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Scholey v. Rew/Opinion of the Court

ERROR to the Circuit Court for the Northern District of New York, in which court Scholey, a British subject, sued Rew, collector of internal revenue, to recover the amount of a 'succession tax' which Rew, as collector, had demanded of him, Scholey, and which-asserting it to be illegal-Scholey had paid only on compulsion and under protest.

The case was found specially, by the Circuit Court, on a waiver of a jury, under the act of March 3d, 1865, which authorizes such a finding by the court, and enacts that when the finding is special the review by this court may extend to the sufficiency of the facts found to support the judgment. The case so found was thus:

Elwood, of Rochester, New York, died in 1863, leaving a widow and three minor children, and a large amount of personal property, besides certain real estate.

He left also a will, by which, after certain bequests of personal property, he directed that all the residue of his estate, real and personal, should be divided by his executors between his wife and three children, according to the statutes of New York, as if he had died intestate; that is to say, as the Reporter supposes though the language or effect of the statute was nowhere stated in the record or briefs-one-third to the wife and two-thirds between the children. And he appointed his wife and two friends, Mumford and Russel, executors of the will.

In May, 1864, Russel, as acting executor, presented to the Supreme Court of New York a petition, setting forth that the assets of the estate were about $500,000, chiefly invested in personal securities, but including a large amount of money uninvested; that it was deemed for the interest of the estate to invest a portion of the assets in productive real estate in Rochester; and asking authority to make the purchase of certain property described, in that city, for $73,000.

In pursuance of this prayer an order was made authorizing the executors to invest so much as should be necessary of the assets of the estate in the purchase of the real estate described; and 'to purchase and to hold the same as such executors.'

Under the authority of this order, the executors in May, 1864, took a conveyance of the premises to themselves as executors of Elwood's will, the survivor or survivors of them, their successors or assigns, for $72,602. These premises were thenceforth styled and spoken of as the 'Elwood lot,' and, after being improved, as the 'Elwood block.'

At the time of Elwood's death, he owned four parcels of real estate in Rochester, one of them a vacant lot on Mill Street, which parcels were altogether of the value of $50,000. After the purchase of the Elwood lot the executors, by authority of the Supreme Court of New York, erected a building on the vacant lot on Mill Street, which cost $15,111, and also made improvements upon the Elwood lot at a cost of $49,006, which increased the value of the property at least to that amount. All these improvements were completed in the spring of 1868, and were paid for, as was also the purchase price of the Elwood lot, out of the personal property of Elwood's estate.

In October, 1867, Mrs. Elwood, the widow of Elwood, was married to Scholey, the plaintiff in the present case; and in September, 1869, she died, leaving a will. By her will, after five annuities during the lives of the five annuitants, amounting altogether to $4100, annually, certain specific legacies of personal property, and certain legacies of money, amounting to $6500, she gave all the residue of her property, real and personal, to her husband, the plaintiff, and appointed him with the above-named Mumford and one Worcester, executors.

In February, 1870, Mumford, as sole surviving executor of Elwood's will (Russel having died in 1866), instituted joint proceedings in the Supreme Court of New York against the three children of Elwood, against Scholey, Worcester, and Mumford, as coexecutors of Mrs. Scholey's will, and against Scholey individually as her husband and residuary legatee.

The complainant alleged that Mrs. Scholey acquired some interest in or title to the Elwood block, and the once vacant lot on Mill Street, by reason of the same having been bought and improved out of Elwood's personal estate, and that Scholey, by virtue of Mrs. Scholey's will, claimed some title to or interest in it. It prayed that Mumford's accounts, as sole surviving executor of Elwood, and Mrs. Scholey's as sole executrix, might be settled and adjudged final and conclusive, and that her executors might be required to render accounts in furtherance of that purpose, including an account of all rents or income of said real estate received by her; that an account might be taken of all Elwood's personal estate, and its value at the time of his death and at all times afterwards; that Mrs. Scholey's share in that personal estate at the time of her death and at the time of the accounting, and also 'what right or title she had in and to the said real estate, bought or improved out of the personal estate of' Elwood, might be determined; that when such share or interest should be determined, it should be partitioned from the body of Elwood's estate; that the shares of the three children in their father's personal estate might be determined and partitioned off to them in severalty, and that thereafter the share of each child might be kept separate, to the end that such share, with its increase, might be paid to each respectively as he or she should become entitled to receive it.

Scholey answered, admitting the making of the various orders and the investment of the sums mentined in the purchase and improvement of real estate; denied the binding character of the orders, but admitted the propriety of the investments in case the advantages thereof were to be equitably shared by the parties interested in the funds invested, in proportion to their respective interests. He admitted that no distribution of Elwood's personal estate had been made, and joined in the prayer for an accounting and distribution, praying further that upon Mrs. Scholey's share being ascertained, the same, or such part of it as should not be required to provide for the legacies given by her will, might be delivered to him as her residuary legatee.

The other defendants also answered, and the same was referred to three referees to try the issues; to take and state the several accounts mentioned in the complaint; to determine the extent and value of the interest in Elwood's personal estate, which Mrs. Scholey's executors, and her husband as her residuary legatee, were entitled to receive under her will; to determine the share of each of Elwood's children in his personal estate; to determine whether actual partition of his personal estate could be made between Mrs. Scholey's executors and Mumford as Elwood's surviving executor, and if so, to make such partition; and to determine whether Elwood's personal estate could be actually partitioned as between his three children, and if so to make such partition.

These referees reported on the 5th of November, 1870, among other things, as follows:

That Elwood's personal estate at his death amounted to $331,709, and at the date of the report to $492,374, which last sum included the building on the Mill Street lot, at $15,111 and the Elwood block at $135,000; and that the value of such personal estate subject to partition at the latter date, after deducting three specific bequests or charges in Elwood's will, was $467,402, which sum included the Elwood block and Mill Street building at the above valuation.

That the extent and value of the shares and interests of the several parties in Elwood's estate subject to partition, after making all proper deductions, was as follows:

Mumford, Worcester, and Scholey, as executors

of Mrs. Scholey, and Scholey as her residuary

legatee, $154,894

$154,894

That the referees had set apart to Elwood's three children their respective shares as above stated, schedules of which similar to the foregoing were given, and each schedule contained as the last item:

'One-third of the appraised valuation of the Elwood block and Mill Street building, $50,037'

That they had not included the Elwood block in the partition between Elwood's three children, because it was not capable of actual partition.

A judgment was entered upon this report December 8th, 1870, reciting the partition, including the setting apart to each of the children of the undivided one-third of the Elwood block; confirming such partition, and adjudging that the complainant Mumford should remain in possession of the Elwood block as trustee for the children until they should respectively become of age.

Upon these facts the plaintiff here, Scholey, was assessed for a succession tax of six per cent. upon $45,000, as the value of one-third interest in the Elwood block. He asserted that he was not liable to such tax; that he never was entitled to such real estate or any part of it, and that he never had any interest in it as a successor. He appealed from the assessment to the Commissioner of Internal Revenue, who decided the appeal adversely to him, whereupon he paid the defendant, May 30th, 1871, the amount so assessed, being $2700, under compulsion and protect, and on the following day demanded repayment thereof, which was refused.

Upon this case, found as already said by the court, the plaintiff's counsel requested the court to order judgment against the defendant for $2700 and interest. But the court held, as a matter of law, that on the statutes governing the case and immediately hereinafter cited the defendant was entitled to judgment, and judgment was entered accordingly.

The assignment of errors was thus made on the brief of the plaintiff in error:

'The sole question in the case is, was the plaintiff liable to a succession tax upon this property? The sole error assigned is the decision of the court in the affirmative.'

The statute in relation to 'succession taxes,' in force at the time of Mrs. Scholey's death, in September, 1869, was the original Internal Revenue Act of June 30th, 1864, as amended by the act of July 13th, 1866.

That for the purposes of the act 'the term 'real estate' shall include all lands, tenements, and hereditaments, corporeal and incorporeal;' and that the term 'succession' shall denote the devolution of title to any real estate.'

'That every past or future disposition of real estate by will, deed, or laws of descent, by reason whereof any person shall become beneficially entitled, in possession or expectancy, to any real estate, or the income thereof, upon the death of any person dying after the passing of this act, shall be deemed to confer, on the person entitled by reason of any such disposition, a 'succession."

That 'there shall be levied and paid to the United States in respect of every such succession as aforesaid, according to the value thereof,' duties at rates depending upon the degree of consanguinity between predecessor and successor; and where the successor is 'a stranger in blood,' at the rate of six per cent.

That the duty, 'shall be paid at the time when the successor, or any person in his right or on his behalf, shall become entitled in possession to his succession, or to the receipt of the income and profits thereof;' except that if it afterwards becomes more valuable by the determination of a prior charge upon or interest in it, an additional duty shall then be paid on its increased value.

That 'the interest of any successor in moneys to arise from the sale of real estate, under any trust for the sale thereof, shall be deemed to be a succession chargeable with duty under this act, and the said duty shall be paid by the trustee, executor, or other person having control of the funds.'

Also, that 'the interest of any successor in personal property, subject to any trust for the investment thereof in the purchase of real estate to which the successor would be absolutely entitled, shall be chargeable with duty as above.'

The succession tax is by the act creating it made a 'lien' on the land, 'in respect whereof' it is laid, and is to be 'collected by the same officers, in the same manner, and by the same processes as direct taxes upon lands under the authority of the United States.'

