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Sandusky v. National Bank

ON motion by Mr. W. T. Otto, to dismiss, for want of jurisdiction, an appeal from the Circuit Court for the Southern District of Illinois; the case being thus:

By the Bankrupt Act it is thus in effect enacted:

'SECTION 1. That the several District Court be. . . courts of bankruptcy, and shall have original jurisdiction in their respective districts in all matters and proceedings in bankruptcy. . . . And the jurisdiction shall extend to all cases and controversies arising between the bankrupt and any creditor who shall claim any debt or demand under the bankruptcy ' &c.

'SECTION 2. That the several Circuit Courts. . . within and for the districts where the proceedings in bankruptcy shall be pending, shall have a general superintendence and jurisdiction of all cases and questions arising under this act; and except where special provision is otherwise made, may, upon bill, petition, or other proper process, of any party aggrieved, hear and determine the case [as] a court of equity.

'SECTION 8. That appeals may be taken from the District to the Circuit Courts in all cases in equity,' &c.

In this state of statutory law, the First National Bank of Indianapolis, on the 25th of August, 1871, filed a petition in the District Court of the United States for the Southern District of Illinois, to have Harvey Sandusky adjudged a bankrupt. Sandusky appeared on the 5th September and, denying the allegations against him in the petition, demanded a trial by jury. This demand was afterwards withdrawn by his attorney, and, on the 30th January, 1872, he was in due form adjudged by the court a bankrupt. Afterwards an assignee, one J. G. English, was chosen and qualified, who proceeded with the settlement of the estate.

On the 9th December, 1873, Sandusky served upon the bank a notice, entitling it, In the matter of the petition of the First National Bank of Indianapolis v. Harvey Sandusky, in bankruptcy,' and giving to the bank notice that 'on the 10th of December, 1873, at 10 o'clock A.M., before the Honorable S. H. Treat, judge of the said court, at chambers, he, said Harvey Sandusky, would move the court for leave to file his petition in the above-entitled cause, for a review of the proceedings in the said cause, and to vacate the decree of bankruptcy therein, and for other relief, which petition' the notice stated that 'the said Sandusky had on that day placed in the hands and in the office of the clerk of said court for the examination of the bank and of its attorneys.'On the 10th December an entry was made in the cause, reciting that on that day, before the Honorable S. H. Treat, judge, In the matter of Harvey Sandusky, bankrupt, in bankruptcy, came the said Harvey, by his counsel, and the petitioning creditor, The First National Bank of Indianapolis, and J. G. English, the assignee, by their counsel, and that on motion of the said Harvey leave was given him to file his petition herein, which was accordingly done; and that on his further motion it was ordered by the court that the said First National Bank of Indianapolis and J. G. English file their answers to said petition on or before the first Monday of January next.'

The petition was addressed to the court 'in bankruptcy sitting,' and prayed 'for a review of the record of the said proceedings in bankruptcy; that the decree declaring the petitioner a bankrupt be set aside and vacated, and the amended and original petition of the said bank be dismissed, and that the petitioner's estate be restored to him; and for such other and further relief in the premises as may be equitable and just.'

No defendants were named in the petition, and there was no prayer for process.

An answer was filed by the bank, and also by G. W. Parker, who acted as the agent of the bank in the original proceedings. The assignee did not answer. Testimony was taken, and on the 12th June, 1874, after full hearing, the petition was dismissed. Sandusky then prayed an appeal to the Circuit Court, which was allowed, and on 25th June that court affirmed the judgment of the District Court. He then appealed to this court. It was this appeal which it was now moved to dismiss for want of jurisdiction.

Mr. William Tod Otto, in support of his motion, argued that the supervisory jurisdiction vested in the Circuit Court of the United States, by the first clause of the second section of the Bankrupt Act, had been fully considered by this court and its exemption from any appellate control determined in several well-known cases; that these cases decide that f om a decree of the Circuit Court, rendered in exercising such jurisdiction, no appeal lies to this court; that such jurisdiction, by the terms of that clause, extends to 'all cases and questions arising under the act, except when special provision is otherwise made;' and that no special provision is made for any appellate jurisdiction over the finding and decision of a District Court on a petition in involuntary bankruptcy.

Mr. J. Harper, contra, argued that the petition of Sandusky 'for a review of the proceedings' in his cause and to vacate the decree of bankruptcy therein, 'and for other relief,' gave to the petition the character of a 'bill of review,' and made a 'case in equity;' that such a case when taken into the Circuit Court was taken there under the eighth section of the Bankrupt Act, giving an 'appeal' from the District to the Circuit Court, and not under the second section, which gave to the Circuit Court a general revisory jurisdiction over the District Court, under which section, confessedly by all, no appeal would lie; just as if, on the other hand, the case was in the Circuit Court under the eighth section, and as a 'case in equity,' an appeal confessedly of all would lie to this court under the act of Congress of 1803, which enacts that 'from all final decrees in equity rendered in any Circuit Court in any cases of equity'. . . jurisdiction shall exist to review them.

The CHIEF JUSTICE delivered the opinion of the court.

title: Sandusky v. National Bank


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Page:Copyright, Its History And Its Law (1912).djvu/207

 are not explicit. Both English and American courts have therefore been obliged to make or to extend definitions, but the decisions have been somewhat confusing. The most explicit general statement is that made by Judge Blatchford in discussing Daly v. Palmer in 1868: "A composition, in the sense in which that word is used in the act of 1856, is a written or literary work invented or set in order. A dramatic composition is such a work in which the narrative is not related, but is represented by dialogue and action. When a dramatic composition is represented in dialogue and action by persons who represent it as real by performing or going through with the various parts or characters assigned to them severally, the composition is acted, performed, or represented; and if the representation is in public, it is a public representation. To act in the sense of the statute is to represent as real by countenance, voice, or gesture that which is not real. A character in a play who goes through with a series of events on the stage without speaking, if such be his part in the play, is none the less an actor in it than one who, in addition to motions and gestures, uses his voice. A pantomime is a species of theatrical entertainment, in which the whole action is represented by gesticulation without the use of words. A written work consisting wholly of directions, set in order for conveying the ideas of the author on a stage or public place by means of characters who represent the narrative wholly by action, is as much a dramatic composition designed or suited for public representation as if language or dialogue were used in it to convey some of the ideas."

In a recent case of Barnes v. Miner in 1903, where an injunction was asked against a vaudeville change artist who had combined songs in costume with a cinematograph representation of scenes in the

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text: Talk:Sandusky v. National Bank

title: Talk:Sandusky v. National Bank


text:
Sandusky v. National Bank/Opinion of the Court

To authorize an appeal to this court from the judgment or decree of a Circuit Court reviewing the action of a District Court under its bankruptcy jurisdiction, the case must be one in which an appeal may be taken from the District to the Circuit Court; that is to say, it must be a case in equity arising under or authorized by the Bankrupt Act.

In our opinion this is not such a case. A proceeding in bankruptcy from the time of its commencement, by the filing of a petition to obtain the benefit of the act, until the final settlement of the estate of the bankrupt, is but one suit. The District Court, for all the purposes of its bankruptcy jurisdiction, is always open. It has no separate terms. Its proceedings in any pending suit are, therefore, at all times open for re-examination upon application therefor in an appropriate form. Any order made in the progress of the cause may be subsequently set aside and vacated upon proper showing made, provided rights have not become vested under it which will be disturbed by its vacation.

Applications for such re-examination may be made by motion or petition, according to the circumstances of the case. Such a motion or petition will not have the effect of a new suit, but of a proceeding in the old one.

In this case Sandusky had been adjudged a bankrupt in a suit to which he was a party. He desired to have that adjudication set aside, and accordingly filed his petition in the District Court for that purpose. This petition was filed in the original cause. It was in no sense whatever a bill in equity to impeach the adjudication for fraud. It had none of the forms of such a bill. On the contrary, it had all the forms of a petition for a rehearing in the original suit, and at the express request of Sandusky was filed as a petition in that suit. It thus became part of the proceedings in bankruptcy, from which it cannot be separated. No appeal could be taken from the whole proceeding, and consequently none can be taken from this as one of its parts. The only remedy provided for the correction of errors in such cases is to be found in the supervisory jurisdiction of the Circuit Courts under the provisions of the first clause of the second section of the Bankrupt Act. From the decisions of the Circuit Court in the exercise of that jurisdiction no appeal lies to this court. It has been many times so decided.

