amount of their deposits and the names of the banks in which they were kept. But, in the case of local taxes, a "full statement of all taxable property" was required from each taxpayer, who was obliged to make oath that his inventory was "a full, true, and correct list and description." Pub. Stat. (Vt.) §§ 536-540. What difference there may be in the form of the two state ments is plainly not important. The requirements in the case of the depositors in national banks went no further than to secure the payment of the tax, and the returns were subject to official inspection only. Pub. Stat. (Vt.) § 808, supra.

It was in these circumstances that the legislature adopted the provision that, if the national bank agreed to pay an amount which might fairly be regarded as equivalent to the sum demanded of the depositors, the latter should be free from the necessity of making any returns. In no proper sense could this be deemed to place the bank under duress. It may well be that the state desired, by substituting the flat exclusive rate in place of local taxation, to facilitate the appearance in larger amount of a class of property which easily escapes [139] taxa- | tion. 84 Vt. 167, 195, 78 Atl. 944, Ann. Cas. 1012D, 22. But the exaction it imposed upon the depositors was not relatively unfair, and in providing that the bank might, if it saw fit, make the returns and payment stipulated, the state left no possible ground for objection on the score of inconvenience in practical administration. That the plaintiff in error, in the conduct of its savings department, did not fail to perceive the business advantages of the state's plan. is apparent from the excerpts from the advertisements it published during the period covered by the stipulation in suit and prior thereto. The following are illustrative:

"We pay 4 per cent on savings accounts, in any amount from 1 dollar upwards. All taxes are paid by the bank, and you do not need to report deposits in this bank to the

listers."

“Be sure and take advantage of the law governing taxes on deposits in national banks. Our depositors do not make any report of their deposits to the listers."

"Under the law governing saving deposits in national banks, we pay all taxes on any amount. There is no $2,000 limit. You can carry any amount tax free, and no report of your deposit is made by the bank to the listers."

no suggestion that the bank did not have the power to allow interest upon deposits, or to conduct its savings department. Nei. ther party questions the bank's authority in that respect. The practice of maintaining savings departments seems to have become extensive in recent years, without challenge by the government. (Report of the Comptroller of the Currency; Treasury Reports, 1912, p. 361.) The position of the plaintiff in error is that, assuming [140] its right to transact business of this sort, still it could not lawfully enter into the agreement which the state seeks to enforce.

The applicable principles are not in dispute. The Feder. statutes relative to national banks constitute the measure of the authority of such corporations, and they cannot rightfully exercise any powers except those expressly granted or which are incidental to carrying on the business for which they are established. California Nat. Bank v. Kennedy, 167 U. S. 362, 366, 42 L. ed. 198, 200, 17 Sup. Ct. Rep. 831; Logan County Nat. Bank v. Townsend, 139 U. S. 67, 73, 35 L. ed. 107, 110, 11 Sup. Ct. Rep. 496. These incidental powers are such “as are required to meet all the legitimate demands of the authorized business, and to enable a bank to conduct its affairs, within the general scope of its charter, safely and prudently." First Nat. Bank v. National Exch. Bank, 92 U. S. 122, 127, 23 L. ed. 679, 681; Western Nat. Bank v. Armstrong, 152 U. S. 346, 351, 38 L. ed. 470, 472, 14 Sup. Ct. Rep. 572. The bank was authorized to receive deposits. Arising from these deposits were credits to the depositors, forming part of their property, and subject to the taxing power of the state. It cannot be doubted that the property being taxable, the state could provide, in order to secure the collection of a valid tax upon such credits, for garni hment or trustee process against the bank, or in effect constitute the bank its agent to collect the tax from the individual depositors. First Nat. Bank v. Kentucky, 9 Wall. 353, 361-363, 19 L. ed. 701, 703, 704; Merchants' & Mfrs' Nat. Bank 41 L. ed. 236, 238, 17 Sup. Ct. Rep. 829. v. Pennsylvania, 167 U. S. 461, 465, 466, Further, it would seem to be highly appropriate that, the credits of depositors being taxable by the state, the bank should be free to make reasonable agreements, and thus promote the convenience of its business, with respect to the making of returns and

