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Nichols v. Levy/Opinion of the Court

THIS was an appeal from the Circuit Court of the United States for the Middle District of Tennessee.

In that court, James Beal Nichol and John Nichol, Jr filed a bill for an injunction to restrain Levy and thirty-six others, different merchantile houses, from selling, under executions at law, which these houses had obtained against them, certain lands in which they, the said J. B. and J. Nichol, were interested; the ground of the bill being, that the said lands were not liable to be sold to satisfy the judgments in question. The court refused to grant the injunction, and this appeal was taken.

1st. Whether the matter of the liability of said lands was not res adjudicata in favor of the Nichols in a certain other proceeding hereinafter mentioned, in which they were defendants? and

2d. Whether, as an original question, they had any such estate in the lands as was liable to execution at law?

The appellants were grandsons of one Beal Basley, and having been engaged in mercantile business, and failing in it, had become heavily, if not hopelessly, indebted. Their grandfather, desiring to provide for his grandsons, these young men, but unwilling that his bounty should go simply to pay their debts, executed, in 1849, a deed, conveying certain lands (including one tract of 308 3/8 acres) to one John Nichol, Sr., upon trusts that the trustees should permit the said Beal Basley to occupy and enjoy the lands, &c., during his life—

'And after his death that the said John Nichol, Sr., will permit the said J. B. Nichol and John Nichol, Jr., jointly or in severalty, according to any division into two equal parts that may hereafter be made between them, to have, possess, use, occupy, and enjoy the said property, and receive the rents, issues, and profits thereof, so that neither the said property nor the rents, issues, and profits thereof shall ever be liable for any of the present now existing debts, whether due or not due, or now existing contracts of the said J. B. Nichol or John Nichol, Jr., or either of them, or to any incumbrance, liability, or lien that they or either of them or their property are now subject to for said debts or contracts, or by any acts, defaults, or transactions of their own, whereby they may attempt to make the same liable for said debts or contracts, and after the present debts and liabilities of the said J. B. Nichol and John Nichol, Jr., shall have been extinguished and they entirely discharged therefrom, then the said John Nichol, Sr., shall hold said property, and every part thereof, in trust, to convey the same to the said J. B. Nichol and John Nichol, Jr., in fee and absolutely, either as tenants in common or in severalty, and in such manner as may be agreed on by and between the said J. B. Nichol and John Nichol, Jr.'

John Nichol, Sr., the trustee, died, and the legal estate in the lands descended to his nine children, two of whom were James Beal Nichol and John Nichol, Jr.

Subsequently, and during the lifetime of the grandfather, in August, 1854, certain creditors (in number thirty) of the two grandsons having obtained judgments upon debts existing after the conveyance was made, filed bills in chancery against them and the heirs of the deceased trustee, in Tennessee, praying a sale of their interest in the lands so conveyed. These suits were consolidated and tried together. The bills having set forth the deed, judgments, and the case of the creditors on them, concluded:

'From the foregoing statement of facts your honor will readily perceive that said James B. and John Nichol, Jr., are invested with at least a remainder interest in fee in said tract of 308 3/8 acres allotted to them as aforesaid; that the legal title to said tract being in John Nichol, Sr., or his heirs, the same is not subject to execution at law.'

The prayer was, that the premises being considered, and as the complainants had no remedy at law, the 'interest' of the two grandsons Nichol in the property should be sold, and the proceeds applied to the payment of the judgments.

The chancellor decreed that the property could not be thus applied, either under the general jurisdiction of the court, or under an act of the legislature of Tennessee by which it was sought to render it liable, notwithstanding the terms of the deed. And the Supreme Court of Tennessee affirmed this decree.

The statute of Tennessee referred to, authorized certain proceedings to subject equitable interests to the payment of judgments obtained against the defendant, at law. It declared:

'Section 1. That a bill might be filed 'to compel the discovery of any bank stock, or other kind of stock, or any property, or thing in action, held in trust for him, and to prevent the transfer of any such stock, property, money, thing in action, or the payment or delivery thereof to the defendant, except where such trust has been created by, or the fund has proceeded from, some person other than the defendant himself, and is declared by will duly recorded, or by deed duly proved and registered.'

'Section 2. That the court might decree payment of the judgment out of 'any property, stock, money, or things in action, belonging to the defendant or held in trust for him, with the excpetion above stated, which shall be discovered by the proceedings in chancery.'

'Section 4. That when service could not be made at law, and a judgment obtained, and also where the demand was of a purely equitable nature, a court of equity should have jurisdiction to subject legal and equitable interests in every species of stock and other property, with the exception hereinbefore stated, and also in real estate.'

In March, 1861, the two grandsons made partition of the land by deed, and in April, 1860, sold portions of it.

In May, 1860, the grandfather, Beal Basley, died, and immediately thereafter the same thirty judgment creditors above-mentioned, and seven others, who had not joined in the former proceedings, caused executions to be levied upon the entire tract of land in question, and it was accordingly advertised for sale. Whereupon in August, 1860, James Beal Nichol, and John Nichol, Jr., the grandsons provided for as above mentioned, filed a bill in the Circuit Court of the United States, for an injunction to prevent the sale, setting forth the proceedings hereinbefore mentioned by which they contended the creditors were estopped, and also relying upon the exemption of the property, according to the terms and conditions of the trust under which they held.

Upon final hearing, in 1864, the court being of opinion that the defendants were not estopped by the decree of the Supreme Court, and 'that the terms of exclusion of the donees' creditors not amounting to a limitation of the estate, can no more repel the creditors than a restraint upon alienation can in the hands of the donee himself,' dissolved the injunction and dismissed the bill. From this decree the present appeal was taken to this court.

Messrs. Carlisle and McPherson, for J. B. and J. Nichol, appellants:

I. The decree of the Supreme Court of Tennessee estops the parties to the proceedings in which it was rendered, as to the matter in question.

The subject-matter was the same in both cases. The only difference was that caused by the death of the tenant for life, Beal Basley. When the decree was rendered, these appellants had a vested remainder in the lands, after the death of Beal Basley. No change took place after this decree and before the executions were issued, except that by his death the remainder vested in possession. But his death did not change the case. A remainder is as much liable for the satisfaction of judgments as an estate in possession; for a legal estate in remainder may be sold under execution, and an equitable remainder may be subjected, by proceedings in equity, to be sold for debt.

The suit in the Chancery Court was between the same parties. It is true that not all the defendants in this cause were parties to the cause in the Chancery Court (thirty of the thirty-seven being parties), but this latter suit was upon a creditor's bill, to which all had a right to be made parties upon motion, and are, consequently, bound by the decision.

If this be not so, still those who were parties are bound.

II. If the appellees are not estopped, and the question is to be treated as an original one in this suit, still the estate of the appellants in the lands was not subject to be taken in execution.

On this question the decision of the Supreme Court of Tennessee, if not an estoppel, is a controlling authority, being a decision upon the construction of a statute of that State, and laying down a rule of real property therein.

The intent and legal effect of the deed was to vest the legal estate in the trustee until the debts of the cestui que trust should be paid, and upon the happening of that event to convey the lands to the cestui que trust, and in the meantime the lands should be enjoyed by those persons described in the deed. During the continuance of the trust it was made the duty of the trustee to protect the possession of the lands against a specified class of persons, and to defeat any attempt on the part of the cestui que trust to apply the property or its proceeds to a certain specified and prohibited object. It was clearly the requirement of the donor that the trustee should in certain contingencies interfere actively in the execution of his intentions-to eject, for instance, former creditors, to whom the cestui que trust should have conveyed the land in satisfaction of a then existing debt, or even the purchasers who might buy at sheriff's sale, under the executions which it is now sought to enjoin. Moreover, the trustee was to ascertain when a certain event had occurred-the final extinguishment of certain debts of the cestui que trust-and upon the happening of that event he was to make a conveyance in one or the other of the two modes prescribed by the deed of gift. These provisions and conditions, if valid, constitute a special trust.

These provisions and conditions were valid, and especially that providing for a future conveyance of the land.

These positions do not conflict with the authorities which hold that all a debtor's property must be liable to his debts. But the remedy is in equity, where the interest of the debtor under the trust can be reached-not by execution at law, whereby the trust is destroyed.

The trust in this case being executory, and the trusts imperfectly declared, equity will carry the intentions of the parties into effect.