APPEAL DISMISSED.


text: Talk:Sandusky v. National Bank/Opinion of the Court


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Gregory v. McVeigh

ON motion to dismiss, for want of jurisdiction, a writ of error to the Corporation Court of Alexandria, Virginia.

The case was thus:

Towards the close of the late rebellion, the United States filed a libel of information, under the act of 17th July, 1862, 'to suppress insurrection, to punish treason and rebellion, to seize and confiscate the property of rebels, and for other purposes'-the act commonly known as 'the Confiscation Act'-against certain real estate in Alexandria, Virginia, a State then within the government lines, belonging to one McVeigh, a person then in the rebel lines, to confiscate it.

This act authorized a seizure by the President, of the property in the then loyal States of any person giving aid and comfort to the rebellion, and directed that after the property had been seized, proceedings in rem should be instituted in any District Court of the United States, 'which proceedings,' said the act, 'shall conform as nearly as may be to proceedings in admiralty or revenue cases.' The act further directed that if, on such proceedings had, the property, whether real or personal, should be found to belong to a person giving aid and comfort to the rebellion, the same should be condemned 'as enemies' property,' and become the property of the United States, and be disposed of as the court should direct.

This 'Confiscation Act' was the subject of interpretation by this court in several cases which arose in December Term, 1867, and in which it was adjudged that where the proceedings under the act relate to a seizure of land, they present a case of common-law jurisdiction, and are to be conformed in respect to trial by jury to the course of the common law.

In the particular proceedings now before the court, that is to say, the proceedings against McVeigh's land, McVeigh appeared by attorney, interposed a claim to the property, and filed an answer. The District Attorney of the United States submitted a motion that the appearance, answer, and claim should be stricken from the records, for the reason that the respondent was a resident of a place specified, within the Confederate lines, and a rebel. The court (Underwood, J.) granted this motion. A decree pro confesso was subsequently entered, the life interest of McVeigh in the property condemned and ordered to be sold, and sold accordingly; one Gregory being the purchaser. McVeigh then brought the case on error to this court; it is reported in 11th Wallace, page 267. The court, by Swayne, J., then said:

title: Gregory v. McVeigh


text: Talk:Gregory v. McVeigh

title: Talk:Gregory v. McVeigh


text:
Gregory v. McVeigh/Opinion of the Court

'The District Court committed a serious error in ordering the claim and answer of the respondent to be stricken from the files. The order in effect denied the respondent a hearing. It is alleged that he was in the position of an alien enemy, and hence could have no locus standi in that forum. If assailed there he could defend there. The liability and the right are inseparable. A different result would be a blot upon our jurisprudence and our civilization. We cannot besitate or doubt on the subject. It would be contrary to the first principles of the social compact and of the right administration of justice.'

This court accordingly reversed the judgment, and remanded the case with directions to proceed 'in conformity to law.'With this judgment and opinion in his hand, McVeigh now brought ejectment against Gregory, the purchaser, in the Corporation Court of Alexandria, which was the proper court to sue in, to recover the lands in which his life estate had been sold, under the decree in the proceedings under the Confiscation Act.

On the trial the defendant set up the purchase ade under the decree in the suit in confiscation, and requested the court to charge that the decree of condemnation divested McVeigh of his life estate. The court refused so to charge, and, contrariwise, charged that

'The sentence of condemnation was void, and the plaintiff was not divested of any part of his title in the premises by reason of the sentence, sale, and deed of the marshal, because the answer, claim, and appearance of McVeigh were struck from the files by the court before the decree was entered, and the said McVeigh was thus denied a hearing, and his property condemned without any opportunity of defence on his part.'

The defendant excepted to this charge.

Judgment was rendered, of course, in favor of McVeigh, the plaintiff.

The defendant then addressed a petition to the different judges of the Supreme Court of Appeals, of Virginia, praying for a writ of error and supersedeas to the said judgment. The petition was not to the court in its corporate capacity.

The provisions of statute in Virginia on this subject of writ of error, &c., to the court just named are as follows:

When and in what case petition for appeal may be presented, time excluded from the computation.

'SECTION 2. Any person who thinks himself aggrieved by an order in a controversy concerning the. . . possession of title of property to be changed, or adjudicating the principles of a cause, or to any civil case wherein there is a final judgment, decree, or order, may present a petition. . . for a writ of error or supersedeas to the judgment or order.'Record exhibited with petition; how it is made up; what shall not be copied.

'SECTION 5. With such petition there shall be a transcript of the record, of so much of the case wherein the judgment, decree, or order is, as will enable the court or judge to whom the petition is to be presented properly to decide on such petition, and to enable the court, if the petition be granted, properly to decide the questions that may arise before it.'

'SECTION 9. The petition may be presented to the court wherein the case is to be docketed if the writ of error or supersedeas be allowed, or to a judge thereof, or, if the judgment, decree, or order be of a county court, to any circuit judge.'

When petition to be rejected, and when rejection final.

'SECTION 10. . . .. In a case wherein the court or judge to whom a petition is duly presented shall deem the judgment, decree, or order plainly right, and reject it on that ground, if the order of rejection so state, no other petition shall afterwards be presented to the same purpose.'

The judges of the Supreme Court of Appeals deeming the judgment complained of to be 'plainly right,' each and all rejected the petition and refused to grant any writ of error or supersedeas.

This was, therefore, the end to all further proceedings in appeal in the courts of the State.

The defendant now got a writ of error from this court to the Corporation Court of Alexandria, assuming the case to come within section 709 of the Revised Statutes (the 25th section of the old Judiciary Act), which enacts that—

'A final judgment or decree in any suit in the highest court of the State in which a decision in the suit could be had, where is drawn in question the validity of a treaty or statute of, an authority exercised under the United States, and the decision is against its validity. . . may be re-examined and reversed or affirmed in the Supreme Court upon a writ of error.'

The Corporation Court of Virginia is not the highest court of the State of Virginia. That court is the Supreme Court of Appeals.

Mr. P. Phillips, in support of the motion to dismiss for want of jurisdiction:

1st. That the Corporation Court, to which the writ of error was directed, was not the highest court of the State in which the decision on the case could be had.

2d. That the charge given by the judge-to wit, that the confiscation proceedings did not divest McVeigh of his title, on the ground that he had been refused a hearing and his answer stricken from the files-did not involve a 'Federal question;' in other words, that such proceedings did not show 'an authority exercised under the United States.'

1st. The court was not the highest court of the State in which a decision could be had.

The statute of Virginia enacts that when the court or judge to whom the petition is presented shall deem the judgment plainly right and reject it on that ground, if the order of rejection so state it, no other petition shall afterwards be presented. The defendant in the present case, having the right to present a petition for the writ of error to the Court of Appeals, or to the judge, has adopted the latter mode. His application was rejected not by the Court of Appeals, but by 'all the judges.'

The appellate jurisdiction of this court is exercised only by virtue of section 709 of the Revised Statutes (the old 25th section of the Judiciary Act), and that confines it to the revision of the judgment of the highest court of the State in which the decision could be had.

The question then is, was the Corporation Court the highest court in the State in which the decision could be had?

The appellant maintains the affirmative, because he says that he applied to all the judges of the highest court for the writ of error, and that they refused it.

If he had made his application to the court itself, and had had an order rejecting the application, that rejection would have constituted an affirmance of the judgment below. In other words, it would have been the decision of the highest court of the State that the judgment was plainly right. The writ of error would then, confessedly we suppose, have been only directed to review the judgment of the Court of Appeals. The statute of Virginia requires the petition to be accompanied by the transcript, an assignment of error, and notice to the opposite party. The cause is thus fully before the Court of Appeals, on the showing made by the petitioner, and the decision of the court is as final and complete, as it could have been if the cause had been docketed and regularly argued.

But this is not an open question.