3. With this view of the scheme of the statute, we come to the question of the validity of the stipulation in suit. The bank contends that it was ultra vires. There is

might lawfully require of its depositors. Provision for such agreements, instead of constituting an interference with a Federal instrumentality, would aid it in performing its functions, [141] and would remove un

The contention, however, is that in this case the bank, under the statute, stipulated to pay at the specified rate upon an average amount of deposits, and it is insisted that this amount did not correspond precisely to the amounts upor. which interest was actually paid to the depositors, and upon which accordingly they would have been taxable. That is, as already stated, certain deposits being withdrawn between the interest dates fixed by the bank, there would be deposits belonging to the interest-bearing class upon which interest would not in fact be paid. The facts in regard to the fluctuations in deposits during the period in question are shown in the excerpts from the agreed statement set forth in the margin.† But we are of the [142] opinion that this lack of an exact correspondence between the amount upon which the depositors would have been taxed and the average amount upon which the bank agreed to pay cannot be said to furnish a ground for holding the agreement to be invalid. There was, and in the ordinary course of business there naturally would be, a substantial equivalency. The arrangement to make the computation upon the average amount of deposits of the class was a simple and convenient method which could fairly be said to offset in it, advantages such risks as might be incident to the fluctuations. It is further said that the agreement did not contemplate a charge against the depositors' accounts of the amount paid by the bank. The bank, however, was free to adjust its interest rates accordingly. We find no ground for sus taining the contention that the agreement was beyond the bank's power.

4. But it is also insisted that the agreement cannot be enforced for the reason that it was without valid consideration. The proposition is that the tax, considered as one upon the depositors, would, if enforced,

"Deposits to the amount of $4,514, were | made subsequent to July 1, 1908, and were withdrawn prior to January 1, 1909; and deposits to the amount of $3,002.12 were made subsequent to January 1, 1909, and withdrawn, prior to July 1, 1909, some being withdrawn prior to April 1, and some subsequent thereto. No interest was paid by the defendant on any of the deposits mentioned in this article.

In support of the contention that the tax would deprive the depositors of their property without due process of law, it is said, (1), that there was no valid assessment, and he was provided for; and (2), that the tax was assessed, if at all, without proper notice to the depositors. The statute laid the tax at a specified rate upon bank credits; no other assessment than that made by the statute itself was necessary; and no other notice to the depositor than that thus given by law was required. The tax was recoverable by suit in which the depositor would have full opportunity to resist any illegal demand. Dollar Sav. Bank v. United States, 19 Wall. 227, 240, 22 L. ed. 80, 82; King v. United States, 99 U. S. 229, 233, 25 L. ed. 373, 374; United 1909. Eleven of the individual depositors having interest-bearing deposits, not exceeding in the aggregate $4,561.95, became such after October 1, 1908, and ceased to be depositors before March 31, 1909; and fortyeight depositors of this class having deposits on October 1, 1908, not exceeding in the aggregate $22,530.54, ceased to be depositors before March 31, 1909."

It also appeared that the aggregate of such interest-bearing deposits on October 1, 1908, was $569,393.75, of which $36,424.27 were deposited by nonresidents; and on April 1, 1909, such aggregate was $623,242.75, of which $39,361.98 were deposited by nonresidents. The aggregate on the lastnamed date was $28,885.01 in excess of the average for the semiannual period ending March 31, 1909.

Receivers cannot be brought by construction within any of the provisions of this act.

United States v. Harris, 177 U. S. 305, 44 L. ed. 780, 20 Sup. Ct. Rep. 609; Pennsylvania Steel Co. v. New York City R. Co. 176 Fed. 477.

It is not the intent of the act to impose a tax upon the doing of business by a receiver. If this were its intent, it would be unconstitutional so far as it relates to business done by receivers appointed by state courts or under state laws, and therefore it cannot be inferred that Congress intended to tax the business done by receivers.

Flint v. Stone Tracy Co. 220 U. S. 157, 158, 55 L. ed. 415, 416, 31 Sup. Ct. Rep. 342; The Collector v. Day (Buffington v. Day) 11 Wall. 113, 20 L. ed. 122; South Carolina v. United States, 199 U. S. 437, 50 L. ed. 261, 26 Sup. Ct. Rep. 110,

4 Ann. Cas. 737; Porter v. Sabin, 149 U. S.

473, 37 L. ed. 815, 13 Sup. Ct. Rep. 1008; Re Tyler, 149 U. S. 164, 37 L. ed. 689, 13 Sup. Ct. Rep. 785; M'Culloch v. Maryland, 4 Wheat. 316, 4 L. ed. 579.

