Source: https://supreme.justia.com/cases/federal/us/223/280/
Timestamp: 2019-04-19 18:48:42+00:00

Document:
One denying the legality of a tax should have a clear and certain remedy, and where he cannot interfere by injunction, an action to recover back is the alternative unless he waits until the state commences an action and subjects himself to penalties and risks.
Courts have been too slow to recognize implied duress, in payment of taxes, where payment thereof would result disadvantageously.
Where, in addition to money penalties for delay in payment of a tax, there is forfeiture of right to do business and risk of having contracts declared illegal in case of nonpayment of disputed tax, the payment is made under duress.
Where a state officer receives money for a tax paid under duress with notice of its illegality, he has no right thereto, and the name of the state does not protect him from suit.
Where a state statute provides for refunding taxes erroneously paid to a state officer, it contemplates a suit against such officer to recover the taxes paid under protest and duress.
The facts, which involve the right to recover payments for taxes paid under duress and what constitutes duress, are stated in the opinion.
This is an action to recover taxes paid under duress and protest, the plaintiff contending that the law under which the tax was levied is unconstitutional. A demurrer to the declaration was sustained by the circuit court. The tax is a tax of two cents upon each one thousand dollars of the plaintiff's capital stock. Session Laws of Colorado, 1907, c. 211. The plaintiff is a Kansas corporation. The greater part of its property and business is outside of the State of Colorado, and of the business done within that state but a small proportion is local, the greater part being commerce among the states. Therefore it is obvious that the tax is of the kind decided by this Court to be unconstitutional, since the decision below in the present case, even if the temporary forfeiture of the right to do business declared by the statute be confined by construction, as it seems to have been below, to business wholly within the state. Western Union Telegraph Co. v. Kansas, 216 U. S. 1; Pullman Co. v. Kansas, 216 U. S. 56; Ludwig v. Western Union Telegraph Co., 216 U. S. 146. The defendant did not argue that the tax could be maintained, but contended only that the payment was voluntary, and that the defendant is not the proper person to be sued.
distress, and the party indicates by protest that he is yielding to what he cannot prevent, courts sometimes perhaps have been a little too slow to recognize the implied duress under which payment is made. But even if the state is driven to an action, if at the same time, the citizen is put at a serious disadvantage in the assertion of his legal, in this case of his constitutional, rights, by defense in the suit, justice may require that he should be at liberty to avoid those disadvantages by paying promptly and bringing suit on his side. He is entitled to assert his supposed right on reasonably equal terms. See Ex Parte Young, 209 U. S. 123, 209 U. S. 146. If he should seek an injunction on the principle of that case and of Western Union Telegraph Co. v. Andrews, 216 U. S. 165, he would run the same risk as if he waited to be sued.
was made under duress. See Gaar, Scott & Co. v. Shannon, decided this day, post, p. 223 U. S. 468.
The other question is whether the defendant is liable to the suit. The defendant collected the money, and it is alleged that he still has it. He was notified when he received it that the plaintiff disputed his right. If he had not right, as he had not, to collect the money, his doing so in the name of the state cannot protect him. Erskine v. Van Arsdale, 15 Wall. 75. See Poindexter v. Greenhow, 114 U. S. 270. It is said that the money, as soon as collected, belonged to the state. Very likely it would have but for the plaintiff's claim, assuming it to remain an identified trust fund, but the plaintiff's claim was paramount to that of the state, and even if the collector of the tax were authorized to appropriate the specific money and to make himself debtor for the amount, it would be inconceivable that the state should attempt to hold him after he had been required to repay the sum. Moreover, it would seem that the statute contemplated the course taken by the plaintiff, and provided against any difficulty in which the Secretary of State otherwise might find himself in case of a disputed tax. For it provides by § 6 that, "if it shall be determined in any action at law or in equity that any corporation has erroneously paid said tax to the Secretary of State," upon the filing of a certified copy of the judgment, the auditor may draw a warrant for the refunding of the tax, and the state treasurer may pay it. We must presume that a judgment in the present action would satisfy the law.

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