In The Richmond Railroad Company v. The Louisa Railroad Company, where the petition for appeal was directed to the Court of Appeals of Virgina, the appellee contended that this court had no jurisdiction of the cause, because the highest court of the State had not rendered a final judgment, and that its refusal to allow the application for the appeal was not an affirmance of the judgment below.

But this court briefly disposed of the position by saying,

'The decree having been affirmed by the Court of Appeals, by their refusal to entertain an appeal, there can be no doubt of the jurisdiction of this court to review the decision of the State court.'

In Bigelow v. Forrest, the writ was directed to the Court of Appeals, and in this as in the preceding case, the Court of Appeals had merely rejected the petition for the writ of error. This court says:

'There is no ground of complaint that the Supreme Court of Appeals denied the supersedeas to the judgment below.'

It is, therefore, clear that in the case now under consideration, the Court of Appeals was the highest court in the State, and that that court had jurisdiction of the judgment complained of.

If that jurisdiction has not been invoked by the plaintiffs in error, they have no right to say that the Corporation Court is the highest court in which the decision could be had.

It is shown by their own averment that they have not invoked the jurisdiction of that court as they might have done, but have made their application for the writ to the judges.

If the action of all the judges in refusing the writ is in legal effect the same thing as the refusal by the court, then the court has acted, and, on the authority of the cases cited, the writ of this court must be directed to the Court of Appeals.

If it is not the same, but a different thing, then having the power to invoke the action of the highest court, and having failed to do so, the revisory jurisdiction of this court cannot be extended over the judgment of an inferior court of the State.

Where, indeed, by the law of the State limiting the appeal or writ of error, the judgment of the inferior court is of such an amount or of such a character as not to be subject to the revisory power of the appellate tribunal, such inferior court, ex vi termini, is the highest court of the State in which the decision could be had, and then the writ in this court is properly directed to that court. Such was the case of Downham v. Alexandria, where the writ was directed to the Fourth Judicial Court of the State of Virginia, 'in which a judgment of the Corporation Court of Alexandria for $200 was affirmed.' The writ in that case was sustained, because by act of the State no appeal was allowed from the judgments of said District Court where the matter in controversy did not exceed $1000.

2d. There is no Federal question.

The writ of this court can only bring up for review the judgment of a State court 'where is drawn in question the validity of a treaty, or statute of, or an authority exercised under the United States.'Now, Judge Underwood was a judge of the District Court. His powers as judge are specified by statute. His judgment within the limits of his prescribed jurisdiction are conclusive, until reversed by direct proceedings for this purpose. They are then to be regarded as 'authority exercised under the United States,' and cannot be attacked collaterally. But if this judge render a judgment against a person, or on a subject over which the law has conferred no jurisdiction, such a judgment is a nullity, and if presented in another court as a defence, its rejection would not be a denial of 'an authority exercised under the United States.'

Suppose a record from a Circuit Court of the United States, showing a judgment and sale to be given in evidence, and on inspection it were seen that the declaration averred that the plaintiff and defendant were citizens of the same State. Or that it appeared the judgment was by default, and without either service on defendant or any appearance for him. In neither case would such a proceeding show any 'anthority exercised under the United States,' but on the contrary an exercise of power exercised in violation of its authority.

Now, this particular decree of condemnation made by Underwood, J., was made under the act of 1862, which authorizes the confiscation of property when its owner had been guilty of a certain prescribed offence. The property was not offending; but it was subject to condemnation when the owner was proven to be guilty. On the trial the question of guilt is to be submitted, under the statute, as it has been interpreted by this court-that is to say, under the statute rightly read-to a jury. The party offending is to receive notice, and is entitled to be heard. McVeigh did receive notice and filed his answer, but Underwood, J., refused him a hearing and struck his answer from the files, and then rendered a decree pro confesso. Was this the exercise of 'an authority under the United States?' Is such a judgment merely erroneous, or is it an absolute nullity? If the former, then we admit that in its rejection by the State court a Federal question is involved. But if, as we maintain, it was an absolute nullity, its rejection does not involve such a question; for a proceeding which is an absolute nullity cannot be said to be 'an authority exercised under the United States.'

This action of Underwood, J., has been passed upon by this court in the case of Mc Veigh v. United States, in which it is said that the striking from the files the answer of McVeigh if sustaine, 'would be a blot upon our jurisprudence and civilization, and contrary to the first principles of the social compact and of the right administration of justice.'

No stronger language could be well used to show that these proceedings were absolutely null.

The Corporation Court had before it that decision when this case was tried. In charging that the proceedings offered in evidence did not divest McVeigh of his title, did the court deny the validity of 'an authority exercised under the United States?' If the decree of condemnation was, as we have asserted, a nullity, the answer must be in the negative. There must be, say this court in Millingar v. Hartupee, something more than a bare assertion of such an authority to give jurisdiction under section 709. This court in the case cited thus declares:

'The authority intended by the act is one having a real existence derived from competent governmental power. If a different construction had been intended Congress would doubtless have used fitting words. The act would have given jurisdiction in cases of decisions against claims of authority under the United States.'

1. The power of the State courts to correct error in the judgments, if error there was, had been wholly exhausted before the writ of error from this court was applied for. There was no higher court of the State to which the case could be taken for decision. Such being the fact, it matters not how low down in the grade of State courts the judgment may have been left. A writ of error will lie to it from this court as much an if it had been made by the highest court in the State; for, of course, the writ must be directed to the court in which the record of the judgment is. No other court could make return to a writ.

It is argued against us that the petition, instead of being presented to the judges of the Court of Appeals, might have been presented to the court itself, and it is said that their refusal in such case by the court would have been an affirmance of the judgment below, and thus that the decision of the case might have been had in the Court of Appeals.

It by no means follows (if the point were a material one) that such rejection by the court is indentical with an affirmance of the judgment below. That the two are 'exactly equivalent' in practical effect may be admitted, but things may be exactly equivalent in practical effect and yet very dissimilar in themselves.

Nor does the case of The Richmond Railroad Company v. The Louisa Railroad Company establish that a refusal by the court to allow the writ is a formal affirmance of the judgment below. In that case the manner of directing the writ was not a question raised or considered by this court. It considered the larger question, whether the power of the State courts had been exhausted so as to give jurisdiction to this court, and the decision of that question did not necessitate an inquity into the proper manner of directing the writ. What was said by the judge giving the opinion was dictum merely.

The Court of Appeals never enters a judgment of affirmance or reversal, except upon a writ of error or supersedeas, issued, executed, and returned. Until then no case finds place upon its docket.

But, suppose that refusal by the court to allow a writ is identical in law with a formal affirmance, what follows? Clearly that if the petition had been presented to and refused by the court instead of having been presented to and refused by the judges, the writ of error should have been directed to the Court of Appeals, and not to the Corporation Court; and that is all which follows, unless, indeed, the converse may also be said to follow, to wit, that inasmuch as the petition was not so presented and refused, the writ is not improperly directed, when directed to the Corporation Court.

It does not matter by what method the power of the State courts has been exhausted. This court co cerns itself only about the fact, and if the fact appears, the manner in which it has been accomplished is immaterial. It is not denied that we have pursued a method provided by law, and the adoption of which barred us from resort to any other method, and if the test of jurisdiction here be as we assert, the fact-not the method-of the exhaustion of the power of the State courts-not the grade of the court in which the judgment happens to be left when the point of exhaustion is reached-then the argument against us is not well made.

Unless exercised in this way this court cannot, in cases where the practice in matters of appeal is such as exists in Virginia, exercise jurisdiction at all. There is no other court to which the writ could be directed. If the writ, therefore, be dismissed because directed to the Corporation Court, we have a case where a claim of right under Federal law has been denied by a State court-where the party asserting it has exhausted the power of the State courts to reverse the decision-and yet the validity of the claim cannot be passed upon by a Federal court.

2. A Federal question is involved.

The action was an action of ejectment, in which the plaintiff in error was defendant. On the trial the defendant proved and offered in evidence the marshal's deed and the record of the sentence of condemnation by which the plaintiff's life estate in the property had been condemned as forfeited to the United States, and prayed the court on that evidence to rule that the plaintiff's life estate was thereby divested. The court refused the prayer. The defendant therefore claimed a right under the statute of the United States, and the decision of the court was adverse to the claim.