The only franchise the exercise of which is taxable is the corporate franchise. The right to do business in a corporate capacity has many advantages, and is a valuable right. It is only the exercise of this right that Congress intended to tax.

McCoach v. Minehill & S. H. R. Co. 228 U. S. 295, 57 L. ed. 842, 33 Sup. Ct. Rep. 419. Chancery receivers do not represent the corporation in its individual or personal character, nor supersede it in the exercise of its corporate powers, except so far as the property intrusted to their care is concerned. Notwithstanding their appointment, the corporations were clothed with their franchises and still existed. They could still exercise their powers if thereby they did not interfere with the management of the railroads. They could do many corporate acts and could do all things necessary to preserve their legal existence; could sue and be sued, and were liable for their acts and upon their contracts and covenants the same as if the receivers had not been appointed.

Decker v. Gardner, 124 N. Y. 334, 11 L.R.A. 480, 26 N. E. 814.

The court could, in a foreclosure or general creditor's suit, take possession of the secondary franchises, and the receivers could

exercise them.

Memphis & L. R. R. Co. v. Railroad Comrs. (Memphis & L. R. R. Co. v. Berry) 112 U. S. 609, 619, 28 L. ed. 837, 841, 5 Sup. Ct. Rep. 299.

were inseparable from them. To do this they did not require and did not exercise any corporate franchises. They merely did, in their capacity as receivers, what individuals might do.

People ex rel. Third Ave. R. Co. v. Public Service Commission, 203 N. Y. 308, 96 N. E. 1011.

The receiver did not take the place of the corporation or its officers, and was not its agent.

White v. Ewing, 159 U. S. 36, 40 L. ed. 67, 15 Sup. Ct. Rep. 1018; Decker v. Gardner, supra.

Mr. Arthur H. Masten argued the cause, and, with Mr. Ellis W. Leavenworth, filed

a brief for Joline et al.:

The tax imposed by the act is a tax, not upon business per se, but upon the right with particular advantages; to wit, in a to do business in a particular manner and which inhere in corporate organizations. If corporate capacity, and with the advantages business is not done in a corporate capacity, no tax is payable in respect thereto. income. Where income is actually received, is not a tax upon property or franchises or but no corporate business is done, the tax is not payable.

It

55 L. ed. 389, 31 Sup. Ct. Rep. 342, Ann. Cas. 1912B, 1312; Zonne v. Minneapolis Syndicate, 220 U. S. 187, 55 L. ed. 528, 31 Sup. Ct. Rep. 361; McCoach v. Minehill &

Flint v. Stone Tracy Co. 220 U. S. 107,

S. H. R. Co. 228 U. S. 295, 57 L. ed. 842, 33 Sup. Ct. Rep. 419.

The receivers acquired no interest in the right of the Metropolitan Street Railway Company to be a corporation. The corporation continued to exist. It could hold corporate meetings and elect officers. tained title to its property, the receivers being vested with no interest therein, but acting merely as its custodians for the court.

It re

Quincy, M. & P. R. Co. v. Humphreys, 145 U. S. 82, 36 L. ed. 632, 12 Sup. Ct. Rep. 787.

A corporate existence is not an absolute prerequisite to lawful operation of a rail

way.

Memphis & L. R. R. Co. v. Railroad Comrs. (Memphis & L. R. R. Co. v. Berry) 112 U. S. 609, 619, 28 L. ed. 837, 841, 5 Sup. Ct. Rep. 299; New York ex rel. Schurz v. Cook, 148 U. S. 397, 409, 37 L. ed. 498, 502, 13 Sup. Ct. Rep. 645; Phoenix v. Gannon, 195 N. Y. 471, 88 N. E. 1066.

The receiver represents none of the parties to the cause, but acts under the sole direction of the court.

Mr. Justice Pitney delivered the opinion of the court:

These cases were heard together in the district court and in the circuit court of appeals (sub. nom. Pennsylvania Steel Co. v. New York City R. Co. 193 Fed. 286, 117 C. C. A. 556, 198 Fed. 774). They were argued together in this court, and may be disposed of in a single opinion.

