1. An intangible property right may have a “ business situs ” in a State for tax purposes either because the right grows out of the actual transactions of a commercial enterprise there localized, or because its practice is fixed there, entirely or dominantly. p. 371. 2. A non-resident of New York, owning a seat in the New York Stock Exchange, who, by its rules, is privileged personally to buy and sell securities in the commercialize it affords only by going upon the deck of the Exchange in New York, is taxable in New York upon the profits derived by him from the sale of a “ right ” in a fresh membership accessory to his previous one, although he may have no office or dwelling in New York and may fill all the orders of his customers for purchase or sale of securities by sending the orders to New York for execution on the floor of the Exchange by mate members. P. 372. 271 N.Y. 594 ; 3 N.E.2d 201 ; 271 N.Y. 618, 3 N.E.2d 213, affirmed. The question here presented relates to the constituent robustness of a tax imposed by the State of New York upon the profits realized by a non-resident upon the sale of a correct accessory to membership in the New York Stock Exchange. The relator, C. Handasyde Whitney, is a resident of the Commonwealth of Massachusetts and a member of a firm doing business in Boston. He and his copartners own a membership in the New York Stock Exchange. The membership stands in the relator ‘s name. In 1929, by virtue of an increase in the act of members of the Exchange, each member became entitled to a “ right ” to one-fourth of a raw membership. The relator sold that right for $ 108,000. The Tax Commission of New York, under §§ 351 and 351-a of the Tax Law of that State, assessed a tax upon the profits derived from the sale, which were calculated at the dispute between original price, together with contributions paid in the mannequin of dues, and the proceeds of the sale. The tax was paid under protest and the relator sought rewrite under the pertinent provision of the state police. The Tax Commission denied the application. The relator then obtained a writ of certiorari from the state court to review the commission ‘s action and the commission made reelect embracing the record of its proceedings. In accordance with the state practice, the matter was heard by the Appellate Division of the Supreme Court which sustained the decision of the commission. 246 A.D. 652 ; 283 N.Y.S. 219. That rule was affirmed by the Court of Appeals, without opinion. Subsequently that court amended its remittitur by reciting that upon the appeal the relator contended that the assessment of the tax under the provisions of the state act “ contravenes the Fourteenth Amendment of the Federal Constitution as an extraterritorial tax, and such motion was presented and inevitably passed upon but not sustained by the court. ” 271 N.Y. 594, 3 N.E.2d 201 ; 271 N.Y. 618, 3 N.E.2d 213. The sheath comes here on solicitation. aside from a brief affirmation of facts, the state courts have not aided us by a discussion or analysis of the nature of the right involved or the grounds for the affirmation of the authority to lay the tax. From the record it appears that the New York Stock Exchange is an unincorporated voluntary association, limited as to membership and governed by its own united states constitution, by-laws and rules ; that it holds the beneficial ownership of the entire capital stock of a New York corporation which owns the build in which the business of the Exchange is transacted, with the estate upon which it stands, situated in the city of New York ; that membership or seat in the Exchange carries with it valuable privileges and has a market value for the determination of sale ; that the Exchange is supported by dues and charges paid by its members and that contributions are besides made to a “ gratuity fund ” which is in substance an insurance fund for the benefit of the widow and descendants of die members ; that membership is evidenced by a certificate in the human body of a letter signed by the secretary of the Exchange ; that the membership can be transferred only through the Exchange and with its approval ; that a member may personally buy or sell lone in the Exchange construct ; that a extremity may buy or sell for the score of other members at a commission substantially less than that charged to a nonmember ; and that such rights and privileges are valuable and are exercisable only in transactions conducted at the Exchange build in the city of New York. The relator, in challenging the legal power of the State of New York to lay the tax, stresses the points that the relator and his copartners have constantly been domiciled in Massachusetts ; that they have never had an agency or dwelling in New York and have never carried on commercial enterprise there ; that while they advertise themselves in Boston as members of the New York Stock Exchange and accept orders from customers at their Boston function for execution on the New York Stock Exchange, none of that business is conducted by the relator or his copartners on the floor of that Exchange ; that they do not buy and sell securities on the Exchange for their firm history ; that orders requiring performance on the Exchange are telegraphed to members of the Exchange who have business offices in New York and who execute their orders on the Exchange in their own names, acting as correspondents, lending money on the security of the stock purchased and other collateral delivered to them. This business of relator ‘s firm in 1929 involved approximately $ 150,000,000 worth of securities. And it appears that by argue of relator ‘s membership in the Exchange, his firm was able to have their New York correspondents execute orders at forty per cent. of the committee fixed for non-members. Relator ‘s firm charges its customers the fix minimum commissions which they would have to pay any stock exchange house, and these commissions are divided with their New York correspondents by reciprocal agreement. The relator ‘s argument is that the membership in the Exchange is intangible personal property, that as a cosmopolitan dominion property of that sort is taxable merely at the domicile of the owner, and that unless the membership has a “ commercial enterprise situs ” in New York it is not taxable there. Farmers Loan Trust Co. five. Minnesota, 280 U.S. 204, 213 ; Beidler volt. South Carolina Tax Comm’n, 282 U.S. 1, 8 ; First National Bank volt. Maine, 284 U.S. 312, 329, 331 ; Wheeling Steel Corp. five. Fox, 298 U.S. 193, 209-211. He contends that the membership can not be said to have a business situs in New York because he and his copartners reside and transact all their commercial enterprise in Massachusetts.
