International Paper Co. v. Burrill

• Decision Date: 19 September 1919
• Docket Number: 1060.
• Citation: 260 F. 664
• Parties: INTERNATIONAL PAPER CO. v. BURRILL.
• Court: U.S. District Court — District of Massachusetts

260 F. 664

INTERNATIONAL PAPER CO. v. BURRILL.

No. 1060.

United States District Court, D. Massachusetts.

September 19, 1919

Charles A. Snow, Frank T. Benner, and William P. Evearts, all of Boston, Mass., for plaintiff.

Henry C. Attwill, Atty. Gen., and William Harold Hitchcock, Asst Atty. Gen., of Massachusetts, for defendant.

ANDERSON Circuit Judge.

This is an action for money had and received, brought by the plaintiff, a foreign corporation, against the defendant, who was and is treasurer of the commonwealth of Massachusetts, to recover taxes paid by the plaintiff to the defendant on May 22, 1916, under the provisions of statutes held by the Supreme Court of the United States in International Paper Co. v. Massachusetts, 246 U.S. 135, 38 Sup.Ct. 292, 62 L.Ed. 624, Ann. Cas. 1918C, 617, unconstitutional. This tax was paid under protest and under alleged implied duress.

Under the Massachusetts act (St. 1909, c. 490, pt. 3, Sec. 70) a petition was brought by the plaintiff in the Supreme Judicial Court of Suffolk county against the commonwealth of Massachusetts to recover this tax. This petition was on the plaintiff's motion dismissed without prejudice in January, 1919, because, under the holding of the Supreme Judicial Court of Massachusetts in International Paper Co. v. Commonwealth, 232 Mass. 7, 121 N.E. 510, the failure to make service within six months after payment required by said section 70, was fatal to the maintenance of said petition. The plaintiff, therefore, now has no legal remedy against the commonwealth of Massachusetts to recover such tax. The present question is whether this action can be maintained against the defendant personally to recover money paid in response to demands now admittedly illegal. Stat 1909, c. 490, pt. 3, Secs. 56, 58, and 59, provides drastic penalties for the nonpayment of such taxes. Clearly, under these statutes, upon the agreed facts, a finding of implied duress is warranted, and, I think, required. See Atchison, etc., Railway Co. v. O'Connor, 223 U.S. 280, 286, 32 Sup.Ct. 216, 217 (56 L.Ed. 436, Ann. Cas. 1913C, 1050) where Mr. Justice Holmes says as to such payments that 'courts sometimes, perhaps, have been a little too slow to recognize the implied duress under which payment is made.'

The plaintiff's counsel contends that in cases of payment under implied duress protest is not required. It is unnecessary to rule on this point, for it appears that this tax was paid under protest. The defendant, then, obtained money from the plaintiff without legal right, of which the defendant was duly notified, and under implied duress. Although the defendant acted entirely in good faith and under the color of office, the statutes under which he obtained the plaintiff's money are absolutely void. In law, his acts were wrongful.

'A void act is neither a law nor a command. It is a nullity. It confers no authority. It affords no protection. Whoever seeks to enforce unconstitutional statutes, or to justify under them, or to obtain immunity through them, fails in his defense and in his claim of exemption from suit. ' Mr. Justice Lamar, in Hopkins v. Clemson College, 221 U.S. 636, 644, 31 Sup.Ct. 654, 657 (55 L.Ed. 890, 35 L.R.A. (N.S.) 243).

The defense mainly relied on is that the defendant did not personally receive and retain the plaintiff's money, but turned the same over, as in duty bound under the statutes of the commonwealth of Massachusetts, into the treasury of the commonwealth. But the fact that the check in question may not have been handled by the defendant, or even known to him, is, in my view, immaterial. It was handled by his agent, and he was bound to know that the plaintiff was paying to him under protest money that it claimed he was not entitled to receive. He therefore received it and caused it to be deposited in the treasury of the commonwealth at his peril.

'If any person gets money into his hands illegally, he cannot discharge himself by paying it over to another. ' Lord Ellenborough, in Townson v. Wilson, 1 Camp. 396.

Neither he nor the commonwealth had any right to receive or retain this money. It was paid to him by the plaintiff under duress and in terror of penalties provided in the statute, supra.