By the same statute which imposes the duty on the succession to real property, a duty is also laid on legacies and distributive shares of personal property. But while the rates of duty, as in the case of real property, vary with the degree of consanguinity, all personal property passing from wife to husband is exempt from tax, as well as that which passes from husband to wife, the succession to real property being exempt only in the latter case.

Mr. Theodore Bacon, for the plaintiff in e ror:

I. The statute imposing this duty is unconstitutional.

It is within the prohibitions of the Constitution, which ordain that—

'Direct taxes shall be apportioned among the several States. . . according to their respective numbers.'

And that—

'No capitation or other direct tax shall be laid unless in proportion to the census,' &c.

The tax is a 'direct tax,' within all the decisions upon this subject, and it will be admitted that it is not laid in proportion to the census.

The opinions in the carriage-tax case, Hylton v. The United States, while narrowing down the constitutional restriction to the utmost, distinctly recognize 'a tax on land' as the only direct tax contemplated by the Constitution, except a capitation tax.

These views are approved in Pacific Insurance Company v. Soule.

The present is a tax on land, if ever one was. No doubt it is to be paid by the owner of the land, if he can be made to pay it; but that is true of any tax that ever was, or ever can be imposed on property. And as if to prove how directly the property, and not the property owner, is aimed at, the duty is made a specific lien and charge upon the land 'in respect whereof' it is assessed.

More than this: as if to show how identical, in the opinion of Congress, this duty was with the avowedly direct tax upon lands which it had levied but a year or two before, it enacts that this succession tax alone, out of a great revenue system, should be collected by the same officers, in the same manner, and by the same processes as direct taxes upon lands under the authority of the United States.

II. But, assuming the act to be valid, this case is not within it.

1. There has been no 'devolution of title to any real estate,' either upon the plaintiff or upon any one else. And this is the statutory definition of a 'succession.'

The title to the Elwood block is, where it has always been since May, 1864, in the executors of Elwood.

2. The plaintiff has not 'become beneficially entitled, in possession or expectancy, to any real estate, or the income thereof.'

His testatrix never was 'entitled' to the Elwood block, or to the income from it. Whatever rights she had were personal claims against the executors for a certain proportional interest in Elwood's personal property.

3. The orders of the Supreme Court of New York, obtained ex parte, assuming to authorize the acting executor of Elwood's will to invest certain funds is this block, were without effect, except as being a sort of evidence of good faith in the executors in making the investment. The beneficiaries under the will were still entitled to hold them to account for the personalty which came to their hands; and if the investment should prove unprofitable, to deny the propriety of it, and compel them to respond for the amount invested, as upon an abuse of their discretion. The circumstance that a justice of the Supreme Court concurred with them in considering the investment a desirable one, might tend to prove their good faith, but it could not discharge them.

The only investments authorized in the State of New York for funds like these, are such as allow of their being always subject to recall, principal as well as interest, for the benefit of the cestuis que trust, and these are well settled to be government stocks and loans upon real estate to much less than its value.

4. But conceding the right of the executors to make the investment, their duty would be clear to sell the property again and reconvert it into government stocks or bonds and mortgages, if at any time they should be of opinion that the preservation of the fund demanded such change.

If they had, at least any time before the Elwood block was specifically set apart from the body of the estate to the three i fant children, judged such sale to be advantageous, neither Mrs. Scholey in her lifetime, nor this plaintiff after her death, could have forbidden such change of investment. And notwithstanding all objections on the part of any beneficiary of the estate, the executors would have given absolute title, legal and equitable, to the purchaser, by their deed.

Nor has there ever been a time when Mrs. Scholey in her lifetime, or this plaintiff since her death, could compel either a partition or a conveyance of a share of the block, or an assignment of a fixed proportion of its income. How, then, could either of them be said to have 'title' to either the block or its income; and how would that 'title' be described?

Possibly all the beneficiaries together might have ratified the investment, but the dissent of one would have deprived an attempted ratification of all force. And three were in fants and incompetent either to ratify or repudiate.

If, upon the distribution of the estate, this plaintiff had insisted that he was entitled, as the assessor asserts, to one-third of the Elwood block in severalty, both the executors and the court would have repudiated his claim, and would have told him, as their decree in fact told him, that his right was only to receive personal securities and money to an amount to be ascertained upon an accounting.

If Mrs. Scholey had died intestate, it is expressly adjudicated that her interest in the Elwood estate, except so far as it was realty at the time of Elwood's death, would have passed as assets to her administrator, instead of descending to her heirs.

And this proposition seems to us conclusive of this case, for the statute nowhere distinguishes, in laying duties upon 'legacies or distributive shares of personal property,' on the one hand, and upon 'successions to real estate' on the other, between descents by will and by operation of law. The fact that Mrs. Scholey made a will, while it makes an important difference as to who shall receive her property, can make none whatever as to its liability to pay a tax to the United States.

5. But this plaintiff never got anything like the rights even which his testatrix had. Her interest in this block has been appraised by the assessor at $45,000. But before the residuary legatee gets anything from her estate he must satisfy special legacies amounting to $6500, and pay certain annual charges for an indefinite period, amounting to $4100 a year, to say nothing of debts. It does not appear that there is any residuum for the plaintiff. But if, upon his final accounting as administrator, it shall turn out that there is a residue-which may well be less than the amount upon which he has paid 'succession duty'-with what propriety is his share to be called real estate and charged with this tax, any more than the shares of the other distributees?

6. If it should be argued that he had, before distribution of the Elwood estate, some title 'in expectancy' to the block or some part of it, it was not until he should become entitled 'in possession' that the duty was to be paid. That certainly had not happened when this tax was levied and collected.

7. So far as cases at all analogous appear in the books, the authorities seem to support our position.

III. ''The plaintiff is an alien. If Mrs. Scholey's alleged interest in the Elwood block was an 'interest in real estate,' the alleged devise of it to him was absolutely void by statute of New York''.

'SECTION 4. Every devise of any interest in real property, to a person who, at the time of the death of the testator, shall be an alien, not authorized by statute to hold real estate, shall be void. The interest so devised shall descend to the heirs of the testator; if there be no such heirs competent to take, it shall pass under his will to the residuary devisees therein named, if any there be, competent to take such interest.'

If, under the laws of New York, Scholey got no 'interest in real estate,' he cannot be made to pay tax upon an interest.

It is no answer to say: this is an interest in real estate; the plaintiff has in fact got it; therefore he ought to pay duty on it. For if both premises were true the syllogism is not complete. It is further necessary, in order that the duty should attach, that he should have taken it 'by will, deed, or laws of descent.' There is no pretence of a deed. The will, so far as this is concerned, is void. Instead of taking by the law, he takes in spite of the law.

Mr. C. H. Hill, Assistant Attorney-General, contra, for the collector, defendant in error:

I. The succession tax is not a 'direct tax' within the meaning of that term in the Constitution, and is constitutional and valid. The construction always given to Article 1, indicates that the only taxes which the Constitution regards as direct taxes, are capitation taxes and taxes imposed immediately on land, and which are capable of apportionment without producing any inequality or injustice.

The term seems to have been derived from the Roman law, which recognized two kinds of direct taxes; a capitation tax (capitis tributum) and a land tax (agri tributum). Italy and privileged towns, which were exempted from these taxes, paid a tax of five per cent. on all testamentary successions (vicesima hereditatum), and on manumitted slaves, which together with customs and excises, seems to have been first imposed in the time of Augustus.

If all taxes that political economists regard as direct taxes should be held to fall within those words in the Constitution, Congress would be deprived of the practical power to impose such taxes, and the taxing power would be thus greatly crippled; for no Congress would dare to apportion, for instance, the income tax. Hamilton, whose brief is preserved to us in his works published by Congress, said in arguing Hylton v. United States:

'It would be contrary to reason and every rule of sound construction, to adopt a principle for regulating the exercise of a clear constitutional power which would defeat the exercise of the power.'

A succession tax is not a direct tax to any greater extent than the income tax, which was held by Mr. Justice Strong, in the Third Circuit, to be constitutional and valid.

It is assessed upon the landowner 'in respect of' the property. Making it a lien upon the land is only a method of securing the tax, and does not make the tax a direct tax on land. The distinction is illustrated by the rule of law that a covenant in a lease to pay taxes assessed on the demised land, does not cover a tax imposed on the landlord in respect of the land.

II. Under his wife's will, Scholey took an equitable interest in one-third of the esta e in question, and he is liable to pay a succession tax in respect thereof, under section 127 of the act of June 30th, 1864. He became entitled to the income of one-third of the Elwood block, upon the death of his testatrix, that is to say, of his wife, who had herself invested the personal property left by her first husband in this estate; and he consequently became liable to pay a succession tax in respect of the same.

If the Supreme Court had jurisdiction to authorize the investment of the personal estate of Elwood, in the purchase of real estate by his executors, its decree in the premises was in the nature of a proceeding in rem, and bound all persons interested therein; and there is nothing in the record to show that its jurisdiction was not complete.

But there is no question here as to whether equity would treat the Elwood block as real or personal property. The property of Mrs. Elwood devised under her first husband's will had been converted by her own act into real property before she devised the same to her second husband, and this brings the case within the language of the statute. If Scholey thus acquired an interest in the Elwood block, the subsequent partition, whereby this entire estate was set off to the heirs of Elwood, does not relieve him from liability to pay a succession tax in respect of his share of it. He received its full value in other property.