I. The decree of the Supreme Court of Tennessee is not an estoppel.

The essential qualities of an estoppel are that the judgment shall be between the same parties, upon the same subject-matter, and this must appear by the record, or be proved, and is not to be inferred by argument.

The parties are not the same.

We have here thirty-seven creditors as parties. In the suit in the State court of Tennessee there were but thirty. If the decree is a bar, it is a bar only as to the parties to the suit in the State court. The matter must be passed on here for the remaining seven.

It was not on the same subject-matter.

In those cases an effort was made by certain judgment creditors to create a lien in equity upon and subject to sale certain property in which it was alleged the defendants had an equitable interest. The court decided in substance that they had no estate at that time cognizable in a court of equity.

It was a bare possibility. The donees took no interest in presenti. It was to depend on their surviving the donor. He reserved a life estate to himself, and after his death a use to the donees for their lives, to be enlarged upon a certain contingency into a fee. It was a use for life limited upon a use for life and dependent on their surviving the donor. It was an interest too remote, depending on a possibility only, and did not vest any estate in the donee. It was not an estate or interest in the donees which could pass by assignment, whether voluntary or involuntary. It could not pass even by will, because no estate could arise on which the devise could operate.

The Supreme Court therefore was right in the decision which it made in the then condition of the title.

But on the death of the donor, the donees surviving, the interest of the donees becomes a vested interest, subject to the disposition of a court of equity and subject to execution at law.

II. As an original question.

This being a voluntary conveyance by the donor in trust for the donees to 'have, possess, use, occupy, and enjoy said property, and receive the rents, issues and profits thereof,' upon the termination of the life estate of the donor they became seized in fee of the lands, and by virtue of the statute of 29 Charles II, the same became liable to levy and sale upon execution.

The condition annexed to the estate made it inalienable except on a contingency, which was too remote and uncertain and against public policy. It was a contingency which not only might never happen, but which was so uncertain that it could not control the enjoyment and transferable character of the estate.

There is no restraint of alienation in the deed of trust, nor any limitation over to defeat the estate in the event of a conveyance by the cestui que trust before the payment of the debts provided against by the said deed. If then the cestui que trust had united with the trustee after the death of the grandfather in a conveyance of the property in fee, before execution levied, the purchaser would have taken unincumbered title. It follows that the cestui que trust took the full interest and estate as the land, subject only to the outstanding legal title, and such estate and interest was necessarily subject to sale under execution.

Where a grant or devise is made of the rents, issues and profits of an estate, the legal estate being vested in a trustee, with a condition annexed, that they shall not be subject to present or future debts, whether the estate granted or devised be an estate for life or in fee, the condition is void as against public policy.

This is not a special trust. The trustee had nothing to do but to hold the legal title, permit the parties to occupy, and when the trust was ended, convey the legal title to them in such manner as they might determine. A more passive trustee can hardly be conceived of.

Mr. Justice SWAYNE delivered the opinion of the court.

If the determination of this case depended upon the general principles of jurisprudence, the result must necessarily be in favor of the appellees. It is a settled rule of law that the beneficial interest of the cestui que trust, whatever it may be, is liable for the payment of his debts. It cannot be so fenced about by inhibitions and restrictions as to secure to it the inconsistent characteristics of right and enjoyment to the beneficiary and immunity from his creditors. A condition precedent that the provision shall not vest until his debts are paid, and a condition subsequent that it shall be divested and forfeited by his insolvency, with a limitation over to another person, are valid, and the law will give them full effect. Beyond this, protection from the claims of creditors is not allowed to go. *

According to these principles the restrictions in the deed of Beal Basley as to the creditors of the appellants are wholly void.

But the case does not turn upon these considerations.

Two other questions are presented, and our judgment must be determined by their solution.

One of these questions is, whether the appellees, who were complainants in the bills filed to reach the interests of the appellants in the property in question, are not concluded by the decree rendered in those cases by the Supreme Court of Tennessee. The cases were consolidated in that court, and decided together. The bills were filed in the Chancery Court of Davidson County, and addressed to the presiding chancellor. They contained this averment:

'From the foregoing statement of facts your honor will readily perceive that said James B. and John Nichol, Jr., are invested with at least a remainder interest in fee in said tract of 308 3/8 acres allotted to them as aforesaid; that the legal title to said tract being in John Nichol, St., or his heirs, the same is not subject to execution at law.'

Hence the aid of a court of equity was invoked. The prayer of the bills was that the 'interest' of the appellants in the property should be sold, and the proceeds applied to the payment of the judgments.

The chancellor decreed against the complainants, upon the grounds, that the restriction in the trust as to the liability of the property for the debts of James B. and John Nichol was valid; that the creditors could not compel the conveyance of the legal title when the beneficiaries themselves were not in a condition to demand it; and that 'the provisions of the deed were within the purview of the act of 1832;' and the property thus protected from the claims of the creditors.

The complainants appealed to the Supreme Court. That court held 'that said property is not liable for such debts and judgments of the complainants, and that the same may not be subjected to the payment and satisfaction of said debts and judgments,' and the decree of the chancellor was affirmed. As regards the complainants in that case, who are defendants in this, the parties were the same, and the question to be determined was the same. But it is said that Beal Basley was living when that litigation was begun, and dead when this bill was filed. That Basley was living could have made no difference in the result of the former suits, and cannot affect the bar arising from them in this suit. As averred in the bill, the beneficiaries had a vested remainder in fee. Their right to the property was as perfect then as it is now. Their estate was an equitable one, but alienable and descendible, and subject to be conveyed by the same instruments as a legal estate. It was not then vested in possession. The time of possession was dependent upon the termination of the life estate of Beal Basley. But this only lessened its value for the time being. Its liability to their creditors was not in the least affected. It is impossible that the Supreme Court of Tennessee should have held otherwise, and the decree have proceeded upon a different view of the subject. The language of the decree repels the suggestion. We cannot give any weight to an objection which assumes as its basis such a reflection upon that enlightened tribunal. The decree as to the property and questions here in controversy is res judicata, and it has every element of conclusiveness as to those who were parties to it.

Several defendants in this suit were not parties to that litigation, and hence are not bound by the decree.

This brings us to examine the second question presented for our consideration. It relates to the effect of the act of 1832, referred to by the chancellor in his decree.

The Supreme Court of Tennessee held that it had no power to subject stocks, choses in actions, or equitable interests, to the payment of judgments at law. The legislature of the State thereupon passed the act in question.

The first section declares that a bill may be filed 'to compel the discovery of any bank stock, or other kind of stock, or any property, or thing in action, held in trust for him' (the defendant), 'and to prevent the transfer of any such stock, property, money, thing in action, or the payment or delivery thereof to the defendant, except where such trust has been created by, or the fund has proceeded from, some person other than the defendant himself, and is declared by will duly recorded, or by deed duly proved and registered.'

The second section authorizes the court to decree payment of the judgment out of 'any property, stock, money, or things in action, belonging to the defendant or held in trust for him, with the exception above stated, which shall be discovered by the proceedings in chancery.'

The fourth section provides that when service cannot be made at law, and a judgment cannot be obtained, and also where the demand is of a purely equitable nature, 'a court of equity shall have jurisdiction to subject legal and equitable interests in every species of stock and other property, with the exception hereinbefore stated, and also in real estate.'

The Supreme Court of the State decided, in the suits referred to, that this statute embraces trusts of real estate, and that it exempted the property in question from liability to the judgment creditors. There can be no doubt of the power of the legislature to pass the statute. Its wisdom and policy are considerations with which we have nothing to do. Being a local statute and involving a rule of property, we adopt the construction which has been given to it by the highest judicial tribunal of the State.

This is decisive of the case as to those of the appellees who were not parties to the former suits.

The decree of the Circuit Court is REVERSED, and the cause will be remanded to that court with directions to enter a decree

IN CONFORMITY TO THIS OPINION.

title: Nichols v. Levy/Opinion of the Court


text: Talk:Nichols v. Levy/Opinion of the Court

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


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United States v. Armijo

APPEAL from the District Court of the United States for the Northern District of California.

The question presented for determination in the case related to the location of the southwestern line of the survey of a grant of land in California, made to one Francisco Armijo, which survey was approved by the District Court. The Armijo grant adjoined another grant in California made to one Francisco Solano; and, to understand the question presented, a statement of the origin and nature of both of the grants is necessary.

