Source: https://supreme.justia.com/cases/federal/us/149/164/
Timestamp: 2019-04-25 10:03:05+00:00

Document:
Property within a state which is in the possession of a receiver by virtue of his appointment as such by a circuit court of the United States is not subject to seizure and levy under process issuing from a court of the state to enforce the collection of a tax assessed upon its owner under the laws of the state.
The exclusive remedy of the state tax collector in such case is in the circuit court which appointed the receiver, where the question of the validity of the tax may be heard and determined and where the priority of payment of such amount as may be found to be due which is granted by the laws of the state will be recognized and enforced.
The writ of habeas corpus is not to be used to perform the office of a writ of error, or of an appeal.
When no writ of error or appeal will lie, if a petitioner for a writ of habeas corpus be imprisoned under a judgment of a circuit court which had no jurisdiction of the person or of the subject matter or authority to render the judgment complained of, then relief may be accorded by writ of habeas corpus.
court that the testimony should be taken in due course in time for final hearing at the November term, 1893.
"Ordered, that an order do forthwith issue and be served upon said MacMitchell and M. V. Tyler requiring, them to show cause before me on the 20th day of February, 1893 at 10 o'clock A.M. at the United States courthouse, Charleston, South Carolina, why they should not be attached and punished as prayed for."
"2. That the said MacMitchell and M. V. Tyler do likewise show cause before me at the same time and place why they should not be enjoined and restrained from interfering with any or all of the property of the said South Carolina Railway Company or other property in the possession and control of the said D. H. Chamberlain as receiver and officer of this court, or from interfering in any manner whatsoever with the officers and agents of the said receiver, and also from levying upon, advertising, or selling or in any manner whatsoever attempting to dispose of the said property."
"3. That the said MacMitchell and M. V. Tyler do likewise, in due course, file an answer, if any, why such further relief as may be necessary should not be granted in the premises."
"4. In the meantime, it is ordered that the said MacMitchell and M. V. Tyler be, and they are hereby, restrained and enjoined from levying upon, seizing, advertising, or selling or in any manner whatsoever endeavoring to interfere with or to dispose of the said property in the possession of the said D. H. Chamberlain as receiver of this Court until the hearing of the rule and the order of this Court thereon."
"5. That a copy of the petition and order herein be forthwith served upon the said MacMitchell and M. V. Tyler."
On February 8, a supplemental petition was filed by the receiver reciting the filing of the original petition, the order thereon, and the service of copies of said petition and order, and stating that the sheriff refused to comply with a written demand, on February 7, for the release of the property from his custody.
stating the facts in detail, whereupon the order of February 6th was so modified as to require the respondents to show cause on February 11, 1893, instead of February 20.
The respondents answered the petitions on February 12, denying any unlawfulness in the assessment and admitting that the property was in the possession of the court, but denied that such possession exempted the same from process of law for the collection of taxes by the state. They admitted the levy upon the cars, but denied any knowledge or information sufficient to form a belief that any of them belonged to corporations other than the South Carolina Railway, and denied that the levy seriously interfered with the receiver or the public in doing business over said road. They further denied that the facts stated in the original and supplemental petitions, if true, were sufficient to constitute a contempt of court, and insisted upon various matters, afterwards again set forth in the application for habeas corpus.
"and as such engaged in the performance of their duties in issuing the said execution, in making the said levies, and in retaining possession of the property so levied upon, under the valid, constitutional laws of the said state, and that if said petitioners have any controversy with anyone in regard thereto, it is a controversy with the State of South Carolina, which is no way a party to these proceedings, and that there can be no controversy with the respondents in this regard unless they were acting without the commission and warrant of the State of South Carolina, and were trespassers, which they deny,"
"any intention to treat this court or its orders with disrespect, and state that they have been actuated alone with a desire to discharge their official duties as officers of the State of South Carolina."
This return was accompanied by a large number of affidavits tending to show the legality of the tax complained of.
