Source: http://supreme.nolo.com/us/289/373/case.html
Timestamp: 2019-12-14 05:47:04
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Matched Legal Cases: ['§ 989', '§ 1014', '§ 1014', '§ 3226', '§ 156', '§ 1014', '§ 2', '§ 3210', '§ 140', '§ 12', '§ 8', '§ 12', '§ 12', '§ 989', '§ 842', '§ 3182', '§ 102', '§ 1', '§ 145', '§ 250', '§ 24', '§ 41']

GEORGE MOORE ICE CREAM CO., INC. V. COLLECTOR, 289 U. S. 373 - Volume 289 - 1933 - Full Text - US Supreme Court Center - USSC Cases - Nolo
US Supreme Court Center > Volume 289 > GEORGE MOORE ICE CREAM CO., INC. V. COLLECTOR, 289 U. S. 373 (1933) > Full Text
GEORGE MOORE ICE CREAM CO., INC. V. COLLECTOR, 289 U. S. 373 (1933)
(1) That the former rule requiring a protest at the time of payment as a condition precedent to recovery is abolished as to any suit brought after the date of the Act, irrespective of the date of the underlying payment. P. 289 U. S. 375.
(2) This view results from the phraseology and implications of the statute, and is confirmed by its history and congressional reports. P. 289 U. S. 377.
2. The rule that statutes should be so construed as to avoid grave doubts of their validity is inapplicable where the statutory intent is clear. P. 289 U. S. 379.
3. Where an internal revenue Collector, acting by direction of the Commissioner, collects and turns in an income tax assessed by the latter and is sued by the taxpayer for recovery, he is entitled by R.S., § 989 (28 U.S.C. 842), if judgment go against him, to a certificate of the court showing that he so acted, and is relieved of liability to execution; the judgment is payable from the Treasury, and the suit is in effect a suit against the United States. P. 289 U. S. 380.
4. As to such cases, therefore, it cannot be said that § 1014 of the Act of 1924, supra, by abolishing retroactively the requirement of protest by the taxpayer as a condition to his right of action, infringes any right of the Collector under the due process clause of the Fifth Amendment. P. 289 U. S. 383.
5. A general claim of error in assessing net income held amendable after the statutory period. United States v. Memphis Cotton Oil Co., 288 U. S. 62; United States v. Factors & Finance Co., 288 U. S. 89. P. 289 U. S. 384.
1. At common law, and for many years under the federal statutes, protest at the time of payment was a condition precedent to the recovery of a tax. Elliott v.
Swartwout, 10 Pet. 137, 35 U. S. 153; Curtis' Adm'x v. Fiedler, 2 Black 461; Chesebrough v. United States, 192 U. S. 253; United States v. N.Y. & Cuba Mail S.S. Co., 200 U. S. 488. The rule persisted till 1924, when it was abolished by the Revenue Act of that year with a proviso that pending suits should be unaffected by the change. Revenue Act of 1924, c. 234, 43 Stat. 253, 343, § 1014, amending R.S. § 3226; [Footnote 1] 26 U.S.C. § 156. This suit was not begun till March, 1931, and is thus outside of the proviso . Even so, the payment to be recovered was made in 1923, when protest was still necessary. The petitioner contends that the new rule applies to all suits begun after the adoption of the amendment. The government contends that the old rule survives if the payment was before the amendment, though the suit was begun afterwards.
We think the intention of the Congress was to remove the requirement of protest in any suit thereafter brought, irrespective of the date of the underlying payment. [Footnote 2]
Of the tokens within the statute, the saving clause, (b) of § 1014 is entitled to a leading place. "This section shall not affect any proceeding in court instituted prior to the enactment of this Act." The implication is that any proceeding not covered by the exception is to be subject to the rule. Moses v. United States, 61 F.2d 791, 794. Cf. 25 U. S. Maryland, 12 Wheat. 419, 25 U. S. 438. But there are other tokens, and tokens still within the statute, that point the same way. The phraseology of the section in all its parts imports a regulation of procedure. No suit "shall be maintained" until a claim for refund or credit has been filed with the Commissioner. If such a claim has been filed, suit may be "maintained," though there was neither protest nor duress. Even pending actions would commonly be covered by such words. "To maintain a suit is to uphold, continue on foot, and keep from collapse a suit already begun." Smallwood v. Gallardo, 275 U. S. 56, 275 U. S. 61. If suits already begun are taken out by an exception, to "maintain" can mean no less than to prosecute with effect, without reference to the date of the transaction at the root. The Collector v. Hubbard, 12 Wall. 1, 79 U. S. 14. In saying this, we speak of the inference to be drawn when the balance is not shifted by countervailing weights. None can be discovered here. There could
be no denial by anyone that transactions antedating the statute would be subject to the rule that the suit is not maintainable without the filing of a claim. The inference is cogent that the same transactions are covered when it is said in the same sentence that the suit may be maintained without evidence or averment of protest or duress. There is a unity of verbal structure that is a symptom of an inner unity, a unity of plan and function. The field of operation is not shifted between the clauses of a sentence.
