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Matched Legal Cases: ['§ 29', '§ 11', '§ 7', '§ 29', '§ 13', '§ 13', '§ 13', '§ 13', '§ 29', '§ 13', '§ 29', '§ 13', '§ 29', '§ 30', '§ 30', '§ 30', '§ 29', '§ 30', '§ 7']

HERTZ V. WOODMAN, 218 U. S. 205 (1910) - US SUPREME COURT DECISIONS ON-LINE
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HERTZ V. WOODMAN, 218 U. S. 205 (1910)
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Hertz v. Woodman
Argued April 25, 26, 1910
Upon the passing by death of a vested right to the immediate possession or enjoyment of a legacy or distributive share, there was imposed by the inheritance tax provisions of the War Revenue Act of 1898 chanroblesvirtualawlibrary
Page 218 U. S. 206
the tax or duty exacted upon every such right of succession which was saved by the saving clause of the repealing act of April 12, 1902. Mason v. Sargent, 104 U. S. 689, distinguished.
The facts, which involve the construction of the Act of April 12, 1902, c. 500, 32 Stat. 96, repealing certain provisions of the War Revenue Act of 1898 relating to inheritance taxes, are stated in the opinion. chanroblesvirtualawlibrary
Page 218 U. S. 210
"Upon the foregoing facts, the question of law concerning which this court desires the instruction and advice of the Supreme Court is this: does the fact that the testator dies within one year immediately prior to the taking effect of the repealing Act of April 12 1902 (U.S.Comp.Stat.Supp.
Page 218 U. S. 211
1903, p. 279), relieve from taxation legacies otherwise taxable under §§ 29 and 30 of the Act of June 13, 1898, as amended by the Act of March 2, 1901?"
It is also urged that the Circuit Court of Appeals for the Seventh Circuit is precluded from requesting the instruction of this Court, because it had in two cases theretofore decided the very question now certified. United States v. Marion Trust Co., 143 F.3d 1; United States v. Stephenson, not yet reported. In both cases, the decision was adverse to the contention of the United States. The first was affirmed by this Court without opinion, by an evenly divided court, 203 U.S. 594, and, in the second, an application by the United States for a writ of certiorari was denied, 212 U.S. 572. It is further contended that, if not concluded by its own decisions, it was bound to follow the judgments of this Court in Eidman v. Tilghman, affirming the judgment of the Circuit Court of Appeals of the Second Circuit, reported in 136 F.1d 1, the affirmance by this Court being reported in 203 U.S. 580, and similar judgments of affirmance in Philadelphia Trust Co. v. McCoach, 142 F.1d 0, and 205 U.S. 539, and United States v. Marion Trust Co. supra.
All of these cases were affirmances by an equally divided court of the judgments of the court below in favor of the legatees or distributees who had sued to recover taxes paid upon legacies or shares which had passed to the plaintiffs within one year after the death of the testator chanroblesvirtualawlibrary
Page 218 U. S. 212
The circuit court of appeals was obviously not bound to follow its own prior decision. The rule of stare decisis, though one tending to consistency and uniformity of decision, is not inflexible. Whether it shall be followed or departed from is a question entirely within the discretion of the court, which is again called upon to consider a question once decided. The court below, in this instance, when called upon to reconsider its former construction of the inheritance tax act, found itself confronted by the fact that this Court had been equally divided in opinion as to the proper interpretation of the act, and for that reason alone obliged to affirm the ruling of that and other courts against the legality of the tax which had been collected. If the decision of the court under review had been in favor of the legality of the tax, an affirmance must likewise have resulted from an equal division. That court also found that its own former view of the act had not been satisfactory to the Circuit Court of Appeals for the Eighth Circuit, which court had decided contrariwise in Westhus v. Union Trust Co., 164 F.7d 5. In such circumstances, the court below was not only free to regard the question as one open for determination, but one which might well be certified to this Court, that the question of law which had never been authoritatively decided by this Court might be so determined by an instruction as to how it should decide the matter when thus presented for reconsideration.
When this Court, in the exercise of its appellate powers, is called upon to decide whether that which has been done in the lower court shall be reversed or affirmed, it is obvious that that which has been done must stand unless reversed by the affirmative action of a majority. It has chanroblesvirtualawlibrary
Page 218 U. S. 213
therefore been the invariable practice to affirm, without opinion, any judgment or decree which is not decided to be erroneous by a majority of the Court sitting in the cause. The earliest precedent is that of @ 24 U. S. 78. Chief Justice Marshall said at the conclusion of the opinion:
In @ 74 U. S. 110, Mr. Justice Field, for this Court, said, in respect of the effect of the affirmance by a divided Court:
To the same effect are Westhus v. Union Trust Co.,168 F.6d 7; Hartman v. Greenhow, 102 U. S. 672, 102 U. S. 676. A different rule seems to have been sanctioned in the English courts. Catherwood v. Caslon, 13 Mees. & W. 261; Beamish v. Beamish, 9 H.L. Cases 274.
