued, which are payable at any of the offices of the company by which the same are issued. In the course of time the banks have also begun to handle these orders in some instances, and the checks generally, as they do ordinary commercial paper.

Section 3407 of the Revised Statutes defines a bank or a banker as "a

place of business * * * where money is advanced or loaned on stocks, bonds, bullion, bills of exchange, or promissory notes, or where stocks, bonds, bullion, bills of exchange, or promissory notes are received for discount or for sale." In construing this section, the Supreme Court, in Selden v. Equitable Trust Company (94 U. S., 419), holds that "A corporation whose business is confined to the investment of its capital in bonds secured by mortgage on real estate, and to the negotiation, sale, or guaranty of them, is not a bank or a banker within the meaning of" said section. In the course of its business, which was to invest its capital, the corporation loaned money and took bonds and promissory notes secured by mortgage, and it also received bonds and promissory notes so taken and secured, for the purpose of negotiating sales of them. And yet the Supreme Court held that this was merely incidental to the business of the corporation, and therefore did not make it a bank or a banker.

Brokerage is not the business of the express companies; they are carriers, and the issuing of money orders and travelers checks is a mere incident to the business of carriers, the companies for a consideration issuing their own orders, upon themselves, for the payment of money upon presentation to their authorized agents.

My opinion is, therefore, that the transactions described do not bring the companies within the terms of the law which defines a broker, and that they are not liable to the broker's tax under the provisions of the war-revenue act above quoted.

Respectfully,

JAS. E. BOYD, Assistant Attorney-General.

Approved: JOHN W. GRIGGS, Attorney-General.

(145.)

Special tax-Broker-Tax titles.

The special tax of a broker is not required to be paid for the purchase or sale of tax

titles.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., June 4, 1900.

SIR: Your letter of the 30th ultimo has been received, asking "Is there a license required to buy tax titles?"

Tax titles are not understood to be "securities" in contemplation of the second paragraph of section 2 of the act of June 13, 1898, defining brokers. Such being the case, the special tax of a broker is not required to be paid for their purchase or sale.

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The purchase and sale of rare coins is held not to be the business of a broker, as defined

by the statute.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., June 6, 1900.

SIR: Your letter of the 31st ultimo has been received, stating that Elias McMagnas, of St. Louis, desires to become a dealer in rare coins, and asking whether he would thereby involve himself in liability as a broker.

It is held by this office that he would not. A person who buys and sells rare coins which are no longer in use as money, but have a special and arbitrary value attached to them by numismatists, and are bought and sold as curios, is, in the opinion of this office, not to be regarded as a dealer in coined money within the meaning and intent of the second paragraph of section 2 of the act of June 13, 1898, defining a broker. Respectfully, G. W. WILSON, Commissioner. Mr. H. C. GREENER, Collector First District, St. Louis, Mo.

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