The Assessors v. Osbornes
| Decision Date | 01 December 1869 |
| Citation | 76 U.S. 567,19 L.Ed. 748,9 Wall. 567 |
| Parties | THE ASSESSORS v. OSBORNES |
| Court | U.S. Supreme Court |
IN this case, which came on error from the Circuit Court for the Northern District of New York, the same condition of enactment and repeal of statutes presented itself as in the last case. It is set forth, supra, pp. 560-562. It makes the fundamental part of this case as of that. And the reader who desires to read the report of this case as well as the report of that, will please to recall it thence, or refer to it there.
In the present case, D. & J. Osborne, manufacturers, brought suit to June Term, 1866, against one Gates, assessor of internal revenue, to recover damages for his having illegally assessed against them taxes upon certain articles manufactured by them. A case was stated for the judgment of the court. In one clause of it, it was agreed that 'the plaintiffs, for several years past, have been manufacturers of reaping and mowing machines at the city of Auburn, and within the 24th collection district of the State of New York;' and in another clause, that 'the defendant, as the assessor of the 24th district, did require of the plaintiffs that they should return, &c., the number of tons,' &c.
In the declaration a similar representation was made as to the citizenship of the parties. It alleged that the plaintiffs bring 'their certain declaration against Joseph Gates, the assessor of internal revenue for the 24th district of the State of New York, which is in and within the said Northern District of New York;' and it thus began: 'And whereas the said D. M. Osborn & Company, so being the exclusive manufacturers, &c., at their said manufacturing establishment in the said city of Auburn, and within the said 24th collection district of the said State.'
The court gave judgment for the plaintiffs, and the government brought the case here on error.
Mr. Hoar, Attorney-General, and Mr. Field, Assistant Attorney-General, for the assessor.
The cases of the Insurance Company v. Ritchie, and of Hornthall v. The Collector,1 conclude this case, irrespective of merits. Any discussion of these is, therefore, irrelative. The parties were obviously all resident within and all probably citizens of the State of New York, and it was perfectly settled by the first of the cases cited, as it is also affirmed by the second, that in the present state of the statutory law, a Circuit Court of the United States has no jurisdiction of a suit originally brought there for an alleged illegal assessment of internal revenue taxes collected or paid, unless the citizenship of the parties be such as to give it jurisdiction, and unless, also, this citizenship be averred.
Mr. D. Wright, contra, submitted,
1st. That it did not appear that the case had not been brought originally in a State court and removed into the Circuit Court, as required by the statute of July 13th, 1866, to give the Circuit Court jurisdiction under existing laws.
2d. That it did not appear that the plaintiff and defendant were not citizens of different States, as required to confer jurisdiction upon the Circuit Court.
3d. That if the case was properly cognizable in the Circuit Court at the time it was commenced, the subsequent repeal of the provision conferring such jurisdiction would not impair the right of the plaintiffs to maintain the suit.
Mr. Justice CLIFFORD stated the particulars of the case, and delivered the opinion of the court.
Damages are sought to be recovered by the plaintiffs of the defendant, as the assessor of internal revenue taxes for the twenty-fourth district in the State of New York, because, as they allege, he illegally assessed against them certain internal revenue taxes upon certain articles which they manufactured during the period specified in the declaration.
They brought their suit on the twentieth of July, 1866, and the declaration contains forty-one counts. Twenty-eight of the counts relate to certain internal revenue taxes alleged to have been illegally assessed by the defendant against the plaintiffs upon certain iron castings of two classes therein described. One class consisted of castings of iron exceeding ten pounds in weight for each casting, and the other class consisted of castings of iron of ten pounds weight for each casting, or less, as more fully set forth in the first fourteen counts.
Machines, in a finished condition, for reaping and mowing, were also manufactured by the plaintiffs during the same period, and the remaining thirteen counts relate to assessments made by the defendant against the plaintiffs upon reaping and mowing machines which were in a finished condition; and the charge is, that the last-named assessments were also illegal, and that the defendant, as such assessor, transmitted the lists to the collector of the district, and that the plaintiffs paid the taxes under protest, as in the case of the assessments upon the castings of iron, which were in fact used as component parts of the finished machines.
For several years prior to the assessment of the taxes in question the plaintiffs had been manufacturers of the Kiby Harvester and Mower, at Auburn, within that collection district. They were the exclusive licensees for the manufacture and sale of those machines under the several patents granted for that invention, and the agreed statement shows that they make the castings used as parts of the machines as well as the machines in their organized and finished condition, and it is admitted that the castings which they make cannot be used for any other purpose than as component parts of their machine, nor as parts of any different machine made by any other manufacturers.
Castings manufactured by the plaintiffs are made from pigiron, upon which the internal revenue duties imposed under the acts of Congress have been fully paid. All of the castings, after being taken from the moulds, require to be polished, examined, and tested, to see if they are perfect and fit for the purpose before they can be used as component parts of a reaper or mower, and many of them have also to be painted and varnished.
Reapers and mowers, when sold by the plaintiffs, include as parts thereof all the necessary pieces of castings and of woodwork to constitute a complete working machine; but they do not put all of the several parts together until the purchaser is ready to use the machine in the field, as it is much more convenient to transport the several parts in their separate condition than the embodied machine.
Prior to the year 1865 the plaintiffs had never made any returns to the assessor or assistant assessor of any castings which they manufactured, nor had they ever been required to make any such return, either by the assessor, assistant assessor, or commissioner; but the commissioner, in March of that year, directed the defendant, as such assessor, to require of the plaintiffs such a return, specifying the number of tons of such castings which they had manufactured, of the two classes mentioned in the declaration, for the six months next preceding the month of March of that year, and also the number of finished machines which they had manufactured and sold during the same time, in order that the same might be separately taxed, as follows: (1.) That the castings of ten pounds weight or less each casting might be taxed at the rate of five per cent. ad valorem. (2.) That the castings exceeding ten pounds in weight each casting might be taxed at the rate of three dollars per ton. (3.) That the finished machines sold during that time might be taxed five per cent. ad valorem, without any deduction being made for the castings used as component parts of the machines.
Pursuant to the directions of the commissioner the plaintiffs made the required return, and paid the taxes to the collector, under protest, and brought this suit to recover compensation for the illegal acts of the defendant. Process having been served, the defendant appeared and pleaded that he was not guilty, which was duly joined by the plaintiff, and the parties entered into stipulation waiving a jury, and consenting that the cause might be tried by the court without the intervention of a jury.2
Hearing was accordingly had before the court and judgment was rendered for the plaintiffs in the sum of nine thousand eight hundred and five dollars and twelve cents, besides costs and charges. Whereupon the defendant sued out a writ of error and removed the cause into this court.
Besides the first assessment, which included the month of July, 1864, and extended to February, 1865, both inclusive, there were subsequent assessments for each month following, up to and including May, 1866, and the agreed statement finds that the same state of facts apply to every month thereafter until the passage of the act of the thirteenth of July, 1866, which transferred reapers and mowers to the free list.3
Where internal revenue taxes are illegally assessed it is well settled that the injured party, if he complies with the conditions specified in the act of Congress upon that subject, and pays the taxes under protest, may maintain an action of assumpsit against the collector to recover back the amount so paid.4
Collectors in such cases are not required to reimburse themselves for such liabilities, but the provision is, that all such judgments against them shall be paid by the commissioner, including the costs and expenses of the suit. Such a judgment against the collector is in the nature of a recovery against the United States, and consequently the amount recovered is...
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