34 Opinion of the Court. "supplies covered by this contract." Compare Telescope Folding Furniture Co. v. United States, 31 F. Supp. 780, 784; United States v. Glenn L. Martin Co., 308 U. S. 62. Moreover, the clause stipulates for reimbursement of taxes "paid by the contractor." It is reasonable to conclude that this phrase also contemplates payment of taxes to the United States in consequence of an obligation imposed by statute upon respondent. For while in a sense, perhaps, respondent "paid" these processing taxes, it is more accurate to say that they were “paid” by the subcontractors who merely shifted their burden to respondent as a separate item of the contract price. The clause as a whole indicates that this was the sense to be attributed to the phrase quoted. A contrary construction of the "federal taxes" clause introduces difficulties not contemplated by the parties. It would force them to trace the taxes back to the one upon whom the obligation first rested, whether the subsequent transactions were simple or complex. For if it could be said in this case that the processing taxes were imposed on the supplies covered by the contract and were paid by the contractor, it would be immaterial how far the contractor were removed from the original processor if the former could show that the burden of the tax had been shifted as the processed articles had changed hands and perhaps form. We can find nothing which suggests that the parties intended to draft a clause that would operate in such fashion. We conclude that the quoted clause does not obligate the United States to compensate respondent for taxes which were paid by its subcontractors and were merely shifted to respondent pursuant to their subcontract. The judgment of the Court of Claims is reversed and the cause is remanded with directions to dismiss the petition. Reversed. 312 U.S. Opinion of the Court. A. C. FROST & CO. v. COEUR D'ALENE MINES CORP. CERTIORARI OF THE SUPREME COURT OF IDAHO. No. 78. Argued December 18, 1940.-Decided January 20, 1941. 1. The judgment of the state supreme court in this case was based wholly upon an interpretation of the Securities Act of 1933 and is reviewable here. P. 40. 2. A contract of a corporation granting an option to purchase at a stipulated price a specified number of shares of its treasury stock, held-assuming that a "public offering" was involved--not unenforceable although the optioned shares were not registered under the Securities Act of 1933 as amended. P. 42. 61 Idaho 21; 98 P. 2d 965, reversed. CERTIORARI, 311 U. S. 624, to review a judgment denying recovery upon a contract on the ground of invalidity under the Securities Act of 1933. Messrs. Ernest L. Wilkinson and John W. Cragun, with whom Mr. Charles J. Kappler was on the brief, for petitioner. Messrs. W. H. Langroise and James A. Wayne for respondent. Solicitor General Biddle and Messrs. Edwin E. Huddleson, Jr., Chester T. Lane, and Christopher M. Jenks filed a brief on behalf of the Securities & Exchange Commission, as amicus curiae, presenting the views of the Commission as to the interpretation of certain provisions of the Securities Act of 1933, as amended. MR. JUSTICE MCREYNOLDS delivered the opinion of the Court. September 10, 1934, respondent, by a written contract, gave to one Boland "the sole and exclusive right and option to purchase the whole or any part" of 1,300,000 shares of its treasury stock at 10 cents per share, payments to be made in installments. He immediately assigned the contract to petitioner, Frost & Company. April 26, 1935, this was modified as to time and amount of payments. May 15, 1935, another modification authorized respondent to sell optioned stock and credit petitioner with the proceeds above 10 cents per share. Petitioner obtained 165,000 shares and paid therefor $16,500. Respondent sold many at prices above 10 cents and gave petitioner credits amounting to $16,306. None of the corporation's shares were registered under the Securities Act of 1933 as amended, c. 38, 48 Stat. 74; c. 404, 48 Stat. 881, 905. And upon that alleged ground, in June 1935, respondent refused delivery of the remaining optioned ones-855,150. By complaint filed in an Idaho state court, March 26, 1937, petitioner charged that respondent had repudiated the option and asked judgment for $16,306, also damages consequent upon breach of the agreement. The Answer denied liability upon the ground, among others, that the contract "was entered into in violation. of law, and particularly in violation of . . . the Security Act of 1933, approved May 27, 1933, and Acts of Congress amendatory thereof and supplemental thereto, and particularly in this that the 1,300,000 shares of stock attempted to be sold by the defendant to the said W. J. Boland under said instrument was the treasury stock of the defendant corporation, and had never been registered for sale under said National Securities Act, or Acts amendatory thereof or supplemental thereto, with the Securities and Exchange Commission, and that the said W. J. Boland knew these facts and knew that the defendant could not legally sell to him the said stock or any part thereof; and defendant alleges that said contract was void ab initio." The cause was tried without a jury. Some evidence tended to show that both parties purposed that petitioner Opinion of the Court. 