Court Opinion

ID: 8765263
Source: CourtListenerOpinion
Date Created: 2022-11-26 12:22:27.946352+00
Date Added: 2024-06-11T17:01:49.552512
License: Public Domain

HOOK, Circuit Judge
(dissenting). The question in this case is whether the government is entitled to maintain an action for the recovery of stamp taxes imposed by the war revenue act of 1898. The government contends that it is because (a) the rule of Savings Bank V. United States, 19 Wall. 227, 22 U. Rd. 80, still prevails, and (b)> *891by express provision in the act itself Congress adopted and applied to the taxes therein levied all means of collection then authorized by law, and among them was the remedy of plenary action. I am not persuaded that Savings Bank v. United Stales has been overruled, or that the court’s full discussion and decision that a right of action existed independent of statutory provision are obiter dicta. The Supreme Court based its conclusion upon two distinct and independent grounds, either of which was sufficient: First, general principles of law, and particularly those respecting the attributes of sovereignty; and, second, a provision of the statute then in question applying to the particular case. It is manifest that what was said upon either of these cannot be held to be obiter. Any doubt about this would be dispelled by Union Pacific Co. v. Mason City Co., 199 U. S. 166, 26 Sup. Ct. 20, 50 L. Ed. 134, wherein Mr. Justice Brewer said:
“0£ course, where there are two grounds, upon either of which the judgment of the trial court can be rested, and the appellate court sustains both, the ruling on neither is obiter; but each is the judgment of the court, and of equal validity with the other.”
This language was used in affirmance of our own decision in tiiat ca.se (128 Fed. 230, 64 C. C. A. 348), wherein Judge Sanborn said:
“Where a court places its decision of the ultimate legal issue before it upon its decisions of two legal questions, which were pertinent to the issue, debated at the bar, and considered and determined in the opinion, the decision of either one of which is sufficient to sustain the determination of the ultimate issue, the decision of each of the two questions and of every pertinent legal question decided in reaching either decision has the binding, force of an adjudication, and is not a mere obiter dictum.”
It is equally clear that Sawings Bank v. United States has not been overruled by Meriwether v. Garrett, 102 U. S. 472, 26 L. Ed. 197, or its authority impaired by that case, or by the earlier case of Lane County v. Oregon, 7 Wall. 71, 19 L. Ed. 101. In the Lane County Case it was decided that the statutes of Oregon required certain taxes to be paid in gold and silver coin and that the term “debts” used in the legal tender acts of Congress had no reference to taxes imposed by state authority. Nothing more was decided. In the Meriwether Case, which is relied on as a departure from the rule of Savings Bank v. United States, the question now before us, namely, whether the government can maintain an action for the recovery of taxes levied by it, did not arise at all, and was not decided. Justice Field did not deliver the opinion of the court. In fact there was no opinion by the court. There was merely a brief statement of legal conclusions upon the facts involved without an expression of Ibe reasons which induced them. Justice Field, on behalf of himself and Justices Miller and Bradley, merely wrote a statement of the reasons which controlled their concurrence. Three other justices, Strong, Swayne, and Harlan, dissented. But, as already observed, the question before us was not there involved. It is a curious fact that Justice Miller, for whom Justice Field spoke in the Meriwether Case, delivered the opinion in United States v. Pacific Railroad, which I will presently advert to again, in which he held that the government could maintain an action *892to recover a tax, and in referring to Savings Bank v. United States said:
“In that case the Supreme Court held that for the purposes of that collection and in some senses it was a debt; that the tax — which I presume was the same kind of a tax as this is — could be so collected.”
In Savings Bank v. United States the court referred to the established practice in England of actions and suits in the nature of debt being maintained by the crown for the recovery of taxes and duties, though such remedies were unauthorized by statute. The court also referred with approval to decisions in this country holding that the government was entitled to such remedy. United States v. Lyman, 1 Mason, 482, Fed. Cas. No. 15,647; Meredith v. United States, 13 Pet. 486, 10 L. Ed. 258. In the Lyman Case will be found an exhaustive discussion of the question by Justice Story and full reference to the English authorities.
