United States v. Frederick Hvoslef

• Decision Date: 22 March 1915
• Docket Number: No. 331,331
• Parties: UNITED STATES, Plff. in Err., v. FREDERICK W. HVOSLEF and William S. Walsh, Survivors of William Bennett
• Court: U.S. Supreme Court

237 U.S. 1

35 S.Ct. 459

59 L.Ed. 813

UNITED STATES, Plff. in Err.,

v FREDERICK W. HVOSLEF and William S. Walsh, Survivors of William Bennett.

No. 331.

Argued January 13, 1915.

Decided March 22, 1915.

Solicitor General Davis and Mr. Theodor Megaarden for plaintiff in error.

[Argument of Counsel from pages 2-4 intentionally omitted] Mr. Everett P. Wheeler for defendants in error.

Messrs. Simon Lyon and R. B. Lyon as amici curiae.

[Argument of Counsel from pages 4-6 intentionally omitted] Mr. Justice Hughes delivered the opinion of the court:

This is a writ of error to review a judgment of the district court awarding a recovery against the United States for the amount paid as stamp taxes upon certain charter parties under § 25 of the war revenue act of June 13, 1898, chap. 448, 30 Stat. at L. 448, 460, Comp. Stat. 1913, § 6144. These charter parties were exclusively for the carriage of cargo from ports in the states of the United States to foreign ports, and the imposition of the taxes was held to be in violation of § 9, article I. of the Constitution of the United States, which provides: 'No tax or duty shall be laid on articles exported from any state.'

The suit was brought under paragraph 20 of § 24 of the Judicial Code [36 Stat. at L. 1093, chap. 231, Comp. Stat. 1913, § 991 (20)], which confers jurisdiction, concurrent with the court of claims, upon the district court, 'of all claims not exceeding ten thousand dollars founded upon the Constitution of the United States or any law of Congress' (see act of March 3, 1887, chap. 359, § 1, 24 Stat. at L. 505, Comp. Stat. 1913, § 991 (20)); and the claim of the plaintiffs (defendants in error) was based upon the act of July 27, 1912, chap. 256, 37 Stat. at L. 240, Comp. Stat. 1913, § 6370, which is as follows:

'That all claims for the refunding of any internal tax alleged to have been erroneously or illegally assessed or collected under the provisions of section twenty-nine of the act of Congress approved June thirteenth, eighteen hundred and ninety-eight, known as the war-revenue tax, or of any sums alleged to have been excessive, or in any manner wrongfully collected under the provisions of said act may be presented to the Commissioner of Internal Revenue on or before the first day of January, nineteen hundred and fourteen, and not thereafter.

'Sec. 2. That the Secretary of the Treasury is hereby authorized and directed to pay, out of any moneys of the United States not otherwise appropriated, to such claimants as have presented or shall hereafter so present their claims, and shall establish such erroneous or illegal assessment and collection, any sums paid by them or on their account or in their interest to the United States under the provisions of the act aforesaid.'

The government demurred to the petition upon the grounds that the court had no jurisdiction of the defendant, or of the subject of the action, and that the petition did not state facts sufficient to constitute a cause of action. The demurrer was overruled (217 Fed. 680), and, after answer, the case was heard on the merits. The court found in substance that the firm, of which the defendants in error were the surviving members, had paid without protest certain stamp taxes on charter parties of the character described; that, on filing their claim under the act of 1912, it had been certified by the collector to be correct in its statement of facts, but that the Commissioner of Internal Revenue had rejected it for the reason that the act was not applicable. Holding the taxes to be unconstitutional, and the claim to have been duly presented, the court rendered judgment for the claimants.

The government contends that the court erred in deciding (1) that the court had jurisdiction of the case, (2) that it need not be averred or proved that the tax was paid under protest, and (3) that the tax was invalid.

The first contention—with respect to jurisdiction—is that, the claim having been rejected, the remedy of the claimants was an action against the collector of internal revenue, and not against the United States. The course of the pertinent legislation since the passage of the war revenue act of 1898 may be briefly reviewed: In 1900, Congress provided for the redemption of, or allowance for, internal revenue stamps, including cases where 'the rates or duties represented thereby' had been 'excessive in amount, paid in error, or in any manner wrongfully collected.' Act of May 12, 1900, chap. 393, 31 Stat. at L. 177, Comp. Stat. 1913, § 6346. In 1902, various provisions of the war revenue act, and amendments thereof, including §§ 6, 12, 25, schedules A and B, with regard to stamp taxes, and § 29 as to taxes on legacies and distributive shares, were repealed. Act of April 12, 1902, chap. 500, 32 Stat. at L. 96, 97, Comp. Stat. 1913, §§ 6144, 6369. The repealing act was to take effect on July 1, 1902, and shortly before that date Congress made specific provision that certain taxes collected under the repealed statute should be refunded. Act of June 27, 1902, chap. 1160, 32 Stat. at L. 406. These taxes were (1) those that had been paid upon bequests for uses of a religious, literary, charitable, or educational character, etc.; (2) the 'sums paid for documentary stamps used on export bills of lading, such stamps representing taxes which were illegally assessed and collected;' and (3) taxes theretofore or thereafter paid upon legacies or distributive shares to the extent that they were collected 'on contingent beneficial interests' which had not become vested prior to July 1, 1902. It was also provided that no tax should thereafter be assessed under the act in respect of any such interest which had not become 'absolutely vested in possession or enjoyment' prior to the date mentioned.

