Cornelius Billings v. United States United States v. Cornelius Billings

Citation34 S.Ct. 421,58 L.Ed. 596,232 U.S. 261
Decision Date24 February 1914
Docket NumberNo. 66,No. 625,Nos. 33 and 625,66,625,s. 33 and 625
PartiesCORNELIUS K. G. BILLINGS, Plff. in Err., v. UNITED STATES. UNITED STATES v. CORNELIUS K. G. BILLINGS
CourtUnited States Supreme Court

[Syllabus from pages 261-263 intentionally omitted] Mr. William D. Guthrie for Cornelius K. G. Billings.

[Argument of Counsel from pages 263-269 intentionally omitted] Assistant Attorney General Adkins and Mr. Karl W. Kirchwey for the United States.

[Argument of Counsel from pages 269-276 intentionally omitted]

Page 276

Mr. Chief Justice White delivered the opinion of the court:

It is necessary to determine whether these two cases from different courts are not virtually one and to be considered in that aspect.

The United States sued for the amount of a tax with interest. The alleged liability under the statute was challenged, and if it existed the statute was alleged to be repugnant to the Constitution of the United States, and right to interest was denied. The court held the statute to be constitutional, and judgment was awarded for the sum claimed, but the prayer for interest was rejected. Error was prosecuted directly from this court by the defendant, and from the circuit court of appeals by the United States; the first because of the constitutional questions, and the second because of the disallowance of interest. The circuit court of appeals certified a question concerning the right to recover interest, and the two cases before us consist of the direct writ of error on the one hand and the certificate on the other. Both writs of error when taken were authorized. Railroad Commission v. Worthington, 225 U. S. 101, 56 L. ed. 1004, 32 Sup. Ct. Rep. 653; Macfadden v. United States, 213 U. S. 288, 53 L. ed. 801, 29 Sup. Ct. Rep. 490. Our jurisdiction, however, on the direct writ of error, is not confined to the constitutional questions, but embraces every issue in the case. Williamson v. United States, 207 U. S. 425, 52 L. ed. 278, 28 Sup. Ct. Rep. 163. The circuit court of appeals, however, has no power to ask instructions upon an issue which it has no right to decide, and we have no authority to instruct on such a subject, or to refuse to decide issues which are properly before us for judgment.

Under these conditions, we think the better practice is

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as regards the controversy as to interest, which was taken to the circuit court of appeals by writ of error, and in which cases the certificates now before us were drawn, to treat the writ of error from the circuit court of appeals as in substance pending here on a cross writ by the United States; and as without further orders the record is in such a condition as to enable us to decide the whole case, we proceed to do so.

Section 37 of the tariff act of August 5, 1909, chap. 6, 36 Stat. at L. 112, U. S. Comp. Stat. Supp. 1911, p. 1197, provided in part as follows:

'There shall be levied and collected annually on the first day of September by the collector of customs of the district nearest the residence of the managing owner, upon the use of every foreign-built yacht, pleasure boat, or vessel, not used or intended to be used for trade, now or hereafter owned or chartered for more than six months by any citizen or citizens of the United States, a sum equivalent to a tonnage tax of seven dollars per gross ton.'

The second paragraph of the provision, which we need not quote, gives the right to the owner of any 'foreign-built yacht, pleasure boat, or vessel above described' to pay a duty of 35 per cent ad valorem, and thus secure an exemption from the tax provided by the first paragraph.

The act went into effect on August 6, 1909, and the collector of the port of New York thereafter made a demand upon C. K. G. Billings, the plaintiff in error, for the payment of $7,644; that is, of the sum produced by calculating $7 per ton on 1,091.71 tons, the tonnage of the foreign-built yacht Vanadis, owned and controlled by him.

