- 95 -
All judgments as to investments, the purchase and
sale of securities, and substantially all other major
policy decisions were made by officers in the home
office of the trusts situated outside of the United
States; orders for purchase and sale of securities were
executed by * * * [the trusts] directly through
resident banks in the United States; * * * the American
office’s activities were * * * confined to routine and
clerical functions performed by the banks prior to
1936. * * * [Id. at 55-56; fn. ref. omitted.]
The trusts' office, located in Jersey City, New Jersey,
performed the following activities: Collected, verified,
deposited, and remitted to the trusts dividend and interest
payments; exercised voting rights; maintained records for the
trusts; obtained and forwarded investment information to the
trusts; prepared tax returns; leased an office; and paid
expenses. Id. at 56-57.
The Court held that the Scottish trusts were not "engaged in
trade or business within the United States" within the meaning of
former section 231(b), as amended. The Court reasoned that
the real business of * * * [the trusts], the doing of
what they were principally organized to do in order to
realize profit, was the cooperative management in
Scotland of British capital, a large part of which was
invested by them in American securities through
transactions effected through resident brokers. To
this business of * * * [the trusts], the business
activities of the American office were merely helpfully
adjunct. No consequential transactions were effected
through or by the direction of the Jersey City office.
It functioned primarily as a clerical department
performing a number of useful routine and incidental
services for * * * [the trusts]. But it can not be
said here that the local office, even though we look at
its activities as a whole, was doing what was
principally required to be done by * * * [the trusts]
Page: Previous 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 NextLast modified: May 25, 2011