In re Tyler
149 U.S. 164 (1893)

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U.S. Supreme Court

In re Tyler, 149 U.S. 164 (1893)

In re Tyler

No. 17 Original

Argued April 4, 1893

Decided April 24, 1893

149 U.S. 164

Syllabus

Property within a state which is in the possession of a receiver by virtue of his appointment as such by a circuit court of the United States is not subject to seizure and levy under process issuing from a court of the state to enforce the collection of a tax assessed upon its owner under the laws of the state.

The exclusive remedy of the state tax collector in such case is in the circuit court which appointed the receiver, where the question of the validity of the tax may be heard and determined and where the priority of payment of such amount as may be found to be due which is granted by the laws of the state will be recognized and enforced.

The writ of habeas corpus is not to be used to perform the office of a writ of error, or of an appeal.

When no writ of error or appeal will lie, if a petitioner for a writ of habeas corpus be imprisoned under a judgment of a circuit court which had no jurisdiction of the person or of the subject matter or authority to render the judgment complained of, then relief may be accorded by writ of habeas corpus.

This is a petition for a writ of habeas corpus, filed by leave of court March 7, 1893, by M. V. Tyler, Sheriff of the County

Page 149 U. S. 165

of Aiken, South Carolina, representing that he is unjustly detained by G. I. Cunningham, United States Marshal for the District of South Carolina, to which the marshal made return upon a rule laid upon him to do so. The facts appearing from the petition, return, and accompanying documents are as follows:

On December 5, 1889, in the case of Bound v. The South Carolina Railway Company, Daniel H. Chamberlain was appointed receiver of the railway company by an order of the Circuit Court of the United States for the District of South Carolina, with the usual powers of receivers in such cases, and all of the property of the company was placed under his care and management, and protected by injunction. On March 7, 1892, the receiver filed a bill in equity in that court against the treasurers and sheriffs, eighteen in number, in the counties through which the railroad in his possession passed, alleging that the treasurers were about to issue tax executions, and the sheriffs about to levy and seize thereunder property of the railroad company for the taxes for the fiscal year beginning November 1, 1890. The bill alleged that the taxes for that fiscal year were unconstitutional and illegal in part upon various grounds set forth therein in detail and involving an alleged wrongful and illegal raising of the valuation by the state board of equalization; that the levy and sale of the road would cause irreparable injury, preventing the receiver from carrying on the business of the railroad as a common carrier; that there was no adequate remedy at law; that a multiplicity of suits would be necessary to protect his rights if he sued at law, and that the levy would cast a cloud upon the property, and prayed for an injunction against the issue and levy of the tax warrants in question. The bill further set forth that the receiver had tendered without condition the taxes admitted to be due, and that the same had been refused by the county treasurers, but pending the motion for preliminary injunction the defendants were permitted to waive this refusal and receive the amounts tendered, which was accordingly done. On April 8, 1892, the court, after full hearing, issued the injunction prayed for, and, the defendants having answered, it was provided by order of

Page 149 U. S. 166

court that the testimony should be taken in due course in time for final hearing at the November term, 1893.

For the fiscal year beginning November 1, 1891, the receiver made a return of the property for taxes as provided by law similar to the return he had made the year previous and, the state board of equalization having again proceeded in the matter of the assessment and valuation as before, the receiver again tendered the taxes calculated on the valuation as returned, and not upon the valuation as assessed. The amounts so tendered were received, but tax executions or warrants were issued by the county treasurers for the difference between the return and the assessment, and on February 4, 1893, levy was made by Tyler, Sheriff of Aiken County, upon property in the hands of the receiver at Aiken. There were apparently two warrants, one for $1,215.14 and the other for $466.40, and the value of the property levied on was $9,500. That property consisted of fourteen freight cars, five belonging to the South Carolina Railway, one to another South Carolina company, and eight to various railroad companies of other states. All of the cars were marked with the initials of the corporations to which they belonged, and most of them with the names of the owners in full. Eight of the cars were loaded with merchandise belonging to shippers. The cars were chained to the track of the South Carolina Railway Company alongside of the only freight depot of the company in Aiken, and effectively stopped traffic through that depot for a period of twelve days. On Monday, February 6, 1893, the receiver filed his petition in the circuit court of the United States, alleging the illegality of the taxes for which the warrants were issued, in substantially the same terms as in the bill of the year before, and setting forth that he had paid the taxes admitted to be due; that the court in the previous case had decided a tax in all respects similar to be illegal, and after disclaiming any intention to delay or escape the payment of the taxes due, and alleging that he was only doing his duty as an officer of the court, prayed that the treasurer and sheriff be enjoined from interfering with the property in the receiver's charge, and be committed for contempt for levying upon property in the

