Source: https://openjurist.org/232/us/261
Timestamp: 2019-04-23 00:32:02+00:00

Document:
It is necessary to determine whether these two cases from different courts are not virtually one and to be considered in that aspect.
The United States sued for the amount of a tax with interest. The alleged liability under the statute was challenged, and if it existed the statute was alleged to be repugnant to the Constitution of the United States, and right to interest was denied. The court held the statute to be constitutional, and judgment was awarded for the sum claimed, but the prayer for interest was rejected. Error was prosecuted directly from this court by the defendant, and from the circuit court of appeals by the United States; the first because of the constitutional questions, and the second because of the disallowance of interest. The circuit court of appeals certified a question concerning the right to recover interest, and the two cases before us consist of the direct writ of error on the one hand and the certificate on the other. Both writs of error when taken were authorized. Railroad Commission v. Worthington, 225 U. S. 101, 56 L. ed. 1004, 32 Sup. Ct. Rep. 653; Macfadden v. United States, 213 U. S. 288, 53 L. ed. 801, 29 Sup. Ct. Rep. 490. Our jurisdiction, however, on the direct writ of error, is not confined to the constitutional questions, but embraces every issue in the case. Williamson v. United States, 207 U. S. 425, 52 L. ed. 278, 28 Sup. Ct. Rep. 163. The circuit court of appeals, however, has no power to ask instructions upon an issue which it has no right to decide, and we have no authority to instruct on such a subject, or to refuse to decide issues which are properly before us for judgment.
Under these conditions, we think the better practice is as regards the controversy as to interest, which was taken to the circuit court of appeals by writ of error, and in which cases the certificates now before us were drawn, to treat the writ of error from the circuit court of appeals as in substance pending here on a cross writ by the United States; and as without further orders the record is in such a condition as to enable us to decide the whole case, we proceed to do so.
The second paragraph of the provision, which we need not quote, gives the right to the owner of any 'foreign-built yacht, pleasure boat, or vessel above described' to pay a duty of 35 per cent ad valorem, and thus secure an exemption from the tax provided by the first paragraph.
The act went into effect on August 6, 1909, and the collector of the port of New York thereafter made a demand upon C. K. G. Billings, the plaintiff in error, for the payment of $7,644; that is, of the sum produced by calculating $7 per ton on 1,091.71 tons, the tonnage of the foreign-built yacht Vanadis, owned and controlled by him.
The third defense after fully averring that there were within the United States many pleasure yachts not foreign built which were in use, and whose use was identical with that of a foreign-built yacht like the one which the defendant used, charged that the law imposing the burden sought to be enforced was void because repugnant to the due process clause of the 5th Amendment. The case was submitted to the court on bill and answer; and as we at the outset said, there was a judgment holding that the sum claimed was due by the defendant as an excise or duty upon the use of his yacht, and that the act imposing the tax was not repugnant to the Constitution, but that the government was not entitled to recover interest.
To avoid, if it may be, the necessity of determining the constitutional question, we shall first decide what, if any, burden the statute imposes, and then, if necessary, consider its asserted repugnancy to the Constitution. In view of the requirement that direct taxes be apportioned, and assuming, as we do assume, that the act before us was adopted by Congress in the light of the ruling in Pollock v. Farmers' Loan & T. Co. 157 U. S. 429, 39 L. ed. 759, 15 Sup. Ct. Rep. 673, 158 U. S. 601, 39 L. ed. 1108, 15 Sup. Ct. Rep. 912, it is certain that the tax levied by the provision was intended to be an excise tax upon 'the use of every foreign-built yacht, pleasure boat, or vessel . . . now or hereafter owned or chartered for more than six months by any citizen or citizens of the United States.' This is not seriously, if at all, disputed in argument, the controversy turning first upon the period when the tax provided for is to take effect, and the nature and character of the use which is taxed. These subjects are so interwoven that we consider and dispose of them together.