Failing to pay, in January, 1911, the United States sued in the court below to recover the tax. The defendant was alleged to be a citizen of the United States, and the suit was averred to have been brought in the district nearest his residence. The ownership and use by him of the pleasure yacht Vanadis, an English foreign-built vessel,

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the levy based upon her tonnage according to the statute of the amount of $7,644, the demand for payment, the failure to pay on the 1st day of September, 1909, under the statute, were all alleged, and recovery of the tax as well as of interest was prayed. The answer admitted citizenship and the ownership of the yacht, and that she was a foreign-built pleasure craft, but set up three distinct defenses; the first, that the vessel was not enrolled, registered, or documented as a vessel of the United States, and enjoyed no privileges because she was of that character. It was expressly admitted that 'during the year preceding the 1st day of September, 1909,' the said yacht 'has been used by the defendant outside of the waters and territorial limits or jurisdiction of the United States from time to time and at various times . . . and was not used for six months during such year within the waters and territorial limits or jurisdiction of the United States or elsewhere.'

The second defense expressly averred that the tax imposed by the statute was intended by Congress to be 'an annual tax, that it should be prospective, and operate only upon the future use of any such foreign-built yacht, pleasure boat, or vessel, and that said annual tax did not accrue and could not be duly levied and collected prior to the 1st day of September in the year 1910.'

The third defense after fully averring that there were within the United States many pleasure yachts not foreign built which were in use, and whose use was identical with that of a foreign-built yacht like the one which the defendant used, charged that the law imposing the burden sought to be enforced was void because repugnant to the due process clause of the 5th Amendment. The case was submitted to the court on bill and answer; and as we at the outset said, there was a judgment holding that the sum claimed was due by the defendant as an excise or duty upon the use of his yacht, and that the act imposing

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the tax was not repugnant to the Constitution, but that the government was not entitled to recover interest.

To avoid, if it may be, the necessity of determining the constitutional question, we shall first decide what, if any, burden the statute imposes, and then, if necessary, consider its asserted repugnancy to the Constitution. In view of the requirement that direct taxes be apportioned, and assuming, as we do assume, that the act before us was adopted by Congress in the light of the ruling in Pollock v. Farmers' Loan & T. Co. 157 U. S. 429, 39 L. ed. 759, 15 Sup. Ct. Rep. 673, 158 U. S. 601, 39 L. ed. 1108, 15 Sup. Ct. Rep. 912, it is certain that the tax levied by the provision was intended to be an excise tax upon 'the use of every foreign-built yacht, pleasure boat, or vessel . . . now or hereafter owned or chartered for more than six months by any citizen or citizens of the United States.' This is not seriously, if at all, disputed in argument, the controversy turning first upon the period when the tax provided for is to take effect, and the nature and character of the use which is taxed. These subjects are so interwoven that we consider and dispose of them together.

Was the tax due on the 1st day of September, 1909, or was it only due on the same day in September, 1910? In view of the positive direction that the tax shall be levied and collected on the 1st day of September, we can see no escape from the conclusion that the court below was right in holding that it became due on the 1st day of September after the passage of the act. The word 'annually,' upon which so much reliance to the contrary is placed, is manifestly used not for the purpose of postponing the time of payment, but rather as provision for continuity; that is, the word but shows the purpose of fixing the annual duty of levying and collecting the tax on the designated day. This becomes quite apparent when it is observed that if the word 'annually' be removed, there would be room for the implication that the tax was to be but sporadic, and would therefore cease to

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be collectible after one payment. And it is equally clear that the six months clause is concerned not with the period when the tax imposed shall be levied and collected, but addresses itself to the subject-matter upon which the tax is placed; in other words, it qualifies the word 'charter,' and therefore only indicates when the use of a chartered vessel shall become subject to the duty imposed. The tax being leviable and collectible on the 1st of September in each year after the passage of the act, upon what was it assessed is the question. It seems difficult to answer it in clearer terms than does the text of the act when it provides that it shall be upon the use of the yachts with which the provision is concerned. But it is said to respond in the language of the act leaves the question virtually unanswered, since the extent of the use and its essential period are left wholly undetermined. But this is a misconception based upon a disregard of the fact that the word 'use' in the text is unqualified, from which it results that the recurrence of the tax is annual and depends upon two elements,—ownership or charter rights, as specified in the act, and use for any time during the year. It is to be observed that the provision deals with ownership, and distinguishes between ownership and use, since it bases the tax not upon the former, but upon the latter. From this it follows that it is not ownership, but the election during the taxing period of the owner to take advantage of one of the elements which are involved in ownership, the right to use which is the subject upon...

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