President Directors of Manhattan Co v. Blake

• Decision Date: 03 April 1893
• Docket Number: No. 163,163
• Citation: 148 U.S. 412,37 L.Ed. 504,13 S.Ct. 640
• Parties: PRESIDENT & DIRECTORS OF MANHATTAN CO. v. BLAKE, Collector of Internal Revenue
• Court: U.S. Supreme Court

148 U.S. 412

13 S.Ct. 640

37 L.Ed. 504

PRESIDENT & DIRECTORS OF MANHATTAN CO.

v BLAKE, Collector of Internal Revenue.

No. 163.

April 3, 1893.

This is an action at law, brought January 31, 1883, by the president and directors of the Manhattan Company, a New York corporation, possessing banking powers, and carrying on the business of banking in the city of New York, against Marshall B. Blake, in the supreme court of the state of New York, and removed by the defendant, by certiorari, into the circuit court of the United States for the southern district of New York, on the ground that the suit was brought against him on account of acts done by him under the revenue laws of the United States, and as collector of internal revenue for the second collection district of the state of New York.

The complaint in the suit, which was put in in the state court, contains six paragraphs, setting forth (1) the status of the plaintiff; (2) the status of the defendant, and an allegation that the banking house of the plaintiff was situated, and its business was carried on, in said second collection district; (3) that on December 24, 1881, the plaintiff received from the defendant a notice stating that the tax assessed against it, from July 1, 1864, to May 31, 1881, amounting to $121,215.34, was due and payable on or before the last day of December, 1881, and that, unless it was paid by that time, it would become his duty to collect it, with a penalty of 5 per cent additional, and interest at 1 per cent. per month, the tax being one upon deposits; (4) that the plaintiff, apprehending that if it did not pay the tax on or before December 31, 1881, the defendant would levy upon its property to satisfy the tax, paid to him on that day the sum of $113,085.62, being the amount of the tax, without including any penalty, but that, before paying such amount, the plaintiff delivered to the defendant a written protest against the payment of the tax on deposits during the period from July 1, 1864, to November 30, 1879, because a portion of that tax was assessed upon moneys transmitted to the plaintiff by the treasurer of the state of New York, for the payment of debts of the state, and which were not 'deposits,' within the meaning of the statute of the United States, and because the remainder of such tax was assessed upon moneys deposited with the plintiff by the United States Trust Company of New York, on which the latter company had already paid to the United States a tax as upon deposits, but that the defendant, notwithstanding such protest, insisted upon the payment of the tax, and required the plaintiff to pay it; (5) that said tax was in part unlawfully assessed against the plaintiff, and it was not legally liable to pay the same, for the reason that $31,021.25 of said tax was assessed against it on account of moneys transmitted to it by the treasurer of the state of New York, and received by the plaintiff as the agent of the state, to be applied by the plaintiff to the payment of the debts of the state, and the moneys were not 'deposits,' within the meaning of the revenue laws of the United States, and for the further reason that $64,518.73 of said tax was assessed against the plaintiff on account of moneys received by it from the United States Trust Company of New York, upon which the latter company paid to the United States a tax as deposits; and (6) that, before the commencement of the suit, the plaintiff appealed to the commissioner of internal revenue of the United States, and claimed that $95,539.98 of said tax was erroneously assessed and paid, for the reasons before mentioned, and that the plaintiff was entitled to have that sum refunded, and that said commissioner rejected said appeal and claim, for the reason, as stated by him, that the amount was legally assessed and collected. The complaint prayed judgment for $95,539.98, with interest from December 31, 1881.

The answer of the defendant, which was put in in the circuit court of the United States, admitted the allegations contained in paragraphs 1, 2, 3, 4, and 6 of the complaint, and put in issue the allegations of paragraph 5, and averred that the $113,085.62 had been paid to the defendant, as collector of internal revenue, as a tax on the deposits of money with the plaintiff, subject to payment by check or draft, or represented by certificate of deposit or otherwise; that that sum was justly due as such tax; and that he had long since covered the same into the treasury of the United States.

The case was tried before Judge Lacombe and a jury, on the 22d of October, 1888. There is a bill of exceptions, which states that the evidence of the respective parties is set forth in the following agreed statement of facts:

'First. The first, second, third, fourth, and sixth articles of the complaint, the same being admitted by the answer.