The objection that Scholey being an alien, cannot take real estate by devise under the laws of New York, but that such pretended devise is made by them absolutely void, does not seem to have been taken below; but if open to be taken here, is of no avail, for two reasons:

1st. There is nothing to show that Scholey has not been authorized to hole real estate in the manner provided for in the statute cited by him. Indeed, as he received the benefit of the devise, the presumption would be that he had been so authorized.

2d. He having never disclaimed any interest in the devise, and having received its value in the partition of the Elwood estate, from those to whom it would descend if the devise to him is void, is estopped to set up alienage in order to avoid the payment of the succession tax due on the estate. Having received the benefit of the devise, he must bear any burden attaching to it; and the government being entitled to a tax from some one in respect of this estate, may take advantage of the estoppel, being precluded by Scholey's action from claiming a tax from the heirs at law.

Mr. Justice CLIFFORD delivered the opinion of the court.

Questions of importance were discussed at the bar, some of which it cannot be admitted are properly presented for decision. Such questions only as are specified in the assignment of errors are, in general, to be regarded as open to the plaintiff, and it is very doubtful whether an assignment that the decision of the Circuit Court is for the wrong party is sufficient to present any question for decision, but inasmuch as the findings of the court in this case are in their nature a special finding, the better opinion is that their sufficiency to support the judgment is open to re-examination.

Enough has already appeared to show that the plaintiff took under his wife's will an equitable interest in one-third of the estate in question, and the United States contend that in view of those facts he is liable to pay a succession ta or duty in respect of the same by virtue of the act passed to levy such taxes, as it applies to every past or future disposition of real estate by will, deed, or laws of descent, by reason whereof any person shall become beneficially entitled in possession or expectancy to any real estate, or the income thereof, upon the death of any person dying after the passage of that act.

Apply the rule to be deduced from that enactment to the facts found by the court, and it must follow that the argument of the United States is well founded, unless some one or more of the special objections to the tax set up by the plaintiff are sufficient to exonerate him from such liability. Those objections are as follows: (1.) That the act imposing the duty is unconstitutional and void. (2.) That the case is not one within the act imposing the tax or duty. (3.) That the plaintiff being an alien the devise to him is absolutely void.

1. Support to the first objection is attempted to be drawn from that clause of the Constitution which provides that direct taxes shall be apportioned among the several States which may be included within the Union, according to their respective numbers; and also from the clause which provides that no capitation or other direct tax shall be laid unless in proportion to the census or amended enumeration; but it is clear that the tax or duty levied by the act under consideration is not a direct tax within the meaning of either of those provisions. Instead of that it is plainly an excise tax or duty, authorized by section eight of article one, which vests the power in Congress to lay and collect taxes, duties, imposts, and excises to pay the debts and provide for the common defence and general welfare.

Such a tax or duty is neither a tax on land a capitation exaction, as subsequently appears from the language of the section imposing the tax or duty, as well as from the preceding section, which provides that the term succession shall denote the devolution of real estate; and the section which imposes the tax or duty also contains a corresponding clause which provides that the term successor shall denote the person so entitled, and that the term predecessor shall denote the grantor, testator, ancestor, or other person from whom the interest of the successor has been or shall be derived.

Successor is employed in the act as the correlative to predecessor, and the succession or devolution of the real estate is the subject-matter of the tax or duty, or, in other words, it is the right to become the successor of real estate upon the death of the predecessor, whether the devolution or disposition of the same is effected by will, deed, or laws of descent, from a grantor, testator, ancestor, or other person from whom the interest of the successor has been or shall be derived; nor is the question affected in the least by the fact that the tax or duty is made a lien upon the land, as the lien is merely an appropriate regulation to secure the collection of the exaction.

Indirect taxes, such as duties of impost and excises and every other description of the same, must be uniform, and direct taxes must be laid in proportion to the census or enumeration as remodelled in the fourteenth amendment. Taxes on lands, houses, and other permanent real estate have always been deemed to be direct taxes, and capitation taxes, by the express words of the Constitution, are within the same category, but it never has been decided that any other legal exactions for the support of the Federal government fall within the condition that unless laid in proportion to numbers that the assessment is invalid.

Whether direct taxes in the sense of the Constitution comprehend any other tax than a capitation tax and a tax on land is a question not absolutely decided, nor is it necessary to determine it in the present case, as it is expressly decided that the term does not include the tax on income, w ich cannot be distinguished in principle from a succession tax such as the one involved in the present controversy.

Neither duties nor excises were regarded as direct taxes by the authors of the Federalist. Objection was made to the power to impose such taxes, and in answering that objection Mr. Hamilton said that the proportion of these taxes is not to be left to the discretion of the national legislature, but it is to be determined by the numbers of each State, as described in the second section of the first article. An actual census or enumeration of the people must furnish the rule, a circumstance which shuts the door to partiality or oppression. In addition to the precaution just mentioned, said he, there is a provision that all duties of imposts and excises shall be uniform throughout the United States.

Exactions for the support of the government may assume the form of duties, imposts, or excises, or they may also assume the form of license fees for permission to carry on particular occupations or to enjoy special franchises, or they may be specific in form, as when levied upon corporations in reference to the amount of capital stock or to the business done or profits earned by the individual or corporation.

2. Sufficient appears in the prior suggestions to define the language employed and to point out what is the true intent and meaning of the provision, and to make it plain that the exaction is not a tax upon the land, and that it was rightfully levied, if the findings of the court show that the plaintiff became entitled, in the language of the section, or acquired the estate or the right to the income thereof by the devolution of the title to the same, as assumed by the United States.

Doubt upon that subject, it would seem, cannot be entertained if it be conceded that the subject-matter of the assessment is the devolution of the estate or the right to become beneficially entitled to the same, or the income thereof, in possession or expectancy, under the circumstances and conditions specified in the other parts of the section.

Decided support to the proposition that such is the true theory of the act is derived from the fact that the act of Parliament from which the particular provision under discussion was largely borrowed has received substantially the same construction.

Suppose that to be the true construction of the act imposing the duty, and it is undeniable that the case before the court falls within its operation, unless the fact that the plaintiff is an alien exonerates him from such an exaction. Proof of the introductory proposition is found in the conceded fact that the testatrix in her lifetime invested the personal property left her by the will of her first husband, or some part of it, in the said real estate, and that the plaintiff became entitled to the same or to the income of one-third of the same at her decease, and consequently became liable to pay the succession tax or duty in question unless he is exempted from the liability by his alienage.

He does not deny that the investment of the personal property in the manner stated was made by the executrix and her associates, under the dec ee of the Supreme Court of the State, nor does he attempt to impugn the regularity or the validity of those proceedings, nor is there anything in the record that would enable him to do so with success if the attempt was made. Proceedings, it is true, were instituted to effect a partition of the estate of the testatrix, and it is equally true that those proceedings were carried forward to final judgment, from which it appears that the entire block, in respect of which the controversy has arisen, was set off to the heirs of his deceased wife, but it is clear that that circumstance cannot relieve him from liability to pay a succession tax in respect to his share of the estate, for the obvious reason that he received its full value in other property assigned to him belonging to the same estate.

Beyond what may be inferred from the finding of the court, that the plaintiff is an alien, it does not appear that the defence of alienage was set up in the court below, nor does the assignment of errors contain any specification of such a question, except that the plaintiff is not liable to a succession tax and that the decision of the court below that he is so liable is erroneous. Such an assignment is not a compliance with the rule upon that subject, but the court is not inclined to rest the decision upon that ground.

Admit that the question is open, still the court is of the opinion that it cannot avail the plaintiff in this case, even under the comprehensive provision of the State statute. By that statute it is enacted that every devise of any interest in real property to a person who, at the time of the death of the testator, shall be an alien, not authorized by statute to hold real estate, shall be void.

Nothing appears in the record of an express character to show that the plaintiff was ever authorized by statute to hold real estate, but it does appear that he claimed a one-third interest in the block in respect of which the succession tax was levied, and that his claim was recognized by the court and all the parties in the partition suit, and that the same was finally adjudged to him in the judgment of partition by an allowance for the value in other property left by the testatrix; nor can it make any difference that the corresponding allowance to him was of personal property, never converted into real estate, as the record of the proceedings in partition shows that the referees, whose report was confirmed and adopted by the court, adjusted the amounts as if the block was personal property, probably for the reason that the consideration of the same at the time of the investment was paid out of the personal property left by the former husband of the testatrix.

Difficulty, it may be admitted, would attend the solution of the question if the issue was one between the plaintiff and the heirs at law of the testatrix, but the record shows that the testatrix became the owner of the property in the manner before stated, and that the interest claimed by the plaintiff was devised to him by the actual owner, and that he claimed it as if entitled to it under the will of the testatrix, and that he received one-third part of the income of the same from her decease to the commencement of the suit for partition, and that the claim made by him was fully recognized and included in the judgment of partition, and nothing is shown to support the theory that he is not still in the undisputed enjoyment of the allowance made to him in substitution for the one-third interest of the estate in respect of which the succession tax was levied.

Except for the purpose of avoiding the tax or duty due to the United States he has always claimed the benefit of the devise and still claims it for every other purpose. Had he disclaimed the right to take the interest devised to him the actual devolution of the estate would have given the right of possession to the heirs, either by the will or by the law of descent, and in that event the United States would not have met with any embarrassment in levying and collecting the succession tax or duty. By the terms of the will the devise was to the plaintiff, and inasmuch as he claimed the benefit of it without opposition, and has continued to enjoy its use, as before explained, to the present time, it followed that the heirs could not be subjected to such an exaction.

