obtained from the legislature amendments to its special charter. (Waterbury Gaslight Co. v. Walsh, 228 Fed. 54, 1916.)

18. A railway company leased its mines, railroads, and other property, but thereafter maintained an office for the transaction of business, maintained its corporate existence and organization by the annual election of officers, and received an income in the shape of rental, and distributed dividends to its stockholders. It held itself in readiness to resume the operation of its properties if the leases should be violated by the lessees, and in such leases it reserved the right to develop the forests on its land, to remove timber, and to mine everything underlying its properties except coal. It made annual returns of its income, and kept and maintained stock books for the transfer of its capital stock and the transactions of other business. Held, That these acts did not constitute a "doing of business," so as to subject the corporation to the corporate excise-tax act, as it is not the power to act, but actual activities in certain directions, which constitute a "doing of business," and the corporation was not doing business as a common carrier which was the prime object of its incorporation. (State Line & S. R. Co. v. Davis, 228 Fed. 246, 1916.)

19. A corporation which, having leased all its property and franchises, except its franchise to be a corporation, thereafter affirmatively exerts its power for the acquisition of additional franchise rights, is "doing business," so as to be subject to the excise tax, under this section. (Public Service Ry. Co. et al. v. Herold, 227 Fed. 490, 1915. Reversed in Public Service Ry. Co. v. Herold, 229 Fed. 902, 906, 1916.)

20. A corporation, though it has leased its electric power plant and all its property and franchises, except the franchise to be a corporation, is "doing business," and so subject to the excise tax, under this section, one of the express purposes of its incorporation being to lease such plants. (Public Service Elec. Co. et al. v. Herold, 227 Fed. 491, 1915. Reversed by Pub. Service Ry. Co. v. Herold, 229 Fed. 902, 906, 1916, on this point.)

21. A corporation which leases its business as it exists, but in doing so preserves a right to extend such business for the benefit of the lessce, if the lessee requests it, is thereafter "doing business," and so subject to the excise tax, under act August 5, 1909, where it exerts such reserve power in a substantial way, so as to acquire additional property, though doing so for the benefit of the lessee as well as itself. (Public Service Ry. Co. v. Herold, 227 Fod. 494, 1915. Reversed in Pub. Service Ry. Co. v. Herold, 229 Fed. 902, 906, 1916.) 22. Where a corporation leased its property, franchises, rights, and privileges, the lossee agreeing to make extensions to the lessor's lines of railway, etc., and the corporation performed no acts save to receive

rentals, it was not liable to corporation taxes, under this act, because not "doing business." (Public Service Co. et al. v. Herold, 227 Fed. 500, 1915. Affirmed by Pub. Service Ry. Co. v. Herold, 229 Fed. 902, 906, 1916.)

*

23. Corporation tax law (act Aug. 5, 1909, clause 1) * imposes such excise tax, not because of every act performed by a corporation under its incidental powers, but upon the privilege of doing and carrying on the business for which the corporation is organized, and when it ceases the conduct of such business by turning it over to be carried on by another it ceases to be subject to the tax so long as it commits no act by which the resumption of its business is to be inferred.

A corporation authorized by its charter to "manufacture, buy, sell, lease, and let power plants and generating stations for the manufacture and distribution of electric current" is not, because a part of its authorized business is the leasing of property, carrying on or doing business within the meaning of the corporation tax law, where by a lease it divested itself of all of its property, and has since merely maintained its entity and collected and disbursed the rents for the demised property. (Public Service Co. v. Herold, 229 Fed. 902, 1916. Reversing Pub. Service Ry. Co. v. Herold, 227 Fed. 494; Pub. Service Ry. v. Herold, 227 Fed, 490; Pub. Service Elec. Co. et al. v. Herold, 227 Fed. 491. Affirming Pub. Service Ry. Co. et al. v. Herold, 227 Fed. 500; Pub. Service Gas Co. et al. v. Herold, 227 Fed. 496, 1915.)