In the years 1909 and 1910 certain lines of street railway in the city of New York, that may be conveniently designated as the Third Avenue system, were in the hands of the respondent Whitridge, as receiver, under orders made in the year 1908 by the circuit court of the United States for the southern district of New York in actions pending therein against the several proprietary companies. One of these actions was a foreclosure suit; the others were creditors' actions based upon the insolvency of the respective companies. The powers conferred upon the receiver did not vary in any respect now [146] material, and so a recital of the substance of one of the orders will suffice as an example. This order constituted Whitridge receiver of all the railroads and other property of the company, including tracks, cars, and other rolling stock and equipment, easements, privileges, and franchises, and the tolls, earnings, income, rents, issues, and profits thereof, with authority "to run, manage, and operate the said railroads and properties, to collect the rents, income, tolls, issues, and profits of said railroads and property, to exercise the authority and franchises of said defendant, and discharge its public duties, acting in all things subject to the supervision of this court." By the same order the officers, agents, and employees of the company were required to turn over and deliver to the receiver all of the said property in their hands or under their control, and the company was enjoined from interfering in any way with his possession or management.

In the same years (1909 and 1910) certain other lines of street railway in the city of New York, which may be described as the Metropolitan system, were in the possession of the respondents Joline and Robinson as receivers, appointed in the year 1907 by the circuit court of the United States for the same district, in several actions therein pending against the corporations which were owners of these lines. The orders appointing these receivers contain provisions substantially similar to those already recited. (See Re Metropolitan R. Receivership [Re Reisenberg] 208 U. S. 90, 93-96, 52 L. ed. 403–405, 28 Sup. Ct. Rep. 219.)

In the year 1911, petitions were filed in the circuit court in behalf of the United

States, praying for orders directing the receivers to make returns of the net income of the respective railway corporations for the years 1909 and 1910, to the collector of internal revenue, in the manner required by the provisions of the corporation tax law (act of August 5, 1909, § 38, 36 Stat. at L. chap. 6, pp. 11, 112-117, U. S. Comp. Stat. Supp. 1911, pp. 741, 946).

[147] The applications were resisted by the receivers on the ground that the respective corporations did not, during the years 1909 and 1910, carry on any business in respect of the property that was in their hands as such receivers; that they as such receivers managed, controlled, and operated the same, and carried on all the business in respect thereto, and received all the income arising therefrom, not acting in place of the directors and officers of the respective companies, but as officers of the court; and that they were therefore not subject to the provisions of the act.

Jurisdiction of the controversy having been transferred to the district court by virtue of the new Judicial Code, § 290 [36 Stat. at L. 1167, chap. 231, U. S. Comp. Stat. Supp. 1911, p. 243], that court sustained the contention of the receivers (193 Fed. 286) and the circuit court of appeals affirmed this decision (117 C. C. A. 556, 198 Fed. 774). The cases are brought here by writs of certiorari.

As repeatedly pointed out by this court, the corporation tax law of 1909 |-enacted, as it was, after Congress had proposed to the legislatures of the several states the adoption of the 16th Amendment to the Constitution, but before the ratification of that Amendment-imposed an excise or privilege tax, and not in any sense a tax upon property or upon income merely as income. It was enacted in view of the decision of this court in Pollock v. Farmers' Loan & T. Co. 157 U. S. 429, 39 L. ed. 759, 15 Sup. St. Rep. 673, 158 U. S. 601, 39 L. ed. 1108, 15 Sup. Ct. Rep. 912, which held the income tax provisions of a previous law (act of August 27, 1894, 28 Stat. at L. chap. 349, pp. 509, 553, §§ 27 etc. U. S. Comp. Stat. 1901, p. 2260) to be unconstitutional because amounting in effect to a direct tax upon property within the meaning of the Constitution, and because not apportioned in the manner required by that instrument.

As was said in Flint v. Stone-Tracy Co. 220 U. S. 107, 145, 55 L. ed. 389, 411, 31 Sup. Ct. Rep. 342, Ann. Cas. 1912 B, 1312, respecting the act of August 5, 1909: "The tax is imposed not upon the franchises of the corporation irrespective of their use in business, nor upon the property of the corporation, but upon the doing of corporate