Case ID: minor_1/html/0143-01.html
Source: Caselaw Access Project
Author: {"author": "Judge Minor\n    ", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

William Crawford against The State.
    
      December, 1823.
    The act of 1820 to raise a revenue for 1821, does not authorize judgment vs. the president of the Tombeckbe bank, the taxes of 1820.
    THIS was a writ of Error to the Circuit Court of Wash-■inglon, on a judgment on motion at April term, 1822, in fa-vour of the State against William Crawford, President of the Tombeckbce Bank, for “ one thousand dollars, being the “ amount of the penalty incurred for failing to pay into the “ treasury the taxes accruing from said Bank for the year “ 1820.” The transcript of the Record sets out that Wil-Ham Crawford, Esq. President of th'e Tombeckbee Bank, on the 7th day of May, 1820, acknowledged the “ legal service of a notice inform following,” to wit:
    “ Comptroller’s office, Cahawba.
    
    
      “ To William Crawford, Esq. President of the Tombeck-bee Bank.
    
      “ You are hereby notified, that on the first Monday after “ the fourth Monday in April next, I shall, by the solicitor “ of the first Judicial Circuit, move for judgment against yon “in the Circuit Court of Washington County, for the sum “ of one thousand dollars, which you have incurred, by fail- “ ing to pay into the treasury the taxes accruing to the “ State aforesaid from said Bank for the year 1820, January “ 28th, 1822.
    “ SAMUEL PICKENS, Comptroller.”
    The defendant to the motion here assigned as Errors — ‘ 1st, It does not appear that the defendant had notice of the motion as required by law. 2d, The Circuit Court erred in rendering judgment against the defendant individually for the fault of the President, Directors and Company of the Tombeckbee Bank. 3d, The law imposing a tax on the Bank is in violation of its charter, which is a contract, and the law is unconstitutional. 4th, The Record does not shew that a certificate from the comptroller was produced shewing that the tax had not been paid.
    
      Crawford for plaintiff in Error.
    By the Statute, and' from the first principles of jurisprudence, the defendant was '"entitled to notice, in order that he might be heard before being sentenced to pay a penalty. In the Record it is stated, that on the 7th day of May, 1820, he acknowledged service of a notice in the following form, and then follows the form. If this be taken as the notice, it appears not to have issued from the Comptroller’s office before the 28th day of January, 1822, nearly two years after the time of the acknowledgment of its legal service as stated in the Record. But leaving out of view the time when the service of notice was acknowledged, the notice, or form of notice, as set out in the Reeord, charges the defendant with no default or offence for which he was by law liable to a penalty of one thousand dollars, or to any penalty. The notice charges that the defendant, the Px-esident of the Bank, failed to pay the taxes, and thereby incurred the penalty. The tax is laid on each share of Bank stock, not on the President. It is to be paid out of the joint funds, not out of his private funds : the Directory control the joint funds. He cannot dispose of a dollar of them without their order. How then can he Be charged with a penalty for failing to perform what he had no power, what was impossible for him to perform ? (Acts of 1820, p. 10.)
    All the pre-requisites required by the Statute for the exercise of jurisdiction in this summary mode should appear in the Record. (Logwood and alii against Huntsville Bank, decided by this Court at November, 1820.) The Act of 1820 requires notice of the motion to be given to the dc-
      faulting Bank, to the Corporation, not to the President, Does the Record shew such notice, or any notice ? The Clerk certifies that on the 7th day. of May, 1820, (more than seven months before the enactment of the Act referred to,) the President acknowledged “ legal service of a notice in form following,” and he sets out a notice to the President, dated the 28th day of January, 1822, nearly two years after this acknowledgment of service. The defendant in the Court below did not appear. Judgment, was rendered against him when he was not a party in the Court.
    In a proceeding of this nature, jurisdiction must be expressly given by Statute to the tribunal by which, and according to the mode in which, it is exercised. (Logwood and alii against Huntsville Bank, case of the Collector of Charleston, Wheaton’s Rep. McIntyre against Wood. Ib.) What Statute vested the Circuit of Washington County With this jurisdiction ? None can be found. The Revenue Act, passed December 20th, 1820, directs that motion shall be made in the Circuit Court, for the penalty of two thousand dollars, imposed'" for failing to pay the taxes therein named. tChis Act is to raise a revenue for the year 1821. It lays the taxes for that year, not for the past year. ’ It directs, that on making out the last dividend for each preceding year, the amount of taxes due from the Bank shall be returned ; and that it shall be paid, and the Treasurer’s receipt produced, on or before the first day of January in every year. This Act received the Governor’s signature on the 20th day of December, 1820. It could not have been promulgated until after the first day of January, 1821. It cannot have been the intention of the Legislature, that the Directors of the Bank at St. Stephens should, within eleven days after the Act had been approved at Cahawba, and before it had been published, make out their Iasi dividend for the year with a view to this tax, malte, return of its amount, pay it into the treasury, and produce the Treasurer’s receipt; and that for their failure to perform this, the President of the Bank should individually be adjudged to pay a heavy penalty.
    By the Act to raise a revenue for the year 1820, (Acts 1819, page 90.) a tax is laid on the Bank. But the penalty for failing to pay- is directed to be recovered on motion in the Supreme Court, not in the Circuit Courts. There is no Statute giving jurisdiction of a motion for the recovery of the penalty imposed by the Act of 1819 to any other than the Supreme Court.
    But can the Legislature rightfully tax this Bank Stock? The Tombeckbee Bank is a private Corporation. Its charter, granted by the Legislature in 1818, is a contract between the Government and the Stockholders. The grantor, with-GU(- (jle consent of the grantees, cannot revoke or restrain the privileges granted. The Legislature cannot impair thd obligation of the contract. (Bill of Bights, section 19, Logwood, &c. against Huntsville Bank, 4 Wheaton, 316, &c. McCulloch against State of Maryland.) The charter' does not require that for the exercise of its privileges the Bank shall annually pay a certain amount of taxes into the treasury. If new conditions and burthens can now be imposed, the grantees hold the charter only at the mercy of the grantor : for the Bank .stock may be so heavily faxed as to prevent the exercise of the privileges granted by the charter.
    By the Act of 1820, the certificate of the Comptroller’is declared to be the evidence of the failure to pay the tax. The Circuit Court must know this-fact, before it could rightfully adjudge that by reason of it, • the plaintiff in Error should pay a penalty of one . thousand dollars. It eould judicially be shewn. only from the Comptroller’s certificate. The Record does not shew that this was produced. Is it now to be presumed to be intended that it was ? This Court, in the case of Logwood, «fee. against the Huntsville Bank, decided, that a party claiming the benefit of a summary proceeding under a Statute, must come strictly within-its terms, and shall take nothing by intendment.
    