In January, 1837, Francisco Solano, a chief of an Indian tribe, presented a petition to the commanding general of the northern frontier of California, and director of colonization, for a grant of a tract of land of about four square leagues in extent, known by the name of Suisun. In his petition he represented that the land belonged to him by hereditary right from his ancestors, and that he was in its actual possession, but that he desired to 'revalidate' his rights; that is, to obtain a new recognition of their validity, in accordance with the existing laws of the Republic and the recent law of colonization decreed by the supreme government. The commanding general soon afterwards, during the same month, acceded to the petition so far as to give Solano a provisional grant of the land, 'as belonging to him by natural right and actual possession,' but accompanied it with a direction to him to ask from the government the usual title, in order to give validity to his rights, in conformity with the new law of colonization. In accordance with this direction, Solano applied, in January, 1842, to Alvarado, then Governor of California, for a full grant, accompanying his application with the above petition to the commanding general and the provisional grant of that officer.

On the 20th of the same month a formal grant was accordingly issued to him by the Governor, which was afterwards approved by the departmental assembly.

This grant was presented to the board of land commissioners created under the act of March 3, 1851, by Archibald C. Ritchie, who had become interested in the land, and the same was confirmed to him by the board, and afterwards by the District Court, and the decree of confirmation was affirmed by this court at its December Term, 1854.

In the following year the four square leagues were surveyed under the directions of the Surveyor-General of the United States for California, and the survey was approved by that officer. In conformity with this survey, a patent was issued by the United States to Ritchie in January, 1857, and his representatives (heirs or vendees) have been in possession of the premises even since.

In November, 1839, more than two years after the application of Solano to the commanding general, Francisco Armijo also presented a petition to that officer for a grant of a tract of land of about three leagues in extent, known by the name of Tolenas, representing that the land solicited adjoins the Suisun tract. The general immediately gave the petitioner permission to occupy the land thus situated, as it was vacant and was not private property. The order granting this permission enjoins upon the petitioner, as a duty to avoid molesting the Indians or other neighbors, to endeavor to win their confidence, to give information of any attempt at rebellion, and, in every case, to act in accord with the chief of the Suisun, and directors him to apply, with this order, to the political authorities for the necessary title-papers. Application was accordingly made to the prefect of the district, and by him the application was transferred to the governor of the department, who, on the 4th of March, 1840, issued to Armijo a formal grant of the premises. One of the conditions annexed to the grant provided that on no account should the grantee molest the Indians nor his immediate neighbors. This grant was also presented to the board of land commissioners, and was rejected. On appeal to the District Court, the decision of the board was reversed and the grant confirmed, and at the December Term of 1859 the decree of the District Court was affirmed by this court.

The survey made by the Surveyor-General of the United States for California of the tract thus confirmed located the land adjoining the tract patented to Ritchie, and was approved by the decree of the District Court in July, 1863, and the case came before this court on appeal from this decree. The appeal was prosecuted by two intervenors, claiming under the Armijo title. All the other representatives of the original grantee approved of the location made, and desired its confirmation.

The United States were also appellants on the record, but they did not press their objections urged in the court below. The specific quantity granted was not described by metes and bounds in either of the two grants, but in each reference was made to a map indicating the exterior limits within which the quantity was to be taken. Both maps represented, to a great extent, the same general tract, and the intervenors sought to include within the survey of the Armijo grant a portion of the land patented to Bitchie, and thus to be enabled to retain the land occupied by them, either as pre-emptors or holders of warrants issued by the State for the five hundred thousand acres given by Congress under the act of September 4, 1841.

Messrs. J. B. Williams and J. A. Wills, for the appellants, and Messrs. Carlisle and Stanley, for the respondents.

Mr. Justice FIELD, after stating the case, delivered the opinion of the court, as follows:

title: United States v. Armijo


text: Talk:United States v. Armijo

title: Talk:United States v. Armijo


text:
United States v. Armijo/Opinion of the Court

The motives which may actuate the intervenors appealing, or the fact that an inconsiderable interest in the grant is represented by them, can have no influence upon the decision of the matter presented. The holder of the slightest interest, if properly before the court, has the right to insist upon a fair location of the quantity granted, however much such location may clash with the wishes of his co-owners.

The intervenors appealing rest their claim principally upon two grounds:

1st. Upon the alleged priority of the grant to Armijo; and

2d. Upon the alleged priority of occupation and settlement.

The priority of the grant consists only in the date of the former title-papers. The grant to Armijo bears date on the 4th day of March, 1840; that to Solano on the 20th of January, 1842. But the rights of Solano are recognized by Armijo in his petition, and in the order of concession by the commanding general, and are specially referred to in the formal grant issued by the governor. The concession to Armijo assumes, and correctly assumes, that the land known as Tolenas was vacant and unappropriated. It is clear, therefore, that the political authorities intended that Armijo should take his grant in subordination to the previously existing, or, at least, previously asserted, rights of the Indian chief.

There can be no doubt, as observes the district judge, that, under these circumstances, the rights of Solano, according to Mexican usages, would have been recognized as superior to those of Armijo in any contest, notwithstanding the formal title issued first to Armijo. And, as he justly adds, 'the archives abound in instances where not only the equity created by a prior occupation and cultivation under a provisional license to occupy, but even that created by a prior solicitation, has been recognized and enforced.'

This is not all. Where a grant was of a specific quantity within exterior limits embracing a much larger quantity, there was no obligation on the part of the former government, nor is there any obligation on the part of the present government, to allow the quantity to be selected in accordance with the wishes of the grantee. The duty of the government is discharged when the right conferred by the grant to the quantity designated is attached to a specific and defined tract.

Under our system the right of the grantee to direct a selection of the quantity granted is admitted, subject only to the restriction that the selection be made in one body, and in a compact form. This right, we say, is admitted, though strictly it is not a right; it is only a privilege given by the generosity of the government.

The law of Mexico, as stated by Galvan, was otherwise. It was as follows: 'No person, though his grant be older than others, can take possession for himself, or measure, or set limits to his landed property, unless it is done by judicial authority, with the citation of all those who bound upon him; for whatever is done contrary to this will be null, of no validity or effect.'

And to the same purport is the language of this court in the case of Fremont v. United States. 'Under the Mexican government,' said the court, 'the survey was to be made or approved by the officer of the government, and the party was not at liberty to give what form he pleased to the grant. This precaution was necessary, in order to prevent the party from giving it such a form as would be inconvenient to the adjoining public domain and impair its value. The right which the Mexican government reserved to control this survey passed, with all other public rights, to the United States, and the survey must now be made under the authority of the United States, and in the form and divisions prescribed by law for surveys in California, embracing the entire grant in one tract.'

The exercise of the right of selection given to the grantee is not permitted by the political authorities, and when a location is subject to the control of the courts is never permitted by them so as to defeat the equitable prior rights of others.

2. The alleged priority of occupation and settlement consists in the fact that Armijo, after obtaining his grant, built a house upon a portion of the land included in the patent to Ritchie, and occupied it. But this fact is met by the further fact that the erection of the house gave rise to a suit between the owners of the two grants as to the boundary between them, which finally led to an arbitration of the matter. The award, as we construe it, fixed the Sierra Madre as the common boundary of their respective claims. The patent of the Suisun tract does not embrace any land situated on the Armijo side of this boundary, and cannot, therefore, be justly a ground of objection by the claimants under the Armijo title.

The objection that the survey does not locate the land in a compact form cannot be sustained. Compactness of form must depend, in many instances, upon a variety of circumstances: such as the character of the country, its division into different parcels by mountains, rivers, and lakes, and sometimes by the relation of the tract to neighboring grants. In this case, the Tolenas tract is surrounded by three grants, confirmed, surveyed, and patented. The survey is made so as to avoid collision with any of the elder patents, and, under these circumstances, is in reasonable conformity with the decree of confirmation-the only conformity which the law requires.

DECREE AFFIRMED.


text: Talk:United States v. Armijo/Opinion of the Court


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Serrano v. United States

THIS was a proceeding, under the act of March 3d, 1851, for the confirmation of a claim to a tract of land in California known as the rancho of 'Temescal,' of four square leagues in extent. The petition to the board of land commissioners asked for the confirmation on two grounds:

1st. By virtue of an alleged grant of the premises by the authorities of the King of Spain to Leandro Serrano, the testator of the claimants; and

2d. By virtue of long-continued and uninterrupted possession of the premises.