Whether that decision was correct or erroneous is not a question material to this motion, the appellate jurisdiction of this court not depending upon whether the State court decided the question correctly, but upon whether it decided the question adversely to the party raising it.

The distinction between the cases now before the court and the case of Millingar v. Hartupee is obvious.

In the latter case jurisdiction in this court was claimed, because of a right asserted under 'an authority' of the United States, and there existed no 'authority' of the United States under which any such right could be asserted. The jurisdiction was therefore denied, the court saying:

'In respect to the question we are now considering, 'authority' stands upon the same footing with 'treaty' or 'statute.' If a right were claimed under a treaty or statute, and on looking into the record it should appear that no such treaty or statute existed or was in force, it would hardly be insisted that this court could review the decision of a State court, that the right claimed did not exist.'

There is no question in the present case as to the existence of the 'statute' under which the plaintiffs in error claimed their right, or as to the fact of the rendering of the judgment by the District Court and of the marshal's sale and conveyance. The only matter with respect to which a question is made is the legal validity of the judgment, and that is not a question proper to be discussed under this motion.

It is perhaps proper, however, to say that our general proposition in respect to the judgment is, that whilst it may have been or clearly was erroneous it was not void; that the court which rendered it had jurisdiction to render it, and if so, that a sale made under it carried a valid title to the purchasers.

The CHIEF JUSTICE delivered the opinion of the court.

The motion to dismiss this cause for want of jurisdiction is denied.

'A final judgment or decree in any suit, in the highest court of a State in which a decision in the suit could be had,' may in a proper case be re-examined in this court.

The Court of Appeals is the highest court in the State of Virginia. If a decision of a suit could be ha in that court, we must wait for such a decision before we can take jurisdiction, and then can only examine the judgment of that court. If, however, the suit is one of which that court cannot take jurisdiction, we may re-examine the judgment of the highest court which, under laws of the State, could decide it.

The Court of Appeals has revisory jurisdiction over the judgments of the Corporation Court of the city of Alexandria, but parties are not permitted, in the class of cases to which this belongs, to take such judgments there for review as a matter of right. Leave for that purpose must first be obtained. Two modes of obtaining this leave are provided. One by petition to the Court of Appeals itself, and the other by petition to a judge thereof. If the petition is presented to a judge and he denies it generally, without more, it may be again presented to the court. But if the judge to whom the application is made 'shall deem the judgment, &c., plainly right,' and reject it on that ground, if the order of rejection shall so state, no other petition shall afterwards be presented to the same purpose. The parties are left free to present their petitions to the court or to a judge thereof, as they may find it most convenient or desirable.

It has long been settled that if a cause cannot be taken to the highest court of a State, except by leave of the court itself, a refusal of the court upon proper application made to grant the leave, is equivalent to a judgment of affirmance, and is such a final judgment as may be made the basis of proceedings under the appellate jurisdiction of this court.

In the present case the Court of Appeals has now no power to review the judgment of the court below. It cannot even entertain a motion for leave to proceed. A judgment has been rendered by the highest court of the State in which a decision can be had. The Court of Appeals has never, in fact, had jurisdiction. A suit cannot be taken there, except upon leave, and that leave has, in the regular order of proceeding, been refused in this case. From this refusal there can be no appeal. Everything has been done that can be to effect the transfer of the cause. The rejection of a petition by one judge does not prevent its presentation to another. Here the petition has been presented to each and every one of the judges, and they have all rejected it because the judgment was 'plainly right.' Thus the doors of the Court of Appeals have been forever closed against the suit; not through neglect, but in the regular order of proceeding under the law governing the practice.

We think, therefore, that the judgment of the Corporation Court of the city of Alexandria is the judgment of the highest court of the State in which a decision of the suit could be had, and that we may re-examine it upon error.

Without stopping to discuss the other question presented by the motion, it is sufficient to say that we think the case involves the consideration of a Federal question. The proceeding in the District Court was under the authority of the United States, and its validity is drawn in question.

MOTION DENIED.

title: Gregory v. McVeigh/Opinion of the Court


text: Talk:Gregory v. McVeigh/Opinion of the Court


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Blake v. National Banks

ERROR to the Circuit Court for the Southern District of New York, in which court several National banks sued Blake, a collector of internal revenue, to recover certain taxes of 2 1/2 per cent., upon dividends which had been declared and made payable by the banks, during the last five months of the year 1870; which taxes Blake as collector had demanded, and which the banks had paid on compulsion and under protest.

There were other cases from other circuits, including one from the Eastern District of Pennsylvania, heard with these, involving the same question, and also the question whether additions to surplus and payments of interest made by corporations during the five months above mentioned, that is to say, during the months of August, September, October, November, or December, 1870, were liable to be charged with the said tax.

The case depended upon certain statutes, and was thus:

The 118th, 119th, 120th, 121st, and 122d sections of an act of June 30th, 1864, laid a tax of 5 per cent. on income; the tax commonly known as the 'income tax.'

So far as the income which was enjoyed by any one was not obtained from dividends made by corporations, or from interest on their bonds or other securities, or from additions to the surplus, contingent, or other funds of such corporations, individuals, by the 118th and 119th sections of the act, were to make it known by return to the assessor, and were themselves to pay it directly to the collector. The tax thus payable directly by individuals was to be levied on the first day of May in each year (on the gains, of course, of the preceding year), and be payable on or before the 30th of June following; and it was enacted that it should be levied until the year 1870 and no longer than until that year; that is to say, that this tax of 5 per cent. should end with and in the year 1869.

So far as income came from dividends made by corporations or additions by the corporations to the surplus, contingent or other fund of undistributed earnings, or by the interest payable on bonds, &c., of corporations, the matter was regulated by the 120th, 121st, 122d, and 123d sections.

The 122d section-which imposed a duty of 5 per cent. upon interest on bonds issued, on dividends declared, and on undistributed profits earned by railroad and other corporations made it the duty of the officers of said corporations to return to the assessor and pay to the commissioner the tax within thirty days after the said interest and dividends became due and payable, and they were authorized to retain the tax so paid, out of the interest and dividends due to bond and stockholders.

This act of June 30th, 1864, was the only act, prior to July, 1870, which imposed a tax on interest and dividends payable by railroad companies.

In this condition of things-that is to say, with an income tax law in 1864, which extended to and included the year 1869, but no later years-Congress, on the 14th July, 1870, passed a new act. This new act of July 14th, 1870, was entitled 'An act to reduce internal taxes, and for other purposes;' and in certain sections not now under consideration, taxation was reduced.

The sections with which the present case was immediately concerned, were the sixth, the seventh, the fifteenth, and the seventeenth; and they were in substance as follows:

'SECTION 6. There shall be levied and collected annually, as hereinafter provided, for the years 1870 and 1871, and no longer, a tax of 2 1/2 per centum upon the gains, profits, and income of every person residing in the United States, and of every citizen of the United States residing abroad, derived from any source whatever, whether within or without the United States, except as hereinafter provided.'

'SECTION 7. In estimating the gains, profits, and income of any person, there shall be included all income derived from. . . the gains, profits, and income of any business, profession, trade, employment, office, or vocation, including any amount received as salary or pay for services in the civil, military, naval, or other service of the United States, or as senator, representative, or delegate in Congress, except that portion thereof from which, under authority of acts of Congress previous hereto, a tax of 5 per centum shall have been withheld.'

'SECTION 15. There shall be levied and collected for and during the year 1871, a tax of 2 1/2 per centum on the amount of all interest or coupons paid on bonds or other evidences of debt issued and payable in one or more years after date, by any of the corporations in this section hereinafter enumerated, and on the amount f all dividends of earnings, income, or gains hereafter declared by any bank,. . . railroad company, &c., whenever and wherever the same shall be payable, and to whatsoever person the same may be due; and on all undivided profits of any such corporation, which have accrued and been earned and added to any surplus, contingent, or other fund. And every such corporation having paid the tax as aforesaid is hereby authorized to deduct and withhold from any payment on account of interest, coupons, and dividends, an amount equal to the tax of 2 1/2 per centum on the same.'

