The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1868-02-14
UNITED STATES SUPREME COURT,

The Government Tax Railroad Bonds-s
Is it an Income Tax .-its Payment by the
Companies Uaoer tue Act Of Juno 80, 1851
Foreign Holders.
Samuel Haiga, Plaintiff in Error, va The Pass5ury,
Ftrt Wayne and Chicago Raiiyoad Comp1ny Error y
the Circuit Court Of tue United states for the WestsrA
district OF Pennsylvania. The plaintiff holds husI
dred OF the dsfcnsauts bonds o 900 each. payable
January l. 1887 With interest coupons attached, u
seven per cent per snnum paysbls half yearly, sad
also mortgage in to ordinary form, to secure The
Same, on lot OF ground in the o'y Of Ptsburg. The
interest coming the plaintiff these bonds 10 taxed
by Congress Of June So 1904 and tho defendant
thereby required pay the tax 10 the government
and deduct that out Of the interest coupSne
when paying them, "except where said combsnieS
may have contracted otherwise The defendant fof
several years paid the required, and retained
the amount from the plaintiff paging the eeuponss
and this suit to the amount thus retained.
The plaintiff insists that the defendant has contracted
to pay these taxes. because in the condition Of dssae
Of the mortgage 1t provided that the mortgage
shall be vod payment ~ the debt and interest,"
"wtbout any deduction be made respect Of
any taxes, Charges asss SIN nis whasoeve.o rns fob
case ana the question OF law involved 0n the 10Th Of
April 1857, Samuel halsht aud vie conveyed 10 IhA
Ptsbnrg. Fort Wayua aad Chicago Railroad Company
tot OF ground In the cry o. pi-isburg for sos 900;
S. 900 paid IN hand, aud for The residue Of tho
purchase BIZ. received
Of $1,000 each, With Coupons attached, bearing seysA
per cent, payable sein.aauualy. Tless bonds
cured by mortgage on The pom ccntaining In the
clause oil deieasancs the a stipulation, without
any fraud or furer dear and without any deduction,
dea cation OF sbi,epsnt DO maize thlng for Of
in respect to any taxes Charges whatsa-
over" BY tho Internal Ike. enne law the upon
t.esc bonds is subject 10 Of i've per cent Tho
bonds have nearly twenty years yet run, and The
mortgage upon the sLo rec ed clause or which IL 70
claimed The defends ats incurred tho liability
TO pay this tax, could DOT be sued for FORE,
a A da q lar lA atuFtv 0S
the bonds As the mortgage security for the
payment Of the bonds hsr sccruins interest," thsr
satisfaction would be LIS discharge We must then
xecur TO the coupons upon winch properly this suit ~
instituted What are they bat in.oneY Tho annual
profit upon the money Is safely Invested Thers u no
special contract 10 pay upon The IN
teaest. The measure OF tns i.iend~as' liability h 81.
They have nothing 10 do with the which the gov.
eminent may inpuse upon the palnn for tina interest,"
enlarge tie duty which the mortgage ~as given W
sscursthal IL, tho pa ment OF deDt and interest 10
TO be found IN ail mortsageA and sue doctrine con-
tended for by the plaintiff DO correct the standard By
which tho imposiiJn of taxes should DO regulatch
wou he in prop1rtion 10 mans poverty aud not hip
wealth, for the mortgage would DO boand 10 pay neb
only bis own axes out tbUs0 Of tue mortgaece. was
admitted at the that plaintiff. citizen Of
New York, paid internal revenue save on these
bonds at place Of rss,asn Il therefore Is no
Case OF double taxation. II should be pad somewhere
aud meet pvestmeuts IKE this in banks rail-
roads, insurance and other Companies thk tue liza
section of tho act OF 1864 passed. Congress
enforced y as : duty upon all such corporalio.s
on account OF any interest or coupons aud divf.
donds due and payable tho YAK Of i've or cent; apd
The SAID from thai tho inssre Or
coupons unless where SAID companies contracted
zens OF United States resident both al home sna
abroad, sometimes forget the institution Ia which thelf
shs asi.ndan,s and inseod Of 81 200 iud sn.ut IL on
deed for piAntiH $40 admitted 10 be due with inter-
sst from the la Of July isd7 Judgment accordingly
The psintin appealed ursiug that careful exanina-
ton Of The l22d section vi tho act OF S0h Of june
1850. shows that Tho ias imposei In IL s intended -
laid On the thing, and not tue pefs income ltG
language Includes forsisnrs, whether residing Ia the
Un.tsd states or not; therefore u tax the thiag
aud person or the nco ne a. income for Co.'S
gfsss never taxes The forcignerS tno income
or foreigner, ie-doat abroad, unless by taxing tho
thing or proieft hs owns toe uu.sd states. u "
lax ON the person income & Ii unequal, A. belwesn
czen and foeignsr who resides aor nd Tor tne otzen
eau, In hn return or income, u above $500 take D.
get no credit, as bs income not taxed. II Il a.
tax on income tas suchD is unequal IA TIE mos! oden-
sve cases vz.No citizoD whone income exceads $780,
the amount tax wi hhed BY tic railroad
paoy can take a credit Ia biz return OF incoms thers-
FOR; but "A whoss income does rot exceed 5000
viii have 10 pay the tax aud got no credit Tue
fam liar rule " construction ieI Tres that this tax be-
considered Tax on the tning aud not on the In.
come for thus only can all tue provisions OF tho aoa
stand the contrary construction wou rcpea tho prin-
a. a oenne sx ep 10 excess Of 1900 Tue PROVISION
except where the company may nave contracted cher
wise" shows that II was not intended rs tax on in
come Tor railroad would Coaract H. pay hs Income
tax Of any person. TINS ABOVE remarks are applicable
TO the OF 1895 $685. but 10 tue ACT Of july 1891.
tho words except where the said company may hsyS
contracted otherwie," mrs omitted. II may also DO
remarked that the acts oi l3th July, 1861 c,iou o.
and March 1867, section l22 clare thai this duy
OF i've per cent SHAFT DO withheld from all psrsous tn.
Guiding non.residspts, e,hcr citizens or aliens.w
Tlis throws additional light on tho Intention OF Con-
grsss, aud confirms the Interpretation that II nca
income income that was taxsi, but toe thing, VIA,
the interest coupon or dividend. No argument 10
fairly deducbIo that tins II Oh income from the
fact that the person VINO has income above 5000 mar
deduci this tax from his income tar. All that can bs
justly remarked that Congress did not intend 10
double tax. Therefore these taxes are not taxes on
the income but on the thing; and do eudant cannos
deduct them from the iatsrsss due Tor " has 'psA.
tracted oshsrwtseL"