312 U.S. would sell acquired shares to sundry parties through use of the mails and instrumentalities of interstate com merce. The trial court held the option unenforceable so far as not executed because contrary to law; that petitioner could recover the $16,306 credit; also that there could be no recovery for respondent's failure to deliver. Upon appeal, the supreme court ruled that, as intended, petitioner sold acquired shares to sundry purchasers, directed deliveries to brokers for resale and "that all stock offered for sale amounted to public offerings and that interstate means of communication and transportation were used in connection therewith." Consequently it declared the agreement void ab initio. Further that the parties must be left in the situation where found. It ordered final judgment for respondent. 61 Idaho 21; 98 P. 2d 965, 967. This action was based wholly on interpretation and application of the Securities Act. Thus a federal question arose which demands determination. Awotin v. Atlas Exchange Bank, 295 U. S. 209, 213. The essential purpose of the statute is to protect investors by requiring publication of certain information. concerning securities before offered for sale. Some of its relevant provisions are in the margin.1 Petitioner maintains that the record shows there was no public offering of optioned stock within the meaning of the statute and §4 (1) is controlling. Considering the interpretation which we adopt it is unnecessary now 'Securities Act of 1933 as amended, 48 Stat. 74, 78, in 1934, 48 Stat. 881, 905-6. "Sec. 2. [15 U. S. C. § 77b]. When used in this title, unless the context otherwise requires "(3) The term 'sale,' 'sell,' 'offer to sell,' or 'offer for sale' shall include every contract of sale or disposition of, attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a 38 888 Opinion of the Court. to pass upon the point. The Supreme Court of Idaho thought the evidence sufficient to show a public offering and, for present purposes only, we may accept that view. No provision of the Act declares that in the absence of registration, contracts in contemplation of or having relation to a public offering shall be void. If there has security, for value; except that such terms shall not include preliminary negotiations or agreements between an issuer and any underwriter. . . ." "Sec. 4 [15 U. S. C., § 77d]. The provisions of section 5 shall not apply to any of the following transactions: "(1) Transactions by any person other than an issuer, underwriter, or dealer; transactions by an issuer not involving any public offering; . . "Sec. 5 [15 U. S. C., § 77e]. (a) Unless a registration statement is in effect as to a security, it shall be unlawful for any person, directly or indirectly "(1) to make use of any means or instruments of transportation or communication in interstate commerce or of the mails to sell or offer to buy such security through the use or medium of any prospectus or otherwise; or "(2) to carry or cause to be carried through the mails or in interstate commerce, by any means or instruments of transportation, any such security for the purpose of sale or for delivery after sale. "(b) It shall be unlawful for any person, directly or indirectly— "(1) to make use of any means or instruments of transportation or communication in interstate commerce or of the mails to carry or transmit any prospectus relating to any security registered under this title, unless such prospectus meets the requirements of section 10; or "(2) to carry or cause to be carried through the mails or in interstate commerce any such security for the purpose of sale or for delivery after sale, unless accompanied or preceded by a prospectus that meets the requirements of section 10." Section 11 [15 U. S. C., § 77k] permits security holders to sue specified persons who, in some way, make, permit or use an untrue statement in a registration statement, etc. "Sec. 12. [15 U. S. C., § 771]. Any person who "(1) sells a security in violation of section 5, or "(2) sells a security (whether or not exempted by the provisions of section 3, other than paragraph (2) of subsection (a) thereof), |