"This cause came on to be heard on petition, rules to show cause, return thereto, and affidavits, and on hearing the same, and upon due consideration thereof, it is"
"Ordered, adjudged, and decreed that an injunction do issue to M. V. Tyler, Sheriff of Aiken County, his deputies and agents, enjoining and restraining them from further intermeddling, interfering with, keeping, and holding the personal property distrained upon by him, belonging to the petitioner, as receiver of the South Carolina Railway Company, or in his care and custody as receiver and common carrier, and that this injunction remain of force until the further order of this Court."
"It is further ordered that the said property be restored to the custody of the receiver of this Court, and that the marshal put him in possession thereof."
"M. V. Tyler, Sheriff of Aiken County, having been served with two rules to show cause why he be not attached for contempt for the matters set forth in copy of petition to each rule attached, and sufficient cause not having been shown, and it further appearing that he, notwithstanding, continues to hold and detain said property, we adopt the precedent set in In re Chiles, 22 Wall. 157, by the Supreme Court of the United States."
"It is ordered, adjudged, and decreed that he is in contempt of this Court, and of its orders and process."
dollars, and that the clerk of this court shall enter judgment thereon, and issue execution therefor, and that he also stand committed to the custody of the marshal of this court until he has paid said fine or purged himself of his contempt herein."
the state, and contrary to the Eleventh Amendment of the Constitution of the United States."
"2d. That under the laws of the United States and of the state, the remedy of the owner or taxpayer is ample by proceeding at law, and he can have none in equity, which is denied by the statute of the state, and on general principles of equity practice, and that the exigency which induced the appointment of a receiver does not in any respect change the legal aspect of the case, but makes the order of the court of the United States illegal, void, and without jurisdiction."
"3. That to fine and imprison your petitioner for action as a legal officer under and according to the valid laws of South Carolina is to deny the authority of the state itself by making it impossible for the state to execute its laws by agents, except under penalties which the United States courts cannot impose as an obstruction to the functions of the state itself."
"Wherefore your petitioner insists that he is held in custody against law and contrary to the Constitution of the United States, the supreme law of the land. "
that thereby our appellate jurisdiction was enlarged, we should still decline to consider the whole record for error merely, but only to ascertain whether the judgment was absolutely void.
The property in question was in the custody of the circuit court, in a cause within its jurisdiction, and protected by injunction. The power exercised was the power to protect the property in the custody of the court from invasion, and in order to sustain the receiver's application, the ordinary grounds of equity interposition were not required to be set forth. Whether inadequacy of remedy at law in respect of the disputed taxes, or the requisite jurisdictional amount, or diverse citizenship were shown to exist was not and could not be matter of inquiry. But it may be observed that diverse citizenship is not material in ancillary and dependent proceedings, where jurisdiction exists over the subject of the litigation, Krippendorf v. Hyde, 110 U. S. 276; Morgan's Co. v. Texas Central Railroad, 137 U. S. 171, 137 U. S. 201, that the objection of adequacy of legal remedy, as here presented, goes to the want of equity, and not to want of power, Reynes v. Dumont, 130 U. S. 354, and that an apparent defect of jurisdiction for lack of a matter in controversy of sufficient pecuniary value can be availed of only by appeal or writ of error, In re Sawyer, 124 U. S. 200, 124 U. S. 221. In the latter case, the distinction between an absolute want of power and its defective exercise -- between cases where the subject matter falls within a class over which equity has jurisdiction and those where it does not -- is clearly pointed out, and the authorities cited.
v. Barbour, 104 U. S. 126; Gumbel v. Pitkin, 124 U. S. 131.
"such suit shall be subject to the general equity jurisdiction of the court in which such receiver or manager was appointed so far as the same shall be necessary to the ends of justice."
Neither that nor the second section, which provides that the receiver shall manage the property "according to the valid laws of the state in which such property shall be situated," restricts the power of the circuit courts to preserve property in the custody of the law from external attack.
