Court Opinion

ID: 8639567
Source: CourtListenerOpinion
Date Created: 2022-11-24 19:50:56.424748+00
Date Added: 2024-06-11T16:56:03.289533
License: Public Domain

NELSON, District Judge.
The seventeenth section of the act of July 14, 1870 (16 Stat 201), provided for the tax upon the earnings, income and profits of the defendant during the month of July, 1870, at the rate of five per centum; and the fifteenth section of the same act reduced this tax to two and one-half per centum, and limited its continuance during the remaining portion of the year 1S70 and the year 1S71. There can be no doubt in our opinion in regard to the effect of the fifteenth section. The language is plain and unmistakable. The defendant’s counsel admit that this section imposed the tax at two and one-half per centum for the year 1S71, but deny that the language used imposing the tax “on the amount of all dividends of earnings, income, or gains hereafter declared by any bank,” etc., has the effect of imposing this two and one-half per centum tax upon the dividends declared, or undivided profits added to any funds, after August 1, 1870, and before the expiration of the year. In our opinion this view is not correct. The word “hereafter” refers to a time after the passage of the act; any other limitation or qualification would render this word, according to the context, meaningless.
The defendant’s counsel urge that, inasmuch as the first clause of the section enacts “that there shall be levied and collected for the year 1871, a tax,” etc., it excludes the idea that any tax could be levied and collected in the year 1870. Admit that such is the case, and still there is no inconsistency m the subsequent phraseology of the section. A tax could certainly be levied and collected in 1S71, upon the earnings, income, etc., of 1S70. This section fixed the period when the tax ceased, and imposed it upon the earnings, income and profits of certain institutions during the years 1S70 and 1S71.
In the language of Mr. Justice Miller in Stockdale v. Insurance Co. [20 Wall. (87 U. S.) 323], when considering the act of 1870: “It repealed several sections of the internal revenue law absolutely. It fixed a period in the future for the cessation of others, and it reduced the income tax in a certain class of cases from five to two and one-half per centum, and provided for its continuance through the years 1870 and 1871, at the end of which all income tax was to cease.” If there was any ambiguity of language used in this section, and we should examine it in the light of all the surrounding legislation upon the subject of taxation of the earnings, income and gains of banks,, and other institutions therein named, there could be no satisfactory reason assigned, or explanation given, why congress, having imposed the taxes up to August 1, 1870, should rescind them for the remaining portion of the year 1870, and renew them during the year 1871. The complaint states facts sufficient to show a failure to make a list or return, which, if true, would entitle the government to recover the penalty denounced by the act.
The demurrer is overruled with leave to answer in twenty days after notice of this decision or judgment. Ordered accordingly..