Tested by these suggestions it is clear that the claim of the plaintiff to recover back the amount of the tax or duty is inequitable, and in that regard the court here concurs in the proposition submitted by the United States, that the plaintiff is estopped to set up alienage as a ground of recovery under the circumstances of this case.

Having accepted the beneficial interest under the will, and being in the undisturbed enjoyment of the same, he must bear the burden which legally attaches to the interest.

JUDGMENT AFFIRMED.

title: Scholey v. Rew/Opinion of the Court


text: Talk:Scholey v. Rew/Opinion of the Court

license: Creative Commons - Attribution Share-Alike - https://creativecommons.org/licenses/by-sa/4.0/


text: Reedy v. Scott

title: Reedy v. Scott


text: Talk:Reedy v. Scott

title: Talk:Reedy v. Scott


text:
Reedy v. Scott/Opinion of the Court

APPEAL from the Circuit Court for the Southern District of Ohio.

'SECTION 53. Whenever a patent is inoperative or invalid by reason of a defective or insufficient specification, or by reason of the patentee claiming as his own invention or discovery more than he had a right to claim as new; if the error has arisen by inadvertence. . . the commissioner shall on the surrender of such patent,. . . cause a new patent for the same invention, and in accordance with the corrected specification, to be issued to the patentee. . . for the unexpired part of the original patent, the surrender of which shall take effect upon the issue of the amended patent. . . . And the patent so reissued, together with the corrected specification, shall have the effect and operation in law on the trial of all causes thereafter arising, as though the same had been originally filed in such corrected form.'

This court in construing similar language in the previous Patent Act of 1836, said:

'A surrender of the patent to the commissioner. . . means an act which in judgment of law extinguishes the patent. It is a legal cancellation of it, and hence can no more be the foundation for the assertion of a right after the surrender than could an act of Congress which has been repealed. . . . The antecedent suits depend upon the patent existing at the time they were commenced, and unless it exists, and is in force at the time of trial and judgment, the suit fails.'

In this state of the law this case arose. It was thus:

Reedy filed a bill, January 20th, 1871, in the court below, the case being No. 1434, alleging the grant to him, as inventor, of letters-patent of the United States, No. 78,829, dated the 9th of June, 1868, for an improvement in hoisting machines; an 'exemplified copy of which letters' the complainant alleged that he was ready to produce in court when required. No copy of any sort, however, was annexed to the bill.

The bill then averred that one Scott, without leave had, since the 9th of June, 1868, infringed the right of the complainant by making, using, and vending to others to be used, a number of machines-the exact number unknown-which 'in principle and mode of operation' were the same as those described in the letters-patent.

The bill prayed for a subpoena, a discovery, an account, a preliminary injunction, and, upon the final hearing of the cause, for special and general relief.

A subpoena issued on the day of the filing of the bill, and was served.

On the 8th of March, 1871, the defendant having failed to answer, it was ordered that the bill should be taken as confessed.

On the next day this order was set aside, and the complainant had leave to file, and did file, a supplemental bill.

The supplemental bill related the substance of the original bill, and averred, 'by way of supplement,' that, since the filing of the original bill, the complainant had made a surrender of the letters-patent mentioned in it, dated June 9th, 1868, for the purpose of obtaining a reissue of the said letters upon an amended specification, drawings, &c. And that, on the 21st of February, 1871, such a reissue was granted by the Commissioner of Patents for the same invention; which letters reissued, No. 4273, were of record in the Patent Office. No copy of them was annexed.

It further averred that the defendant had without leave, and since the date of the reissued letters-patent, made, used, and sold to other to be used, machines which comprised the invention of the complainant as described and intended to be secured by the letters-patent last mentioned.

The bill prayed that the case which it stated be taken into consideration with reference to the prayer of the original bill; that the defendant be required to answer upon oath, as if interrogated specially, &c.

On the 9th of May, 1871, the defendant, by leave, pleaded to the supplemental as well as to the original bill of complaint.

The substance of the plea was, that on the 20th of January, 1871, after the filing of the bill, an agreement in writing was made by the parties, under their hands and seals, reciting that whereas the complainant was the owner of letters-patent, No. 78,829, for an improvement in hoisting machines, granted June 9th, 1868, and whereas the defendant was the owner of letters-patent, No. 81,299, for an improvement in elevators, dated August 18th, 1868, and was building hoisting machines which he set up a right to manufacture under said patent and a pending application, but which were asserted by the complainant to be an infringement of his letters-patent No. 78,829, and whereas the complainant had filed a bill in equity against Scott, the defendant, Case No. 1434, in the Circuit Court of the United States for the Southern District of Ohio, and whereas the parties were desirous of avoiding the expense and delay of litigation, it was thereby, between the complainant and the defendant, mutually agreed to submit to S. S. Fisher, Esq., the question whether the machine manufactured by the defendant was or was not an infringement of the letters-patent No. 78,829, and to abide by his decision of the said question; that is to say, if Fisher should decide the said machine to be an infringement, the defendant agreed to abandon the manufacture of said machines, and to make no more of them in any part of the United States; and if Fisher should decide that the said machine was not an infringement, then the complainant agreed that his bill in said suit No. 1434 should stand dismissed at his cost, and that he would not molest the defendant in the manufacture of said machines.

That the bill mentioned in the agreement was the original bill of complaint in this suit.

That, in pursuance of the agreement, the two parties personally appeared before the said Fisher, and submitted to him for his arbitration and decision the question and their respective claims in reference thereto, and their said patents; and that the parties having been fully heard by him, Fisher thereupon, afterward, to wit, on the 21st day of January, 1871, made and published his decision and award therein, wherein he found and decided, that the machine manufactured by the defendant was not an infringement of the letters-patent No. 78,829, granted to Reedy, June 9th, 1868; a copy of which decision, finding, and award was thereupon immediately by the said Fisher delivered to each of the parties.

Instead of demurring to this plea or tendering an issue to its allegations, the complainant had leave of the court to file, and did file, a second supplement to his original bill and an amendment to his first supplement. The substance of it all was, that the comp ainant, after the filing of his original bill, on the 20th of January, 1871, at the request and suggestion of the defendant, accompanied him (the defendant) to the office of Mr. Fisher, for the purpose of hearing the opinion of the said Fisher upon the question of infringement stated in the said bill; that, after a statement of the complainant's claims under his original patent, it was agreed between the parties to submit in writing the whole question of said infringement for the opinion of Fisher; that Fisher then drew an agreement in writing which the complainant and the defendant signed, but which the complainant did not understand as making the farther prosecution of this suit dependent on the opinion so to be given; that the complainant executed the agreement without consulting his solicitors, and without knowing its effect; that as soon as he became advised of the nature of the agreement and its possible effect, on the morning of the 21st day of January, 1871 (the agreement having been executed in the evening of the previous day), he went to the office of Fisher for the express purpose of revoking any and all authority given to him by the said agreement, but that Fisher was not in his office, and the complainant was informed that he would not be in the city until late in the afternoon; that the complainant then took away from Fisher's office the original letters-patent, and did not return them; that in the afternoon of the said 21st day of January, 1871, and before the making or signing of the pretended award hereinafter mentioned, the complainant saw Fisher at his office and explained to him that he (the complainant) was mistaken as to the nature and effect of the agreement, and that he did not wish him, the said Fisher, to act thereunder, and, at the same time, served him, Fisher, with a written notice revoking all authority and power given to him by the agreement; that, notwithstanding such revocation and the withdrawal of the letters-patent, which were the only evidence of the complainant's invention before him, Fisher proceeded in the matter of said reference, and afterward made and delivered an opinion with respect to the infringement by the defendant of the first claim of the letters-patent, but did not give any opinion or make any award as to the second claim (for an infringement of which, as well as of the first, this suit was brought), and did not award, adjudge, or direct anything to be done by either of the parties; that the complainant did not receive notice of the sittings of the said pretended arbitrator, nor was any opportunity given him to call witnesses, or to be heard in person or by counsel; and that it did not appear that the machine of the defendant was before Fisher, or that any evidence respecting the same was offered or by the said Fisher required.

Prayer as in the bill and first supplement. Verification in due form.

June 14th, 1871, the defendant again pleaded, with an answer in support of his plea.

This plea and answer was, that it was not true that the complainant signed the agreement to submit not understanding the same to make the further prosecution of said suit dependent on the decision of Fisher; and, on the contrary, that the complainant signed the same with full knowledge and perfect understanding of the effect thereof, and, particularly, that the very purpose of signing the same was to put an end to this suit. And that it was not true that the complainant revoked the authority of Fisher, given him by the said agreement, before Fisher had made and published said decision and award. Nor true that the complainant did not receive notice of the sittings of the arbitrator, and that no opportunity was given the complainant to call witnesses or to be heard in person or by counsel; but, on the contrary, that the complainant was personally present before the arbitrator at all his sittings, and had full opportunity to and did in fact produce and offer all evidence he considered material to his claim, and was fully heard thereon by said arbitrator.

Verification in due form, June 7th, 1871.

On the 12th October, 1872, a motion to strike out the plea and the answer, 'for insufficiency,' was overruled, and on the 6th March, 1873, an order for the taking of testimony made.