The act of 1902 was followed by other refunding statutes. In United States v. New York & C. Mail S. S. Co. 200 U. S. 488, 50 L. ed. 569, 26 Sup. Ct. Rep. 327, suit had been brought in the district court to recover taxes which had been paid under the war revenue act upon manifests of cargoes bound to foreign ports, and it was held (following Chesebrough v. United States, 192 U. S. 253, 48 L. ed. 432, 24 Sup. Ct. Rep. 262) that no recovery could be had because the payment had been voluntarily made; the jurisdiction of the court was not impugned. Thereupon Congress provided for the refunding of sums paid for stamps 'on export ships' manifests' representing taxes 'which were illegally assessed and collected,' 'said refund to be made whether said stamp taxes were paid under protest or not, and without being subject to any statute of limitations.' Act of March 4, 1907, chap. 2919, 34 Stat. at L 1373. Again, in 1909, the Secretary of the Treasury was directed to pay to those who had duly presented their claims prior to July 1, 1904, the sums paid for stamps used 'on foreign bills of exchange' (drawn between July 1, 1898, and June 30, 1901) 'against the value of products or merchandise actually exported to foreign countries, such stamps representing taxes which were illegally assessed and collected, said refund to be made whether said stamp taxes were paid under protest or duress or not.' Act of February 1, 1909, chap. 53, 35 Stat. at L. 590; see also acts of August 5, 1909, chap. 7, 36 Stat. at L. 120; June 25, 1910, chap. 385, 36 Stat. at L. 779; August 26, 1912, chap. 408, 37 Stat. at L. 626.

It thus appears that the act of 1912—upon which the present claim is based—was the culmination of a series of statutes which leave no question as to the intention of Congress to create an obligation on the part of the United States in favor of those holding the described claims, and it follows that these claims must be deemed to be founded upon a 'law of Congress' within the meaning of the provisions of the Tucker act, now incorporated in the Judicial Code. See Medbury v. United States, 173 U. S. 492, 497, 43 L. ed. 779, 782, 19 Sup. Ct. Rep. 503; McLean v. United States, 226 U. S. 374, 378, 57 L. ed. 260, 262, 33 Sup. Ct. Rep. 122. With respect to the refunding of taxes paid on the 'contingent interests' described in the act of June 27, 1902, supra, it has been held that upon the rejection of the claim an action lies against the United States in the court of claims, or in the district court (where the amount is within the prescribed limit). Fidelity Trust Co. v. United States, 45 Ct. Cl. 362, s. c. 222 U. S. 158, 56 L. ed. 137, 32 Sup. Ct. Rep. 59; United States v. Jones, 236 U. S. 106, 59 L. ed. ——, 35 Sup. Ct. Rep. 261; Thacher v. United States, 149 Fed. 902; United States v. Shipley, 116 C. C. A. 627, 197 Fed. 265. And this is true not only where such taxes were paid before the refunding act was passed, but also where subsequently they were wrongfully collected in violation of its provisions. United States v. Jones, 236 U. S. 106, 59 L. ed. , 35 Sup. Ct. Rep. 261. The same rule must obtain as to all claims described in the act of 1912, and in this view we are not concerned in the present case with questions arising under the general provisions of the internal revenue laws.

It is urged by the government that Congress intended to limit the act of 1912 to the refunding of death duties erroneously or illegally assessed under § 29 of the war revenue act. Reference is made to the legislative history of the statute, but the contention lacks adequate support. See House Reports, 62d Cong. 2d Sess., Report No. 848, June 6, 1912. While the pendency of claims for the refunding of such taxes may have induced the passage of the act, its terms were not confined to these. On the contrary, after providing for the claims arising under § 29, Congress added the further clause making express provision for the presentation of claims for the refunding 'of any sums alleged to have been excessive, or in any manner wrongfully collected under the provisions of said act;' and the Secretary of the Treasury is directed to pay to those who duly present...