The proof negatived the existence of a grant, but showed that Serrano had received the written permission of the priest of the mission of San Luis Rey (to which mission the land originally belonged), or of the military commander of San Diego, to occupy the premises, and that under such permission he took possession of them, and occupied them, or a portion of them, from about 1818 or 1819, until his death, which occurred in 1852.

The present claim was presented by his executrix (the widow), and his executor.

The deceased Serrano, made some improvements on the premises, consisting principally of two or three adobe houses, and he had a vineyard and fruit orchard. He had also several acres under cultivation, and was the owner of cattle, horses, and sheep, in large numbers, which roamed over and grazed on the hills and in the valleys surrounding his residence, to the extent of the four leagues claimed by him. His possession was continuous and undisputed until the cession of the country to the United States.

The land commission rejected the claim, but the District Court, on appeal, reversed the action of the board, and by its decree adjudged the claim valid, and confirmed it to the extent of four leagues. From this decree the United States appealed to this court.

Mr. Stanbery, A. G., and Mr. Wills, for the United States:

I. There is no archive evidence of the existence of a grant by Spain or Mexico to Serrano.

There is no petition, no diseno, no informs, no concession, no titulo, no confirmation by the departmental assembly, and no act of juridical possession. In short, there is not a single link in the ordinary chain of title for grants of land in California by the Spanish or Mexican governments, either before or after the passage of the colonization law of 1824 and the regulations of 1828.

The claim must, therefore, be rejected, on the authority of a long line of cases.

II. Serrano's possession did not originate and continue under such circumstances as to bind the faith of Spain or Mexico, or to create an equity against the United States.

According to his own statement, these lands were originally occupied by the mission San Luis Rey, of which Serrano was the mayor-domo. The priest of that mission permitted him to settle on and occupy a portion of the lands claimed by it. Now, it is well settled that the mission had no title, and consequently could give no binding title or possession.

According to his own statement, he was allowed to continue his possession by the military commandante. Military commandantes had no authority to make grants, except in pueblos.

Messrs. J. Hartman and Cornelius Cole, contra, for the respondents:

The positions taken for the claimants are, that Serrano, having entered in good faith under what he believed and may be presumed to have been competent authority, and having continued to occupy and improve the land under the governments of Spain and Mexico until the acquisition of this country by the United States and till this time, a period of about forty-eight years, has acquired thereby a title by prescription against this government as the successor of the former ones; and if this position be untenable, that the facts of the case present an equitable title, which should be confirmed.

I. The Spanish law of prescription is laid down in Escriche.

Attention need be directed only to those provisions which declare a possession of twenty years, without title but in good faith, induced by the acts of others with the knowledge of the proprietor, to be good as a prescription even against the absent, and ten years against the present; and continuous possession of thirty years, however acquired, without suit brought against it, to constitute a prescription, even if it were acquired by violence or robbery; good faith not being exacted in a prescription of thirty years.

By the Spanish law prescription of forty years is good against the king.

In the Recopilacion, will be found a royal decree, which, after reciting that persons hold cities, towns, and villages without title, and that it is doubted whether the same could be acquired against the crown, ordained, 'That immemorial possession proved in the manner and under the conditions required by the law of Toro, be afficient to acquire against us and our successors any cities, towns, use, jurisdiction, civil or criminal, and thing or part thereof annexed or belonging thereto, provided the time of said prescription be not interrupted by our command, naturally or civilly.'

The law of Toro, above referred to as defining the conditions on which property is acquired by prescription, is as follows:

'The time in which things are prescribed is comprehended under two kinds of prescription, immemorial and temporal; the first is proved by witnesses of good fame and character, who depose to having seen the person in possession of the thing or property for forty years, and having heard their ancestors say they never saw or heard anything to the contrary.'

In Landry v. Martin, the Supreme Court of Louisiana decided that the Spanish government recognized verbal as well as written grants to lands; and that after a long possession, for nearly half a centuary, a written grant, if necessary, would be presumed.

In Barclay v. Howell's Lessee, this court held that an uninterrupted possession for thirty years would authorize the presumption of a grant. 'Indeed, under peculiar circumstances,' they say, 'a grant has been presumed from a possession of less than the number of years required to bar the action of ejectment by the statute of limitation.' It seems that the common law rule (that the presumption derived from possession is that the possessor owns absolutely), is applicable to possession before the introduction of the common law.

In United States v. Castro, where the grant was not produced, but the claimant had occupied the land for twenty years, the court says:

An occupation so long-continued and notorious, with a claim of ownership so universally recognized, might of itself be deemed sufficient evidence of ownership.'

Serrano undoubtedly always believed he was lawfully in possession, and had a right to the possession; and that belief was induced and fully justified by the acts of the Mexican authorities for a long course of years.

It is difficult, if not impossible at this day, to ascertain exactly what discretionary authority was vested, by the governors under the Spanish regime, in the priests of the mission, and the military commandantes in remote and thinly settled districts. Rockwell, in his Spanish and Mexican Law, gives us some 'instructions of the viceroy (dated Mexico, August 17th, 1773), to be observed by the commandante appointed to the new establishments of San Diego and Monterey.'

Among them were:

'Article 12th. With the desire to establish population more speedily in the new establishments, I, for the present, grant the commandante the power to designate the common lands, and also even to distribute lands in private to such Indians as may most dedicate themselves to agriculture and the breeding of cattle; for having property of their own, the love of it will cause them to radicate themselves more firmly; but the commandante must bear in mind that it is very desirable not to allow them to live dispersed, each one on the lands given to them, but that they must necessarily have their house or habitation in the town or mission where they have been established or settled.

'Article 13th. I grant the same faculty to the commandante with respect to distributing lands to the other founders (pobladores), according to their merits and means of labor. They also living in the town and not dispersed, declaring that in the practice of what is prescribed in this article and in the preceding, twelfth, he must act in every respect in conformity with the provisions made in the collection of the laws respecting newly acquired countries and towns (reducciones y poblaciones), granting legal titles for the owner's protection, without exacting any remuneration for it, for the act of possession.'

Here is authority conferred upon the commandante, whose successor, at San Diego, placed Serrano in possession, for the distribution and granting of lands, with full discretion as to quantity, outside of the towns and missions; for it provides that the grantees shall not live dispersed on the lands granted, but in the towns and missions, for mutual defence.

The commandantes sometimes acted as the informing officers, when there was no civil officer in the vicinity, and grants were made upon their informations; and in pueblos, at least, they had full power to put parties in possession of land.

Similar functions were exercised by the priests, and they could give permission to occupy. It is not assuming anything to say that Serrano entered into possession lawfully, and not as a trespasser.

At common law the general rule with regard to prescriptive claims is, that every such claim is good, if by possibility it might have had a legal commencement, and for upwards of twenty years' enjoyment of an easement, or profit a prendre, a grant, or, as Lord Kenyon is reported to have said, even a hundred grants, will be presumed, even against the crown, if by possibility they could legally have been made. In Parker v. Baldwin, Lord Ellenborough recognizes the right to presume a grant after twenty years, and asserts the practice of the courts to do so. And this doctrine has been repeatedly affirmed in our own country.

The law will presume anything which would make the ancient appropriation goods, for whatever may commence by grant is good by prescription.

This court has passed upon the validity of permission to occupy lands where no grant had ever issued. It did so in the case of Berdugo et al. v. United States, for the San Rafael rancho, and in that of Yorba et al. v. United States, for the rancho of Santana, in both of which the claims were confirmed and appeals dismissed. The court has also uniformly held that the term 'grants' in a treaty comprehends not only those which are made in form, but also any concession, warrant, or permission to survey, possess, or settle, whether evidenced by writing or parole, or presumed from possession, and that in the term 'laws,' is included custom and usage, when once settled, though of recent date.

II. The equities of this case are sufficient to sustain the claim for a decree of confirmation. In Mitchel v. United States, this court, in referring to the Florida case, uses this language:

'Another objection is of a more general nature, that the grantees did not acquire a legal title to the land in question. But it must be remembered that the acts of Congress submit these claims to our adjudication as a court of equity, and, as often and uniformly construed in its repeated decisions, confer the same jurisdiction over imperfect, inchoate, and inceptive titles, as legal and perfect ones, and require us to decide by the same rules on all claims submitted to us, whether legal or equitable. Whether, therefore, the title in the present case can partake of the one case or the other, it remains only for us to inquire whether that of the petitioner is such, in our opinion, that he has, either by the law of nations, the stipulations of any treaty, the laws, usages, and customs of Spain, or the province in which the land is situated, the acts of Congress and the proceedings under them, or a treaty, acquired a right which would have been valid if the territory had remained under the dominion of Spain.'