The testimony of Mr. Fisher was taken, and showed that the allegations of Reedy's so-called second supplement were not in their essential points true; and, on the contrary, that the pleas and answer of the defendant in such points were. It showed also that on the 21st of January, 1871, that is to say, one month before the reissue, Mr. Fisher had made an award thus:

'The question presented by the agreement of the parties to me for decision as referee, is whether the machine manufactured by Scott is or is not an infringement of the letters-patent No. 78,829, for an improvement in hoisting machines, granted to Reedy, June 9th, 1868.

'The patent embraces two claims, but the controversy as to infringement is, by agreement, limited to the first, which reads as follows:

"The combination, substantially as described, with a hoisting platform of the suspending-rope, weights, rollers, sheaves, and shaft, or their mechanical equivalents, by which the platform is both balanced and enabled to be elevated and depressed in the manner explained.'

'The mechanism involved in this claim may be briefly described as follows: The platform of an ordinary hoisting machine is suspended in the bight of a long rope, about at mid-length of the latter. The two ends of the rope pass up, one on each side of the hatch way to a sheave, the two sheaves being secured to the same horizontal shaft, which is caused to rotate by gearing, after passing over the sheaves each end of the rope described, and is attached to a weight or counterpoise. At the point where the rope passes under the platform a small roller is located, one on each side, to prevent the abrasion of the rope as it is drawn backward or forward. The rope may be caused to move under the platform by irregularities in the load or by one sheave taking up the rope faster than the other; and the purpose of passing the rope below the platform and of making provision to prevent its abrasion is, that by using the rope in this way the platform is more perfectly balanced under all conditions. Hence, the claim describes the mechanism not only as raising and depressing the platform, but as 'balancing' it; and it is in the performance of this latter function that the rollers play their especial part.

'The machine of Scott shows a platform hung in the bight or loop of a rope which passes under a beam directly over the centre of the platform, with which it is connected by two side stanchions. The ends of the rope are taken up to two sheaves on the same horizontal shaft, over which they pass, descending over two idle pulleys on one side of the machine to a single weight, to which both ends are fastened. At the point at which the rope passes under the beam of the platform there is a grooved metallic saddle, which holds up the ends of two levers which operate the safety-brake; the rope passes in the groove around this saddle, and in fact suspends the saddle in the loop or bight.

'In my judgment, in so far as the function of elevating or depressing the platform by means of two ropes passing over two sheaves, and attached to weights is involved in Reedy's claim of invention, the same function is performed in substantially the same way by the mechanism in Scott's machine. But Reedy's claim is not for the mechanism for elevating and depressing the platform disconnected from that for balancing it. On the contrary, the mechanisms for performing the two functions are claimed in combination and not otherwise.

'It is well-settled law that a patent for a combination is not infringed unless all the parts of the combination are used by the alleged infringer. He must use every element enumerated or must substitute a substantial equivalent for those omitted. The cases upon this subject are all one way.

'After careful examination I do not think that Scott uses the rollers, or any equivalent for them. His rope does not pass under the platform. As the ends are not attached to separate weights, but to the same weight, there is no movement of the rope. It does not play any part in balancing the platform, which is simply suspended as from a single central point. He does not use a roller, but a grooved piece of metal; and while it is true that such a curved piece of metal, placed in the same place as the roller, and aiding the rope in balancing the platform by diminishing the friction, would probably be an equivalent for the roller, yet I am clearly of opinion that, used as it is in Scott's organization, merely to inclose and sustain the ends of the brake-levers and performing no part in balancing the platform or in preventing the abrasion of the rope, it is not an equivalent of the rollers. It follows that Scott has omitted a material element of the combination patented to Reedy, and, consequently, has not infringed his patent.

'I therefore find, in answer to the questions submitted to me, that the machine manufactured by Scott is not an infringement of the letters-patent No. 78,829, for an improvement in hoisting machines, granted to Reedy, June 9th, 1868.

'S. S. FISHER,

'January 21st, 1871.

'Referee.'

Mr. Fisher's cross-examination showed still further that after making this award Reedy consulted him professionally, and that he, Fisher, understanding the controversy with Scott to be terminated, advised the surrender and reissue of the patent, and that an application was made and reissue obtained through his (Mr. Fisher's) office, Mr. Fisher drawing the claims; and that he 'advised Mr. Reedy that a reissue would cure the defect that had prevented him from covering Scott's machine, and secure to him what appeared to be his real invention.'

The decree was thus:'This cause came on for hearing upon the complainant's bill and supplemental bill and the plea of the defendant thereto, the bill of complaint by way of amendment and further supplement, and the plea of the defendant and answer in support of the same to the said bill, exhibits, and testimony, and was argued by counsel. And thereupon the court, being fully advised thereon, find that the plea is true and sufficient, and that the equity of the case is with the defendant. It is thereupon ordered, adjudged, and decreed that the bill and the supplemental bill and bill by way of amendment and further supplement thereto be and the same are hereby dismissed,' &c.

The errors now assigned were—

1. That the court below held the plea of the defendant to be true and sufficient with respect to the matters alleged in the supplemental bill.

2. That it found the equity of the cause, with respect to the matters alleged in the supplemental bill, to be with the defendant.

1. The original bill related simply to the rights secured by the original patent; that is to say, patent No. 78,829, dated June 9th, 1868. Reedy, the complainant, alleged that Scott, the defendant, infringed that patent. Whether he infringed the reissued or new patent, that is to say, patent No. 4273, was not a question.

The reissued patent had not then any existence. It was in this state of things that whatever submission was made to Mr. Fisher was made.

Of course the complainant's rights under the reissue were not within the terms of the submission, and the opinion and award of Mr. Fisher have no reference to it. Indeed, it was only after the award and in consequence of it that a reissue was applied for. To construe an award on one matter existing and submitted, at one time, in such a manner as to make it apply to another matter which at the time was non-existent and not submitted, is plain error.

The rights of Reedy under the reissued pa ent come in question only on the supplemental bill. For when the reissue of the original patent took place, the original patent itself became null. In point of fact it was surrendered and cancelled. The practice of the Patent Office requires that it should be. The original suit, and all questions and all proceedings under it, fell therefore to the ground.

The case, then, is on the supplemental bill. That bill first raised the question on the new patent, rights under which, as we have said, were never submitted to Mr. Fisher, and by any submission made at the date when the only one here set up was made, could not, in the nature of things, have been submitted. Yet the plea would seek to set up that by the arbitration and award Reedy's rights under the reissue were concluded. When the court below found that the plea of the defendant was sufficient with respect to matter alleged in the supplemental bill, it surely made error.

It is no answer to say that the reissue is alleged to have been 'for the same invention' as the original patent. Of course it was. But it was for the same invention particularly, properly, and validly set forth and described, and not for the invention generally, improperly, and invalidly set forth and described. And while, of course, the reissue could not lawfully include an invention beyond the scope of the original letters-patent, it does not follow that an omission to claim, with entire distinctness, what the tenor of the specification shows to have been the 'real invention' of the patentee, and what it sufficiently appears he intended to claim, must be remediless forever. The very object of the statute in permitting letters-patent to be surrendered, and to be again issued, upon an amended specification, is to provide for such a case.

At all events, the validity of the reissue ought to be determined upon a question directly made.

That the whole decision of Mr. Fisher rests on defect of a specification-a failure in Reedy to describe his invention with suffficient certainty-is shown by the fact that Mr. Fisher himself, after his award and in consequence of it procured the reissue, he advising Mr. Reedy that a reissue would cure the defect that had prevented him from covering Scott's machine and secure to him what appeared to be his real invention. And that the difference between the claim in the original patent and the claim in the reissue was meant to be insisted on by us below, is shown by our cross-examination of Mr. Fisher, where it is brought out and made plain by us that that gentleman, when acting as arbitrator, must have rested his award upon a defective specification.

2. Mr. Fisher was to take the place of the judges of the Circuit Court as to the particular 'question' submitted; and from his decision there was to be no appeal.

That has been accomplished. The letters-patent No. 78,829, have been surrendered; and every cause of action or complaint, arising under them, has been abandoned.

Nothing in the submission shows that Scott was to abandon his letters-patent No. 81,299, 'for an improvement in elevators,' dated August 18th, 1868, nor that he should 'make no more' hoisting machines. But, only, that he should forbear to make such machines, without license, as embraced the invention of Reedy described in the 'aforesaid' letters-patent.

No opposing counsel.

Mr. Justice CLIFFORD delivered the opinion of the court, and after stating the case and making some general remarks proceeded as follows:

The following assignment of errors is the assignment made:

1st. That the Circuit Court erred in holding that the plea of the respondent was true and sufficient with respect to the matters alleged in the supplemental bill.

2d. That the § id court erred in finding that the equity of the case with respect to the matters set forth in the supplemental bill is with the respondent.

In the case before us all necessity for any discussion of the charges contained in the original bill of complaint is superseded, as the assignment of errors does not impugn in that respect or call in question the correctness of the decision or decree of the Circuit Court. Such an assignment of errors, if it had been filed, would have been utterly unavailing, for the reason that the surrender of a patent to the commissioner within the sense of the provision, means an act which, in judgment of law, extinguishes the patent. It is a legal cancellation of it, and hence the patent can no more be the foundation for the assertion of a right, after the surrender, than could an act of Congress which has been repealed, and it has frequently been determined that suits pending which rest upon an act of Congress fall with the repeal of it. Antecedent suits depend upon the patent existing at the time they were commenced, and unless it exists and is in force at the time of the trial and judgment, the suits fail.