Under the precedents of this Court, and, as seems justified by reason as well as by authority, an affirmance by an equally divided Court is, as between the parties, a conclusive determination and adjudication of the matter adjudged, but, the principles of law involved not having been agreed upon by a majority of the Court sitting chanroblesvirtualawlibrary
Page 218 U. S. 214
The statutes involved and requiring consideration are the twenty-ninth section of the Act of June 13, 1898, 30 Stat. 464, c. 448; the thirtieth section of the same act, as amended by § 11 of the Act of March 2, 1901, 31 Stat. 948, c. 806, and §§ 7, 8, and 11 of the Act of April 12, 1902, 32 Stat. 97 et seq., c. 500. So much of the sections referred to as is material to the present question is set out in the margin. * chanroblesvirtualawlibrary
Page 218 U. S. 215
The seventh section of the Act of April 12, 1902, which act we shall hereafter refer to as the repealing act, did not go into effect until July 1, 1902. That section explicitly repealed § 29 of the Act of June 13, 1898, which was the only section imposing a tax upon inheritances, and the only authority for the tax collected from the defendants in error. The claim of the United States was and is that, as the testator's death occurred prior to July 1, 1902, the tax demanded had been imposed as an obligation before the repeal of the taxing section, and that chanroblesvirtualawlibrary
Page 218 U. S. 216
the liability thus imposed was saved by the eighth section of the repealing act. For convenience, that section is here again set out:
"The repeal of any statute shall not have the effect to
Page 218 U. S. 217
release or extinguish any penalty, forfeiture, or liability incurred under such statute, unless the repealing act shall so expressly provide, and such statute shall be treated as still remaining in force for the purpose of sustaining any proper action or prosecution for the enforcement of such penalty, forfeiture, or liability."
This section is not alone applicable to penalties and forfeitures chanroblesvirtualawlibrary
Page 218 U. S. 218
under penal statutes. It extends as well to "liabilities," and a liability or obligation to pay a tax imposed under a repealed statute is not only within the letter, but the spirit and purpose, of the provision. Therefore we must take that general saving clause into consideration as a part of the legislation involved in the determination of whether a "liability" had been incurred by the imposition of a tax prior to the act that destroyed the law under which it had been imposed.
The repealing act here involved includes a saving clause, and if it necessarily or by clear implication conflicts with the general rule declared in § 13, the latest expression of the legislative will must prevail. In the case of Great Northern Ry. Co. v. United States, cited above, the question was whether the saving clause in the Hepburn Act was so plainly in conflict with the rule of construction found in § 13 as to limit the actions or liabilities saved to those enumerated therein; but the Court held that, as the later clause applied to remedies and procedure, it was not, by implication, in conflict with the general provision of § 13, which saved penalties, forfeitures, and liabilities. 208 U.S. 208 U. S. 466-467. The significance of § 13 is therefore this: that if, prior to the repealing act, the defendants in error were under any liability or obligation to pay the tax or duty imposed by § 29 of the Act of June 13, 1898, that obligation or liability was not relieved by the mere repeal of that section, nor as a consequence of the saving clause in the repealing act, unless the special character of that clause, by plain implication, cuts down the scope and operation of the general rule in § 13.
In the light of these principles of interpretation, we come, then, to the question as to whether, at the date of the repeal of § 29 of the Act of June 13, 1898, the legacies to the defendants in error were subject to any tax or duty under the repealed section which constituted a "liability" under chanroblesvirtualawlibrary
Page 218 U. S. 219
§ 13, or to a tax or duty "imposed," under the saving clause of the repealing act.
Upon the facts certified, the right of succession which passed by the death of the testator was an absolute right to the immediate possession and enjoyment -- a right neither chanroblesvirtualawlibrary
Page 218 U. S. 220
postponed until the falling in of a life estate, as in Mason v. Sargent, 104 U. S. 689, nor subject to contingencies, as in Vanderbilt v. Eidman, supra. No further event could make their title more certain nor their possession and enjoyment more secure. The law, then unrepealed and in full force, operated to fasten at the moment this right of succession passed by death, a liability for the tax imposed upon the passing of every such inheritance or right of succession. The time for scheduling or listing was practically identical with the time for payment, and the listing or scheduling was required to be done by the executor charged with payment, but might be and was postponed for reasons of grace and of convenience. That is almost universal under any taxing system. The liability attaches at some time before the time for payment. But the liability for the payment of the tax exacted under § 29 of the Act of June 13, 1898, accrued or arose the moment the right of succession by death passed to the defendants in error, and the occurrence of no other fact or event was essential to the imposition of a liability for the statutory tax upon the interest thus acquired.