The same construction has been placed upon the rights of claimants, under the act of Congress by which this case is brought within the jurisdiction of this court. In United States v. Alviso, where the claimant had only taken the preliminary steps for the acquisition of title, and had obtained, pending his application, a mere permission to occupy, under which he had occupied the land since 1840, had improved and cultivated it, and his family had resided on it, the court says:

'The claimant appears to have been a citizen of the department, and no objection was made or suggested why he should not have been a colonist of that portion of the public domain he has solicited; no imputation has been made against the integrity of his documentary evidence, and no suspicion exists unfavorable to the bona fides of his habitation, or the continuity of his possession and claim. He has been recognized as the proprietor of this land since 1840.'

The documentary evidence referred to in that case, consisted only of the petition and permission to occupy; of no legal effect as a grant, but showing the bona fides of his occupancy, and the knowledge and assent of the authorities, which, coupled with his continuous possession, gave him, in the opinion of the court, an equitable title which they felt bound to recognize.

In United States v. Wilson, where the claim rested upon a general order of Governor Alvarado, in 1842, to the alcalde of the mission of Obispo, to distribute the mission lands among the resident Indians, according to the merits of each, under which order the alcalde made a general distribution, giving to one Romualdo much more than to the others, upon a special order of the governor, in reward for meritorious services, Romualdo having lived on the land for many years, the court says: 'The title seems to be in conformity with the practice and usages of the Mexican Government. . . . In the present instance the possession and cultivation were of considerable duration, and the distribution was intended to be permanent, and as a home for the occupant. The claim appears to be an honest one, unaccompanied by suspicion, and under the circumstances, we think, was properly confirmed.'

The decision of the court does not recognize the order of Alvarado as competent to convey title, but as merely creating an equity recognized by Mexican usages, which, coupled with a long possession and cultivation, constituted 'an honest claim,' which the court did not feel it could disregard.

Mr. Justice DAVIS delivered the opinion of the court.

title: Serrano v. United States


text: Talk:Serrano v. United States

title: Talk:Serrano v. United States


text:
Serrano v. United States/Opinion of the Court

The court below confirmed the claim of the appellees to the rancho known as 'Temescal,' embracing five leagues, and situated in the county of San Bernardino.

It is insisted by the United States that this judgment was wrong, because Leandro Serrano, under whom the appellees claim, had no title, legal or equitable, to the land in controversy.

It can serve no useful purpose to review the voluminous testimony in the record, for there is no substantial difference in it on any point material to the decision of the cause, and hardly any portion of it but what can be readily reconciled. It is clear that Serrano occupied a portion of the property which was confirmed to his widow and heirs continuously, from 1818 or 1819 until his death, which occurred in 1852. The improvements on the place consisted of two or three adobe houses, a small vineyard and fruit orchard, and a few acres in actual cultivation. At different periods of his occupancy he was the owner of cattle, sheep, and horses, which subsisted on the uninclosed valleys and hills that surrounded his residence. That his possession and occupation were undisturbed and undisputed during the whole period of Mexican sovereignty in California until our acquisition of the country, is fully established. It is not so easy to determine the extent of his possession, but in the view we take of the case, the question is unimportant.

The petition presented to the board of land commissioners asked for the confirmation of this claim on two grounds,-first, because a provisional grant was made; and, second, by virtue of long-continued and uninterrupted possession. The proof not only negatives the existence of a grant, but clearly shows that Serrano occupied the premises by a written permission from the priest of the mission, or the commandante of San Diego, or from both conjointly. The only witness who pretends ever to have seen a paper concerning a grant was Villia, an ignorant man, unable to write, with very little knowledge of reading, and who, on being shown some writing, in order to test his ability to read, was unable to tell what it was. It is impossible to escape the conclusion that this witness was mistaken, without discrediting all the remaining evidence, including the repeated declarations of Serrano that he had no title. Villia evidently saw a paper in the hands of Serrano in relation to this land, but it was not a title of concession by Governor Sala, but the written permission to occupy given by the commandante and priest. The archives of the country are totally silent on the subject of this pretended grant, and there is no record evidence even of an application for a grant, which exists in ordinary cases. If Serrano even thought he had such a grant, why did he reply to Wilson (who was his friend and relative by marriage), on being advised of the necessity of perfecting his title, if he had any, 'that he had no title, but had been living on the place ever since the settlement of California, and everybody respected his claim.'

It is apparent, from the testimony produced by the claimants, without considering that offered by the United States, that the grant was a fiction, and that Serrano occupied by a written permission given to him by the priest, and perhaps by the commandante. It is equally certain that this permission was the paper sent by him to Governor Echandea for the purpose of obtaining from him a title. Under the government of Spain, in California, the commandante or priest had no authority to grant lands, or to make contracts that could bind the Spanish government to grant them. The governors of the country only had this power. If Serrano had an imperfect grant, it would show that he was in possession, claiming title, but a possession under a simple permission to occupy could not raise even an equity against the government.

It is clear, therefore, that there was nothing done which estopped the Spanish government from denying Serrano's title, and his bare possession did not bind the Mexican government, during its dominion in California, from 1823 to 1846, not to deny it. The colonization laws of Mexico were exceedingly liberal, and yet they were never invoked by Serrano to aid him in getting a title.

If, then, Spain and Mexico never granted this land, or contracted to grant it, or were under obligations to grant it, the claim has surely no validity as against the United States.

But it is insisted that if the legal title fails, yet the notorious and long-continued possession establishes an equitable one.

The actual possession in this case was limited to a very small quantity of ground; but, conceding that it embraced five leagues, no equities attached to it, considering the manner in which it was obtained and continued. There is no adverse holding here, but the possession was a permissive one, and consistent with the proprietary interest of Spain and Mexico; and the fact that those governments did not terminate the possession, which was a mere tenancy at will, cannot create an equity entitled to confirmation. Serrano held under a license to occupy, and that license could be revoked at any time. The failure to revoke it cannot change the original character of the possession into an adverse one. If Serrano had entered into possession under a claim of right, and had title-papers, though imperfect, he might say that the length of his possession entitled him to the favorable consideration of the court. Not so, however, where he had no interest in the land, never applied for any, either to Spain or Mexico, and was content with a permission to occupy it for the purposes of pasturage.

The judgment of the court below is reversed, and the case remanded to the District Court of California, with directions to enter an order

DISMISSING THE PETITION.

Mr. Justice FIELD did not sit in this case, nor take any part in its decision.


text: Talk:Serrano v. United States/Opinion of the Court


text: License Tax Cases

title: License Tax Cases


text: Talk:License Tax Cases

title: Talk:License Tax Cases


text:
License Tax Cases/Opinion of the Court

CONGRESS, by an internal revenue act of 1864, subsequently amended, enacted that no persons should be engaged in certain trades or businesses, including those of selling lottery tickets and retail dealing in liquors, until they should have obtained a 'license' from the United States.

By an amendatory act of 1866, the word 'special tax' was substituted in the place of the word license in the former act.

A party exercising any business for which a 'license' was necessary, or on which the 'special tax' was imposed, without having obtained the former or paid the latter, was made liable, under the acts respectively, both to the tax and to fine or imprisonment, or both. By the two principal acts, respectively, it was provided that no license so granted, or special tax so laid, should be construed to authorize any business within a State prohibited by the laws thereof, or so as to prevent the taxation by the State of the same business.

In New York and New Jersey, selling lottery tickets, as in Massachusetts retailing liquors (except in special cases, not important to be noted), is, by statute, wholly forbidden. Such selling or dealing is treated as an offence against public morals; made subject to indictment, fine, and imprisonment; and in one or more of the States named, high vigilance is enjoined on all magistrates to discover and to bring the offenders to justice; and grand juries are to be specially charged to present them.

In this condition of statute law, National and State, seven cases were brought before this court.

They all arose under the provisions of the internal revenue acts relating to licenses for selling liquors and dealing in lotteries, and to special taxes on the latter business.

The first came before the court upon a certificate of division from the Circuit Court of the United States for the Northern District of New York.