Where the patent expires and is extended pending the litigation, and the infringement by the respondent is continued in respect to the extended patent, a supplemental bill is a proper pleading to prolong the suit, as in that state of the case the complainant may well claim, if he is the original and first inventor of the improvement, to recover of the respondent the gains and profits made by the infringement, both before and subsequent to the extension, but the rule is otherwise where the original patent is surrendered, as the effect of the surrender is to extinguish the patent, and hence it can no more be the foundation for the assertion of a right than can a legislative act which has been repealed without any saving clause of pending actions. Consequently the infringement of the reissued patent becomes a new cause of action for which, in the absence of any agreement or implied acquiescence of the respondent, no remedy can be had except by the commencement of a new suit.

Instances, however, may be found where in such a case the complainant sought his remedy in a supplemental bill, no objection having been made by the respondent, and such examples induce the court to disregard the irregularity in this case, inasmuch as neither the respondent or the court below appear to have regarded it as a matter of any importance. Instead of that the complainant was permitted to file his supplemental bill charging infringement as in case of an extended patent, and the respondent making no objection to the regularity of the bill, refiled the plea which he filed to the original bill of complaint, accompanied with a general denial of every material allegation contained in the supplemental bill, as subsequently amended by leave of the court. Subsequently the proofs exhibited were taken, and the parties having been heard the court entered the aforesaid decree deciding the whole case, as more fully set forth on the record. None of the proofs were taken before the reissued patent was granted, nor until after the supplemental pleadings were completed.

These suggestions are sufficient to show that every irregularity, whether on the one side or the other, was waived before the decree of the Circuit Court was entered, and that both parties understood that the question submitted to the arbitrator was whether the machine manufactured by the respondent infringed the improvement invented by the complainant. Conclusive support to that proposition is found in the fact that both parties proceeded, throughout the trial in the Circuit Court, upon the legal ground that the reissued patent was for the same invention as that embodied in the original patent.

Reissued patents are required by law to be for the same invention as that secured by the surrendered patent, and the complainant expressly alleges in this case that is reissued patent is for the same invention as the surrendered original. Nor can the court take any other view of the case, as neither the original nor the reissued patent is made a part of the record. Clear proof is exhibited that the agreement to arbitrate and the submission in form were both executed before the original patent was surrendered, and that the submission had been signed and delivered before the complainant made any effort to revoke the instrument.

Sufficient has already appeared to show that the arbitrator examined the question submitted to him, and made an award that the machine manufactured by the respondent did not infringe the invention secured to the complainant in his original patent, and that he gave his reasons for the conclusion, which appear to be satisfactory as far as can be ascertained without the means of comparing the patent of the complainant with the machine of the respondent. Such a comparison cannot be made without such means, nor can the court look out of the record for means to make the comparison.

Attempt is made to avoid the force and effect of the award of the arbitrator, upon the ground that the complainant was misled in signing the agreement and that he was deprived of the opportunity to summon witnesses and to be heard in person or by counsel, but it will be sufficient to say in response to those suggestions that the proofs exhibited do not satisfactorily sustain the charges. On the contrary, enough appears to convince the court that the agreement is obligatory and that the complainant is bound to execute the agreement and to dismiss his bill of complaint and not to molest the respondent in the manufacture of his machine.

Substantial doubt cannot be entertained that the rule of decision adopted by the arbitrator is correct if he properly construed the patents. He found that the patent of the complainant was a combination of old ingredients, and that the machine manufactured by the respondent did not contain all of the ingredients embodied in the combination patented by the complainant. Nothing is exhibited in the record to show that the arbitrator erred in the construction of the patent, and if he did not, and his finding as to the character of the machine manufactured by the respondent is correct, it is settled law that his decision is correct.

Arbitrators as well as courts are presumed to decide correctly until the contrary appears, and if the party desires that the decision of such a tribunal shall be re-examined by an appellate court he must see that the means for such a review is embodied in the record. Neither the patent of the complainant nor any authentic description of the machine manufactured by the respondent is contained in the record, and in the absence of such it must be presumed that the arbitrator construed the patent correctly, and that his finding in respect to the construction and mode of operation of the machine manufactured by the respondent is also correct.

Judging from the character of the assignment of errors it is presumed that none of these views as applied to the matters alleged in the original bill are controverted, and the court here is of the opinion, in view of the previous explanations, that they are equally applicable to the matters alleged in the supplemental bill, for several reasons:

1st. Because the agreement to arbitrate and the submission in form were duly executed before the original patent was surrendered.

2d. Because the arbitrator proceeded to examine and to decide the question submitted without any objection from either party growing out of the surrender or reissue.

3d. Because the subsequent pleadings and proceedings in the suit show that the surrender and reissue did not have the effect to change the substantial issue in the li igation.

4th. Because the complainant alleged in his supplemental bill that the reissued patent was for the same invention as that embodied in the original.

5th. Because the agreement to dismiss the bill of complaint, if executed by a proper decree, must include all the subsequent appendages to it and would be of itself a decision adverse to the complainant.

DECREE AFFIRMED.

title: Reedy v. Scott/Opinion of the Court


text: Talk:Reedy v. Scott/Opinion of the Court


text:
Smith v. Adsit (90 U.S. 368)

ON motion to dismiss, for want of jurisdiction, a writ of error to the Supreme Court of the State of Illinois; the case being thus:

An act of Congress of February 11th, 1847, providing for raising a military force for a limited time, enacted that a bounty in the form of one hundred and sixty acres of land, to be located by the warrantee, should be given to soldiers honorably discharged, but provided 'that all sales, mortgages, powers, or other instruments of writing going to affect the title or claim to any such bounty right, made or executed prior to the issue of the warrant or certificate, should be null and void to all intents and purposes whatever.'

With this statute in force Smith filed a bill in one of the inferior State courts of Illinois, against Adsit, Wright, Rourk, and certain trustees of schools, charging that in 1850, by conveyance from one Holmes, he, Smith, became the owner of certain lands described. The bill averred that Holmes had been a soldier in the Mexican war, that he received a certificate of service and of honorable discharge, entitling him, under the acts of Congress, to a land warrant, and that he applied to Adsit to procure the warrant for him; that Adsit prepared the necessary papers, and at the same time made out a power of attorney for Holmes, authorizing the assignment of the land warrant about to be obtained, with blank spaces for its date, for the number and date of the warrant, and for the name of the attorney, and that he fraudulently induced Holmes to sign it; that this power of attorney was filled up subsequently, and after the land warrant was obtained, with the name of one Hoard as the attorney, with the number and date of the warrant issued (No. 23,129, date August 18th, 1848), and with August 30th, 1848, as the date of the power. The bill further charged that Adsit then procured the attorney to assign the warrant to him, that he located it and obtained for the land a patent in his own name, as assignee or Holmes; that at the date of the power Holmes was a minor, and that the defendants, Wright, Rourk, and the school trustees, hold the land under conveyances from Adsit, with notice of the plaintiff's rights; that the power of attorney was a nullity because obtained by fraud, and because of the minority of Holmes; and it averred that if any sale was made by him to Adsit of the land warrant, it was in fact made before the warrant was issued, that it was therefore null by force of the act of Congress, and that consequently Adsit held and located the warrant as a trustee for Holmes, and that the purchasers from him were chargeable with the same trust.

The prayer of the bill was that Adsit might be decreed to have acquired the lands in trust for Holmes; that the other defendants might be decreed to have purchased them, and to hold them charged with the same trust; that an account should be directed, and also a conveyance to the plaintiff as assignee of Holmes. There was also a prayer for general relief.

The answer of Adsit, responsive to the bill, fully denied the fraud charged, and averred that he purchased the land warrant from Holmes, without any agreement to act as his agent; and the other defendants set up that they were bon a fide purchasers from Adsit, without notice of any equity in Holmes. Both Holmes and Adsit were examined as witnesses. Holmes swore to matters showing a trust; Adsit swore that the matters thus sworn to were false.

The court in which the bill had been filed entered a decree against Adsit for $6829, and dismissed the bill as to the other defendants. Adsit then appealed to the Supreme Court of the State, where the decree against him was reversed, and the bill dismissed as to him, for want of jurisdiction; nothing further appearing that is to say, no reason or exfoliation of the grounds of the decree being given. From that decree Smith, the complainant, appealed to this court, under an assumption that the case came within section 709 of the Revised Statutes (the 25th section of the Judiciary Act of 1789, or the act of February 5th, 1867, amendatory of it), and that a title, right, or privilege under a statute of the United States, had been specially set up and claimed by him and decided against by the Supreme Court of the State.

But this court dismissed the writ. It said:

'We do not perceive that we have any authority to review the judgment of the State court. Plainly, if there be any Federal question in the case it is because the plaintiff claimed some title, right, privilege, or immunity under the act of Congress to which reference was made in his bill, and because the decision of the court was against the title, right, privilege, or immunity thus set up or claimed. Such a claim and such a decision must appear in the record. But we think this does not appear. It must be admitted that the question whether the sale of the land warrant by Holmes to Adsit, if made before the warrant issued, as charged in the bill, was not a nullity, may have been presented, but it does not appear that such a question was decided, much less that it was decided adversely to the plaintiff in error.