No one questions but that one effect of this saving clause would be to save any such tax as was "due and payable" one year before July 1, 1902. This being so, it would be very unjust if the tax in the latter case is saved and the other remitted, inasmuch as the thing made subject to chanroblesvirtualawlibrary
Page 218 U. S. 221
the tax would, in each case, be the same -- namely, the transmission of a beneficial right to the possession and enjoyment of a legacy or distributive share at the death of a testator or intestate. In the one case, the tax paid upon the right passing by death would be preserved. In the other, a tax upon a like inheritance would be remitted. The only difference would be that, in one case, the time for payment had arrived, while in the other it had not, though, in the latter case, the ultimate obligation to pay was equally as certain and fixed as in the first case.
But in place of saying in so many words that "all taxes or duties which should be due and payable prior to the taking effect of the act" should be subject to the provisions of § 30, etc., the Congress said that "all taxes or duties imposed by section twenty-nine," etc., prior to the taking effect of this act, should be subject to the provisions of § 30. Now it is to be noticed that this § 30, which is the remedial or procedure section, is not one of the sections repealed. The twenty-ninth section, which alone imposes any tax, is the one which is repealed. The plain purpose of the saving clause was to preserve some liability which had been imposed under § 29, which would otherwise be lost. This it did by providing that all taxes "imposed" prior to the going into effect of the act should, notwithstanding the repeal of the section which originated the tax, be preserved, and as to collection lien, etc., be chanroblesvirtualawlibrary
Page 218 U. S. 222
subject to the unrepealed § 30. It must also be borne in mind that this time limit for payment to "one year after the death of the testator" came into the thirtieth section only by the amendment of March 2, 1901. Up to the time of that amendment, the only provision as to time was that still found in the later parts of the same section, namely, that "before payment and distribution to the legatees" the executor, administrator, or trustee
It would seem to follow that the purpose and effect of the amendment making such tax "due and payable in one year after the death of the testator" was to advance the time of payment so as to require payment within one year if there should be longer delay in paying legacies and distributive shares, leaving in full force the requirement that the tax should be paid before the payment of legacies and distributive shares, if such payment and distribution should be made in less than one year. We have not passed over the fact that this time limit in terms applies only to the tax due under wills, and to the uncertainty as to the time for the payment of the tax upon distributive shares. It, however, seems quite obvious that that time limit was intended to apply to shares in intestate estates, as well as chanroblesvirtualawlibrary
Page 218 U. S. 223
The precise question here involved, and upon which this case must turn, namely, whether a tax is not at once "imposed," by succeeding to an immediate right of possession and enjoyment, during the operation of the Act of June 13, 1898, in such sense as to be within the chanroblesvirtualawlibrary
Page 218 U. S. 224
intent of the saving clause in the act which repealed that act, was not and could not have been involved in the case cited. The terms, both of the act of 1864, as amended in 1866, and of the act which repealed that act, and of the saving clause in the repealing act, are in some important aspects to be differentiated from the acts here involved. It is enough, however, to say of that case that no taxable succession having occurred before the repeal of the act, there was nothing to save by the saving clause in the repealing act. In the present case, it is equally as clear that, if no taxable succession actually vested prior to the repeal of the taxing act, no tax would be saved. If, however, there did occur such an absolute right to the possession and enjoyment of the legacies to the present defendants in error as made it subject at once to the imposition of a tax under the law in operation when such succession occurred, a very different question must be decided from any decided in Mason v. Sargent.
I am unable to agree to the judgment of the Court. I regret that time does not serve to give adequate expression to my views or to consider opposing ones. Some of the elements of dissent I can only hastily give. The question of the interpretation of a statute is, however, seldom in broad compass. The purpose is to get at the meaning of the words, and fortunately there are well known rules chanroblesvirtualawlibrary
Page 218 U. S. 225
The majority of the committee recommended a reduction of $73,000,000; the minority was of opinion it should be $123,000,000. In the reduction, there was a special item of legacies. The figures need no comment. They display the purpose of Congress. Words, however, were added to emphasize it. "Sound business judgment," it was said, "dictates a sweeping reduction of our revenues." chanroblesvirtualawlibrary
Page 218 U. S. 226
The final word of recommendation of the measure was that "every consideration of prudence commends" its "wisdom." This, then, was the purpose of the measure, sanctioned by the highest considerations of judgment and wisdom. Should it not prevail, certainly have dominance in the interpretation of the law passed to effect it? Even as to a live and continuing law, the rule of interpretation is that taxes must be expressed in clear and unambiguous language. If there be doubt, it is to be resolved against the government. Eidman v. Martinez, 184 U. S. 578. Such a rule of interpretation certainly should be applicable to a statute repealing taxation. To what an anomalous contrast does its disregard bring us? Shall a law passed to supply the wants of a deficient treasury have a more restrictive construction than one passed against the burden of a constantly increasing surplus? Indeed, this case presents even a stronger contrast. Under the rule of interpretation announced in Eidman v. Martinez, a law providing for the exigencies of war cannot prevail against the right of the taxpayer to resist taxation, the authority for which is equivocally expressed. But peace legislation, it seems, may claim a more determined power, though it have no necessities but the reduction of revenue; though it proclaims that purpose, and is urged to it by governmental policy. It may have a double sense and yet be unfaltering in its exactions, resisting presumptions of law and legal rules, but a war measure may not.
