Malley v. Woodrough

• Citation: 307 U.S. 277,83 L.Ed. 1289,59 S.Ct. 838
• Decision Date: 22 May 1939
• Docket Number: No. 810,810
• Parties: O'MALLEY v. WOODROUGH et ux
• Court: United States Supreme Court

307 U.S. 277

59 S.Ct. 838

83 L.Ed. 1289

O'MALLEY

v WOODROUGH et ux.

No. 810.

Supreme Court of the United States

Argued April 28, 1939.

May 22, 1939

Messrs. Frank Murphy, Atty. Gen., and Robert H. Jackson, Sol. Gen., for appellant.

Messrs. J. A. C. Kennedy and George L. DeLacy, both of Omaha, Neb., for appellees.

Mr. Justice FRANKFURTER delivered the opinion of the Court.

The case is here under Section 2 of the Act of August 24, 1937, 50 Stat. 751, 752, 28 U.S.C.A. § 349a, as a direct appeal from a judgment of a district court whose 'decision was against the constitutionality' of an Act of Congress. The suit below, an action at law to recover a tax on income claimed to have been illegally exacted, was disposed of upon the pleadings and turned on the single question now before us, to wit: Is the provision of Section 22 of the Revenue Act of 1932 47 Stat. 169, 178, reenacted by Section 22(a) of the Revenue Act of 1936, 49 Stat. 1648, 1657, 26 U.S.C.A. § 22(a), constitutional insofar as it included in the 'gross income', on the basis of which taxes were to be paid, the compensation of 'judges of courts of the United States taking office after June 6, 1932'.

That this is the sole issue will emerge from a simple statement of the facts and of the governing legislation. Joseph W. Woodrough was appointed a United States circuit judge on April 12, 1933, and qualified as such on May 1, 1933. For the calendar year of 1936 a joint income tax return of Judge Woodrough and his wife disclosed his judicial salary of $12,500, but claimed it to be constitutionally immune from taxation. Since it was not included in 'gross income' no tax was payable. Subsequently a deficiency of $631.60 was assessed on the basis of that item, which, with interest, was paid under protest. Claim for refund having been rejected, the present suit was brought, and judgment went against the Collector. The assessment of the present tax was technically under the Act of 1936, but that Act merely carried forward the provisions of the Act of 1932, for the inclusion of compensation of 'judges of courts of the United States taking office after June 6, 1932' which had been similarly incorporated in the Revenue Act of 1934, 48 Stat. 680, 686, 687, 26 U.S.C.A. § 22(a). Therefore, the power of Congress to include Judge Woodrough's salary as a circuit judge in his 'gross income' must be judged on the basis of the validity of Section 22 of the Revenue Act of 1932, and not as though that power had been originally asserted by the Revenue Act of 1936. For it was the Act of June 6, 1932 that gave notice to all judges thereafter to be appointed, of the new Congressional policy to include the judicial salaries of such judges in the assessment of income taxes. The fact that Judge Woodrough before he became a circuit judge and prior to June 6, 1932, had been a district judge is wholly irrelevant to the matter in issue. The two offices have different statutory origins, are filled by separate nominations and confirmations, and enjoy different emoluments. A new appointee to a circuit court of appeals occupies a new office no less when he is taken from the district bench than when he is drawn from the bar.

By means of Section 22 of the Revenue Act of 1932, Congress sought to avoid, at least in part, the consequences of Evans v. Gore, 253 U.S. 245, 40 S.Ct. 550, 64 L.Ed. 887, 11 A.L.R. 519. That case, decided on June 1, 1920, ruled for the first time that a provision requiring the compensation received by the judges of the United States to be included in the 'gross income' from which the net income is to be computed, although merely part of a taxing measure of general, non-discriminatory application to all earners of incomes, is contrary to Article III, § 1 of the Constitution, U.S.C.A., which provides that the 'Compensation' of the 'Judges' 'shall not be diminished during their Continuance in Office.' See also the separate opinion of Mr. Justice Field in Pollock v. Farmers' Loan & Trust Co., 157 U.S. 429, 586, 604 et seq., 15 S.Ct. 673, 691, 698, 39 L.Ed. 759. To be sure, in a letter to Secretary Chase, Chief Justice Taney expressed similar views.¹ In doing so, he merely gave his extra-judicial opinion asserting at the same time that the question could not be adjudicated.² Chief Justice Taney's vigorous views were shared by Attorney General Hoar.³ Thereafter, both the Treasury Department⁴ and Con- gress⁵ acted upon this construction of the Constitution. However, the meaning which Evans v. Gore, supra, imputed to the history which explains Article III, § 1 was contrary to the way in which it was read by other English-speaking courts.⁶ The decision met wide and steadily growing disfavor from legal scholarship and professional opinion.⁷ Evans v. Gore, supra, itself was rejected by most of the courts before whom the matter came after that decision.⁸

