Source: http://lexroll.com/289-u-s-373/
Timestamp: 2017-12-14 10:06:55
Document Index: 14676851

Matched Legal Cases: ['§ 1014', '§ 3226', '§ 156', '§ 156', '§ 156', '§ 2', '§ 3210', '§ 140', '§ 140', '§ 12', '§ 8', '§ 12', '§ 12', '§ 989', '§ 842', '§ 842', '§ 842']

289 U.S. 373 | LexRoll.com
U.S. Supreme Court Opinions > 1933 > 289 U.S. 373
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, 153, 9 L.Ed. 373; Curtis’s Adm’x v. Fiedler, 2 Black, 461, 17 L.Ed. 273; Chesebrough v. United States, 192 U.S. 253, 24 S.Ct. 262, 48 L.Ed. 432; United States v. N.Y. & Cuba Mail S.S. Co., 200 U.S. 488, 26 S.Ct. 327, 50 L.Ed. 569. 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;1 26 U.S.C. § 156 (26 USCA § 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.
Of the tokens within the statute, the saving clause, (b) of section 1014 (26 USCA § 156 note), 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 (C.C.A.) 61 F.(2d) 791, 794. Cf. Brown v. Maryland, 12 Wheat. 419, 438, 6 L.Ed. 678. But there are other tokens, and tokens still within the statute, that point the same way. The phraselogy 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, 61, 48 S.Ct. 23, 72 L.Ed. 152. 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, 14, 20 L.Ed. 272. 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 any one 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.
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, 574, 51 S.Ct. 278, 75 L.Ed. 551; United States v. Jin Fuey Moy, 241 U.S. 394, 401, 36 S.Ct. 658, 659, 60 L.Ed. 1061. ‘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, 4, 42 S.Ct. 1, 66 L.Ed. 99. 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 (26 USCA § 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, 11 L.Ed. 576; 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, 731, 18 L.Ed. 614; Curtis’s Adm’x v. Fiedler, 2 Black, 461, 479, 17 L.Ed. 273; The Collector v. Hubbard, supra; Arnson v. Murphy, 109 U.S. 238, 241, 3 S.Ct. 184, 27 L.Ed. 920; 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, 25 L.Ed. 235; Philadelphia v. The Collector, supra, page 733 of 5 Wall., 18 L.Ed. 614; 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 to-day. 28 U.S.C. § 842 (28 USCA § 842).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.
The decision of this case does not require us to determine whether the act of 1924 would affect the respondent’s liability if the certificate of the court converting the suit into one against the government were dependent upon controverted facts, or upon facts permitting different inferences or calling upon the judge to exercise discretion. 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, 168, 53 S.Ct. 98, 102, 77 L.Ed. 231; York v. Texas, 137 U.S. 15, 20, 11 S.Ct. 9, 34 L.Ed. 604. 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.
Section 3226: ‘No suit or proceeding shall be maintained in any court for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessive or in any manner wrongfully collected until a claim for refund or credit has been duly filed with the Commissioner of Internal Revenue, according to the provisions of law in that regard, and the regulations of the Secretary of the Treasury established in pursuance thereof; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress. No such suit or proceeding shall be begun before the expiration of six months from the date of filing such claim unless the Commissioner renders a decision thereon within that time, nor after the expiration of five years from the date of the payment of such tax, penalty, or sum, unless such suit or proceeding is begun within two years after the disallowance of the part of such claim to which such suit or proceeding relates. The commissioner shall within 90 days after any such disallowance notify the taxpayer thereof by mail.’
‘Section 1114. The provisions of Section 1318 of existing law have been amended to provide that after the enactment of the bill it shall not be a condition precedent to the maintenance of a suit to recover taxes, sums, or penalties paid, that such amounts shall have been paid under protest or duress. The fact protest was made has little bearing on the question whether the tax was properly or erroneously assessed. The making of such a protest becomes a formality so far as well advised taxpayers are concerned and the requirement of it may operate to deny the just claim of a taxpayer who was not well informed.’
‘§ 842. When a recovery is had in any suit or proceeding against a collector or other officer of the revenue for any act done by him, or for the recovery of any money exacted by or paid to him and by him paid into the Treasury, in the performance of his official duty, and the court certifies that there was probable cause for the act done by the collector or other officer, or that he acted under the directions of the Secretary of the Treasury, or other proper officer of the Government, no execution shall issue against such collector or other officer, but the amount so recovered shall, upon final judgment, be provided for and paid out of the proper appropriation from the Treasury.’