The sixteenth section provided that an account should be rendered by the corporation making a dividend, &c., to the assessor on or before the tenth day of the month following the dividend of the amount of income and of profits and of taxes as aforesaid, and that the amount payable as tax should be paid within thirty days after it became due.

The next section was thus:

'SECTION 17. Sections 120, 121, 122, and 123 of the act of June 30th, 1864, & c., shall be construed to impose the taxes therein mentioned to the 1st day of August, 1870; but after that date no further taxes be levied or assessed under said sections,' &c.

The difficulty now arose upon the peculiar phraseology of the above-quoted fifteenth section as indicated by the italicized words: 'There shall be levied and collected for and during the year 1871, a tax of 2 1/2 per centum, on the amount of all. . . dividends hereafter declared.' The act was passed July 14th, 1870. Suppose now that a dividend was made between that date and January 1st, 1871. It was declared 'after' the passage of the act, and the act enacted that the tax was to be on all dividends 'thereafter declared.' But it also enacted that the tax was to be levied for and during the year 1871, and the dividend was not made for that year.

And the seventeenth section of the act enacted that no tax should be levied longer under the sections 120, 121, 122, or 123 (the sections affecting corporations) of the act of 1864.

Only two constructions seemed possible:

One of them would hold that the thing to be done in 1871 was the 'levying and collecting.' This would make the meaning thus: 'A tax of 2 1/2 per cent. on the amount of all dividends hereafter declared shall be levied and collected in the year 1871.' This was the view of the meaning of the act taken by the government. It asserted that the limitation to the year 1871 did not apply to the accruing or to the declaring of the dividend to be taxed, but only to the time when the tax was to be levied and collected, and that the words 'hereafter declared' showed that the tax was to be levied on all dividends declared after the passage of the act, and therefore that a dividend declared in December, 1870, being 'hereafter declared,' must pay the tax, though the levying and collecting was to be postponed till 1871.

The other construction was that the words 'for and during the year 1871' apply to, and limited, and were intended to describe, the time of the earning of the money out of which the dividends were declared, and also the time of the declaration of the dividends; that is to say, that dividends were not to be taxed unless they were either declared in 1871, or the moneys from which they were declared were earned in that year, and that the object of the section was to tax only dividends declared or earned therein.

On the part of the government it was said, 'Income is equally income, and, in practical view, identically the same thing, whether it be interest coming from an individual debtor or interest coming from a railroad company; whether it be a dividend of profits declared to one of a mercantile firm having several partners, or a like dividend declared to one of several stockholders of a bank or railroad or other corporation specified in the fifteenth section of the act of 1870. Why would you seek to tax the income from the first source and not to tax that from the second? In so acting you would make us give up and aban on for five months the less odious form of taxation, since it is less odious to let the corporation retain the tax and pay it for the citizen-in which case vast numbers of persons never so much as know that they have been taxed-and you would make us retain and enforce the more odious form, since it is more odious to make the citizen report, by an inquisitorial process, what gain has come directly into his hands, and then make him unclench his hand and give up what, from his mere possession of it, he had almost felt was his own. In so acting you would make us do worse, for you would make us put the burden of taxes on the poorer sorts of persons in every class (since the gains of these are generally made directly by themselves); and you would make us absolve, for five months, those whose gains come from the bonds and stocks of corporations, that is to say, the rich alone or chiefly.'

To all this the reply of the banks, railroad, and other corporations was: We do not presume to be wiser than Congress, or to speculate upon the reasons for what it has done. Command being plain, our duty is obedience. And when in regard to income paid directly Congress says—

'There shall be levied and collected annually. . . for the years 1870 AND 1871, and no longer, a tax of 2 1/2 per centum,' &c.;

and in regard to income retained by and paid through corporations, says:'There shall be levied and collected for and during the year 1871, a tax of 2 1/2 per centum,' &c.;

We think it plain that Congress did not mean to lay a tax in the two cases for the same term of time.

This was the view taken by the banks, and in accordance with it they construed the section as though it read 'a tax of 2 1/2 per cent. shall be levied and collected on the amount of all dividends hereafter declared for and during the year 1871.'

The Circuit Courts, where the question arose, sustained the position taken by the banks. That position was thus forcibly defended by McKennan, J., in the Pennsylvania Circuit:

title: Blake v. National Banks


text: Talk:Blake v. National Banks

title: Talk:Blake v. National Banks


text:
Blake v. National Banks/Opinion of the Court

'The seventeenth section of the act of July § 4th, 1870, repeals the 122d and other sections of the act of 1864, by providing that, after the first day of August, 1870, no further taxes shall be levied or assessed under them. It is plain, therefore, that the tax complained of by the banks could not be assessed and collected under the act of 1864, and that unless it was authorized by the act of 1870, there is no warrant anywhere for its assessment. The fifteenth section of the latter act is the only part of it for which this effect can be asserted.

'The word 'levied' in the beginning of the section, is evidently employed as convertible with assessed or imposed, so that the import of the enactment is, that interest, dividends, and surplus earnings shall be subjected to a tax of 2 1/2 per cent. for and during the year 1871. The plainly expressed meaning of the section would, therefore, seem to be, that the tax to be levied was a tax for the year 1871, and not for the whole or any part of any previous years, and that it was to be imposed upon the enumerated subjects during and within the year 1871, and not during or within any other year. Interpreting the words of the section then, according to their ordinary sense, interest falling due and dividends declared and payable within the last five months of 1870, were excluded from the operation of the tax.

'But it is urged that the phrase 'hereafter declared,' applied to dividends subject to the tax, dividends declared and payable before 1871. There is certainly no ground, either in the import of these words or in their collocation in the law, for extending their qualifying effect to interest or undivided profits. Only dividends are properly spoken of as 'declared;' not so either interest or undivided earnings, and to apply the term to them would be both inappropriate and unmeaning. It must be taken as referring exclusively to dividends; and interest and undivided earnings must be considered as affected by the unqualified import of the clause which makes them taxable for and during the year 1871.

'Nor is there any better reason for interpreting this phrase to describe only dividends declared after August 1st, 1870. It is not found in the same section with that date, and while, ex vi termini, it applies to the date of the passage of the act, this obvious reference cannot be changed by the exigencies of a mere arbitrary construction.

'But were these words used in any other sense than as referring to a period occurring after the passage of the act, and for and during the year 1871, as they naturally import, and not with intent to impose a tax upon dividends exceptionally? To preserve the congruity of legislative action and to harmonize the several sections of the act of 1870 itself, they must be thus interpreted.

'From the origin of the system of internal revenue taxation, through the whole course of legislation on the subject, interest on corporate indebtedness, dividends of profits, and undivided earnings were treated as closely related if not inseparable subjects of taxation. They were associated in the same section, the same tax was imposed upon them, and the same mode provided for its return and collection; and this relation was preserved in their relief together from the 5 per cent. tax, by the repeal of the 122d section of the act of 1864. They are, indeed, but a single subject, because they are the product of the inseparable exercise of corporate franchises, and are only nominally distinguishable by being set apart for different classes of recipients. They were, therefore, uniformly dealt with as cognate subjects of taxation. Now, to hold that dividends were intended to be taxed, and that interest and undivided profits were not, ought to be the result of an unequivocal declaration of Congress to that effect. Aside from this there is no reason for such a conclusion by construction. But if anything in the act is plan, it is that the tax upon interest and undivided profits was limited in its operation to the 1st of August, 1870, and that the new tax was not to be imposed upon them during the remainder of that year or until the year 1871. Now the same limitation is expressly applicable to the taxation of dividends, and the new tax to be levied upon them is also declared to be for the year 1871. A discriminating construction, by which they would be subjected to the new tax before 1871, would then not only disregard the analogies of former legislation, but it would necessarily characterize a tax, expressly declared to be 'for and during the year 1871,' as a tax for and during five months of the year 1870.