Was the tax due on the 1st day of September, 1909, or was it only due on the same day in September, 1910? In view of the positive direction that the tax shall be levied and collected on the 1st day of September, we can see no escape from the conclusion that the court below was right in holding that it became due on the 1st day of September after the passage of the act. The word 'annually,' upon which so much reliance to the contrary is placed, is manifestly used not for the purpose of postponing the time of payment, but rather as provision for continuity; that is, the word but shows the purpose of fixing the annual duty of levying and collecting the tax on the designated day. This becomes quite apparent when it is observed that if the word 'annually' be removed, there would be room for the implication that the tax was to be but sporadic, and would therefore cease to be collectible after one payment. And it is equally clear that the six months clause is concerned not with the period when the tax imposed shall be levied and collected, but addresses itself to the subject-matter upon which the tax is placed; in other words, it qualifies the word 'charter,' and therefore only indicates when the use of a chartered vessel shall become subject to the duty imposed. The tax being leviable and collectible on the 1st of September in each year after the passage of the act, upon what was it assessed is the question. It seems difficult to answer it in clearer terms than does the text of the act when it provides that it shall be upon the use of the yachts with which the provision is concerned. But it is said to respond in the language of the act leaves the question virtually unanswered, since the extent of the use and its essential period are left wholly undetermined. But this is a misconception based upon a disregard of the fact that the word 'use' in the text is unqualified, from which it results that the recurrence of the tax is annual and depends upon two elements,—ownership or charter rights, as specified in the act, and use for any time during the year. It is to be observed that the provision deals with ownership, and distinguishes between ownership and use, since it bases the tax not upon the former, but upon the latter. From this it follows that it is not ownership, but the election during the taxing period of the owner to take advantage of one of the elements which are involved in ownership, the right to use which is the subject upon which the statute places the excise duty. In this view the fact of use, not its extent or its frequency, becomes the test, as distinguished from mere ownership, for that, in the statutory sense, could exist without use having taken place. The words of the statute under this construction were used in an every-day sense, and not in a technical one: in other words, but convey the distinction without reference to nice analysis of the nature of things which is commonly conceived to exist between ownership and use. Let it be conceded that the ownership of property includes the right to use; plainly we think, as use and ownership are distinguished one from the other in the provision, the word 'use,' as there employed, means more than the mere privilege of using which the owner enjoys, and relates to its primary signification, as defined by Webster: 'The act of employing anything or of applying it to one's service; the state of being so employed or applied.' If the use which arises from the fact of ownership, without more, was what the statute proposed, then it is inconceivable why the difference between use and ownership was marked in the provision and made the basis of the tax which it imposed. While this construction in this case leads to the same conclusion as does that which the court below affixed to the statute, that is, that it taxed the privilege of use, or, in other words, the potentiality of using involved in ownership, inherently there is this fundamental difference between the interpretation we give and that which the lower court adopted, since the privilege of use is purely passive (or subjective),—a right which necessarily pertains to ownership and must exist where there is ownership, as one may not obtain ownership without acquiring the privileges of use which ownership gives. The other, on the contrary, that is, use in the statutory sense, although it arises from ownership, is active (objective); that is, it is the outward and distinct exercise of a right which ownership confers, but which would not necessarily be exerted by the mere fact of ownership. The contention that inequality must be the result from making the tax depend upon mere use without reference to the extent of its duration addresses itself not to the question of power, and is therefore beyond the scope of judicial cognizance. But it is to be observed that it may well have been that the character of the property with which the statute deals and the mere element of caprice as to its use and the uncertainties of the subject led to the fact of making the use alone the criterion as the wiser and juster method of operating equally upon all. Again let it be conceded that the causing the tax for the annual period to become due in September, 1909, is to give it in some respects a retroactive effect, such concession does not cause the act to be beyond the power of Congress under the Constitution to adopt. Flint v. Stone Tracy Co. 220 U. S. 107, 55 L. ed. 389, 31 Sup. Ct. Rep. 342, Ann. Cas. 1912B, 1312, and authorities there cited. While the rule is that statutes should be so construed as to prevent them from operating retroactively, that principle is one of construction, and not of reconstruction, and therefore does not authorize a judicial re-enactment by interpretation of a statute to save it from producing a retroactive effect.
As under the meaning which we thus give the statute the admitted use of the vessel was within its provision, and therefore the amount due for excise was rightfully imposed, and under our interpretation was due when demanded, we must consider whether the asserted repugnancy of the statute to the Constitution is well founded.