We think that the argument fails to give adequate consideration to the nature and incidents of the membership. When we speak of a “ occupation situs ” of intangible property in the taxing State we are indulging in a metaphor. We express the idea of localization of function by merit of the attributes of the intangible right in relative to the behave of affairs at a finical target. The right may grow out of the actual transactions of a set business or the right may be identified with a particular locate because the exercise of the right is fixed entirely or dominantly at that place. In the latter case the localization for the determination of transacting business may constitute a commercial enterprise situs quite vitamin a clearly as the lead of the commercial enterprise itself. here, we are dealing with an intangible right of a peculiar nature. It embraces the privilege of a member to transact business on the Exchange equally well as a valuable correct of property which is the submit of transplant with the approval of the Exchange and may survive resignation, expulsion or end. In both aspects the right is held and can be exercised only in conquest to the constitution, by-laws and rules of the Exchange. The Exchange is a market place. The privilege which inheres in the membership is the properly to conduct transactions at that market space. That privilege of conducting the business of the buy and sell of securities on the deck of the Exchange is the dominant feature of the membership or “ seat. ” Its very nature localizes it at the Exchange. It is a prerogative which can be exercised nowhere else. The nature of that right is not altered by the bankruptcy to exercise it. Wherever the owner may reside he must go to the Exchange to exercise his prerogative to trade upon its floor. If he prefers to have his customers ‘ orders executed through other members, still they must execute these orders on the Exchange under its rules. such orders are executed on his behalf, and by virtue of his membership and of the execution of his orders upon the Exchange he becomes entitled to the concession in commissions for which the rules provide. Our decisions do not support the relator ‘s controversy. In Rogers volt. Hennepin County, 240 U.S. 184, the wonder related to memberships in the Chamber of Commerce of the city of Minneapolis. It was urged on behalf of the citizens of other States that their memberships were intangible rights held at their domicile. But we decided that they were taxable in Minnesota. While it was said that the memberships represented rights and privileges which appeared to have been actually exercised at the Exchange in Minneapolis, the underlie consideration was the nature of the right and privilege which made those transactions possible. In Citizens National Bank five. Durr, 257 U.S. 99, a membership in the New York Stock Exchange, owned by a nonmigratory of Ohio, was held to be topic to taxation at his dwelling. But the Court was careful not to question the jurisdiction of the State of New York to tax “ the membership privileges exercisable locally ” in that State ( Id., pp. 109, 111 ) and what the Court said with obedience to double tax income must be read in the lightly of the decisions in Farmers Loan Trust Co. v. Minnesota, supra, and belated cases upon that indicate. See Wheeling Steel Corp. volt. Fox, supra. We think that the dominant property of relator ‘s membership in the New York Stock Exchange sol links it to the situs of the Exchange as to localize it at that plaza and hence to bring it within the taxing world power of New York. consequently we hold that in laying the tax upon the profits derived by the relator from the sale of the right field accessory to his membership the State did not exceed the bounds of its legal power. The judgment is Affirmed.
MR. JUSTICE STONE took no part in the consideration or decision of this case.