United States v. Stone Downer Co

• Decision Date: 16 May 1927
• Docket Number: No. 150,150
• Citation: 274 U.S. 225,47 S.Ct. 616,71 L.Ed. 1013
• Parties: UNITED STATES v. STONE & DOWNER CO. et al
• Court: U.S. Supreme Court

274 U.S. 225

47 S.Ct. 616

71 L.Ed. 1013

UNITED STATES

v STONE & DOWNER CO. et al.

No. 150.

Argued Feb. 24, 1927.

Decided May 16, 1927.

[Argument of Counsel from pages 225-227 intentionally omitted] The Attorney General and Mr. William W. Hoppin, of New York City, for the United States.

Mr. Edward P. Sharretts, of New York City, for respondent.

[Argument of Counsel from pages 227-229 intentionally omitted] Mr. Chief Justice TAFT delivered the opinion of the Court.

This is a proceeding by certiorari to review the judgment of the Court of Customs Appeals in the classification for duty of thirteen importations of wool in the fleece and in the yarn. 12 Ct. Cust. App. 557. The certiorari was granted by this court October 12, 1925, 269 U. S. 542, 46 S. Ct. 20, 70 L. Ed. 402; a certificate of importance by the Attorney General under section 195 of the Judicial Code, as amended by Act Aug. 22, 1914, c. 267, 38 Stat. 703 (Comp. St. § 1186), having been filed in the Court of Customs Appeals before the case was decided in that court.

A similar case between the same parties, involving the same questions and importations of similar merchandise was decided adversely to the government by the Court of Customs Appeals on November 17, 1923. Stone &amp Downer Co. v. United States, 12 Ct. Cust. App. 62, 45 Treasury Decisions, 167, T. D. 40019. In that case, however, there was no certificate of importance filed by the Attorney General, and no application was made for a writ of certiorari.

The case as now presented to this court involves two questions.

First. Is the judgment of the Court of Customs Appeals in November, 1923, involving the same customs classification an estoppel by res judicata against the government?

Second. If it does not so operate, was the Court of Customs Appeals right in holding that 12 of the 13 importations herein are entitled to come in as wool of the sheep under the Tariff Act of October 3, 1913 (c. 16, 38 Stat. 114), and not as clothing wool under paragraphs 18 and 19 of the Emergency Tariff Act of May 27, 1921 (c. 14, 42 Stat. 9, 10)?

First Question. It is settled in this court that the general rule by which a judgment estops the parties, in future litigation between them, to question either a fact or a point of law necessary to the first judgment and adjudicated therein, applies to cases of taxation as well as to other subjects of litigation. This was decided in the case of New Orleans v. Citizens' Bank, 167 U. S. 371, 17 S. Ct. 905, 42 L. Ed. 202. That was a tax suit, and the issue was whether the judgment of a court of competent jurisdiction in holding that the Citizens' Bank had exemption by contract from certain taxation was res judicata, and estopped the city from attempting to enforce subsequent taxes contrary to the same exemption. The court, through Mr. Justice White, said (page 396 (17 S. Ct. 913)):

'The proposition that because a suit for a tax of one year is a different demand from the suit for a tax for another, therefore res judicata can not apply, whilst admitting in form the principle of the things adjudged, in reality substantially denies and destroys it. The estoppel resulting from the thing adjudged does not depend upon whether there is the same demand in both cases, but exists, even although there be different demands, when the question upon which the recovery of the second demand depends has under identical circumstances and conditions been previously concluded by a judgment between the parties of their privies.'

This is not the rule in a number of the states. City of Newport v. Commonwealth, 106 Ky. 434, 50 S. W. 845, 51 S. W. 433, 45 L. R. A. 518; Louisville Bridge Co. v. City of Louisville, 81 Ky. 189; Bank v. Memphis, 101 Tenn. 154, 46 S. W. 557; State v. Bank, 95 Tenn. 221, 231, 31 S. W. 993; Georgia Railroad & Banking Co. v. Wright, 124 Ga. 596, 603, 53 S. E. 251; Michigan Southern, etc., R. R. v. People, 9 Mich. 448, 450; L. S. & M. S. R. R. v. People, 46 Mich. 193, 208, 9 N. W. 249; C., B. & Q. R. R. v. Cass County, 72 Neb. 489, 491, 101 N. W. 11, 117 Am. St. Rep. 806; Adams v. Yazoo & Miss. R. R., 77 Miss. 194, 266, 24 So. 200, 317, 28 So. 956, 60 L. R. A. 33; State v. American Sugar Refining Co., 108 La. 603, 32 So. 965. Judge Cooley in his work on Taxation (8th Ed.) says at pages 2648, 2649, that the state courts, differing from this court, do not generally regard an adjudication as to taxes for one year as making the decision of the supporting points res judicata for the following years.

