The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1910-03-27
Peculiar Situation IN
Corporation Tax Case
by SYDNEY EsPEY

possible for each and every attorney to
present his respective case to the bench.
The explanation given at the depart
ment of justice for the peculiar turn that
affairs took was almost as complicated
as the situation which presented itself be-
fore the supreme court, although it's jul
dicial aspect was never criticised or ques-
toned by any member of that bar ia
Eliliar with the course of the corporation
tax litigation.
III silc first place the United States gov
eminent was the party most interested in
the several suits by reason Of the fact
that an acs OF Congress involving the in
depreciation of the constitution was at
tackled Second, that suits could not
be directed against the United States
because il the fact that the law specially
charged that suits could not be brought
against the government agents for the
purpose of delaying the collection of the
taxes, and third, that by this situation
the United States government was
barred from defending these suits in
direct manner, but had to make an at
tempt under the constitution itself to de-
fend any suit brought which attacked or
tended to impair the validity of the con-
stitution in which they were even indi-
rectly interested. Thus in Judicial par
lance, the government was trying to do
in an indirect manner what it could not
do in a direct manner and, of course, in
law. it was necessarily doing an unlawful
act.
1t is not for the purpose of procedure
however, that the United States govern
ment, simply by the introduction of it's
brief in the case in which it is vitality
affected, was trying to do an unlawful act
in attempting to become a party to the
suit. Its stand in this respect was thor
oughly appreciated by the court, and its
right Of appearance respected. 1t could
have neglected officially to appear in the
case, for the reason that arguments pre-
sented by those who defended the ac-
tons in the lower courts were practically
the same AS were advanced by the gov
eminent. The purpose of the govern
ments entrance into the case, however,
was to safeguard the laws made by
Congress and to support the contention
that the imposition of the tax was con-
stitutional.
Aside from the position occupied by the
United States, it was hardly conceivable
ito the lay mind why the stockholders of
IA corporation should sM the corporation
OF which they form an integral part The
answer is that the corporation does not
wish to pay the tax any more than its
stockholders do, yet under the law they
must pay the tax or be subjected to an
immense fine by the government, from
which there is no evasion. To refuse to
pay the fine, the corporation argued,
would have been foolhardy, and if not
paid. which, Of course, they did, they
merited the tremendous kick of the stock
holders, which would have followed.
Consequently the lesser of the two evils
was chosen-pay the fine and enter suit
against the United States in an indirect
manner and test the validity of the
statute.
This was done by the stockholders, who
entered suit against the corporations, re-
straining them from paying the fine. AS
they could not be restrained from paying
it, the suit was necessarily entered in
the federal courts, through the stock
holders attacking the validity of the
congressional act. Hence the final APP
pearance of the case in the United
States supreme court, involving the legal
department of the country, and for once
In the history of the supreme curt, max
ing certain friendly factions in the liti-
cation defendants with the government,
vet prosecutors of themselves.