Edward Jordan v. James Roche No 202 Edward Jordan v. Charles Ross No 203

• Decision Date: 28 April 1913
• Docket Number: Nos. 202 and 203,s. 202 and 203
• Citation: 228 U.S. 436,33 S.Ct. 573,57 L.Ed. 908
• Parties: EDWARD B. JORDAN, Collector of Internal Revenue, v. JAMES W. ROCHE. NO 202. EDWARD B. JORDAN, Collector of Internal Revenue, v. CHARLES H. ROSS and William P. Ross. NO 203
• Court: U.S. Supreme Court

228 U.S. 436

33 S.Ct. 573

57 L.Ed. 908

EDWARD B. JORDAN, Collector of Internal Revenue,

v JAMES W. ROCHE.

NO 202.

EDWARD B. JORDAN, Collector of Internal Revenue,

v. CHARLES H. ROSS and William P. Ross.

NO 203.

Nos. 202 and 203.

Argued April 15, 1913.

Decided April 28, 1913.

Assistant Attorney General Harr for Edward B. Jordan, collector.

Messrs. John David Lannon, Howard T. Walden, and Henry J. Webster for James W. Roche and Ross & Ross.

[Argument of Counsel from pages 437-439 intentionally omitted] Mr. Justice McKenna delivered the opinion of the court:

Actions were brought in the circuit court, eastern district of New York, to recover money paid upon certain importations of bay rum from Porto Rico. Judgment was entered for defendants in the actions, and error was prosecuted from the circuit court of appeals for the second circuit, and that court certifies the following question to this court:

'Was bay rum imported from Porto Rico subsequent to the passage of the act of April 12, 1900 [31 Stat. at L. 77, chap. 191], and prior to the passage of the act of February 4, 1909, subject to the payment of a tax equal to the internal revenue tax imposed in the United States, under §§ 3248, and 3254 (U. S. Comp. Stat. 1901, pp. 2107, 2111), on 'distilled spirit, spirits, alcohol, and alcoholic spirit?"

The facts are these: In the years 1907 and 1908 plain- tiffs imported from the island of Porto Rico certain casks of bay rum manufactured in said island. Upon arrival at the port of New York, the collector of internal revenue for the first district collected taxes upon the same under the act of April 12 and §§ 3248 and 3254 of the Revised Statutes of the United States. Plaintiffs duly protested against such exaction and paid the same to obtain delivery of the goods. Bay rum is a fragrant spirit obtained by distilling rum with the leaves of the bay berry, or by mixing various oils with alcohol.

The act of April 12, 1900, referred to in the question certified, is known as the Foraker act. Section 3 provides that after the passage of the act all merchandise coming into the United States from Porto Rico, and reversely, shall be subject to a duty of 15 per cent of the duties which were required to be levied upon like articles imported from foreign countries, and, in addition thereto articles of merchandise of Porto Rican manufacture coming into the United States shall pay 'a tax equal to the internal revenue tax imposed in the United States upon the like articles of merchandise of domestic manufacture.' Articles of United States manufacture coming into Porto Rico were required to pay a tax equal to the internal revenue tax imposed on like articles of Porto Rican manufacture. It was provided that whenever the legislature of Porto Rico should put into operation a system of local taxation, the President should make proclamation thereof, and thereupon all tariff duties upon goods going from the United States into Porto Rico, or from Porto Rico to the United States, should cease, and all such articles should be free of duty.

Section 4 of the act provided that the duties and taxes imposed under § 3 should not be paid into Treasury of the United States, but should be placed at the disposal of the President, to be used for the government of Porto Rico, and that upon the organization of the government of Porto Rico such moneys should be transferred to the local treasury of Porto Rico, the duties and taxes to be collected at such ports and by such officers as the Secretary of the Treasury should designate. And it was provided that as soon as civil government was established in Porto Rico, the President was to make proclamation thereof, and thereafter all duties and taxes in Porto Rico under the provisions of the act should be paid into the treasury of Porto Rico and expended as required by law.

The proclamation of the President, referred to in § 3, was issued July 25, 1901 (32 Stat. at L. p. 1983), and all tariff duties on merchandise coming into the United States from Porto Rico ceased. The internal revenue tax upon articles of Porto Rican manufacture remained as that imposed 'upon the like articles of merchandise of domestic manufacture' (§ 3). This, however, plaintiffs dispute, contending that the Foraker act was intended to be, and was declared to be, an act temporarily to provide revenue, and that with the institution of a system of taxation in Porto Rico the act ceased to have operation. The contention is untenable. The act explicitly declares that the tariff duties shall cease. The distinction was deliberate and its effect unmistakable. We repeat, therefore, that the internal revenue tax upon Porto Rican articles remains as that imposed 'upon the like articles of domestic manufacture.' Upon the quoted words the controversy in this case turns. What shall determine the likeness between articles of domestic and Porto Rican manufacture,—their name or their substance? The latter is the government's contention; the former is that of plaintiffs.

The contention of plaintiffs has the support of Newhall v. Jordan in the circuit court of the eastern district of New York (149 Fed. 586); also of the circuit court of appeals of the second circuit in Anderson v. Newhall, 88 C. C. A. 511, 161 Fed. 906, sustaining a judgment of the circuit court of the southern district of New York. But the circuit court of appeals seems to have come to doubt the correctness of its ruling, for the present certificate is from that court, and bears the signature of Judges Lacombe and Ward, who constituted a majority of the court when Anderson v. Newhall was decided. We realize, therefore, that the contentions of the parties present a close question.

Bay rum is a fragrant spirit obtained by distilling rum with the leaves of the bay berry, or by mixing various oils with alcohol. We must seek its likeness in the revenue laws, and the government contends that it is found in §§ 3248, 3254, 3251, and 3282 (U. S. Comp. Stat. 1901, pp. 2107, 2111, 2108, 2128), as respectively amended by the acts of August 27, 1894 (28 Stat. at L. 509, 563, chap. 349, U. S. Comp. Stat. 1901, 2109), and March 1, 1879 (20 Stat. at L. 327, 335, chap. 125, U. S. Comp. Stat. 1901, pp. 2060, 2128).

Plaintiffs contend that 'Porto Rican bay rum is the article of merchandise 'like' to bay rum of domestic manufacture, and not 'like' to distilled spirits of domestic manufacture.' And then insisting, and quoting the Commissioner of Internal Revenue in support of the insistence, that, as there is no internal revenue tax imposed on bay rum, as such, it follows necessarily 'that if bay rum of domestic manufacture does not pay a tax, then the article of Porto Rican manufacture is not liable to pay a tax.' And stress is put upon 'manufacture' as defined in Anheuser-Busch Brewing Asso. v. United States, 207 U. S. 556, 562, 52 L. ed. 336, 338, 28 Sup. Ct. Rep. 204, where it is said: 'There must be a transfromation; a new and different article must emerge, 'having a distinctive name, character, and use." And bay rum, it is asserted, satisfies the distinction and has been regarded as satisfying it in the laws, also commercially and practically. It has never been treated, it is said, as distilled...