If we turn to extrinsic tokens of intention, and view the statute in the light of its history and aims, the signposts are the same. The requirement of protest, as it stood before the statute, was not limited to suits against a Collector of Internal Revenue or other public officer. It extended and was often applied to suits against the government itself. Even in suits against the Collector, the United States almost always the genuine defendant, the liability of the nominal defendant being formal, rather than substantial. In this situation, the government was unjustly enriched at the expense of the taxpayer when it held on to moneys that had been illegally collected, whether with protest or without. So at least the lawmakers believed, and gave expression to that belief not only in the statute but in congressional reports. Senate Report No. 398, 68th Congress, First Session, pp. 44, 45; [Footnote 3] House Report No. 179, 68th Congress,
First Session, pp. 33, 34. The amendment was designed to right an ancient wrong. It did not draw a distinction between suits against the body politic and suits against a public officer who was to be paid out of the public purse. It put them in a single class, and made them subject to a common rule. A high-minded government renounced an advantage that was felt to be ignoble, and set up a new standard of equity and conscience. There was no thought to discriminate between payments made and those to come. A fine sense of honor had brought the statute into being. We are to read it in a kindred spirit. United States v. Emery, 237 U. S. 28, 237 U. S. 32.
The argument is made that power was lacking, though intention be assumed. Defect of power is not suggested where the claim for restitution is against the government itself. The case assumes another aspect, we are told, when the suit is against an officer who is to be personally charged. Until 1924, a Collector was not liable to a taxpayer for a tax illegally collected unless protest gave him notice that he was a party to a wrong. The government suggests that there is an infraction of the Fifth Amendment, a denial of due process, if liability is cast upon him after the event. There is a subsidiary point that at least the doubt is so great as to canalize construction along the course of safety. United States v. La Franca, 282 U. S. 568, 282 U. S. 574; United States v. Jin Fuey Moy, 241 U. S. 394, 241 U. S. 401. "A statute must be construed, if fairly possible, so as to avoid not only the conclusion that it is unconstitutional, but also grave doubts upon that score." United States v. Jin Fuey Moy, supra. But avoidance of a difficulty will not be pressed to the point of disingenuous evasion. Here, the intention of the Congress is revealed too distinctly to permit us to ignore it because of mere misgivings as to power. The problem must be faced and answered.
As applied to this respondent in the circumstances of his official action stated in the record, the statute is constitutional though its effect is to broaden liability both for the past and for the future. As the law stood before later statutes, the taxpayer's protest was notice to a Collector that suit was about to follow, and was warning not to pay into the Treasury the moneys collected. Elliott v. Swartwout, supra; Smietanka v. Indiana Steel Co., 257 U. S. 1, 257 U. S. 4. Statutes first enacted in 1839 (Act of March 3, 1839, c. 82, § 2, 5 Stat. 348) and progressively broadened (R.S. § 3210, 26 U.S.C. § 140) made it the duty of Collectors to pay the money over to the government whether there had been protest or no protest. At first, this was thought to have relieved them of personal liability (Cary v. Curtis, 3 How. 236; Smietanka v. Indiana Steel Co., supra), but later acts of Congress established a different rule, though maintaining the duty to make remittance to the Treasury. Philadelphia v. The Collector, 5 Wall. 720, 72 U. S. 731; Curtis' Adm'x v. Fiedler, 2 Black 461, 67 U. S. 479; Collector v. Hubbard, supra; Arnson v. Murphy, 109 U. S. 238, 109 U. S. 241; 5 Stat. 727; 12 Stat. 434, 725, 729; 12 Stat. 741, § 12; 13 Stat. 239; 14 Stat. 329, § 8. Along with the duty there went a pledge of indemnity by the government itself, a pledge not absolute, it is true, but subject to a condition. 12 Stat. 741, § 12; United States v. Sherman, 98 U. S. 565; Philadelphia v. The Collector, supra, p. 72 U. S. 733; Smietanka v. Indiana Steel Co., supra. The condition was that a certificate be granted by the court either (a) that there was probable cause for the act done by the Collector or other officer, or (b) that he acted under the directions of the Secretary of the Treasury or other proper officer of the government. 12 Stat. 741, § 12, Act of March 3, 1863. In that event, no execution was to issue upon the judgment, but the amount of the recovery was to be paid out of the Treasury . The pledge of indemnity was carried forward into
the Revised Statutes with only verbal changes (R.S. § 989), and stands upon the books today. 28 U.S.C. § 842. [Footnote 4] The effect of the certificate, when given, is to convert the suit against the Collector into a suit against the government. United States v. Sherman, supra.
