Hannis Distilling Company v. Mayor and City Council of Baltimore

Decision Date21 February 1910
Docket NumberNo. 75,75
Citation216 U.S. 285,30 S.Ct. 326,54 L.Ed. 482
PartiesHANNIS DISTILLING COMPANY, Plff. in Err., v. MAYOR AND CITY COUNCIL OF BALTIMORE
CourtU.S. Supreme Court

Mr. Shirley Carter for plaintiff in error.

Messrs. Sylvan Hayes Lauchheimer, Edgar Allan Poe, and Oscar Leser for defendant in error.

Mr. Justice White delivered the opinion of the court:

The city of Baltimore sued to recover from the Hannis Distilling Company, a West Virginia corporation, $18,218.77, of which $9,259.28 was the amount of state and city taxes for 1902 on an assessment of 50,996 barrels of distilled spirits, and $8,959.49 was the sum of state and city taxes for 1903 on an assessment of 54,514 barrels of distilled spirits. It was alleged that the spirits assessed were 'in the ownership and possession or custody of said defendant in the city of Baltimore, state of Maryland . . . at the time each assessment was made.' The declaration, as amended, alleged that the taxes sued for had been levied by virtue of 'chapter 704 of the acts of general assembly of Maryland passed at the January session of 1892, as amended by chapter 320 of the acts of the general assembly of Maryland, passed at the January session of 1900.' The provisions thus referred to are embraced in §§ 214 to 224, inclusive, of article 81 of the Code of Public General Laws of Maryland of 1904. Their purpose is indicated by §§ 214 and 215, which are as follows:

'Sec. 214. There shall be levied and collected upon all distilled spirits in this state, as personal property, the same rate of taxation which is imposed by the laws of the state on other property for state and county purposes.

'Sec. 215. For the purpose of such assessment and collection, it is hereby made the duty of each distiller, and of every owner or proprietor of a bonded or other warehouse in which distilled spirits are stored, and of every person or corporation having custody of such spirits, to make report to the state tax commissioner, on the 1st day of January in each and every year, of all the distilled spirits on hand at such date, and the tax for the ensuing year from the said 1st of January shall be levied and paid on the amount of distilled spirits so in hand, as representing the taxable distilled spirits for such year; provided, however, that the same distilled spirits shall not be taxed twice for the same year.'

By the remaining provisions of the act, the machinery for levying and collecting the taxes for which the act provided was created. Such regulations afforded those interested an opportunity to be heard as to the amount of any assessment, made it the duty of the person having the possession, control, or custody of the spirits assessed to pay the taxes levied thereon, and gave to the persons thus made liable to make payment a lien upon the spirits to secure the reimbursement of the taxes paid.

Because of diversity of citizenship, the defendant removed the case to the circuit court of the United States for the district of Maryland. In that court two pleas to the declaration were filed. By the first, it was alleged that the corporation was not only incorporated under the laws of West Virginia, but had always been exclusively a citizen and resident of that state, and of no other. The corporation, it was averred, was not, at the time when the taxes sued for were levied, the owner of the distilled spirits upon which the levy was made, or any portion thereof, and, indeed, had never at any time since the assessment and levy had any interest, direct or indirect, in the distilled spirits in question. Under these circumstances it was charged 'that under the provisions of article 15 of the Bill of Rights of the Constitution of Maryland, as the same has been construed by the court of appeals of Maryland . . . the respective taxes levied on the assessed value of all of the said barrels of distilled spirits . . . were levied on the owners of said barrels of distilled spirits, who were and are persons other than this defendant, and the said taxes were not and could not have been levied on this defendant.' The plea then proceeded to aver that at all times prior to the day when the assessment had been made, and since, the spirits assessed has been stored in the defendant's bonded warehouse, subject to the acts of Congress applicable to bonded warehouses, and that the defendant had at no time 'any further custody or control of the spirits than is by the acts of Congress applicable to the subject.' The plea further charged that the corporation had no funds in its possession or under its control, belonging to the owners of the spirits, with which to pay the taxes; that the corporation had not agreed to pay them, that it had never borne any other relation to the owners than that of creditor, and therefore there was no right to recover the taxes from the corporation or to compel it to pay them. It was specially averred that to compel the corporation to pay the taxes would be to deprive it of its property without due process of law, in violation of the 14th Amendment to the Constitution of the United States. The second plea substantially reiterated the averments of the first, and, in addition, specially alleged that all the persons who owned the distilled spirits resided outside of the state of Maryland, and could not be taxed in personam, and that, by the construction given to the Constitution of the state by the highest court of the state, the property, although situated in the state, was not susceptible of being taxed, and, therefore, the taxes were void, and there was no power to cast upon the corporation the duty of paying them, and to compel the corporation to pay the taxes would be a violation of the due-process clause of the 14th Amendment.

A demurrer filed by the city to both pleas, on the ground that they stated no defense, was sustained without an opinion. The distilling company electing to stand upon its pleas, judgment was entered against it for the amount of the taxes. Thereupon a writ of error directly from this court was prosecuted upon the assumption that questions under the Constitution of the United States were involved which gave a right to an immediate resort to this court for their solution. Upon the correctness of such assumption our jurisdiction depends. The assumption, however, may not be indulged in simply because it appears from the record that a federal question was averred, if such question be obviously frivolous or plainly unsubstantial, either because it is manifestly devoid of merit, or because its unsoundness so clearly results from the previous decisions of this court as to foreclose the subject and leave no room for the inference that the questions sought to be raised can be the subject of controversy. Leonard v. Vicksburg, S. & P. R. Co. 198 U. S. 416, 421, 49 L. ed. 1108, 1110, 25 Sup. Ct. Rep. 750, and cases cited; Delmar Jockey Club v. Missouri, 210 U. S. 324, 335, 52 L. ed. 1080, 1084, 28 Sup. Ct. Rep. 702; McGilvra v. Ross, 215 U. S. 70, 54 L. ed.——, 30 Sup. Ct. Rep. 27.

The assignments merely charge that error was committed in sustaining the demurrer to the pleas, and consequently in refusing to give effect to the alleged rights under the Constitution which the pleas asserted. But the pleas based the claim of Federal right, not merely upon the inherent operation of the law under which the taxes were levied, abstractly considered, but upon limitations which it was assumed were to be treated as embodied in the law in consequence of restrictions on the general power of the state to tax, based upon the construction which it was asserted had been given to a provision in the Bill of Rights in the state Constitution by the court of last resort of the state. And the argument elaborately pressed at bar concerning the assumed Federal question accords with this conception of the pleas, since it does not deny that the act under which the taxes were levied would not be wanting in due process if it had been enacted by a state government possessing normal powers of local taxation, but contends that the act under consideration must be held to be wanting in due process, because its provisions should be construed with reference to the assumed abnormal limitations upon the taxing power of the state of Maryland, above referred to. By the limitation which the argument thus assumes to exist it is urged the government of the state of Maryland, in the exertion of its taxing power, is...

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