In this case, instead of issuing an attachment against the petitioner at once for forcibly seizing the rolling stock of this railroad under the circumstances appearing upon the face of the record, the court adopted the course of serving him with a rule to show cause and with an order restraining him, in the meantime, from interference with the property. The petitioner refused to release the property upon request of the receiver, and persisted in his attempt to hold possession thereof by force in disregard of the order of the court.
balances characteristic of republican institutions requires the coordinate departments of government, whether federal or state, to refrain from any infringement of the independence of each other, and the possession of property by the judicial department cannot be arbitrarily encroached upon save in violation of this fundamental principle.
The levy of a tax warrant, like the levy of an ordinary fieri facias, sequestrates the property to answer the exigency of the writ, but property in the possession of the receiver is already in sequestration, already held in equitable execution, and, while the lien for taxes must be recognized and enforced, the orderly administration of justice requires this to be done by and under the sanction of the court. It is the duty of the court to see to it that this is done, and a seizure of the property against its will can only be predicated upon the assumption that the court will fail in the discharge of its duty -- an assumption carrying a contempt upon its face.
The acceptance of the rule had been general, and but few decisions were cited on the argument in illustration of its application.
"whether, after a decree has been passed by a court of equity for the sale of real estate, and trustees have been appointed to make such sale, a collector of taxes has the power to seize and sell the same, or any part thereof, for taxes due."
of its jurisdiction, and transfer the question of title to another tribunal. His plain and obvious duty was to apply to the court for the payment of the taxes due, and as they had full power, the presumption is that they would have directed their payment through their agents, the trustees, in a manner that would have occasioned no unnecessary delay, while at the same time the rights of all interested would have been properly protected."
"The amount of the taxes was undisputed and the receiver had in his hands funds sufficient to pay them, and we think the order should have been made. It may be conceded that the state did not have an express lien upon the assets that went into the hands of the receiver, but it had a right paramount to other creditors to be paid out of those assets -- a right which it could have enforced through its revenue officers by the summary process of distress but for the fact that the property and assets of its debtor had passed into the custody of its courts, whose duty it was, in the administration and distribution of those assets, to respect that paramount right, upon the untrammeled exercise of which depends the power to protect the very fund being distributed, and to maintain the existence of the tribunal engaged in distributing it, and to make no order for the distribution of assets in custodia legis except in subordination to that right. The ordinary revenue officers of the state being deprived of the ordinary means of securing the state's revenue from the fund in the custody of the court, the duty devolved upon the court to be satisfied, and upon the receiver to see, that the taxes due the state were paid before the estate was distributed to other creditors, and we can conceive of no scheme of administration that the court could properly adopt by which the state's demand could be reduced to the level of an ordinary debt and be cut off unless presented to the court for allowance within a given time."
And see Central Trust Co. v. N.Y. & Northern Railroad, 110 N.Y. 250.
"The levy of the tax gave to the intervener a judgment and lien on the property assessed, having the force and effect of an execution, which might be enforced in the same manner as other executions. This lien was not divested by the subsequent proceedings taken by Brumagim and others, but the fund, being in the custody of the law, was not liable to seizure, and the proper remedy was by direct application to the court having the fund in possession."
We do not understand any other or different rule to have obtained in the courts of South Carolina. Indeed, in Hand v. Savannah & Charleston Railroad, 17 S.C. 219, the court, without objection, passed upon a claim for taxes by the state against the property of the railroad company in the hands of the court, and held that it could not be maintained.
If such be the ordinary rule in the state courts, it is quite apparent that it is the only one that can be properly applied where property is in the custody of the courts of the United States. Their officers are the agents of the United States, and, without an order of the court appointing them, they are in duty bound to hold the property, and refer those who would interfere with it to the court.
right of the state should be preserved so far as it should be brought judicially to the notice of the court.
In Western Union Tel. Co. v. Atl. & Pac. Tel. Co., 7 Bissell 367, Judge Drummond decided that proceedings in the state court on the part of one of the parties to condemn a right of way of the other, in the exercise of the power of eminent domain, was invalid because the property was in the possession of the circuit court of the United States through receivers, "and, that being so, no action could take place in the state court affecting it without the consent first obtained of this court."