'The sixteenth section of the act of 1870 directs the mode and time of making a return of the income and profits subject to taxation under the fifteenth section. It requires a return to be made to the assessor of the district or his assistant, 'of the amount of income, and profits, and taxes as aforesaid. . . on or before the tenth day of the month following that in which any dividends or sums of money became due or payable as aforesaid,' and the act of July 13th, 1866, section eleven, requires the payment of the tax on or before the last day of the month. Under these provisions it as the obvious duty of corporations to return the dividends and sums of money due by them, and to pay the tax to which they are liable within the periods designated. If they are not bound to do so, it can only be for the reason that the dividends declared and the sums due by them are not subject to taxation. Now the tax imposed by the fifteenth section was not to be 'levied or collected' until the year 1871. If no tax was to be levied or demandable until the year 1871, it is plain that the provisions in relation to the return and payment of the tax imposed are inapplicable to dividends declared and payable in 1870; are if no provision is made for the return and assessment of dividends then declared, as in other case, is not the conclusion irresistible that they were not intended to be placed in the category of subjects upon which a tax was imposed?

'Whatever § gnification, then, the words 'hereafter declared,' as applied to dividends, may have, they cannot be interpreted to subject dividends to a discriminating tax against the uniform course of previous legislation and the clear meaning of the preceding words, which limit the tax imposed to the year 1871, and to subjects properly classified as belonging to that period.

'Even if they can be regarded as casting doubt upon the meaning of the law, that doubt must be resolved in favor of the citizen. The exercise of the power of taxation is not to be affirmed upon conjectural or arbitrary inferences. No burden is to be taken as imposed upon the citizen which the government has not clearly made it his duty to assume. Nor can any portion of his property be exacted for any purpose, except in pursuance of an unambiguous mandate.

'Whatever degree of liberality, therefore, may be allowable in the construction of statutes relating to the revenue of the government, there is neither reason nor justice in expanding them by a strain upon the ordinary import of their words, to give effect to a hypothetical legislative intention.

'It results, then, that dividends declared and payable by railroad companies during the last five months of 1870 were not subject to taxation; and that the tax described in the plea was assessed without authority of law.'

Judgments were accordingly entered for the plaintiffs; that is to say, for the corporations; and to bring them here these writs of error were taken.

Mr. G. H. Williams, Attorney-General, and Mr. S. F. Phillips, Solicitor-General, for the collector, plaintiff in error; Mr. F. C. Barlow and Mr. J. E. Gowan, contra.

Mr. Justice HUNT delivered the opinion of the court.

The language to the act of July 14th, 1870, is too manifest to admit of a doubt that Congress intended to extend for two years the tax upon the incomes of individuals. Without further legislation the power to levy that tax expired with the year 1870. A tax for the year 1869 had been levied in March, 1870, under the authority of the laws referred to. No further levy could be made. It is then provided by section six that there shall be levied for the years 1870 and 1871 a tax upon individual incomes.

By the statute of 1864 that portion of the income of an individual derived from dividends on stocks, interest on corporate bonds, and the like, was directed not to be included in his return of gains and profits, and no tax was assessed to him directly for that portion of his income. Another section of the same statute provided that dividends of earnings, interest on corporate bonds, and the like should be taxed to the corporation directly and in its name. While these items were passed over in the individual account, they were rigidly and searchingly sought out and taxed in the name of the corporation. We here find the explanation of that portion of the seventh section of the act of 1870, which excepts from individual income as a subject of taxation 'that portion thereof from which, under authority of acts of Congress previous hereto, a tax of 5 per centum shall have been withheld.'

Intending and expecting that this source of taxation would continue to be reached by the taxation upon corporations, it was intended that the individual should be relieved from the imposition.

From the examination of the Globe Congressional Journal of the 41st Congress, #fn-s-s-s and of the originial Journal of the House of Representatives, we learn that as originally reported and passig the House the words 'for and during the year 1871,' now making a part of the fifteenth section, were not in the bill; nor were there any corresponding words. The bill read:

'That there shall be levied and collected a tax of two and one-half per centum on the amount of all interest or coupons, &c.,. . . and on the amount of all dividends of earnings or gains. . . hereafter declared, whenever and wherever the. . . same shall be payable, and to whatsoever person the same may be due.'

As it thus stood the imposition of the tax upon the dividends of corporations was unlimited as to time.

The same record shows that the Senate amended the fifteenth section by inserting after the word collected as follows:

'During the years 1871 and 1872.' So that it would read—

'Be it enacted that there shall be levied and collected during the years 1871 and 1872 a tax of two and one-half per centum on the amount of all interest, & c.'

Up to this point it stands that the House proposed to tax the corporations upon their dividends and coupons without limit as to time, while the Senate desired to fix their liability to the taxes to be levied and assessed during the years 1871 and 1872.

The record further shows that the House disagreed to this and to other amendments of the Senate. There were many points of difference. A committee of conference was appointed, the chairman of which, Mr. Schenck, reported to the House on the 13th day of July, among other things, 'that the House receded from their disagreement to the twentieth amendment of the Senate [the one above quoted], and agree to the same with the following amendment:

'Strike out said Senate amendment and insert in lieu thereof the following: 'for and during the year 1871."

This was agreed to, and the section which we are now considering became a law in its present form.

Connected directly with this point is the provision of section seventeen of the same act, viz., that sections 120, 121, 122, and 123 of the act of June, 1864, as amended, shall be construed to impose the taxes therein mentioned to the 1st day of August, 1870, but after that date no further taxes shall be levied or assessed under the said sections.

These sections are the ones imposing the income tax of five per cent. upon corporations, and that tax is thus continued upon corporations until August, 1870, and no longer.

The journal and record show two other facts:

1st. That the words 'hereafter declared,' in the fifteenth section of the act of 1870, immediately following the words 'dividends of earnings, income, or gains,' formed a part of the original bill as it passed the House and was sent to the Senate.

2d. That the seventeenth section, by which it was enacted that the sections of the statute of 1864 imposing the income tax of five per cent. upon corporations, should be construed to impose the taxes therein mentioned to the 1st day of August, 1870, but that after that date no further tax shall be levied or assessed under those sections, formed no part of the original House bill. It was an amendment proposed on the part of the Senate, and agreed to by the House.

By section fifteen it is declared that this tax of two and one-half per cent. shall be imposed 'on the amount of all dividends of earnings, income, or gain hereafter declared' by any bank, railroad company, trust company, &c. All the dividends which shall be thereafter declared by any bank or railroad company shall be taxed. No time is limited within which the dividend is to be declared. No restriction is made except that it shall be 'hereafter' declared, i. e., after the 17th of July, 1870, the date of the passage of the act. The dividends in question were all declared after this date, and they fall within the general language made use of.

The first branch of the section directs the levying and collection of taxes on dividends for and during the year 1871; the latter branch imposes the tax upon all dividends thereafter declared.

Under these circumstances, we are compelled to ascertain the legislative intention by a recurrence to the mode in which the embarrassing words were introduced, as shown by the journals and records, and by giving such construction to the statute as we believe will carry out the intentions of Congress.

The intention of the House upon the record we have quoted is plain. That body proposed to tax all dividends thereafter declared by corporations, but yielded to the indisposition of the Senate to assent to that principle.

The Senate proposed to amend this principle, first, by the limitation of the tax of five per cent. to August, 1870; and, second, by inserting the words 'there shall be levied and collected during the years 1871 and 1872,' which gave a tax of two and a half per cent. for those two years. The order in which these amendments were agreed to in the Senate is not easily ascertained. The record does not show the time of the adoption of the second amendment by the Senate. The senate consented to say that the tax should be levied and assessed 'during the years 1871 and 1872.' The House agreed to the amendment by making it to read not only 'during' but also 'for' the year 1871, and omitting the year 1872, and the result appears in the act we are considering.

This action does not correctly indicate the feeling of either body, as the House evidently wished to impose an extended tax, while the record shows that in several of its votes the Senate voted to abolish entirely the income tax, both as to individuals and as to corporations.