It has been conclusively determined that the requirement of uniformity which the Constitution imposes upon Congress in the levy of excise taxes is not an intrinsic uniformity, but merely a geographical one. Flint v. Stone Tracy Co. supra; McCray v. United States, 195 U. S. 27, 49 L. ed. 78, 24 Sup. Ct. Rep. 769, 1 Ann. Cas. 561; Knowlton v. Moore, 178 U. S. 41, 44 L. ed. 969, 20 Sup. Ct. Rep. 747. It is also settled beyond dispute that the Constitution is not self-destructive. In other words, that the powers which it confers on the one hand it does not immediately take away on the other; that is to say, that the authority to tax which is given in express terms is not limited or restricted by the subsequent provisions of the Constitution or the Amendments thereto, especially by the due process clause of the 5th Amendment. McCray v. United States, 195 U. S. 27, 49 L. ed. 78, 24 Sup. Ct. Rep. 769, 1 Ann. Cas. 561, and authorities there cited. Nor is there anything in Carroll v. Greenwich Ins. Co. 199 U. S. 401, 50 L. ed. 246, 26 Sup. Ct. Rep. 66, or Twining v. New Jersey, 211 U. S. 78, 53 L. ed. 97, 29 Sup. Ct. Rep. 14, which in the remotest degree nullifies or restricts the principle thus stated. Indeed it is apparent, if the suggestion as to the meaning of those cases were assented to, it would result in rendering the Constitution unconstitutional. This certainly was the view entertained by the pleader when the answer in the case was prepared, since the sole attack on the constitutionality of the statute was based upon the assertion that it was repugnant to the due process clause of the 5th Amendment. And such also is the line of the argument at bar where the fundamental rights secured by the 5th Amendment are constantly referred to as the basis upon which the unconstitutionality of the statute is urged. Is there foundation for this claim under the 5th Amendment, is then the issue, and that, of course, requires a statement of the grievances which it is asserted result from upholding the tax. They all come to this,—that to impose a burden in the shape of a tax upon the use of a foreign-built yacht when a like tax is not imposed on the use of a domestic yacht under similar circumstances is so beyond the power of classification, so abhorrent to the sense of justice, and so repugnant to the conceptions of free government, as to be void even in the absence of express constitutional limitation. We do not stop to point out the obvious unsoundness of the contentions, nor, indeed, to direct attention to the self-evident demonstration of their want of merit even from the point of view of the power to classify, since the differences between things domestic and things foreign, and their use, are apparent on the face of things, and are expressly manifested by the text of the Constitution. We say we do not stop to do these things because in any event we are of opinion the conclusion cannot be escaped that the propositions, each and all of them, whatever may be their form of expression, are in substance and effect but an assertion that the tax which the statute imposes is void because of a want of intrinsic uniformity; and therefore all the contentions are adversely disposed of by the previous decisions of this court on that subject. That which is settled beyond dispute may not be disregarded and be brought into the realm of that which is controvertible and questionable by the mere garb in which propositions are clothed.
The conflict between the systems is pronounced and fundamental. In the one, the state rule, except as to contract; no interest without statute in the United States rule; interest in all cases where equitably due unless forbidden by statute. In one no suit for taxes as a debt without express statutory authority; in the other, the right to sue for taxes as for a debt in every case where not prohibited by statute.
From this review it results that the doctrine as to nonliability to pay interest for taxes which have become due which prevails in the state courts is absolutely in conflict with the doctrine applied to the same subject in this court, and cannot now be made the rule without repudiating settled principles which have been here applied for many years in various aspects, and without in effect disregarding the sanction either expressly or impliedly given by Congress to such rules. From this it follows that although in the cases in this court to which we at the outset made reference which enforced the liability for interest, and which are here controlling if they be not now overruled, there was no controversy as to the liability for interest, this was presumably because the matter was deemed not disputable as the direct result of the then-settled doctrine that interest could be recovered by the United States on a default in payment of import duties. Under this condition we can see no ground for departing from the rule which the cases enforced, and we are therefore constrained to the conclusion that the court below was wrong in rejecting the prayer of the government for interest, and its action in that respect must be reversed, while in others it must be affirmed.

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