The rule of Savings Bank v. United States finds abundant support, were any needed, in other decisions of the national courts. In Stockwell v. United States, 13 Wall. 531, 20 L. Ed. 491, it was said:
“Debt lies whenever a sum certain is due to the plaintiff or a sum which can readily be reduced to a certainty — a sum requiring no future valuation to settle its amount. It is not necessarily founded upon contract. It is immaterial in what maimer the obligation was incurred or by what it is evidenced, if the sum owing is capable of being definitely ascertained.”
See, also, Chaffee v. United States, 18 Wall. 516, 21 L. Ed. 908.
United States v. Pacific Railroad, 4 Dill. 66, Fed. Cas. No. 15,983, was a suit in equity to recover the amount of taxes claimed to be due from the railroad company under the internal revenue law and to enforce the lien of the taxes upon its property. Mr. Justice Miller, with whom Judge Dillon was associated, said:
“A good deal of argument on both sides has been presented to us upon the question whether an action to recover taxes is an action of debt, and whether an obligation to pay taxes to the government is a debt. *' ⅜ * In the view that all of us here take I think, however, that this discussion is immaterial. It is immaterial what you call the obligation of a citizen to pay his taxes. It is very clearly an obligation which may be enforced by the courts.”
The doctrine of Savings Bank v. United States was recognized as controlling by Justice Clifford and the district judge who sat with him in United States v. Hazard, Fed. Cas. No. 15,337. In United States v. Cobb (C. C.) 11 Fed. 76, it was said that the settled rule that import duties were personal debts of the importer for which action would lie had been applied to the internal revenue acts. In United States v. Dodge, 1 Deady, 124, Fed. Cas. No. 14,973, the Meredith Case, supra, is cited as authority for a personal liability of importer and consignee for import duties, and in the Meredith Case the liability was sustained upon general principles of law. United States v. Tilden, 9 Ben. 368, Fed. Cas. No. 16,519, was an action to recover income taxes; but it involved the questions now before us — whether the remedies specified in the act imposing the tax were exclusive, and whether an action in debt would lie. Judge Blatchford, after an exhaustive discussion of the Savings Bank Case, said that it decided every question before *893him. He also disposed of the contention that certain portions of the opinion in that case were obiter. United States v. Washington Mills, 2 Cliff. 601, Fed. Cas. No. 16,647, was an action to recover a revenue tax under the act of June 30, 1864. Justice Clifford said:
“Objection is also made to the right of the plaintiffs to recover in this caso, because it is insisted that the remedy by distraint as given in the ad: of (ion-gross is the exclusivo remedy in the case. $ v ⅛ Extended argument upon this subject, however, Is unnecessary, as the cuestión is regarded as settled by the decisions of the Supreme Court. The same objection was made in the case of Meredith v. United States, 13 Pet. (38 U. S.) 493, 10 L. Ed. 258, which was a suit for duties on imports. Duties due upon all goods inipo’Med, say the court in that case, constitute a personal debí due to the United States from the importer, independently of any lien on the goods or any bond given for the duties. ⅞ ⅜ * Assumpsit for taxes imposed under the ads of Con gross providing for internal revenue is also the proper form of action.”
In King v. United States, 99 U. S. 229, 25 L. Ed. 373, a case not involving the question before us, Justice Miller, in speaking for the court, said:
“The court held explicitly (in the Savings Bank Case) that the obligation to pay the lax did not depend ou an assessment made by any officer whatever, but that, the facta beix>g established ou which the tax rested, the law made the assessment, and an action of debt could be maintained to recover it, though no officer had made an assessment.
In United States v. Erie Railway Co., 107 U. S. 2, 2 Sup. Ct. 83, 27 L. Ed. 385, the court adverted to what had been decided in the Savings Bank Case,-and not with disapproval; also in United States v. Reading Railroad, 123 U. S. 113, 8 Sup. Ct. 77, 31 L. Ed. 138, and in United States v. Snyder, 149 U. S. 210, 13 Sup. Ct. 846, 37 L. Ed. 705.
There is no decision of the Supreme Court which, when rightly regarded, impairs the controlling authority of Savings Bank v. United States. The state courts are in conflict; the majority favoring the contrary doctrine. Judge Dillon, in his work on Municipal Corporations (volume 2, § 815), says:
“When ¡he power to levy the tax is plainly given, the right to collect by suit should not be taken to be impliedly denied, unless the intention of the Legislature, thai the special inode prescribed should be the only mode., appears with reasonable certainty.’’