We have held that where, in a federal court, a judgment of a state court in a tax case is pleaded in a subsequent tax case arising in a federal court, the estoppel from the judgment of the state court will not be given greater effect that it would have in the state court, and that a judgment not operating as res judicata in suits for taxes for another year in the state court will not be an estoppel in a federal court for subsequent years. Phoenix Fire & Marine Insurance Co. v. Tennessee, 161 U. S. 174, 16 S. Ct. 471, 40 L. Ed. 660; Covington v. First National Bank of Covington, 198 U. S. 100, 25 S. Ct. 562, 49 L. Ed. 963.

The question here differs from that presented in ordinary tax suits, and involves the effect of an adjudication of a peculiar character. Prior to the passage of the McKinley Tariff Administrative Act, approved June 10, 1890 (26 Stat. 131, 136, c. 407, § 12 (Comp. St. § 5593)), litigation over the collection of duties and the classification of importations under tariff acts was carried on by suits against the collectors who imposed the duties and was in the form of an action against the collecting official as an individual. After the judgment was obtained, the collecting officer was relieved from personal obligation and the judgment was paid from the Treasury of the United States. See Rev. Stat. U. S. §§ 3009-3014. In 1890 new machinery was introduced, by which a board of nine general appraisers was created, which, sitting in divisions of three, constituted in a sense administrative courts of appeals to pass on questions of classification and the imposition of duties, and appeals were allowed from it to the proper Circuit Court of the United States, whence upon an allowance of an appeal by the Circuit Court, the cases came to this court. By the Act of 1891, creating Circuit Courts of Appeals (26 Stat. 826, c. 517, § 6), these cases went by appeal to those courts, and then by certiorari to this court. By the Tariff Act of August 5, 1909 (36 Stat. 11, 105, § 29), another change was made, by which appeals from the decisions of the Board of General Appraisers were allowed to a new court created by the act, called the Court of Customs Appeals, and by that act the whole question of classification and refunding of duties was taken out of the jurisdiction of the legular federal judiciary. The classification by the Court of Customs Appeals was made final, and no appeal was granted to this court. This independent plan for the settlement of tariff questions and the complete finality of the decisions of the Court of Customs Appeals in that field of litigation lasted until August, 1914, when by the Act of August 22 of that year (38 Stat. 703, c. 267) a limited review by writ of certiorari was given to this court of judgments of the Court of Customs Appeals in cases in which the construction of the Constitution or any part thereof, or any treaty made pursuant thereto, was drawn in question, and in any other case when the Attorney General of the United States should, before the decision of the Court of Customs Appeals was rendered, file with the court a certificate that the case was of such importance as to render expedient its review by this court. For five years, however, the Board of General Appraisers and the Court of Customs Appeals between them exercised complete jurisdiction in the construction of tariff acts and the determination of the amount due as duties from every importation coming into the country. By the Act of 1909 (36 Stat. 105) the court was given power 'to establish all rules all regulations for the conduct of the business of the court and as may be needful for the uniformity of decisions within its jurisdiction as conferred by law.' It was by the law to exercise exclusive appellate jurisdiction in all cases as to the construction of the law and the facts respecting the classification of merchandise and the rate of duty imposed thereon under such classification, and the fees and charges connected therewith and all appealable questions to the jurisdiction of the Board of General Appraisers and all appealable questions as to the laws and regulations governing the collection of the customs revenues, and the judgment or decrees of said Court of Customs Appeals were made final in all such cases. Page 106. It was thus for five years put in a position where in must not only make its own rules, but it must determine, as a practical matter, what should be the conclusive effect of its own judgments in the determination of questions of fact and statutory construction and classification in subsequent cases brought before them by the same parties and presenting similar issues. In the exercise of this jurisdiction, it established the practice that the finding of fact and the construction of the statute and classification thereunder as against an importer was not res judicata in respect of a subsequent importation involving the same issue of fact and the same question of law.

In Beuttell & Sons v. United States, 8 Ct. Cust. App. 409, the question was whether machine-made Wilton rugs were dutiable under paragraph 300 of Schedule K of the Tariff Act of 1913, or under paragraph 294, by virtue of paragraph 303 of that act (Comp. St. § 5291). In delivering the opinion of the court Judge Barber, who has been a member of the court since its organization in 1909, used this language:

'At the outset it should be noted that the precise issue here has been before and...