It was argued at the last term, with the five next cases, which came here upon writs of error to the Circuit Court of the United States for the District of New Jersey.

During the present term another case of the same general character, coming from the Circuit Court for the District of Massachusetts, was argued, with two others, similar, except in one particular, to the New York and New Jersey cases, and coming here upon a certificate of division from the Circuit Court for the Southern District of New York.

In the first case, Vassar, a citizen and resident of the State of New York, was indicted for selling lottery tickets in that State without having first obtained and paid for a license under the internal revenue acts of Congress. He demurred to the indictment, and the division of opinion arose upon the question presented by the demurrer and joinder.

In the five cases from New Jersey, citizens and residents of that State were severally indicted for the same offence. They set up, by way of plea, the statute of New Jersey prohibiting the business, for carrying on which, without obtaining a license and payment of the required duty, they were indicted. The district attorney demurred to each of these pleas, and in each case there was a judgment for the defendants upon demurrer and joinder.

In the case from Massachusetts, the defendant was indicted for carrying on the business of retailing liquors without license, to which indictment there was a demurrer. A statement of facts was agreed on to the effect that the defendant was a retail dealer as charged, and that this business was prohibited by the laws of the commonwealth. And the division of opinion occurred on the question presented by the pleadings and this agreed statement.

The general question in these cases was: Can the defendants be legally convicted upon the several indictments found against them for not having complied with the acts of Congress by taking out and paying for the required licenses to carry on the business in which they were engaged, such business being wholly prohibited by the laws of the several States in which it was carried on?

In one of the two remaining cases the defendant was indicted for being engaged in the business of a lottery dealer, and in the other for being engaged in the business of a lottery ticket dealer, in New York, without having paid the special tax required by law. In each case there was a demurrer and joinder in demurrer. The division of opinion occurred upon the pleadings, and the question certified was the same in each case.

In these two cases, therefore, the general question was: Could the defendants be legally convicted upon an indictment for being engaged in a business on which a special tax is imposed by acts of Congress, without having paid such a special tax, notwithstanding that such business was, and is, wholly prohibited by the laws of New York?

The different cases were argued here for the different defendants by different counsel, Mr. W. M. Evarts representing the defendants in the New York cases, Mr. Senott the defendant in the case from Massachusetts, and Mr. Woodbury (by brief), one of the defendants in the cases, each like the other, from New Jersey.

The provisions of the acts of Congress under which these indictments are found, if regarded as legislation for the suppression and punishment of crime, which selling lottery tickets is regarded in New York and New Jersey to be, as retailing liquor is also regarded in Massachusetts, would be consistent with morality, but, being beyond the competency of Congress, under the Constitution of the United States, would be void; for no question can be made that the whole jurisdiction over domestic crimes and misdemeanors within its territory rests with each State.

The validity and the construction, therefore, of the acts of Congress, the violation of which, within the States of New York, New Jersey, and Massachusetts, is imputed to the defendants as a crime, must depend upon considerations appropriate to these acts as Revenue Laws.

How, in this aspect, are they to be regarded?

1. Congress cannot, constitutionally, punish for a refusal to pay for a license to commit crime, or constitutionally levy a tax for the privilege of committing it. Such a mode of raising revenue would be palpably against public policy. It matters not whether the crime or offence was malum in se or malum prohibitum. Vending lottery tickets and vending liquors appear to be regarded in some of the States,-perhaps from the consequences to which vending them often lead-as mala in se. But whether or not, with the States,-not with Congress,-rests (confessedly, we suppose) a complete and exclusive right to say whether such acts are criminal or not.

2. The various acts of New York, New Jersey, and Massachusetts, on the subject of dealing in lotteries and retailing liquor, were perfectly known to Congress; and it is apparent that the frame and purpose of the scheme of taxation made by Congress in regard to the two matters now before the court, assume the business of lotteries and vending liquors to be open and lawful pursuits, in the gains of which the Federal government may rightfully participate, and which can endure the regulation in protection of the tax imposed, which these provisions of law establish, and yet yield the revenue sought.

But such a scheme of taxation applied to communities whose exclusive and paramount legislation proscribes the taxed pursuit as common and public nuisances, imputes every step in such pursuit as a crime, and punishes every transaction out of which the tax is raised by fine and imprisonment, and requires every grand jury to be specially charged to inquire into every perpetration of these crimes, is an absurdity.

If the acts of Congress had, in terms, provided 'that no person should, within the different States of New York, New Jersey, and Massachusetts, perpetrate the crime of selling lottery tickets or liquor, without having first paid to the United States $100, and registered his name and the place where he intended to perpetrate these crimes, and given bond that he would account to the United States for a fair share of the lucre which the crimes brought him,' &c.,-of all this were expressed in the acts of Congress, it would have been no more a taxation of crime than it is now asserted to be in reference to these different States by the attempts made in the courts below to punish for the non-impetration of a license or to enforce the collection of the tax.

Suppose that a State, while proscribing and punishing all dealing in liquor or in lottery tickets, should enact as its law the scheme of taxation upon selling liquor and upon lotteries which Congress has adopted. Could a more absurd example of cross-purposes in legislation be imagined?

But the absurdity is in the absolute repugnancy of the two courses of legislation, and is inherent in them. This repugnancy is equally great, though the Federal government is the author of one and the State government of the other of the opposing laws.

In this repugnancy between an act of Congress raising a revenue from crime in a State, and the legislation of the State suppressing the crime, there can be no doubt of the supremacy of the State legislation.

Whatever room for argument there may be as to the competency of State legislation to extinguish material products, as sources of internal revenue to the United States, by proscription of their legal use while their actual use continues, it can never be tolerated that personal vice and guilt constitute a fund for Federal taxation, which ousts the States of police and penal regulation of the personal conduct of their inhabitants.

Hence, upon the natural construction of these acts of Congress, not less than upon the foregoing reasons, it is to be inferred that this revenue is sought to be raised only when and where the pursuit taxed is a lawful occupation, and admits of the methods for its regulation and the collection of the tax prescribed by Congress.

3. If this is not a correct view; if Congress meant to exact the license and lay the tax wherever lotteries or liquors were dealt in,-whether declared crimes by the States or not,-there remains another argument:

A license to carry on a particular business is an authority to carry it on. The licensee pays a valuable consideration and gets, or rather 'purchases, a right' to do what he is licensed to do. The trades or businesses here licensed were part of the internal trade of the States; a sort of trade over which, as we have said, Congress has no jurisdiction. And the States have declared them nuisances and crimes, and forbidden them to be carried on at all. The license proffered, and the special tax attempted to be laid, were thus void, and no penalty could be imposed for refusing either to accept the license or pay the tax.

Indeed, it is obvious that if a State, by prohibitory legislation, withdraw a large class of articles from taxation, Congress must either lose the revenue or protect the citizen in its violation of the State law.

But Congress, as we have said, cannot dictate the domestic law of any State. And this court has decided, recently, that a license from the United States is no protection to the licensee against acts forbidden by the State laws.

Mr. Speed, A. G. (at the last term), Mr. Stanbery, A. G. (at this), with the former of whom was Mr. Reed, A. G. of Massachusetts, contra.

The CHIEF JUSTICE, having stated the case, delivered the opinion of the court.

In the argument of all the cases here before the court, it was strenuously maintained by counsel for the defendants that the imposition of penalties for carrying on any business prohibited by State laws, without payment for the license or special tax required by Congress, is contrary to public policy; and illustrations of this supposed contrariety were drawn from hypothetical cases of the license of crime for revenue.

We will dispose of this objection before proceeding to consider the other important questions which these cases present.

It is not necessary to decide whether or not Congress may, in any case, draw revenue by law from taxes on crime. There are, undoubtedly, fundamental principles of morality and justice which no legislature is at liberty to disregard; but it is equally undoubted that no court, except in the clearest cases, can properly impute the disregard of those principles to the legislature.

And it is difficult to perceive wherein the legislation we are called upon to consider is contrary to public policy.

This court can know nothing of public policy except from the Constitution and the laws, and the course of administration and decision. It has no legislative powers. It cannot amend or modify any legislative acts. It cannot examine questions as expendient or inexpedient, as politic or impolitic. Considerations of that sort must, in general, be addressed to the legislature. Questions of policy determined there are concluded here.

There are cases, it is true, in which arguments drawn from public policy must have large influence; but these are cases in which the course of legislation and administration do not leave any doubt upon the question what the public policy is, and in which what would otherwise be obscure or of doubtful interpretation, may be cleared and resolved by reference to what is already received and established.