      Hitc&cock for the State.
    The case, as it has been ar-gtied-for the plaintiff in Error, involves the enquiry into the right to tax the stock of the Bank.
    That the right to lay taxes is inherent in the government seems* to be self-evident. The functions, the very existence ..of -the Government, depend on its'revenue. The Government may legitimately exercise the right of taxation as-to all objects to which it is applicable, and to which it has not expressly abandoned the right. It lias not expressly abandoned it as to the’ stock of the Tombeckbee Bank, either by the charter or by any other Legislative Act. (4 Wheaton, 428.) In ambiguous cases under the Revenue Acts,'good policy and the public interest require a construction in fa-vour of the taxes. (Jacob’s L. Diet. — Taxes.) All proper- , ty and all persons within the limits of the State are protect- ¡ ed by the Government, and- liable to contribute by taxes to its support. Corporations are’ included under the general description of persons, and, like natural persons, are so lia.‘ble.’ (1 Burr. 156. 15 John. 382. 7Mass. 239. 10 Mass. 516.) . The rights of natural persons to the benefit of their labour and ingenuity, to acquire and enjoy property, are, from the nature of the social compact, not less sacred and inviolable than the rights conferred on the Stockholders of the Tombeckbee Bank by the charter. Yet property may be taxed, and taxed to an extent which might render it unpro-Stable to the owner; and so may the Bank stock be taxed. The security against the abuse of the power in either case, is in the structure of the Government. The Legislature acts upon its constituents. Its members are elected for short terms of service : their enactments can be repealed or modified by their successors.
    The Legislature could not rightfully dissolve the Corporation. They could not by law prohibit the Bank from discounting Bills and Notes, issuing its Bank Notes, or doing of any other act expressly authorized by the charter. But until a clause in the charter is shewn by which the Government agrees riot'to tax the Bank stock, it must be evident that it is as subject to taxation as any other property in the .State.
    How is the right to lay and collect a tax to be enforced ? Corporations, as well as natural persons, may be subjected to .a double tax, or to other penalties, for failing to give lists-! of their taxable property, or to pay the taxes due thereon.! Tins is a necessary consequence of the right of laying the tax, and of the duty on the party taxed, to (2 Ray’s Rep. 249. 10 Mass. 516.) But a Bank, likpumer ^Corporations, is an artificial incorporeal being. ít£$EPPfi)» ty is not always visible. The penalty, to be effecra be enforced on its officers who control its operation^ duty it was to return and pay the amount of the default is theirs, and they are rightfully subjected to the penalty. V —
    Has it ever been questioned but that an agent, in possession, of the property of another, and failing to'_ a statement of it to the assessing officer as required by law, may rightfully be subjected to the penalty for such omission?
    By the tax laws of the State of Mew-York, the officers of such Corporations are required to pay the taxes, and their private property is liable if they fail to do so. Indeed, it seems strictly to accord with natural justice to inflict the penalty on the defaulting officers. They, and not the ideal being for whom they act, have the means of knowing and of doing what the Statute has required.
    ■ As to the form of the proceedings in this case- — It cannot be pretended that the Supreme Court, vested with appellate jurisdiction only, could take jurisdiction of this,. an original motion. But the Circuit Court is vested with general jurisdiction; and -if, as I think I have shewn, the officers of the Bank were legally subjected to the penalty, a technical defect' in the Act of 1819 shall not deprive tho State of its revenue. If jurisdiction for recovery of the had not been given by the Act to any particular-Court, it would have appertained to the Circuit Courts as Courts of general jurisdiction : and so it does, although the Legislature, by an unconstitutional and nugatory clause in the Statute, have said that the jurisdiction shall belong to the Supreme Court.
    As to the time when the Act passed — The dividend might have been declared and the taxes paid between the 20th day of December, 1820, and the first day of January, 1821. But the Comptroller, until 1822, did not institute the proceeding for the recovery of the penalty. If the President and Directors intended to pay the tax as required, it was surely in their power, when inaking out their last dividend in 1821, to have returned a statement of the amount of taxes for 1820, and to have paid the amount into the trea«. sury before the first day of January, 1822.
    As to the Notice — Jf the Record states that which is true, the defendant in the Circuit Court, by his acknowledgment of legal service of Notice, admitted every thing which the Notice was intended to effect. If he thought proper to waive the production of the Notice, and to declare that he was ready to hear and defend the complaint against him, or to waive any attempt at defence, will the appellate Court now say that these matters, deliberately admitted by the defendant in the Court below to be sufficient, must yet appear On the Record; and that he may now retract his admissions and call on this Court to determine whether they are sufficient or not ?
    As to the Comptroller’s certificate, it is enough to say, that the Statute makes it evidence of the default of the Bank; and it is not necessary that this, or any other evidence given on the trial should be spread upon the Recqrd.
    