The defendant's construction of the fifteenth section assumes that Congress imposed the tax upon corporations, until August 1st, 1870; that from that date till January 1st, 1871, no tax was imposed, and that after that period the tax was again imposed; that there was a hiatus for five months. The tax upon individuals meanwhile was imposed during the whole of the years 1870 and 1871. It is impossible to believe Congress intended to make this discrimination. It is entirely unreasonable, and is not in harmony with the well-known views of Congress on the subject.

The rate of taxation to August 1st, 1870, was five per centum. Accordingly section seventeen enacts that the taxation under sections 120, 121, 122, 123, of the act of 1864, which would be at and after that rate, shall be paid by the corporations until August 1st, 1870, but after that time no further taxes shall be levied or assessed under those sections. There is no enactment that the corporations shall not be taxed on dividends after August 1st, 1870, but that the force of those sections shall extend no farther. Subsequent taxes are by virtue of other authority. Each rate was intended to be provided for in this statute, as we find that the five per cent. may be collected by virtue of the seventeenth section, and the fifteenth section may be construed as saying that the tax shall be extended through the year 1871, and that the dividends thereafter declared during the year 1870 shall be subject to the tax of two and a half per cent.

The ambiguous terms of the statute prevent the possibility of a satisfactory solution of the question presented. We are inclined to adopt the construction practically placed upon it by the administrative department of the government, which is this: that effect is to be given to the words 'hereafter declared,' by holding that they cover all the dividends and additions of the year 1870, after the passage of the act; and that the words 'levied and collected during the year 1871' relate to the time when the tax is to be enforced rather than as a limitation to the tax itself. Congress may have assumed that the dividends after August would not be declared until the end of the year should be nearly reached, and that they would be properly levied and collected in the year following. The statute hereinbefore quoted, showing that the tax upon individual incomes is to be levied and collected in the year following the period for which they are imposed by the statute, is an illustration of what these words may mean. The words in question do not necessarily limit the kind of property to be taxed or the period of time for which the tax is laid. The tax cannot be levied or collected until 1871, but it may be imposed upon all dividends, additions, or payments of interest made or declared after the passage of the act of July 17th, 1870.

JUDGMENT REVERSED.

Dissenting, Justices DAVIS, STRONG, and BRADLEY.


text: Talk:Blake v. National Banks/Opinion of the Court


text:
Slack v. Tucker & Company

ERROR to the Circuit Court for the District of Massachusetts.

Tucker & Co., partners, sued, in the said court, Slack, collector of internal revenue in the city of Boston, to recover the amount of certain taxes paid by them under protest, and which they alleged to have been illegally assessed. The court, having tried the cause without a jury, held the tax illegal and a recovery was had. This writ of error was brought by the collector to reverse the judgment.

The tax was assessed against Tucker & Co. as 'wholesale dealers' under the seventy-ninth section of the Internal Revenue Act of June 30th, 1864, as amended by the act of July 13th, 1866.

It was agreed, on the trial, that if upon the facts the court should decide that the plaintiffs were not liable to the tax as 'wholesale dealers,' but were liable to a tax of one-half the amount as 'commercial brokers' under the fourteenth clause of the seventy-ninth section, and under the ninety-ninth section as amended, judgment should be rendered in their favor for half the amount claimed and interest, subject to the defendant's exceptions.

The statutory provisions referred to, and on the construction of which the case principally depended, were expressed in the following terms:

1st. As to wholesale dealers, the seventy-ninth section, as amended, enacted thus:

'Wholesale dealers, whose annual sales do not exceed $50,000, shall pay $50; and if their annual sales exceed $50,000, for every additional $1000 in excess of $50,000, they shall pay $1. . . . Every person shall be regarded as a wholesale dealer whose business it is, for himself or on commission, to sell, or offer to sell, any goods, wares, or merchandise of foreign or domestic production, not including wines, spirits, or malt liquors, whose annual sales exceed $25,000.'

An exception was made in favor of manufacturers selling their own goods, by section seventy-four, as amended by the act of July 13th, 1866:

'But nothing herein contained shall require a special tax for. . . the sale by manufacturers or producers of their own goods, wares, and merchandise, at the place of production or manufacture, and at their principal office or place of business, provided no goods, wares, or merchandise shall be kept except as samples at said office or place of business.'

2d. As to commercial brokers, the fourteenth clause of the seventy-ninth section, as amended in 1866, enacts as follows:

'Commercial brokers shall pay $20. Any person or firm whose business it is, as a broker, to negotiate sales or purchases of goods, wares, or merchandise, or to negotiate freights and other business for the owners of vessels or for the shippers or consignors or consignees of freight carried by vessels, shall be regarded a commercial broker.'

And section ninety-nine, as amended, provides:

'And there shall be paid monthly on all sales by commercial brokers of any goods, wares, or merchandise, a tax of one-twentieth of one per centum upon the amount of such sales.'

Under these statutes the plaintiffs contended first, that the sales made by them were made as mere agents of the manufacturers at their principal office and place of business, and therefore came under the exemption provided in section seventy-four, above quoted; secondly, that, at most, they were commercial brokers, and therefore liable for only one-half the amount for which they were assessed.

The facts on which they relied in support of these positions sufficiently appeared from the bill of exceptions taken by the collector on the trial of the cause. It was shown-the testimony of the plaintiffs themselves showing this-that four manufacturing corporations, two of them having their factories at Nashua, New Hampshire, and chartered by that State, and two of them having their factories at Waltham and Clinton, in Massachusetts, and chartered by the latter State, and all manufacturing cotton goods had the same general office in Boston, where they held their meetings, transacted their business, and kept their records, and where they kept a common clerk and a common treasurer. The latter was the chief executive officer, buying all the raw material and making the other purchases for the corporations, taking care of their finances, and under the respective boards (which consisted of substantially the same persons) managing and controlling the affairs of the several corporations, their agents and servants.

Between these corporations respectively and the plaintiffs, who were a mercantile firm, transacting business in Boston, under the name of Tucker & Co., there were separate agreements, either in writing or by parol, that the plaintiffs should sell all the goods manufactured by each corporation, for a fixed percentage on the amount of sales, and the course of business of the plaintiffs under and in pursuance of these agreements was as follows, that is to say: The plaintiffs had a store in Boston, which they hired in their own names, and for which they paid the rent, with clerks, bookkeepers, and other servants whom they employed and paid. In this store was a counting-room, in which their business was transacted, and chambers where samples of goods manufactured by the corporations were kept. No goods except sample-bales and packages were there kept, unless occasionally some goods which had been mis-sent, or for some reason had not been accepted by a customer, found their way there.

The plaintiffs were known to be the agents of these corporations, to sell their goods, and they sold only the goods of these corporations, and their course of business was as follows: They were kept informed daily of what was manufactured at the several mills, and made sales to purchasers as opportunity offered. They kept in their office a different set of books for each of the corporations, and when a sale of any of the goods of any of the corporations was effected, an entry of the fact was made in the books of that corporation, and they informed the manufacturing agent at the mill of such corporation (where all the goods were stored as they were manufactured) to send such goods to the purchaser. The goods were then packed at the mill, and directed to the purchaser, and forwarded to Boston by rail, where a truckman, employed and paid by the plaintiffs, received them and delivered them to the purchaser, if in Boston, or at the steamboat landing or railroad station, if the goods were to be sent elsewhere. The freight by rail, from the mill to Boston, was paid by the plaintiffs, and was, with the expense of truckage, charged by them to the respective corporations. When sufficient time had elapsed after the sale for the delivery of the goods, the plaintiffs sent to the purchaser a bill of the goods in their own names, separate bills being rendered for the goods of each corporation, and not as agents, and in due course, when they were settled, receipted the bills in their own names, and not as agents. When the bills were paid in cash, the money was received by the plaintiffs and deposited in bank in their own names; and if on any given day money was received from sales of the goods of the different corporations, such money was mingled together and deposited by the plaintiffs in their own names. If the bills were settled by notes, the notes were made payable either to the order of the makers, and by them indorsed, or to the order of the particular corporation whose goods were sold. The plaintiffs did not put their names upon any such notes, nor did they guarantee any of their sales. They delivered these notes from time to time to the treasurer, and from time to time paid him money, and every month settled their account with each corporation.