Defendants rely upon Crabtree v. Madden, 54 Fed. 426, 4 C. C. A. 408, McClain v. Fleshman, 106 Fed. 880, 46 C. C. A. 15, and Fleshman v. McClain (C. C.) 105 Fed. 610. In the first of these it is said that taxes are not debts; but it should be observed that the case was an attempt to collect in the courts of one sovereignty taxes levied under the laws of another. The other case was an action to recover from a collector of internal revenue moneys alleged to have been illegally demanded and received by him under claim that they were due by virtue of section 6 of the war revenue act. To secure payment the collector threatened the plaintiff with “proceedings.” The Circuit Court and the Court of Appeals of the Third Circuit held that the penalties specifically prescribed in the act were the sole means of enforcing payment and that there was nothing in the act giving or implying author*894ity “to demand and accept money in lieu of the stamps that are required by law to be affixed.” The case of Savings Bank v. United States was not called to the court’s attention, nor was reference made to section 31 of the act.
In both the Lyman and Meredith Cases, supra, holding that duties were recoverable by the government in an action of debt, significance was attached to the employment in the act imposing the duties of the phrase “there shall be levied, collected and paid.” The same phrase is found in that part of the war revenue act now under discussion which relates to the documents, instruments, etc., of Schedule A. In other words, Congress enacted that there shall be “levied, collected and paid for and in respect of” those documents and instruments “the several taxes or sums of money set down in figures against the same respectively.” I apprehend that it is a matter of no importance at all to the question before us that for convenience in the administration of the law provision was made that the person liable to pay the money was authorized to do so by purchasing, affixing, and canceling stamps That is an administrative detail quite useful in giving evidence of compliance with the law, but having no bearing upon the inherent nature of the tax or upon the remedies of the government for default in payment. Nor does it signify anything to say that a tax or other due, duty, or obligation is a debt, or that it is not a debt, unless we are given to know the text in which the term “debt” appears. Debt has a range of meaning from the narrowest to the widest, both in the law and out of it. The text determines. Thus, a tax may be a debt within statutes concerning bankruptcy, insolvency, and the administration of estates of deceased persons, and yet not so in those relating to set-off and legal tender. That in a broad sense a tax is a debt has been recognized ever since the days of Blaclcstone, who said:
“Whatever, therefore, the laws order any one to pay, that becomes Instantly a debt which he hath beforehand contracted to discharge.” 3 Bl. Com. 158.
Again, I think it is quite clear that actions at law as means of collecting the taxes levied were expressly adopted by the war revenue act. That act imposed increased taxes upon fermented liquors, taxes termed by Congress “special taxes” on the occupations of bankers, brokers, and the like, additional taxes on tobaccos and dealers and manufacturers thereof, taxes in respect of the documents, etc., mentioned in Schedule A, and the medicines, etc., in Schedule B. It also imposed what were termed “excise taxes” on those engaged in refining petroleum and sugar, also taxes on the transmission of legacies and distributive shares of personal property and upon various other subjects of taxation. Section 31 of the act is as follows:
“That all administrative, special or stamp provisions of law, including the laws in relation to the assessment of taxes not heretofore specifically repealed are hereby made applicable to this act.”