      Crawford in reply:
    The rightlto tax the stock is here rather an abstract question, than one on which the decision of the case must turn. If necessary, it can be satisfactorily shewn, that each of the Acts as to the fax on the Bank stock is felo de se. Is the law as to the penalty on the President constitutional ? Have its provisions been pursued 1 These questions, and a comparison of the Record with the Statutes, once’ ^ conceive, determine the case.
    The case put by Mr. Hitchcock of the liability of the agent, sustains rather than weakens my position. The agent 
      has the possession and' control of the property taxed, and from it or its profits can pay the tax, The President or any other single officer of the Bank cannot “ make out” the dividend, or apply the money of the Corporation to the payment of the tax. Probably the right construction of these Statutes is, that all the officers of the Bank, of whom these duties are required, and not one of them separately, shall be liable for the penalty. But here the penalty has been adjudged against ope for not doing that which he never had the power'to do.
    As to the liability of the officers of such Corporations by the Statute of New-Yorlc, I ask, is that Statute in force here 1
    
    Mr. Hitchcock contends, that as this Court, in which by the Act of 1819, the motion is required to be made, is by the Constitution prohibitéd from original jurisdiction of it; the motion is therefore to be made in the Circuit Court, that being a Court of general original jurisdiction.
    But the proceeding was summary, not according to the course of the common law. The authority for the exercise of such jurisdiction is derived solely from the Statute. How then can any other Court than that to which alone the Statute has given the jurisdiction,-take upon itself to exercise it ? Is there any Statute which authorizes the Circuit Court on motion to render judgment for the penalty of one thousand dollars, imposed for failing to pay the tax for the year 1820 ? This Coürt must depart from the principles which have uniformly governed its decisions, and the decisions of every other Court acting under a like system of jurisprudence, before it can determine that a Statute, giving jurisdiction of such motion to one tribunal only, by necessary intendment gives it to another; or that a party claiming the benefit of such statutory remedy, shall have it, without regard to the express terms and restrictions under which it has been authorized.
   Judge Minor

delivered the opinion of the Court;

On the motion of the solicitor of the first circuit, the Circuit Court of Washington County adjudged, that the State recover against William Crawford, President of the Tom-beckbee Bank, the sum of one thousand dollars, the amount of the penalty incurred for failing to pay into the Treasury the taxes accruing from said Bank for the year 1820. On this judgment he prosecutes this writ of Error.

By the Act of 1819, to raise a revenue for the year 1820, this penalty is directed to be recovered on motion in the fSnpreme Court. The Act of 1820 to raise a revenue for the year 1821, directs that motions for the penalties that may accrue under it against the President and Directors of the jjaui^ shan be made in the Circuit Courts; this latter Act is altogether prospective in its terms. It will not admit of a construction, which will include the case of a penalty for failing to pay the .taxes for the year 1820. The penalty imposed by it for the default is two thousand dollars : the penalty imposed by the Act of 1819 is one thousand. It is contended, that as this Court is restrained by the constitution from taking original jurrisdiction of the motion, which by the Act of 1819 is directed to be made here, that it belongs by necessary intendment to the Circuit Courts, as Courts of original jurisdiction. (See State against Flinn, ante, page 8.) We cannot perceive how it can be doubted that the rules of construction, as to penal Statutes, and as to summary proceedings, apply to this part of the Act of 1819. The judgment in its terms is for a penalty, and it is certainly such in its nature. The judgment was rendered on motion. The principles recognized by this Court in the cases of Log-wood against the Bank of Huntsville, Yancey against Han-kins and Childress against McGehee, apply with at’ least equal force here. The Circuit Court was not authorized by Statute, nor by the principles of the common law, to render judgment on motion against the plaintiff in Error for the; penalty which has been adjudged. It is the opinion of a ma* jority of this Court, that the judgment must be reversed.