Court Opinion

ID: 9638049
Source: CourtListenerOpinion
Date Created: 2023-08-22 15:31:29.198604+00
Date Added: 2024-06-11T18:10:03.123102
License: Public Domain

L. HAND, Circuit Judge
(dissenting).
I agree that the defendant cannot invoke § 3443(d). Section 1722 was indeed a general section, when it appeared in the Act of 1924 as § 1000; and since then it has been distributed among various “Chapters” of the Code. However, § 3443(d) is particularly limited to Chapter 29, and a tax on cabarets is not a Manufacturers Excise. I cannot believe that the word, “special,” in § 1722, or in the other places to which § 1000 has been distributed, includes provisions so expressly limited as is § 3443 (d). Besides, § 3443(d) speaks of “articles,” and “purchases” and “vendees,” all of which are not appropriate to admission fees. On the other hand, all refunds are based upon the theory of unjust enrichment, as laid down by Lord Mansfield in Moses v. Macferlan, 2 Burr. 1005; and, although the defendant has no positive statutory sanction for its defence, the plaintiff on its part has no standing to claim the refund, unless it can show that it is inequitable for the defendant to keep the money. Bull v. United States, 295 U.S. 247, 55 S. Ct. 695, 79 L.Ed. 1421.
In disposing of that question I shall assume what is not, strictly speaking, in the record, but what, it seems to me, is fairly inferrable from it: I shall assume that, when the plaintiff charged its guests with the amount of the tax for which it supposed itself liable, it added the amount as a separate item and described it as a tax which it must pay, and which it was apparently collecting from the guests in order to pay it to the Treasury. If the plaintiff wishes to dispute this, I should allow it to do so, because I regard the distinction as crucial whether it made the charge in that form, or merely included in the bills rendered the amount of the supposed tax without saying anything about it. If it said nothing, I should agree with my brothers that the guests had no legally recognizable interest in the money collected, which gave them any claim to it superior to the plaintiff’s; and in that case some statute would be necessary to deprive the plaintiff of its right to recover. On the other hand, if the plaintiff collected the money under what the guests must have understood to be a statement that it was obliged to pay it as a tax, and that it meant to do so, the money was charged with a constructive trust certainly so long as it remained in the plain*71tiff’s hands. For example, if, before the plaintiff had paid it, the Treasury had declared that the tax was not due, the plaintiff could not have successfully resisted the guests’ demand that it be turned back to them, the very purpose for which they had paid it having then become incapable of execution.
I can see no difference between that situation and the one actually at bar. When the plaintiff, having taken the money charged with the constructive trust, paid it to the collector, a claim against the collector and the defendant at once arose in its favor, based upon the collector’s unlawful exaction. That claim was certainly a substitute for the money whose payment created it; in equity it was the same as though the plaintiff had used the money actually to purchase the claim; and, if a constructive trust attached to the money, the same trust attached to the claim. Shearer v. Commissioner, 2 Cir., 48 F.2d 552, 554, held nothing to the contrary; it turned upon whether the purchaser of the motor had paid a tax; a matter of statutory definition. If the plaintiff collects this claim, it will therefore hold it as trustee for its guests. That, I agree, would be no answer, if there was any possibility that the plaintiff would, or indeed could, distribute it to its guests; the defendant could not keep the money merely because it feared that the plaintiff would be truant to its duty. But it is plain that the plaintiff will not be able so to distribute the recovery, however much it may wish; or, at any rate, if that is too much of an assumption, certainly it is prima facie true, and the plaintiff should be required to prove that it can and will distribute it. That being so, the situation as it comes to us is the familiar one, in which the equities are equal and legal title should prevail. Williams v. Jackson, 107 U.S. 478, 2 S.Ct. 814, 27 L.Ed. 529; Ballard Bros. Fish Co. v. Stephenson, 4 Cir., 49 F.2d 581; Taggart v. Keim, 3 Cir., 103 F.2d 194, 199.