Having regard to these circumstances, the question immediately before us is whether Congress exceeded its constitutional power in providing that United States judges appointed after the Revenue Act of 1932 shall not enjoy immunity from the incidences of taxation to which everyone else within the defined classes of income is subjected. Thereby, of course, Congress has committed itself to the position that a non-discriminatory tax laid generally on net income is not, when applied to the income of a federal judge, a diminution of his salary within the prohibition of Article III, § 1 of the Constitution. To suggest that it makes inroads upon the independence of judges who took office after Congress had thus charged them with the common duties of citizenship, by making them bear their aliquot share of the cost of maintaining the Government, is to trivialize the great historic experience on which the framers based the safeguards of Article III, § 1.⁹ To subject them to a general tax is merely to recognize that judges are also citizens, and that their particular function in government does not generate an immunity from sharing with their fellow citizens the material burden of the government whose Constitution and laws they are charged with administering.

After this case came here, Congress, by Section 3 of the Public Salary Tax Act of 1939, amended Section 22(a) so as to make it applicable to 'judges of courts of the United States who took office on or before June 6, 1932 '¹⁰ That Section, however, is not now before us. But to the extent that what the Court now says is inconsistent with what was said in Miles v. Graham, 268 U.S. 501, 45 S.Ct. 601, 69 L.Ed. 1067, the latter cannot survive.

Judgment reversed.

Mr. Justice McREYNOLDS did not hear the argument in this cause and took no part in its consideration or decision.

Mr. Justice BUTLER, dissenting.

Concretely, the question is whether, by exacting from United States circuit judge Joseph W. Woodrough and his wife $631.60 in the form of income tax on his salary of $12,500 for 1936, the government diminished the compensation for his services theretofore fixed by Congress. That item excluded, they had no taxable income. The judge's monthly pay was $1,041.66. The tax took at the monthly rate of $52.63.

The material details may be given briefly.

April 12, 1933, Judge Woodrough was appointed judge of the United States circuit court of appeals for the eighth circuit. He qualified May 1, 1933. Congress had by the Act of December 13, 1926,¹ enacted that 'To each of the circuit judges the sum of $12,500 per year' shall be paid as compensation. Since May 1, 1933, appellee has received the specified pay. The Revenue Act of June 6, 1932, applicable only to taxable years beginning after December 31, 1931, contained a provision declaring that in the case of judges taking office after that date 'the compensation received as such shall be included in gross income; and all Acts fixing the compensation of such * * * judges are hereby amended accordingly.'² The Revenue Act of 1934,³ applicable only to taxable years beginning after December 31, 1933, and that of 1936,⁴ applicable only to taxable years beginning after December 31, 1935, contain the same language as that just quoted from the Act of 1932.

Judge Woodrough and his wife made a joint income tax return for 1936; it disclosed his salary but claimed it was not subject to the tax. The commissioner held the item taxable and made a deficiency assessment of $631.60 Plaintiffs paid under protest and filed claim for refund; it was denied. Claiming the tax that they were so compelled to pay diminished the judge's compensation and that therefore § 22(a) of the Act of 1936 violates § 1, Art. III, of the Constitution, U.S.C.A., plaintiffs sued to recover the amount of the tax. The collector moved to dismiss. The court held the Act unconstitutional, overruled the motion and, defendant having elected not to plead further, gave plaintiffs judgment as prayed. Defendant appealed.⁵

Article III, § 1, declares: 'The Judges, both of the supreme and inferior Courts, shall hold their Offices during good behaviour, and shall, at stated Times, receive for their Services, a Compensation, which shall not be diminished during their Continuance in Office.'

It safeguards the independence of the judiciary. The abuse against which it was intended to be a barrier is included in the list of reasons for our Declaration of Independence. 'The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States * * * He has obstructed the Administration of Justice, by refusing his Assent to Laws for establishing Judiciary powers.—He has made Judges dependent on his Will alone, for the tenure of their offices, and the amount and payment of their salaries.'

Alexander Hamilton, explaining the reasons for and the purpose of § 1 of Art. III, said:

'The Executive not only dispenses the honors, but holds the sword of the community. The legislature not only...