"The forbearance which courts of coordinate jurisdiction, administered under a single system, exercise towards each other, whereby conflicts are avoided, by avoiding interference with the process of each other, is a principle of comity, with perhaps no higher sanction than the utility which comes from concord; but between state courts and those of the United States, it is something more. It is a principle of right and of law, and therefore of necessity. It leaves nothing to discretion or mere convenience. These courts do not belong to the same system so far as their jurisdiction is concurrent, and although they coexist in the same space, they are independent, and have no common superior. They exercise jurisdiction, it is true, within the same territory, but not in the same plane, and when one takes into its jurisdiction a specific thing, that res is as much withdrawn from the judicial power of the other as if it had been carried physically into a different territorial sovereignty. To attempt to seize it by a foreign process is futile and void."
This principle is applicable here, for whether the sheriff were armed with a writ from a state court or with a distress warrant from a county treasurer, this property was as much withdrawn from his reach as if it were beyond the territorial limits of the state.
principles are to be respected in governmental administration does not involve interruption in the payment of taxes or the displacement or impairment of the lien therefor, but on the contrary it makes it the imperative duty of the court to recognize as paramount, and enforce with promptness and vigor, the just claims of the authorities for the prescribed contributions to state and municipal revenue. And when controversy arises as to the legality of the tax claimed, there ought to be no serious difficulty in adjusting such controversy upon proper suggestion. The usual course pursued in such cases is by intervention pro interesse suo, as in the instance of sequestration. 2 Dan.Ch.Pl. & Pr. 4th ed. 1057, 1744; Savannah v. Jesup, 106 U. S. 563, 106 U. S. 564. The tax collector is a ministerial officer, Erskine v. Hohnback, 14 Wall. 613; Stutsman Co. v. Wallace, 142 U. S. 293, and no reason is perceived why he should not bring his claim to the attention of the court, while, on the other hand, it is clearly the duty of the receiver to do so if he contends that the taxes are illegal. If found valid, they must be paid; if invalid, the court will so declare, subject to the review of the appellate tribunals.
The courts of the United States have always recognized the importance of leaving the powers of the state in respect to taxation unimpaired. Where the questions involved arise under the state constitution and laws, the decisions of its highest tribunal are accepted as controlling. Where the Constitution and laws of the United States are drawn in question, the courts of the United States must determine the controversy for themselves.
application for the protection of the property. So far as the order before us is concerned, we are not called upon to review the grounds upon which the assertion of illegality is rested. It has been repeatedly and uniformly held by this Court that, in a proper case for equity interposition, an injunction will lie to restrain the seizure of property in the collection of taxes imposed in contravention of the Constitution of the United States. Osborn v. Bank, 9 Wheat. 738; Dodge v. Woolsey, 18 How. 331; Allen v. Baltimore & Ohio Railroad, 114 U. S. 311; In re Ayers, 123 U. S. 443; Shelton v. Platt, 139 U. S. 591. Whether or not the particular case is one calling for that measure of relief it is for the circuit court to determine in the first instance, and its action cannot be treated as a nullity.
"The power to tax is the most extensive and unlimited of all the powers which a legislative body can exert. It is without restraint except by constitutional limitations. To tie up the hand that can alone resist its unlawful encroachments would not only render uncertain the tenure by which the citizen holds his property, but would make it tributary to the unrestrained demands of the legislature."
South Carolina for taxes, and the writ was refused. Mr. Justice McIver concurred on the ground that the constitutionality of the prohibitory act had been settled in the case of State v. County Treasurer, just cited.
In Chamblee v. Tribble, 23 S.C. 70, the action was brought to enjoin the county treasurer from collecting certain taxes for railroad purpose. The constitutionality of these provisions was again adjudged, Mr. Justice McIver concurring, as before, solely on the ground of stare decisis, while Mr. Justice McGowan dissented.
In Bank v. Cromer, 35 S.C. 213, the court granted a mandamus to correct an assessment, and held that the statute did not prohibit the courts from exercising proper control over officers charged with the listing and assessment of property for the purpose of taxation when proceeding contrary to law.