I cannot believe that Congress intended to leave uncertainty, or, if uncertainty should inadvertently result, that it was to be resolved to retain taxes, and not abolish them. And it had the means of certainty, and, I must assume, availed itself of them. Prior cases had given it examples of the interpretation of taxing law -- indeed, of the special kind of taxing laws which it was repealing, and we may be sure that it had those examples in mind in fixing the scope of its enactment. And this is in accordance chanroblesvirtualawlibrary
Page 218 U. S. 227
with a familiar rule of interpretation which this Court has applied and necessarily will be called upon to apply again. That is that, when provisions which have received judicial interpretation are used in a statute, they are supposed to be used with the meaning that had been given to them. Under any other rule, judicial decisions would make "not light, but darkness visible."
The Court stated the question to be when the right to the tax accrued -- "at the death of the testator or at the death of the widow, when the plaintiff became entitled to the possession of the land?" In answer to the question, the chanroblesvirtualawlibrary
Page 218 U. S. 228
Court conceded that the will of Mason conveyed an estate to William P. Mason and Charles H. Parker (those who took after the widow), and that, although they were not entitled to immediate possession, they had a vested estate. And it was conceded that not only vested estates, but those in expectancy, were within the statute. The admission, however, the Court said, did not aid them in deciding the point before them, as the question of time still arose -- when was the vested estate taxable?
"It is manifest that the right does not accrue until the duty can be demanded -- that is, when it is made payable; in other words, at the end of thirty days after becoming entitled to possession."
The questions were reexamined and decided same way in Mason v. Sargent, 104 U. S. 689. The latter case, however, exhibits more clearly the applicability of the principles discussed to the case at bar. Mason died December 4, 1867. He bequeathed by his will certain personal property to the plaintiffs in the action in trust for his widow, and upon her death one-half to William P. Mason and one-half to Eliza R. Cabot. The widow died in 1872. In April, 1873, the tax in question was assessed. It was paid under protest, and plaintiffs brought the action for the refunding of the tax, on the ground that the property chanroblesvirtualawlibrary
Page 218 U. S. 229
Clapp v. Mason was cited as applicable, and the Court chanroblesvirtualawlibrary
Page 218 U. S. 230
Clapp v. Mason and Mason v. Sargent were followed as determinative of when, under § 7 of the Act of April 12, 1902 (the act now in question), the tax should be regarded as "imposed" in Tilghman v. Eidman, by Circuit Judge Lacombe at circuit, and also by the Circuit Court of Appeals of the Second Circuit. 131 F.6d 2. The judgment was affirmed by this Court by an equal division of its members. 203 U.S. 580.
Those cases were also made to turn on the fact that, as the tax was upon the legacy or distributive share, there could be no tax nor claim in favor of the government until such legacy or share was vested in the possession and enjoyment of the legatee or distributee. In this again they were followed in Vanderbilt v. Eidman. And it seems to me, therefore, that there is such resemblance of the provisions of the act of 1864 to those of the Act of chanroblesvirtualawlibrary
Page 218 U. S. 231
An argument is made to show that a tax may be said to be imposed, though it be not due and payable. The argument is answered, I think, by what I have said. A tax is not imposed by a mere provision for it. Illustrations of this will readily come to mind besides those afforded by the cited cases. However, I will not attempt to further review the contentions of the government or the opposing chanroblesvirtualawlibrary
Page 218 U. S. 232
ones, nor consider from which the greater embarrassments, if any, will result. The force of the conflicting contentions, and, of course, they have force, establish the ambiguity of the statute and the different meanings that can be ascribed to it. In such situation, the rule of interpretation which I have announced, and which I have shown is sanctioned by this Court, should turn decision against the tax. I will not quote the circuit courts and the circuit courts of appeal, which have so thought and have pronounced against the government. They make a body of authority, persuasive in their numbers and rank. And this Court has divided in opinion. I do not mention the fact as a circumstance which should preclude consideration of the question, but I bring it forward as an element of some power in the discussion. In may not have the "true, fixed, and resting quality" of stare decisis, but it has nevertheless strong appeal and persuasion. It has persisted through quite a period of time and against many attempts to disturb it. It is certainly something more patent than inaction. It gave authority to the decision of the circuit court of appeals in Eidman v. Tilghman and that again determined other judgments and became a rule of decision for the settlement of estates.