24. A gas company leased all of its property, the contract of lease providing that the lessee should assume the company's contracts and should be entitled to use the company's name whenever necessary to have the benefit of its franchises. It was also agreed that the lessor's plan should be maintained by the lessee, who should make any necessary or advisable extensions. The company retained its corporate organization, paying secretary's salary, director's fees, and for books and postage used in the distribution of dividends and the payment of interest on bonds. No new bonds, however, were issued, although stock owned by the company in another corporation was voted. Held, That the company was not "doing business" within this act, and so was not liable to corporation taxes. (Public Service Gas Co. et al. v. Herold, 227 Fed. 496, 1915. Affirmed by Public. Service Ry. Co. v. Herold, 229 Fed. 902, 906, 1916.)

25. In the case of the Rio Grande Junction Ry. Co. v. U. S., the Court of Claims held that a corporation doing the business for which it was organized was liable to tax. The court said:

We do not believe a corporation should be allowed to organize for the ostensible purpose of building and operating a railroad and then lease the road before it was built under such circumstances as to show that that was its original and only purpose, and thereby evade the payment of the corporation tax. (Rio Grande Junction Ry. Co., v. U. S., 51 Ct. Cls. 274, 284, 1916.)

26. If the purpose for which the corporation was organized was to build and lease property, the rents derived from such lease are taxable, even though thereby the corporation leases all the property and of necessity goes out of all corporate business excepting the collection and distribution of its rents. (Rio Grande Junction Ry. Co. v. U. S., 51 Ct. Cls. 274, 284, 1916.)

27. An operating agreement by which a street railroad company surrenders its own and leased lines to the possession of another company for operation for a term of 999 years, in consideration of annual rentals and the payment of interest on its indebtedness and that of its lessors, does not differ in legal effect from a lease, and the lessor is not subject to the excise tax imposed by the Corporation Tax law (act Aug. 5, 1909) * as "doing business" through the oper

ating company as its agent.

A corporation which has ceased to pursue the occupation for which it was organized by reason of the leasing of its property, may continue to exist, and to receive and disburse rentals, and pay or renew its debts, or create new indebtedness, without being subject to the excise tax for "doing business" under such statute. Continental Passenger Ry. Co., 233 Fed., 976, 1916.)

(McCoach v.

so as

28. The true test of distinction to determine whether a corporation organized for a business purpose is "engaged in business" within the meaning of corporation tax law, act August 5, 1909 * * * to be subject to the excise tax thereby imposed is whether it is continuing the body and substance of the business for which it was organized, and in which it set out, or whether it has substantially retired from it and turned it over to another. If the latter appears then its tax exempt status must be tested by the further query whether it had during the critical period done only such acts as are properly and normally incidental to the status of a mere lessor of its property or whether it has exercised its peculiar corporate franchise outside of and beyond the fair scope of that status.

Street and suburban railroad companies which owned and had operated their lines leased the same to an operating company for the full term of their franchises. Thereafter they did only what was necessary to maintain their organization, and collect and disburse their rentals in dividends and otherwise, except that in accordance with the provisions of some of the leases, giving the lessees the right to sell unimportant items of property, which was not needed and to reinvest the proceeds in other property subject to the lease, the lessors joined in conveyances of the property sold; also in one case under the terms of the lease the lessor issued to the lessee treasury stock and bonds previously authorized for improvement purposes, in payment for such improvements made by the lessee, and in another case the lessee brought a suit in the name of the lessor, the

latter having no connection with the case. Held, That none of such acts constituted "engaging in business" within the meaning of this act, and that such corporations were not subject to the excise tax imposed thereby. (Traction Co.'s v. Collectors of Int. Rev., 223 Fed.

984, 1915.)

29. A railroad corporation which had leased all its property to another, which operated and maintained it, paying a fixed rental to the lessor, is not carrying on or doing business within this act, though such corporation maintained its corporate existence and has an office where it receives the rental and distributes it among its stockholders, and though, as required by the lease, it has during the year made certain improvements on the property, paid for by the sale of old material or by certificates of indebtedness of the lessee, since the expression "doing business" in that statute is one in common use, which has the same meaning applied to a corporation as to a natural person, and does not include one who has retired from business and is merely maintaining property leased by him to another. (Jasper & E. Ry. Co. v. Walker, 238 Fed. 533, 1917.)