This was followed by the passage of the Act of December 24, 1892, providing that the assessment of property for taxation should be deemed and held to be a step in the collection of taxes, and inhibiting interference by mandamus, summary process, or any other proceeding, with official action in respect of assessments.
Manifestly the object of this legislation was to confine the remedy of the taxpayer for illegal assessments and taxation to the payment of taxes under protest, and bringing suit against the county treasurer for recovery back, but all this is nothing to the purpose. The legislature of a state cannot determine the jurisdiction of the courts of the United States, and the action of such courts in according a remedy denied to the courts of a state does not involve a question of power.
The reasonableness of the contention that it would have been wiser, in this instance, for the circuit court to have directed the receiver to pay these taxes and bring suits at law, in nine different courts, against the county treasurers of as many counties, to recover them back, need not be passed upon.
The jurisdiction exercised by the circuit court had relation to the property in its custody, and the proceeding before us relates only to its exercise of power in the protection of that property from unauthorized seizure.
The stress of the argument, however, on behalf of the petitioner is placed upon the proposition that this proceeding is void because it is in fact a suit against a state, and forbidden by the eleventh amendment. But this begs the question under consideration. The petitioner was either in contempt or he was not. This property was in the custody of the circuit court under possession taken in a cause confessedly within its jurisdiction, and if such possession could not be lawfully interfered with, the petitioner was in contempt, and, apart from the question of the validity of such legislation, we know of no statute of South Carolina that attempts to empower its officers to seize property in the possession of the judicial department of the state -- much less in that of the United States.
The object of this petition was, we repeat, to protect the property; but even if it were regarded as a plenary bill in equity properly brought for the purpose of testing the legality of the tax, we ought to add that, in our judgment, it would not be obnoxious to the objection of being a suit against the state. It is unnecessary to retravel the ground so often traversed by this Court in exposition and application of the Eleventh Amendment. The subject was but recently considered in Pennoyer v. McConnaughy, 140 U. S. 1, in which Mr. Justice Lamar, delivering the opinion of the Court, cites and reviews a large number of cases. The result was correctly stated to be that where a suit is brought against defendants who claim to act as officers of a state, and, under color of an unconstitutional statute, commit acts of wrong and injury to the property of the plaintiff to recover money or property in their hands unlawfully taken by them in behalf of the state or for compensation for damages, or, in a proper case, for an injunction to prevent such wrong and injury or for a mandamus in a like case to enforce the performance of a plain legal duty, purely ministerial, such suit is not, within the meaning of the amendment, an action against the state.
jurisdiction depends on the party, it is the party named in the record," and that "the Eleventh Amendment is limited to those suits in which a state is a party to the record," had been qualified to a certain degree in some of the subsequent decisions of this Court, yet it was also rightly declared that the general doctrine there announced -- that the circuit courts of the United States will restrain a state officer from executing an unconstitutional statute of the state when to execute it would be to violate rights and privileges of the complainant that had been guarantied by the Constitution and would do irreparable damage and injury to him -- has never been departed from.
The views expressed in United States v. Lee, 106 U. S. 196; New Hampshire v. Louisiana, 108 U. S. 76; In re Ayers, 123 U. S. 443; Hans v. Louisiana, 134 U. S. 1; McGahey v. Virginia, 135 U. S. 662, and numerous other cases, render further discussion unnecessary.
The levies here were excessive, were made in large part on property other than that of the defendants in the warrants, and in such a way and on such property as to obstruct the operation of the railroad. No leave of court was sought, and it was known that the legality of the amount unpaid was disputed by the receiver and that identical taxation had been previously held by the court to be illegal. The sheriff declined, upon request, to release the property from seizure or to yield to the order of the court.
Such conduct was not to be tolerated, and the court was possessed of full power to vindicate its dignity and to compel respect to its mandates. Its action to that end is not subject to review upon this application.
MR. JUSTICE FIELD did not hear the argument, and took no part in the consideration of this and the following cases.

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