I think that my associates are in error in saying that this section is under the heading “Legacies and Distributive Sha-fes. of Personal Property”; the inference suggested being that the section should be confined in its operation to the subject-matter of that heading. The er*895ror in this seems manifest from the reading of the section itself. By the very terms of section 31 pre-existing provisions of law were made applicable to the entire war revenue act, and not merely to the preceding sections 29 and 30, which deal with legacies and distributive shares of personal property. If this method of construction is applied to other portions of the act, it must with equal reason be said that section 28 comes under the heading “Excise Taxes on Persons, Firms, Companies and Corporations Engaged in Refining Petroleum and Sugar,” and is so confined in its operation; yet section 28 merely imposes a tax on every seat sold in a pa lice or parlor car and every berth sold in a sleeping car. At the time of the passage of this act there had existed for many years a comprehensive scheme for the collection of taxes constituíing a machinery thoroughly familiar to the officers charged with its operation and to a great extent illumined by the decisions of the courts and the rulings of administrative officials. Among those provisions is section 3213 of the Revised Statutes, under the title “Internal Revenue,” which provides, among other things, that taxes may be sued for and recovered in the name of the United States in any proper form of action before any Circuit or District Court of the United States for the district within which the liability to such tax is incurred or where the tax debtor resides. This provision has been upon the .statute books ever since 1866. The revenue act of 1864 (13 Stat. 336, c. 173) levied stamp taxes similar to those of the act: now before us. Section 41 authorized actions for the recovery of fines, penalties, and forfeitures prescribed by that act. The act of 1866 (14 Stat. 110, c. 184) left the stamp taxes in force, but amended section 41 so that the right of action extended to fines, penalties, and forfeitures prescribed by any' law and also to the taxes themselves. So, as the law stood in 1866, there were stamp taxes like that in the case before us, and the government might sue for their recovery. Some years afterwards the sections imposing the stamp taxes were repealed, but the remedy applicable to all taxes has remained to this day. Then in 1898 the war revenue act restored the stamp taxes. Can there be much doubt that without express provision the old general remedy for the recovery of all taxes applied to those imposed by the new act? Can there be any doubt whatever that to make the matter certain Congress inserted section 31?’
When the bill that became the war revenue, act was called up for consideration in the House of Representatives April 27, 1898, Mr. Diugley, who had charge of it, said, in explaining its scope and purport, that they had restored the adhesive stamp tax which existed from 1864 to 1872, placing it in large part on the basis of the old law as it stood in 1866, with certain additions (31 Cong. Ree. part 5, p. 4298). It seems to me altogether clear that by section 31 it was the intention of Congress to expressly adopt this old provision as part of the machinery for the enforcement of the taxes then levied. It made applicable to the act all “administrative provisions of law,” and if section 3213, Rev. St., is not an administrative provision, what is it? When we speak of laws relating to the administration of estates, we include laws prescribing the methods and remedies for the collection of the as*896sets and their distribution and the powers of officers in connection therewith. When we speak of administrative provisions of law in respect of taxes, I think we naturally include all those granting powers to executive officials and providing ways and means for collection. That this result was in tire mind of Congress I have little doubt. Mr. Dingley also said in explaining the general scope of the bill:
“These taxes have been' selected, first, because we have the machinery for the collection of them now, and they can be colle'cted with but slight additions to the force and with but slight increase of expense. We have selected them, also, because they were a source of revenue successfully seized upon during the Civil War,” etc. 31 Cong. Rec. p. 4297.
These same ideas were repeated during the progress of the bill until it finally was enacted into law., I am unable to see why the repeal in 1902 of the provisions imposing taxes on the transmission of legacies and inheritances and the retention of the machinery for the collection of those already accrued is of significance in this case. The liability for accrued taxes in respect of conveyances still remained, and so did section 31 of the act, and also section 3213 of the Revised Statutes of 1878. Those sections were not repealed. Nor can I perceive any relevancy in other acts of Congress which provide that the taxes imposed should be in addition to fines, penalties, and forfeitures prescribed for violation of particular commands of those acts, unless it is claimed that the absence of such provision in respect of the stamp taxes of the war revenue act is an argument that Congress intended that the payment of a fine under that act should operate as a payment of the tax and a release from further liability. I think that a statement of this argument is its refutation. No imprisonment was prescribed in the war revenue act for failure to stamp, except when accompanied by an intent to 'evade the provisions of the act. No such intent is charged in this case. That some states deny the power of Congress to disqualify an unstamped instrument as evidence was known when the act was passed, and the inefficacy of such a disqualification as a coercive means was apparent.
So much for the “fines, penalties and forfeitures” which it is claimed constitute the sole means of insuring payment of these taxes. It would be strange that Congress should so intend when it was endeavoring to provide the government with means vitally necessary for the conduct of a war — that it should not give the government the simple remedies which every individual has for the collection of a debt. If Congress has power to enact that a tax shall be levied, collected, and paid, and it does so enact, there is nothing so unusual or oppressive in an action for the recovery of the tax that such remedy should be denied, and it should not be denied, unless it is evident that it was the legislative intent to limit the means of enforcement to the penal provisions of the act.