30. Where a lessee corporation agrees with the lessor for the benefit of the latter's shareholders to pay such shareholders quarterly sums or dividends on dates stated each year during the terms of the lease to registered holders of such shares on the 10th day preceding each date for payment and the agreement was endorsed on certificates of the capital stock of the lessor corporation, Held, That lessor corporation was doing business within the meaning of the above act as the lessee company merely relieved lessor of the duty of distribution. (Blalock, Collector, v. Georgia Ry. & Elec. Co., 246 Fed. 387, 1917.) 31. A street railway corporation which leased its lines and property to another corporation in 1897 and had not since operated them was not in 1913 "engaged in business" within corporation tax law, August 5, 1909, so as to be subject to the tax imposed by such (West End Street Ry. Co. v. Malley, 246 Fed. 625, 1917.) 32. The plaintiff corporation to which payments were required to be made by the railroads using the terminal, and which granted concessions and licenses to others than the said stockholding railroads for the transaction of various kinds of business, and which operated facilities for supplying power, heat, light, gas, etc., manufactured by it, was engaged in business. (Boston Terminal Co. v. Gill, 246 Fed. 664, 1917, affirming the decision of the district court in T. D. 2428, 1916.)

law.

* * *

33. A corporation which has not reduced its activities to owning and holding property and the distribution of its avails, but maintains its organization for continued efforts in pursuit of profit and for such activities as are therein essential, is carrying on business within the meaning of the act.

Respondent corporations, besides receiving and distributing among their shareholders the royalties from a number of outstanding longterm "mining leases," employed another company to inspect the lessee's operations and keep them to their contracts, made some mining explorations at expense on other parts of their properties, sold or leased other parcels and sold some timber, Held, That they were carrying on business within the meaning of this act. (Von Baumbach v. Sargent Land Co., 242 U. S. 503, 1917.)

34. A railroad corporation leased its property and franchises, for the full term of its charter and any renewal thereof, to another railroad company, the lease being approved by the State Legislature granting the original charter, and providing, not only that the lessor should thereafter maintain its corporate existence, but should issue to the lessee stock, bonds, or other obligations for the completion of a proje ted branch road and for the construction of any other railroads which the lessee might desire to construct and to cover expenses for the construction or purchase of locomotives, cars, and mahinery, the lessee binding itself to pay and discharge such obligations at maturity, Held, that the issuance of bonds by the lessor corporation under such provision did not amount to a resumption of business which the lease had transferred or an engaging in business within corporation tax act, August 5, 1909. (Anderson v. Morris & E. R. Co., 216 Fed. 83, 1914; followed in 219 Fed. 185, 1915; N. Y. Central & H. R. R. Co. v. Gill; 223 Fed. 989, 1915, Traction Co's. v. Colle tors of Int. Rev.; 229 Fed. 902, 1916, Pub. Service Ry. Co. v. Herold; 239 Fed. 739, 1917, Rensselaer & S. R. Co. v. Irwin.)

35. The Old Colony Railroad Co., whose demised roads were operated by the New York, New Haven & Hartford Railroad Co. as lessee, and not as agent, Held not a corporation "engaged in business" during the years 1909-1912, inclusive, within the meaning of corporation tax law August 5, 1909, sec. 38, and therefore not subject to the imposition of the tax authorized. (Old Colony R. Co. v. Gill, 257 Fed. 220, Aug. 6, 1919.)

36. A pipe-line company organized by, and doing business only for, two other pipe-line corporations, Held, not merely a convenient agent of these corporations, but to be doing business for profit within corporation tax law. (Associated Pipe Line Co. v. United States, 258 Fed. 800, 1919.)

Dissolved corporations.

A corporation which has continued in business through a calendar year can not evade liability for the special excise tax imposed by act August 5, 1909, by dissolving before the time when it is required to make a return of said business to the collector of internal revenue