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):