'Second. That plaintiff has for more than forty years maintained a transfer office within its banking house in 40 Wall street, in New York, as provided by a contract made by the commissioners of the canal fund and the canal board with the Manhattan Company, and pursuant to an act passed by the legislature of the state of New York authorizing such contract, passed May 13, 1840. See Sess. Laws 1840, p. 229. Said agreement or contract is contained in document 5 of Assembly Reports of the state of New York for the year 1841, and said act and said contract as contained in said volumes may be referred to by either party herein, and are admitted to be in evidence for the purpose of this action. It has also during the period above mentioned, and long prior thereto, acted as a depositary of moneys of the state of New York committed to its keeping by the treasurer of the state of New York under the authority vested in that officer by the statute of this state, (title 4, c. 8, pt. 1, Rev. St., [1 Edm. 177,] Exhibit B, post,) and any and all acts in reference to the relations of the plaintiff to the state as a depositary of moneys of the state may be referred to by either party herein, and are admitted to be evidence for all the purposes of this action.

'Third. That in pursuance to the provisions of the said contract contained in assembly document No. 5, and between the years 1864 and 1882, the plaintiff maintained such transfer office, and paid out to various creditors of the state large sums of money received from the treasurer of the state of New York, to be applied to the payment of the interest accruing from time to time on various stocks of the state of New York, and more particularly stock of the canal loan and volunteer bounty loan, and also for the payment of the principal of the same as the same from time to time became due and payable, and gave receipts and vouchers for the same, as were required by the state, in accordance with the provisions of the act and agreement hereinbefore referred to; that such money so sent to bank, so far as the same was to be applied to the extinguishment of the canal loan or volunteer bounty loan debts, was to be applied to the extinguishment of debts incurred by the state in the exercise of its sovereign and reserved powers.

'Fourth. That the tax assessed against the plaintiff, as stated in the third article of the complaint herein, was assessed upon deposits in plaintiff bank, which included the amounts so received by the plaintiff from the treasurer of the state of New York to satisfy the interest or principal of said stocks; that the tax upon the amounts so received from the treasurer of the state of New York by the plaintiff was the sum of $31,021.25; that the course of business between the plaintiff and the treasurer of the state of New York in reference to the money so transmitted by him, for the purpose aforesaid, to the plaintiff was as follows: The interest upon said canal loan and volunteer bounty loan and the principal thereof fall due upon the first day of certain specified months. At some time during the week preceding the first day of the month when such principal or interest would fall due, the treasurer of the state would remit by mail to plaintiff drafts drawn by various country banks upon their respective correspondents in the city of New York to an amount equal to the payments to be made on the first of the ensuing month, the receipt of which drafts would be acknowledged by mail in a letter addressed by the plaintiff to the treasurer. Upon the receipt of these drafts the amount thereof was at once credited to an account upon plaintiff's books entitled 'Treasurer of the State of New York, Account of Canal Fund,' so far as the proceeds of said drafts were to be applied for payments on account of the canal indebtedness, and to an account entitled 'Treasurer of the State of New York,' so far as the proceeds of said drafts were to be applied to the bounty indebtedness. These drafts were collected by the plaintiff through the New York clearing house and their proceeds mixed with the general deposits of the plaintiff. Plaintiff had on hand at the close of each day's business sufficient deposits to meet all claims of the state. Upon the receipt by the treasurer of the state of a notification from plaintiff that such drafts had been received by it, the treasurer has drawn drafts upon the plaintiff to the order of the cashier of the plaintiff, inclosed and mailed in a letter addressed to the plaintiff, in which was indicated the purpose to which the funds were to be applied. The draft relating to canal loan, upon its receipt by plaintiff, was charged against the account entitled 'Treasurer of the State of New York, Account of Canal Fund,' and credited to a new account called 'Interest New York State Stocks, Canal Loan, July 2, 1881.' The draft relating to bounty loans was in like manner charged against the account entitled 'Treasurer of the State of New York,' and credited to a new account entitled 'Interest Loan for Payment of Bounties to Volunteers Due January 1st, 1877.'

'The mode in which...