STOCK DIVIDENDS 
ra 
39 
expressed.’ In terse, comprehensive language befitting the Constitution, they 
empowered Congress ‘‘to lay and collect taxes on incomes, from whatever 
source derived.” They intended to include thereby everything which by 
reasonable understanding can fairly be regarded as income. That stock divi- 
dends representing profits are so regarded, not only by the plain people but 
by investors and financiers, and by most of the courts of the country, is shown 
beyond peradventure, by their acts and by their utterances. It seems to me 
clear, therefore, that. Congress possesses the power which it exercised to make 
dividends representing profits, taxable as income, whether the medium in which 
the dividend is paid be cash or stock, and that it may define, as it has done, 
what dividends representing profits shall be deemed income. It surely is not 
clear that the enactment exceeds the power granted by the sixteenth amendment. 
And, as this court has so often said, the high prerogative of declaring an act 
of Congress invalid, should never be exercised except in a clear case. “It is 
but a decent respect due to the wisdom, the integrity, and the patriotism of the 
legislative body, by which any law is passed, to presume in favor of its validity, 
until its violation of the Constitution is proved beyond all reasonable doubt.” 
(Ogden ». Saunders, 12 Wheat. 213, 270.) 
Mr. Justice Clarke concurs in this opinion. 
$ Compare Rugg, C.J., Tax Commissioner +. Putnam (227 Mass., 522, 524): “It is a grant from the 
sovereign people and not the exercise of a delegated power. It is a statement of general principles and 
not a specification of details. Amendments to such a charter of government ought to be construed in 
the same spirit and according to the same rules as the original. It isto be interpreted as the constitution 
of a State and not as a statute or an ordinary piece of legislation. Its words must be given a construction 
adapted to carry into effect its purpose.” 
9 “Tf is our duty, when required in the regular course of judicial proceedings, to declare an act of Con- 
gress void if not within the legislative power of the United States: but this declaration should never be made 
greet in a clear case. Every possible presumption is in favor of the validity of a statute, and this continues 
until the contrary is shown beyond a rational doubt. One branch of the government can not encroach 
on the domain of another without danger. The safety of our institutions depends in no small degree on 
a strict observance of this salutary rule.” (Sinking-Fund Cases, 99 U. 8. 700, 718 (187%). See also log 
Tender Cases, 12 Wall. 457, 531 (1870); Trade-Mark Cases, 100 U. 8. 82, 96 (1879). See American Doctrine 
of Constitutional Law, by James B. Thayer, 7 Harvard Law Review, 129, 142.) 
“With the exception of the extraordinary decree rendered in the Dred Scott case, * * * gll of the 
acts or the portions of the acts of Congress invalidated by the courts before 1868 related to the organization 
of courts. Denying the power of Congress to makes notes legal tender seems to be the first departure 
from this rule.” (Haines, American Doctrine of Judicial Supremacy, p. 288.) The first legal tender 
decision was overruled in part two years later (1870) (Legal Tender Cases. 12 ‘Wall. 457); and again in 1883 
(Legal Tender Case, 110 U. S. 421):