The plaintiffs had a branch house in New York, and an agency in Philadelphia, and the sales in New York and Philadelphia were reported to the Boston house, and deliveries and collections were made as to such sales in the same manner as in sales at the Boston house. Such sales were not included in their returns to the assessor at Boston, and no part of the taxes which this action was brought to recover was paid upon such sales at New York and Philadelphia.

It was proved also that the several corporations had paid what is called the 'manufacturers' tax'-a tax of five per cent. upon all the goods that were sold by the plaintiffs.

Upon this evidence adduced by the plaintiffs, the defendant moved for judgment on the following grounds:

1st. Admitting all that was attempted to be proved, it manifestly appeared that the plaintiffs were wholesale dealers within the meaning of the law, and so liable to pay the tax collected.

2d. That the sales made by the plaintiffs were not sales made by the manufacturing corporations within the meaning of the law; and

3d. If the sales were made by the plaintiffs as agents of the manufacturing corporations, within the meaning of the law, they were not made at the place of manufacture, nor at the principal office or place of business of the corporations, but were made at the store of the plaintiffs.

The court overruled the motion and ordered judgment to be entered for the plaintiffs for the full amount claimed.

This judgment was of course to be reversed if, upon the evidence as disclosed, the defendants in error were either wholesale dealers or commercial brokers within the act. In the one case they could have recovered nothing, in the other only one-half of what they did recover.

If on the contrary they were neither 'wholesale dealers,' nor 'commercial brokers,' within the act; or if the sales were sales made by the manufacturers at the place of production and at their principal office or place of business-no samples being kept there the judgment would be to be affirmed.

Mr. H. D. Hyde, in support of the judgment below:

The judgment below should be affirmed. A corporation can only act through agents, and the defendants were the agents of the several corporations for selling their goods. That they were such agents appears from their course of dealing and from the admitted fact that 'there were separate agreements, either in writing or by parol, that the defendants should sell all the goods manufactured by each corporation for a fixed percentage on the amount of sales.' The ownership or prossession of the goods never passed from the several corporations to the defendants. The transactions of each corporation were kept on separate books; separate bills of the goods of each corporation when sold were rendered; all expenses of transportation were paid by the respective corporations; and all notes taken for the payment of goods sold were the property of each corporation, and were delivered to its treasurer. The defendants 'were known to be the agents of these corporations to sell their goods.' An action could have been maintained by or against the several corporations upon the contract of sale.

If the defendants were the agents of the respective corporations for selling their goods, were the goods sold at such a place that no tax could be assessed upon the sales? It is admitted that only samples were kept at the place of sale.

The defendants sold all the goods of each corporation; none were sold at the place of production or manufacture. The only place where their goods were sold was the place where the defendants sold them. This place was, then, not only their principal office of place of business for selling, but it was their only office or place of business for that purpose.

The purpose of a corporation in manufacturing goods is that it may sell them, and thereby make a profit. The goods are manufactured to sell, and, after they are manufactured, the principal business is to sell them. It is hardly fair to suppose that Congress intended to distinguish between the relative importance of the duties of the treasurer and selling agent of a corporation, but that the corporation having paid the 'manufacturers' tax,' five per cent., upon its production, should be llowed to sell its own goods, through its own agents, at the place of production, or at its office or principal place of business for selling.

It may be argued that the defendants sold goods in Boston, New York, and Philadelphia, and that it does not appear which of the three was the principal place, or at which place the largest amount was sold. But it can hardly be supposed that Congress intended that, if a corporation manufactured goods in Maine, it should not have a right to sell them through their own agents at a recognized place of business in each of these cities upon the same terms; and that if it had an office and agent for selling in Boston, it could not have an additional office and agent for selling in New York, without paying in the latter place a tax of one dollar per thousand upon all its sales. In the present case, the goods upon which the tax was collected were all sold in Boston, and all sales passed through the books of the Boston house, and their place of business was the principal one for sales.

It is asserted by the government that if the defendants were not required to pay the tax of one dollar per thousand on all sales made by them as wholesale dealers, they were liable to pay one-half of that amount as 'commercial brokers.' This we admit, provided that they were not exempt as previously shown.

A wholesale dealer is a commission merchant who has possession of goods and sells them, one 'whose business it is for himself or on commission to sell or offer for sale any goods,' &c.

A commercial broker is one 'whose business it is, as the agent of others, as a broker to negotiate sales or purchases of goods,' &c.

The defendants were never commission merchants; and if they were not the selling agents they were only brokers, negotiating sales for their principals, and should only have been taxed as such. The distinction between a 'wholesale dealer' and a 'commercial broker' is as marked and distinct as it is between a commission merchant and a broker.

Mr. G. H. Whillams, Attorney-General, and Mr. S. F. Phillips, Solicitor-General, contra, for the plaintiff in error.

Mr. Justice BRADLEY delivered the opinion of the court.

title: Slack v. Tucker & Company


text: Talk:Slack v. Tucker & Company

title: Talk:Slack v. Tucker & Company


text:
Slack v. Tucker & Company/Opinion of the Court

The general meaning of the act of Congress in the passages under consideration is sufficiently clear. Congress evidently intended to tax as 'wholesale dealers' as well those who sold goods as commission merchants as those who sold on their own account; always excepting manufacturers, selling at the place of manufacture, or by sample at their principal office and place of business. The intention is equally evident to tax as 'commercial brokers' those who, as brokers merely, negotiated sales or purchases for others, and not in their own names nor on their own account.

We are clearly of opinion that the evidence propounded by the plaintiffs showed that the sales were not the sales of the corporations made by the plaintiffs as mere agents, much less that they were made at the principal office or place of business of the corporations. The latter had an office and place of business of their own where their principal executive officer managed their executive and financial operations, and to which any persons having business with the corporations would naturally go. On the contrary, the store of the plaintiffs was their own store, hired and furnished by themselves. The clerks employed in it were their own clerks. All the expenses were paid by themselves. The business was carried on in their own names. The sales were made, and the bills made out, in their names. The money arising from the sales was paid to them and deposited to their account. They charged regular commissions on the sales. It is true they sold by sample, and did not keep the goods in their store; but that did not make the sales any less their own. Persons selling their own goods often do the same. But, though they did not keep the goods at their store, and though, as sales were made, the goods by their direction were put up at the mill and directed to the urchasers, yet they were sent to and received by the plaintiffs; who delivered them if the purchasers were in Boston, or shipped them if the purchasers resided elsewhere. The goods passed through their hands before the purchaser received them. They came into their possession as soon as it was necessary to enable them to fulfil their contracts of sale.

In our opinion, therefore, the plaintiffs were commission merchants, and chargeable as such with the tax in question as 'wholesale dealers.' The difference between a factor or commission merchant and a broker is stated by all the books to be this: a factor may buy and sell in his own name, and he has the goods in his possession; while a broker, as such, cannot ordinarily buy or sell in his own name, and has no possession of the goods sold. The plaintiffs made the sales themselves, in their own names, at their own store, and on commission, and had possession of the goods as soon as the sales were made, and delivered or shipped them to their customers. This course of business clearly constituted them commission merchants as contradistinguished from mere brokers or agents.

The fact that the corporations paid the manufacturing tax of five per cent. on the same goods is of no consequence at all in deciding the case. The tax in question was not imposed upon the corporations, but upon the commission merchants, as a tax on their business. It would even have been imposed on the corporations themselves if they had sold the goods in any other manner than as provided in the seventy-fourth section of the act, namely, at the place of manufacture, or, by sample, at their principal office and place of business.

We are of opinion, therefore, that upon the evidence adduced, the court ought to have given judgment for the defendant instead of the plaintiffs.

A VENIRE DE NOVO.

Mr. Justice FIELD dissented from the judgment, being of opinion that the plaintiffs were not wholesale dealers, either within the common acceptation of the terms or the meaning of the statute.


text: Talk:Slack v. Tucker & Company/Opinion of the Court


text: Scholey v. Rew

title: Scholey v. Rew


text: Talk:Scholey v. Rew

title: Talk:Scholey v. Rew