'The bill was dismissed for want of jurisdiction. The judgment of the court respecting the extent of its equitable jurisdiction is, of course, not reviewable here. The record does not inform us what other questions, if any, were decided. It nowhere appears that the sale from Holmes to Adsit was ruled to be valid, notwithstanding the act of Congress which declared that sales of bounty-rights, made or executed prior to the issue of land warrants therefor, shall be null and void. Nor was it necessary to the decree that was entered that such a decision should have been made. After the land had been sold by Adsit to bon a fide purchasers without notice, which had been decreed in the court below, from which decree there was no appeal-after it had thus been settled that there was no continuing trust in the land-it may well have been determined that the plaintiff's remedy against Adsit was at law, and not in equity, even if the sale from Holmes to him was utterly void. But whatever may have been the reasons for the decision, whether the court had jurisdiction of the case or not, is a question exclusively for the judgment of the State court.'

Smith, the complainant below, now brought the case here on a new writ. In the present instance a revision of the statutes of Illinois by its legislature, made A.D. 1874, having enacted that the opinion of the court should be a part of the record of every case, the opinion below was made part of the record, which it had not been when the case was here below, A.D. 1872. This opinion said:

'There is no evidence of a trust or of fraud on the part of Adsit, his testimony balancing that of Holmes on that point. Nothing, therefore, is left of the case but the fact of obtaining, by Adsit, Holmes's discharge, and procuring thereon a warrant to be issued for the land in controversy. The most that can be said of this is that the transaction was in violation of an act of Congress, but that would not give a court of chancery jurisdiction to hold Adsit as a trustee and make him accountable as such.

'None of the matter alleged, of trust and of fraud, has support in the testimony; nothing appears to corroborate Holmes's statements, and they being denied by Adsit, the one is as much entitled to belief as the other. There is nothing, then, in the record sufficient to give  court of chancery jurisdiction of the subject-matter; there being no fraud and no trust established. Consequently the decree finding a trust existed must be reversed, and the bill must be dismissed.

'If Holmes has any right to the money Adsit received for the land, he can prosecute that right in a court of law, and recover according to the justice of his case.

'DECREE REVERSED.'

Mr. W. J. Burgess, for the plaintiff in error and in support of the jurisdiction:

The statutes of the State of Illinois make the opinion of the court part of the record.

Does that record thus composed present the question necessary to give this court jurisdiction? Has a right claimed under a statute of the United States been denied by the Supreme Court of the State? That one has been, appears from the record; from the language of that court used twice. First that court said:

'Nothing is left of the case, but the fact of obtaining by Adsit Holmes's discharge, and procuring thereon a warrant to be issued for the land in controversy. The most that can be said of this is, that the transaction was in violation of an act of Congress.'

And then that court denied the relief which the plaintiff, by reason of that act, claimed as entitled to. It said:

'That would not give a court of chancery jurisdiction to hold Adsit as a trustee, and make him accountable as such.'

Holmes set up, under the act of Congress referred to in the bill of complaint, that he was entitled to the land. The legal title Adsit had acquired from the United States. He transferred it to other parties before he obtained his patent upon the papers as they existed in the land office. These papers, and the patent when issued, advised all parties, claiming under them, that the sole right in Adsit in this land, was as the assignee of Holmes, under a land warrant, issued to Holmes and assigned to Adsit under the power of attorney. That power was simply void by the act of Congress set up in the bill. Holmes so claimed it, and assigned the land to Smith, the complainant, and the plaintiff in error, who avers in his bill that by reason of that violation he is entitled to the legal title and a conveyance of the land from the parties who had derived that legal title from Adsit, with notice. Whether the facts will sustain the right as set up is one thing; but a right under an act of Congress is specifically made in the pleadings of this case, and the decision of the State court is in totidem verbis against that right. So that we have alike in the pleadings and in the judgment of the court, this vital question both raised and denied of record.

Mr. Thomas Wilson, contra, and against the jurisdiction, contended that the case was essentially the same as when before the court in 1872, and that the sentence relied on from the opinion did not change it; that the court below had decided that no trust was proved; and, of course, that there was nothing for a chancellor to act on. That whatever might have been said en passant or adjectitiously, this was the ground on which the judgment below was rested.

Mr. Justice STRONG delivered the opinion of the court.

title: Smith v. Adsit (90 U.S. 368)


text: Talk:Smith v. Adsit (90 U.S. 368)

title: Talk:Smith v. Adsit (90 U.S. 368)


text:
Smith v. Adsit (90 U.S. 368)/Opinion of the Court

We do not perceive that this case differs essentially from what it was in 1872, when it was dismissed for want of jurisdiction in this court to hear it. In the Supreme Court of the State it was an appeal from an inferior court, in which it had been sought to enforce an alleged trust, by a bill in equity, and the bill was ordered to be dismissed, because the court was of opinion no trust was proved. The record does not show that the question whether the sale of the land warrant was a nullity if made before the warrant issued, was passed upon, much less that it was decided against the complainant. The decree ordering the bill to be dismissed must have been mad, if it had been decided that the sale was void. Even then it would have been necessary to establish the existence of a trust. What amounts to a trust, or out of what facts a trust may spring, are not Federal questions, and on a writ of error to a State court we can review only decisions of Federal questions. The case is covered by Smith v. Adsit, in 16 Wallace.

WRIT OF ERROR DISMISSED.


text: Talk:Smith v. Adsit (90 U.S. 368)/Opinion of the Court


text:
Smythe v. Fiske

ERROR to the Circuit Court for the Southern District of New York; in which court Fiske sued Smythe, collector, in December, 1868, to recover money alleged to have been illegally exacted by the said defendant, as collector, for duties upon imports.

The things in respect to which the duties were exacted were silk neck-ties, imported in October, 1868.

The collector had exacted a duty of 60 per cent. upon them, against the payment of which the defendant protested, because, as he alleged, silk neck-ties were liable to a duty of but 35 per cent.

It was shown in evidence that the neck-ties in question were made of silk, folded and ironed, turned over and pressed by hand, the ends being afterwards stitched; that they were known in trade and commerce as 'silk ties,' and never as 'scarfs' or as articles of ready-made clothing.

The true decision of the question depended upon the right interpretation of certain acts of Congress, referred to and relied on by the two parties respectively. The enactments referred to are as follows:

The twentieth section of an act of August 30th, 1842, after laying duties on a large number of enumerated articles, thus enacted:

'There shall be paid on every non-enumerated article which bears a similitude, either in material, quality, texture, or the use to which it may be applied, to any enumerated article chargeable with duty, the same rate of duty which is charged on the article which it most resembles in the particulars mentioned. If any non-enumerated article resembles equally two or more enumerated articles on which different rates of duty are chargeable, there shall be paid on such article the rate of duty chargeable on the article it resembles paying the highest duty; and on all articles manufactured from two or more materials, the duty shall be assessed at the highest rate at which any of its component parts may be chargeable.'

An act of July 30th, 1846, imposed a duty of 30 per cent. ad valorem upon the articles of merchandise specified in a schedule annexed to it, and embracing among other things,

'Articles worn by men, women, or children, of whatever materials composed, made up or made wholly or in part by hand, not otherwise provided for.'

An act of May 2d, 1861, imposed a duty of 30 per cent. upon the articles therein enumerated. Among them were 'articles worn by men,' &c., as specified in the act of 1846, and described in the same terms. Another section enacted that upon certain specified articles of silk (neck-ties not being among them), and upon

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'All other manufactures of silk or of which silk shall be the component material of chief value, a duty of 30 per cent. ad valorem shall be paid.'By an act of July 14th, 1862, an additional duty of 5 per cent. was imposed upon 'articles worn by men,' &c., repeating the language of the act of 1846 in describing them.

Up to this date it seemed to be admitted that silk neckties would pay but 30 or 35 per cent. at most. However, on the 30th July, 1864, Congress passed another act, an act entitled 'An act to increase duties on imports, and for other purposes.'

This act, though not in substitution of all prior acts laying duties on imports, was, nevertheless, an act which went over a great field of duties on imports, and laid a vast number of duties in lieu of former ones. It covered sixteen pages of the statute-book, and had in it twenty-nine sec ions.

Teas, sugar, confectionery, molasses, brandy, spirits, cordials, liquors, bay rum, wines, ale, porter, beer, cigars, snuff, tobacco, iron, tin, steel, copper, lead, and zinc of many different sorts and differently fabricated; diamonds, wool, and manufactures of wool, sheepskin, carpets and carpeting, women's dress goods, shirts, drawers, hosiery, manufactures of worsted and cotton, cotton velvet, linens, and manufactures of flax, spun silk, earthenware, stoneware, and china, slates, clay, glass, a large variety of drugs, bristles, lemons, pepper, salt, books, gunpowder, mineral water, marble, soap, and several other articles were all affected by its provisions.

This act of July 30th, 1864, by its eighth section thus enacted:

'SECTION 8. In lieu of the duties heretofore imposed by law, on the articles hereinafter mentioned, there shall be levied, collected, and paid on the goods, wares, and merchandise enumerated and provided for in this section, imported from foreign countries, the following duties and the rates of duty, that is to say—

'On spun silk for filling in skeins or cops, 25 per centum ad valorem. On silk in the gum, not more advanced than singles, tram, and thrown on organzine, 35 per centum ad valorem. On floss silks, 35 per centum ad valorem. On sewing silk in the gum or purified, 40 per centum ad valorem. On all dress and piece silks, ribbons, and silk velvets, or velvets of which silk is the component material of chief value, 60 per centum ad valorem.

'On silk vestings, pongees, shawls, scarfs, mantillas, pelerines, handkerchiefs, veils, laces, shirts, drawers, bonnets, hats, caps, turbans, chemisettes, hose, mitts, aprons, stockings, gloves, suspenders, watchchains, webbing, braids, fringes, galloons, tassels, cords, and trimmings, 60 per centum ad valorem.