A leading case dealing with the principles here involved is that of Elliott v. Swartwout, 10 Pet. 137, 9 L.Ed. 373.

This was an action for money had and received against the collector of the port of New York to recover certain duties found to have been illegally exacted by the collector from an importer. As to a part of the duties sought to be recovered, the collector had 'received the money in the ordinary and regular course of his duty, * * * paid it over into the treasury, and no objection made at the time of payment, or at any time before the money was paid over to the United States. ' The court held that this must 'be considered as a voluntary payment, by mutual mistake of law; and, in such case, no action would lie to recover back the money.' As to another part of the tax collected, the payer having at the time of payment given notice to the collector that the duties charged were too high, that he paid to get possession of his goods and intended to sue him to recover back amount erroneously paid, the court held this not to be a voluntary payment, but that an action for money had and received would lie against the collector, citing among other authorities Irving v. Wilson, 4 T.R. 485; Greenway v. Hurd, 4 T.R. 553; Sadler v. Evans, 4 Bur. 1984; Snowdon v. Davis, 1 Taunt. 358; Clinton v. Strong, 9 Johns. 369; Hearsey v. Pruyn, 7 Johns. (N.Y.) 179; Frye v. Lockwood, 4 Cow. (N.Y.) 454. The protest in the present case was, in my view, enough; it was not necessary for the plaintiff therein to threaten the defendant with a personal suit, in order to prevent the payment from being a voluntary one, assuming for the moment that protest is, in cases of implied duress, necessary.

A similar question came before the Supreme Court in Cary v. Curtis, 3 How. 236, 11 L.Ed. 576. This also was an action against the collector of the port of New York to recover duties found to have been illegally collected. The majority of the court held, by Mr. Justice Daniel, that the Act of March 3, 1839, c. 82, 5 Stat. 339, requiring the collector of customs to place money collected to the credit of the treasury of the United States and authorizing application by the aggrieved taxpayer to the Secretary of the Treasury, cut off the common-law right of action for money had and received against collectors of customs. From this construction of the statute Justices Story and McLean dissented, contending that the majority had misconstrued the act; also that, construed as the majority did construe it, it was unconstitutional. Apart from the statute, all the Justices were of the opinion that action for money had and received would clearly lie against the collector. That the minority of the court construed the act as Congress intended it to be construed appears from the facts stated by Mr. Justice Matthews in Arnson v. Murphy, Collector, 109 U.S. 238, 240, 3 Sup.Ct. 184, 186 (27 L.Ed. 920). It is there pointed out that after the Supreme Court held in Cary v. Curtis that the legal effect of the act of March 3, 1839, 'was to take from the claimant all right of action against the collector, by removing the ground on which the implied promise rested. Congress, being in session at the time that decision was announced, passed the explanatory act of February 26, 1845, which, by legislative construction of the act of 1839, restored to the claimant his right of action against the collector, but required the protest to be made in writing at the time of payment of the duties alleged to have been illegally exacted, and took from the Secretary of the Treasury the authority to refund conferred by the act of 1839. * * * ' It certainly is significant that Congress restored a right of action against federal officials acting ultra vires.

These authorities make it clear that, unless and except as modified by statute, the common-law right of action for money had and received lies against a tax collector to recover taxes illegally collected, with notice that they are not paid voluntarily, but under protest; duress, express or implied, may make protest unnecessary, as already noted.

Compare Lincoln v. Worcester, 8 Cush. (Mass.) 55, 61.

In Erskine v. Van Arsdale, 15 Wall. 75, 77 (21 L.Ed. 63), the court says:

'Taxes illegally assessed and paid may always be recovered back, if the collector understands from the payer that the taxes are regarded as illegal and that suit will be instituted to compel the refunding of them.'

De Lima v. Bidwell, 182 U.S. 1, 21 Sup.Ct. 743, 45 L.Ed. 1041, was also an action against the collector of the port of New York to recover duties alleged to have been illegally exacted and paid on certain importations of sugar from Porto Rico after cession to the United States. On page 177 et seq. of 182 U.S., 21 Sup.Ct. 743, 45 L.Ed. 1041, the court deals with the question whether the legality of the duties can be tested in this form of action and answered in the affirmative.

See also, Pacific Whaling Co. v. United...