The cases before us are not of this sort. The legislature has thought fit, by enactments clear of all ambiguity, to impose penalties for unlicensed dealing in lottery tickets and in liquors. These enactments, so long as they stand unrepealed and unmodified, express the public policy in regard to the subjects of them. The proposition that they are contrary to public policy is therefore a contradiction in terms, or it is intended as a denial of their expediency or their propriety. If intended in the latter sense, the proposition is one of which courts cannot take cognizance.

We come now to examine a more serious objection to the legislation of Congress in relation to the dealings in controversy. It was argued for the defendants in error that a license to carry on a particular business gives an authority to carry it on; that the dealings in controversy were parcel of the internal trade of the State in which the defendants resided; that the internal trade of a State is not subject, in any respect, to legislation by Congress, and can neither be licensed nor prohibited by its authority; that licenses for such trade, granted under acts of Congress, must therefore be absolutely null and void; and, consequently, that penalties for carrying on such trade without such license could not be constitutionally imposed.

This series of propositions, and the conclusion in which it terminates, depends on the postulate that a license necessarily confers an authority to carry on the licensed business. But do the licenses required by the acts of Congress for selling liquor and lottery tickets confer any authority whatever?

It is not doubted that where Congress possesses constitutional power to regulate trade or intercourse, it may regulate by means of licenses as well as in other modes; and, in case of such regulation, a license will give to the licensee authority to do whatever is authorized by its terms.

Thus, Congress having power to regulate commerce with foreign nations, and among the several States, and with the Indian tribes, may, without doubt, provide for granting coasting licenses, licenses to pilots, licenses to trade with the Indians, and any other licenses necessary or proper for the exercise of that great and extensive power; and the same observation is applicable to every other power of Congress, to the exercise of which the granting of licenses may be incident. All such licenses confer authority, and give rights to the licensee.

But very different considerations apply to the internal commerce or domestic trade of the States. Over this commerce and trade Congress has no power of regulation nor any direct control. This power belongs exclusively to the States. No interference by Congress with the business of citizens transacted within a State is warranted by the Constitution, except such as is strictly incidental to the exercise of powers clearly granted to the legislature. The power to authorize a business within a State is plainly repugnant to the exclusive power of the State over the same subject. It is true that the power of Congress to tax is a very extensive power. It is given in the Constitution, with only one exception and only two qualifications. Congress cannot tax exports, and it must impose direct taxes by the rule of apportionment, and indirect taxes by the rule of uniformity. Thus limited, and thus only, it reaches every subject, and may be exercised at discretion. But, it reaches only existing subjects. Congress cannot authorize a trade or business within a State in order to tax it.

If, therefore, the licenses under consideration must be regarded as giving authority to carry on the branches of business which they license, it might be difficult, if not impossible, to reconcile the granting of them with the Constitution.

But it is not necessary to regard these laws as giving such authority. So far as they relate to trade within State limits, they give none, and can give none. They simply express the purpose of the government not to interfere by penal proceedings with the trade nominally licensed, if the required taxes are paid. The power to tax is not questioned, nor the power to impose penalties for non-payment of taxes. The granting of a license, therefore, must be regarded as nothing more than a mere form of imposing a tax, and of implying nothing except that the licensee shall be subject to no penalties under national law, if he pays it.

This construction is warranted by the practice of the government from its organization. As early as 1794 retail dealers in wines or in foreign distilled liquors were required to obtain and pay for licenses, and renew them annually, and penalties were imposed for carrying on the business without compliance with the law. In 1802 these license-taxes and the other excise or internal taxes, which had been imposed under the exigencies of the time, being no longer needed, were abolished. In 1813 revenue from excise was again required, and laws were enacted for the licensing of retail dealers in foreign merchandise, as well as to retail dealers in wines and various descriptions of liquors. These taxes also were abolished after the necessity for them had passed away, in 1817. No claim was ever made that the licenses thus required gave authority to exercise trade or carry on business within a State. They were regarded merely as a convenient mode of imposing taxes on several descriptions of business, and of ascertaining the parties from whom such taxes were to be collected.

With this course of legislation in view, we cannot say that there is anything contrary to the Constitution in these provisions of the recent or existing internal revenue acts relating to licenses.

Nor are we able to perceive the force of the other objection made in argument, that the dealings for which licenses are required being prohibited by the laws of the State, cannot be taxed by the National government. There would be great force in it if the licenses were regarded as giving authority, for then there would be a direct conflict between National and State legislation on a subject which the Constitution places under the exclusive control of the States.

But, as we have already said, these licenses give no authority. They are mere receipts for taxes. And this would be true had the internal revenue act of 1864, like those of 1794 and 1813, been silent on this head. But it was not silent. It expressly provided, in section sixty-seven, that no license provided for in it should, if granted, be construed to authorize any business within any State or Territory prohibited by the laws thereof, or so as to prevent the taxation of the same business by the State. This provision not only recognizes the full control by the States of business carried on within their limits, but extends the same principle, so far as such business licensed by the National government is concerned, to the Territories.

There is nothing hostile or contradictory, therefore, in the acts of Congress to the legislation of the States. What the latter prohibits, the former, if the business is found existing notwithstanding the prohibition, discourages by taxation. The two lines of legislation proceed in the same direction, and tend to the same result. It would be a judicial anomaly, as singular as indefensible, if we should hold a violation of the laws of the State to be a justification for the violation of the laws of the Union.

These considerations require an affirmative answer to the first general question, Whether the several defendants, charged with carrying on business prohibited by State laws, without the licenses required by acts of Congress, can be convicted and condemned to pay the penalties imposed by these acts?

The remaining question is, whether the defendant, indicted for carrying on a business on which a special tax is imposed by the internal reveuue law, but which is prohibited by the laws of New York, can be convicted and condemned to pay the penalty imposed for not having paid that tax?

What has been already said sufficiently indicates our judgment upon this question.

Congress, in framing the act of 1866, has carefully guarded against any misconstruction of the legislative intention by substituting throughout the term 'special tax' for the word 'license.' This judicious legislation has removed all future possibility of the error which has been common among persons engaged in particular branches of business, that they derived from the licenses they obtained under the internal revenue laws, an authority for carrying on the licensed business independently of State regulation and control. And it throws, moreover, upon the previous legislation all the right of a declaratory enactment. It fully confirms, if confirmation were needed, the view we have already expressed, that the requirement of payment for licenses under former laws was a mere form of special taxation.

The act of 1866 contains the same provision in respect to the effect of special taxes which the original act of 1864 contained in respect to licenses. It provides expressly that the payment of the taxes imposed by it shall not exempt any person carrying on a trade or business from any penalty or punishment provided by State laws for carrying on such trade or business, or authorize the commencement or continuance of any such trade or business contrary to State laws, or pevent the imposition of any duty or any tax on such trade or business by State authority.

It was insisted by counsel that whatever might be the power, it could not have been the intention of Congress to tax any business prohibited by State laws. And the argument from public policy was much relied upon in support of this view.

We think it unnecessary to repeat the answer already made to this argument, when urged against the requirements of licenses. It is, if possible, less cogent against the direct imposition of a tax on a prohibited business than against the indirect imposition.

It may, however, be properly said that the law of 1866 was enacted after the arguments of the last term, and that Congress imposed these special taxes with the distinct understanding that several branches of business thus taxed were prohibited by State legislation. This is conclusive as to the intention. The hypothesis we are asked to adopt would nullify some of the plainest provisions of the act, and is inadmissible. The question must be answered affirmatively.

Upon the whole, we conclude—

1. That licenses under the act of 1864, and the amendatory acts, conveyed to the licensee no authority to carry on the licensed business within a State.

2. That the requirement of payment for such licenses is only a mode of imposing taxes on the licensed business, and that the prohibition, under penalties, against carrying on the business without license is only a mode of enforcing the payment of such taxes.

3. That the provisions of the acts of Congress requiring such licenses, and imposing penalties for not taking out and paying for them, are not contrary to the Constitution or to public policy.

4. That the provisions in the act of 1866 for the imposing of special taxes, in lieu of requiring payment for licenses, removes whatever ambiguity existed in the previous laws, and are in harmony with the Constitution and public policy.