'On all manufactures of silk or which silk is the component material of chief value, NOT OTHERWISE PROVIDED FOR, 50 per centum ad valorem.'

In addition to this act of 1864, an act of 1865 laid a duty of 60 per cent. 'on ready-made clothing of silk, or of which silk should be a component part.'

The view of the importer, the plaintiff in the case, was that 'silk ties' were plainly within the terms 'articles worn by men, women, and children,' and, therefore, plainly and specifically provided for by the acts of 1861 and 1862, imposing the first, 30 per cent., and the second, a 5 per cent. additional.

The collector apparently considered the act of July 30th, 1864, as a new tariff system so far as rates of duties were concerned, and finding 'silk scarfs' enumerated and taxed at 65 per cent., while 'silk ties' were not enumerated, and assuming that 'silk ties' bore a closer similitude to silk scarfs than to anything else, went back and availed himself of the twentieth section of the act of August, 1842, which fixed on every non-enumerated article which bears a similitude in material, quality, or texture, or to the use to which it may be applied, to any enumerated article, chargeable with duty, the same rate of duty which is charged on the article which it most resembles in the particulars mentioned. He was ready also to assert that they were 'ready-made clothing of silk,' and so taxable under the act of 1865 with 60 per cent.

It might be, however, that neither the view of the importer nor that of the collector was a right one, and that there might be yet a third view differing from both.

The question about this third view arose on the concluding words of the eighth section, above quoted, of the act of July 30th, 1864, in these words:

'On all manufactures of silk or of which silk is the component material, not otherwise provided for.'

What was the meaning of these italicized words? Was the act of 1860 a complete tariff act as to silk, and did they mean not provided for by preceding parts of the section of which they made the closing words, or was the act only additional to for er tariff acts about silk, and did they mean not provided for by former acts?

This, as already said, was a third and new question, and according as it was answered in one way or in the other, the judgment obviously was to be with the importer or with the collector.

The court below in charging the jury said:

'When Congress provided in respect to articles non-enumerated, but yet similar to those which are enumerated, they did not mean simply and only to provide for articles that are specified by name, but they meant to provide for articles that did come within a specific designation found in existing laws. They foresaw, or perhaps had learned, that with the utmost care and painstaking of the legislature to provide for duties upon goods in various classes, in such classification as they deemed the interest of the country required, there would nevertheless appear occasionally goods which could not be assigned a place in the law by any designation which had been employed. I think this act of 1842 meant to provide for that class of cases in which goods were imported, in respect to which in no terms of enumeration could there be found a clause in the statute that was apt to describe them; that any such goods should be classed with those to which they bore similitude in kind, quality, and use, and that, therefore, when Congress adopted a designation, distinct and explicit, which embraced a particular article, then this section in the act of 1842 had no application to it; so that I am not able to adopt the views of the counsel for the government in this case. I, therefore, dispose of the case upon my view of the construction of the act under which the duty was imposed. That provides that, on and after the day and year aforesaid, in lieu of duties heretofore imposed by law on the articles hereinafter mentioned, there shall be levied, collected, and paid on the goods, wares, and merchandise enumerated and provided for in this section, imported from foreign countries, the following duties and rates of duties; that is to say, among other things, upon silk vestings, pongees, shawls, scarfs, handkerchiefs, and various other things. Now, if, upon the evidence, silk ties are not included in that enumeration of shawls, scarfs, mantillas, handkerchiefs, veils, and laces, then ties are not among the articles in that part of the section mentioned, and I do not understand the counsel for the government to insist that they are.

'Then follows: 'On all manufactures of which silk is the component material of chief value, not otherwise provided for, 50 per cent.'

'Now, had this statute of July 30th, 1864, been a statute which purported to cover the whole subject-if it purported to be an entire revision of the whole law relating to duties on imports, and had, either by express words or by implication, repealed previously existing laws, there would have been no room to doubt that 'not otherwise provided for' meant not otherwise provided for in this act. Counsel for the government insists that the intention to give those words that construction is apparent on reading the entire section. I am not satisfied that that is so. The act is specific. In most or all of its provisions it appears to have been a taking up of the tariff laws, and on a review of them, a selecting in various classes the articles which are here enumerated or embraced, and anew defining the duties upon them, and the language 'any manufacture of silk, or of which silk is a component material of chief value, not otherwise provided for,' in my judgment means not otherwise provided for in this or any other act.

'Entertaining that view of the construction of the statute, if these goods are not ready-made clothing, and that is not strenuously insisted upon, and if they are not scarfs, then, for the purpose of this trial, I must say that the plaintiff is entitled to recover the amount which he claims.'

To which charge defendant's counsel excepted, and verdict and judgment having been given for the plaintiff, the collector brought the case he e.

Mr. S. T. Phillips, Solicitor-General, for the plaintiff in error; Mr. Edward Hartley, contra.

Mr. Justice SWAYNE delivered the opinion of the court.

title: Smythe v. Fiske


text: Talk:Smythe v. Fiske

title: Talk:Smythe v. Fiske


text:
Smythe v. Fiske/Opinion of the Court

A thing may be within the letter of a statute and not within its meaning, and within its meaning, though not within its letter. The intention of the lawmaker is the law.

Revenue laws are to be construed liberally to carry out the purposes of their enactment. Their penal provisions are not penal in the sense that requires a rigidly strict construction. Where doubt exists as to the meaning of a statute, the title may be looked to for aid in its construction. The pre-existing law, and the reason and purpose of the new enactment are also considerations of great weight.

Upon the trial of this case the learned circuit judge held that silk neck-ties were within the last clause of the eighth section of the act of July 30th, 1864, unless the words not otherwise provided for excluded them from it, and brought them within the acts of 1861 and 1862. Such he instructed the jury was the effect of this negation.

In his view, those words referred not to the preceding part of the section in which they are found, but to the prior acts specified.

We agree with him as to the comprehensive character of the previous part of the sentence, if unqualified, but we dissent from his second proposition. To the latter, we think there is a conclusive answer.

The object of the statute was to increase the duties before imposed upon the things which it embraces. The title and the context alike show this. The preceding part of the section contains a very full enumeration of articles of silk, both manufactured and unmanufactured. It was evidently intended to be exhaustive. The last clause seems to have been added, as it is not unusual in such cases, out of abundant caution, that nothing might escape. Hence, the phrase 'not otherwise provided for,' was interposed, and meant to apply, not to preceding acts which may not have been present to the mind of the draftsman, and to which there was no necessity to recur, but to the preceding enumeration in the same section-which it supplemented.

The section, thus construing this clause, covers the whole subject of silk, in all its variety of forms. It was complete in itself. There was no need to refer generally or specially to any prior act. If there was conflict, the prior legislation yielded, necessarily, ipso facto to the later.

All the manufactured articles enumerated in this section of the act of 1864 were subjected to a duty of 60 per cent.

The duty imposed by the acts of 1861 and 1862 is 35 per cent.

Why leave the non-enumerated articles, covered by the act of 1864, subject only to this lower rate of duty? Why this distinction? Such a result would, we think, be a solecism, and contrary to the spirit and purpose of the act. It cannot reasonably be supposed that such was the intent of the clause in question.

This view of the subject fixes the duty upon silk neck-ties at 50 per cent. ad valorem.

If we had not come to this conclusion, we should hold that the case is controlled by the twentieth section of the act of 1842. The provisions of that section first appeared in the second section of the act of September 11th, 1841. They were re-enacted in the act of 1842, and were a permanent part of the customs duty system of the country. They were unaffected by any of the later tariff acts, and were in force when the duty in question was collected. Under that section, as applied to the act of 1864, the rate of duty would be 60 per cent. instead of 50. But, as we hold that the clause we have considered, of the eighth section of the act of 1864, applies, it excludes the operation of the earlier statute.

The construction we have indicated of these statutes, is that given to them in their practical administration by the Treasury Department ever since their enactment. This, though not controlling, is not without weight, and is entitled to respectful consideration.

Our views as to the amount of duty chargeable on the neck-ties in question are corroborated by the following further considerations:

In the Revised Code of the United States, of June 22d, 1874, the similitude clause of the act of 1842, and the eighth section of the act of 1864, are reproduced without change. The provision as to 'articles worn by men,' &c., is also reproduced, but as follows:

'Articles worn by men, women, or children, of whatever material composed, except silk and linen, made up or made wholly or in part by hand, not otherwise provided for, 35 ''per cent. ad valorem''.'

The exceptions mentioned were here for the first time expressly interposed, but it was a legislative declaration that such was the state of the law on the 1st of December, 1873, without the exceptions; and it is necessarily a construction of the last clause of the eighth section of the act of 1864, in accordance with that which we have given to it. It was the declared purpose of Congress to collate all the statutes as they were at that date, and not to make any change in their provisions. Obviously these exceptions were intended to remove doubts and misconstruction, which were known to have prevailed to some extent.

The question whether these neck-ties were either 'scarfs' or 'ready-made clothing,' was submitted to the jury, and they must have found the negative as to both. We have proceeded upon the assumption that this finding was correct. We have no power to review it in this proceeding.

JUDGMENT REVERSED, and the cause remanded to the Circuit Court with directions to award a venire de novo, and proceed

IN CONFORMITY TO THIS OPINION.

title: Smythe v. Fiske/Opinion of the Court


text: Talk:Smythe v. Fiske/Opinion of the Court