This Collector did act under the directions of the Secretary of the Treasury, or other proper officer of the government, in the collection of the tax. The complaint shows upon its face that the tax had been duly assessed by the Commissioner of Internal Revenue. In that situation, the Collector was under a ministerial duty to proceed to collect it. R.S. § 3182, 26 U.S.C. § 102; Erskine v. Hohnbach, 14 Wall. 613. There was nothing left to his discretion. Other duties less definitely prescribed may leave a margin for judgment and for individual initiative. Cf. Agnew v. Haymes, 141 F. 631. There was no such margin here. His duty being imperative, he is protected by the command of his superior from liability for trespass (Erskine v. Hohnbach, supra; 82 U. S. Mason, 15 Wall. 671, 82 U. S. 675; Harding v. Woodcock, 137 U. S. 43, 137 U. S. 46), and is entitled as of right to a certificate converting the suit against him into one against the government (United States v. Sherman, supra). His position could be no better if there had been protest at the time of payment. He would still have been under a duty to obey the command of his superior and collect the tax assessed. Also, he would
still have been under a duty to make prompt remittance to the Treasury. There had been confided to him no power to review or to revise. Erskine v. Hohnbach, supra; Harding v. Woodcock, supra. The case is not one for a certificate of probable cause, as it might be if the officer had trespassed under a mistaken sense of duty. In such circumstances, a certain latitude of judgment may be accorded to the certifying judge, though even then it is enough that a seizure has been made upon grounds of reasonable suspicion. Locke v. United States, 7 Cranch 339; Agnew v. Haymes, supra; Carroll v. United States, 267 U. S. 132, 267 U. S. 149; Dumbra v. United States, 268 U. S. 435, 268 U. S. 441. One does not speak of probable cause when justification is complete. Here, the certifying judge will be subject to a specific duty upon the facts admitted by the demurrer to relieve the Collector of personal liability and to shift the burden to the Treasury. This Court has often held that a pledge of the public faith and credit will permit the seizure of property by right of eminent domain, though what is due for compensation must be ascertained thereafter. Sweet v. Rechel, 159 U. S. 380; Crozier v. Krupp, 224 U. S. 290; Joslin Co. v. Providence, 262 U. S. 668, 262 U. S. 677; Dohany v. Rogers, 281 U. S. 362, 281 U. S. 366; Hurley v. Kincaid, 285 U. S. 95, 285 U. S. 104-105. The assurance of indemnity is as ample, the reparation prompter and more summary, upon the facts before us here.
A suit against a Collector who has collected a tax in the fulfillment of a ministerial duty is today an anomalous relic of bygone modes of thought. He is not suable as a trespasser, nor is he to pay out of his own purse. He is made a defendant because the statute has said for many years that such a remedy shall exist though he has been guilty of no wrong, and though another is to pay. Philadelphia v. The Collector, supra, p. 72 U. S. 731. There may have been utility in such procedural devices in days when the government was not suable as freely as now.
United States v. Emery, supra; Ex parte Bakelite Corp., 279 U. S. 438, 279 U. S. 452; Act of February 24, 1855, c. 122, 10 Stat. 612, §§ 1 and 9; Judicial Code, § 145, 28 U.S.C. § 250; Judicial Code, § 24(20), 28 U.S.C. § 41(20). They have little utility today, at all events where the complaint against the officer shows upon its face that, in the process of collecting, he was acting in the line of duty and that, in the line of duty, he has turned the money over. In such circumstances, his presence as a defendant is merely a remedial expedient for bringing the government into court.
No such situation is presented by the record now before us. Indeed, no such situation, it would seem, can ever be presented where a Collector has done no more than accept payment of a tax assessed by a superior who has been invested by the statute with power to command. Our duty does not require us to deal with problems merely hypothetical. If a case should develop where a certificate might issue as a matter of discretion, other questions would be here. There would then be need to consider whether the objection of a denial of due process would be open to a Collector until a request for the certificate had been made and refused. "Due process requires that there be an opportunity to present every available defense, but it need not be before the entry of judgment." American Surety Co. v. Baldwin, 287 U. S. 156, 287 U. S. 168; York v. Texas, 137 U. S. 15, 137 U. S. 20. There would be need also to consider whether, in its application to an officer acting of his own motion and not in the fulfillment of the command of a superior, the requirement of protest is a procedural limitation upon the remedy for a wrong, or one of the substantive elements of the wrong itself. We leave those questions open.
The claim in its original form gave notice of specific errors in the adjustment of invested capital. It gave notice also in general terms that, aside from any errors in the adjustment of the capital, there had been an erroneous assessment of net income at the sum of $16,940.18 when, in fact, there had been a loss. We think the statements as to income were subject to amendment. United States v. Memphis Cotton Oil Co., 288 U. S. 62; United States v. Factors & Finance Co., 288 U. S. 89.
In the lower federal courts the decisions are conflicting. Most of them have taken the view adopted here. Beatty v. Heiner, 10 F.2d 390; Warner v. Walsh, 24 F.2d 449; Hyatt Roller Bearing Co. v. United States, 43 F.2d 1008; Weir v. McGrath, 52 F.2d 201; Electric Storage Battery Co. v. McCaughn, 52 F.2d 205; cf. Winant v. Gardner, 29 F.2d 836; Moses v. United States, 61 F.2d 791. Contra, Warner v. Walsh, 27 F.2d 952.
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