5. That the recognition by the acts of Congress of the power and right of the States to tax, control, or regulate any business carried on within its limits, is entirely consistent with an intention on the part of Congress to tax such business for National purposes.

It follows: That in the case from the Northern District of New York, the question certified must be answered in the affirmative.

That in the five cases from the District of New Jersey, the several judgments must be reversed, and the several causes remanded to the Circuit Court for new trial, in conformity with this opinion.

That in the case from the District of Massachusetts, the two questions certified must be answered in the affirmative; and—

That in each of the two cases from the Southern District of New York, the following answer must be returned to the Circuit Court, namely: 'That the law imposing the special tax in the indictment mentioned, and for the non-payment of which, said indictment was preferred and found, is valid, and not unconstitutional.'

ALL WHICH IS ORDERED ACCORDINGLY.

title: License Tax Cases/Opinion of the Court


text: Talk:License Tax Cases/Opinion of the Court


text:
Pervear v. Massachusetts

THIS cause was brought before the court by writ of error to the Supreme Court of the Commonwealth of Massachusetts, under the 25th section of the Judiciary Act.

Pervear, the plaintiff in error, was indicted in the State court for keeping and maintaining without license a tenement for the illegal sale and illegal keeping of intoxicating liquors.

In bar of this indictment he pleaded specially three matters of defence:

(1) That he had a license from the United States under the internal revenue acts of Congress to do all the acts for which he was indicted:

(2) That he had paid a tax or duty on the intoxicating liquors, for keeping and selling which the indictment was found, in the same packages, and in the same form and quantity in which he sold the same; and

(3) That the fine and punishment imposed and inflicted by the law of Massachusetts for the acts charged in the indictment were cruel, excessive, and unusual, and that the State law was therefore in conflict with the Constitution of the United States [the 8th article to the amendments of which, proposed in 1789, declares that 'excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted].

This plea was overruled, and Pervear declining to plead further, a plea of not guilty was entered for him. He was then put on trial, and the court instructed the jury that the plea was no defence to the indictment; to which instruction exception was taken. A verdict of guilty was thereupon found, and Pervear was sentenced to pay a fine of fifty dollars and to be confined at hard labor, in the house of correction, for three months.

The writ of error brought this sentence under review, and the general question now was, Did the State court err in instructing the jury that the plea was no defence to the indictment?

Mr. Sennott for Pervear, plaintiff in error:

I. Congress, in the exercise of its power to lay and collect taxes, duties, imposts, &c., has constantly taxed imported articles. Such articles, so taxed, have been protected from State interference by this court because they were taxed by Congress to raise revenue. The same body, in its internal revenue acts, has of late taxed domestic spirits and beer by measure, for the purpose of raising a revenue.

Now, if the payment by the first impost protects imported brandy from State laws, why does not the payment of the second impost protect the plaintiff's domestic spirits and beer?

In Brown v. Maryland, Chief Justice Marshall declares that, 'by the payment of the duty to the United States, the importer purchases a right to sell his merchandise, a State law to the contrary notwithstanding.' If this be true, the plaintiff, by paying his duty, purchased a similar right to sell his goods, notwithstanding a State law.

II. The end of government is the protection of the persons and the property of men, and not to enforce morality or to teach religion, or to carry on farming, or the lumber trade, or to monopolize the liquor traffic. Laws passed by government, which it has no right to pass, are not laws. Punishments inflicted in pursuance of them are illegally inflicted.

The punishment, in this case, being for doing a lawful act, was excessive, cruel, and unusual, and therefore against the eighth amendment of 1789.

Mr. Reed, Attorney-General of Massachusetts, contra:

The only distinction which it can be pretended exists between McGuire v. Commonwealth and The License Tax Cases, already decided by this court, and the case now under consideration is, that in the present case the tax paid was upon the articles sold instead of upon the business carried on. But the distinction is not one of essence, and, notwithstanding it, the rule established in the cases cited must apply.

title: Pervear v. Massachusetts


text: Talk:Pervear v. Massachusetts

title: Talk:Pervear v. Massachusetts


text:
Pervear v. Massachusetts/Opinion of the Court

The CHIEF JUSTICE, after stating the case as already given, delivered the opinion of the court.

We have already decided at this term that the first proposition of the plea in this case is no bar to an indictment under a State law taxing or prohibiting the sale of intoxicating liquors.

The second proposition of the plea is nothing more than a different form of the first. Both are identical in substance.

The case of Brown v. Maryland was referred to in argument as an authority for the general proposition that the sale of goods in the same packages on which a duty had been paid to the United States cannot be prohibited by State legislation. But this case does not sustain the proposition in support of which it is cited.

The discussion in Brown v. Maryland related wholly to imports under National legislation concerning commerce with foreign nations. A law of Maryland required importers of foreign goods to take out and pay for a State license for the sale of such goods in that State; and under this law the members of a Baltimore firm were indicted for having sold certain goods in packages as imported, without having taken out the required license. The defence was that the duty on the goods, imposed by the act of Congress, had been paid to the United States; that the license tax was, in effect, an additional import duty, which could not be constitutionally imposed by State law.

This court sustained the defence then set up. It held that, by the terms of the Constitution, the power to impose duties on imports was exclusive in Congress; and that the law of Maryland was in conflict with the act of Congress on the same subject, and was therefore void.

But the defence set up in the case before us is a very different one. It is not founded on any exclusive power of Congress, nor any act of Congress in conflict with State law. It is founded on the general power to levy and collect taxes, admitted on all hands to be concurrent only with the same general power in the State governments; and upon an act of Congress imposing a tax in the form of duty on licenses, but expressly declaring that the imposing such a tax shall not be taken to abridge the power of the State to tax or prohibit the licensed business.

The defence rests, then, in this part, on the simple proposition that a law of a State taxing or prohibiting business already taxed by Congress is unconstitutional. And that proposition is identical in substance and effect with the first proposition of the plea, and has been held in the License Tax Cases to be no bar to the indictment.

The circumstance that the State prohibition applies to merchandise in original packages is wholly immaterial. Even in the case of importation, that circumstance is only available to the importer. Merchandise in original packages, once sold by the importer, is taxable as other property. But in the case before us there was no importation. So far as appears the liquors were home-made, or, if not, were in second hands. And the sale of such liquors within a State is subject exclusively to State control.

The third proposition of the plea is that fines and penalties imposed and inflicted by the State law for offences charged in the indictment are excessive, cruel, and unusual.

Of this proposition it is enough to say that the article of the Constitution relied upon in support of it does not apply to State but to National legislation.

But if this were otherwise the defence could not avail the plaintiff in error. The offence charged was the keeping and maintaining, without license, a tenement for the illegal sale and illegal keeping of intoxicating liquors. The plea does not set out the statute imposing fines and penalties for the offence. But it appears from the record that the fine and punishment in the case before us was fifty dollars and imprisonment at hard labor in the house of correction for three months. We perceive nothing excessive, or cruel, or unusual in this. The object of the law was to protect the community against the manifold evils of intemperance. The mode adopted, of prohibiting under penalties the sale and keeping for sale of intoxicating liquors, without license, is the usual mode adopted in many, perhaps, all of the States. It is wholly within the discretion of State legislatures. We see nothing in the record, nor has anything been read to us from the statutes of the State which warrants us in saying that the laws of Massachusetts having application to this case are in conflict with the Constitution of the United States.

The judgment of the Supreme Court of the Commonwealth must be

AFFIRMED.

NOTE.

The same order was made in four other cases, presenting,' as the Chief Justice said, 'substantially the same facts and governed by the same principles.'

At a later day of the term, to wit, April 30th, 1867, several other cases on this same subject, coming here in error to the Supreme Court of Iowa, were submitted to the court on the records and briefs of Mr. Riddle, for the plaintiffs in error, and Mr. Cooley, contra.

On the following 7th of May the CHIEF JUSTICE delivered the opinion of the court, that the cases resembled, in all essential features, cases already decided at this term, which presented the question of the constitutionality of State laws prohibiting, restraining, or taxing the business of selling liquors under the internal revenue licenses of the United States; that the brief of the learned counsel for the plaintiff in error calling upon the court to review its decisions affirming the validity of those laws, the court had done so, and was satisfied with the conclusions already announced.

The several judgments of the Supreme Court of the State of Iowa were therefore

AFFIRMED.


text: Talk:Pervear v. Massachusetts/Opinion of the Court


text: Dictionary of National Biography, 1885-1900/Love, David