Page 149 U. S. 167

custody of the court. The court issued a restraining order and a rule to show cause, returnable at Charleston on February 20, 1893, as follows:

"Ordered, that an order do forthwith issue and be served upon said MacMitchell and M. V. Tyler requiring, them to show cause before me on the 20th day of February, 1893 at 10 o'clock A.M. at the United States courthouse, Charleston, South Carolina, why they should not be attached and punished as prayed for."

"2. That the said MacMitchell and M. V. Tyler do likewise show cause before me at the same time and place why they should not be enjoined and restrained from interfering with any or all of the property of the said South Carolina Railway Company or other property in the possession and control of the said D. H. Chamberlain as receiver and officer of this court, or from interfering in any manner whatsoever with the officers and agents of the said receiver, and also from levying upon, advertising, or selling or in any manner whatsoever attempting to dispose of the said property."

"3. That the said MacMitchell and M. V. Tyler do likewise, in due course, file an answer, if any, why such further relief as may be necessary should not be granted in the premises."

"4. In the meantime, it is ordered that the said MacMitchell and M. V. Tyler be, and they are hereby, restrained and enjoined from levying upon, seizing, advertising, or selling or in any manner whatsoever endeavoring to interfere with or to dispose of the said property in the possession of the said D. H. Chamberlain as receiver of this Court until the hearing of the rule and the order of this Court thereon."

"5. That a copy of the petition and order herein be forthwith served upon the said MacMitchell and M. V. Tyler."

On February 8, a supplemental petition was filed by the receiver reciting the filing of the original petition, the order thereon, and the service of copies of said petition and order, and stating that the sheriff refused to comply with a written demand, on February 7, for the release of the property from his custody.

Accompanying this supplemental petition were affidavits

Page 149 U. S. 168

stating the facts in detail, whereupon the order of February 6th was so modified as to require the respondents to show cause on February 11, 1893, instead of February 20.

The respondents answered the petitions on February 12, denying any unlawfulness in the assessment and admitting that the property was in the possession of the court, but denied that such possession exempted the same from process of law for the collection of taxes by the state. They admitted the levy upon the cars, but denied any knowledge or information sufficient to form a belief that any of them belonged to corporations other than the South Carolina Railway, and denied that the levy seriously interfered with the receiver or the public in doing business over said road. They further denied that the facts stated in the original and supplemental petitions, if true, were sufficient to constitute a contempt of court, and insisted upon various matters, afterwards again set forth in the application for habeas corpus.

They asserted the legality and regularity of the warrants for the collection of the taxes, and that the levy was made in obedience thereto, and submitted that they were acting under the laws of South Carolina, as the officers and agents of the state,

"and as such engaged in the performance of their duties in issuing the said execution, in making the said levies, and in retaining possession of the property so levied upon, under the valid, constitutional laws of the said state, and that if said petitioners have any controversy with anyone in regard thereto, it is a controversy with the State of South Carolina, which is no way a party to these proceedings, and that there can be no controversy with the respondents in this regard unless they were acting without the commission and warrant of the State of South Carolina, and were trespassers, which they deny,"

and finally they disclaimed

"any intention to treat this court or its orders with disrespect, and state that they have been actuated alone with a desire to discharge their official duties as officers of the State of South Carolina."

This return was accompanied by a large number of affidavits tending to show the legality of the tax complained of.

A hearing having been had, the circuit court delivered its

Page 149 U. S. 169

opinion, stating the facts briefly and holding that the interference by the court by injunction was justified on the ground of excessive levy, and on the ground of the taking of property other than the property of the alleged taxpayer, but further that while property in the hands of a receiver of any court, either state or national, was bound for the payment of taxes -- state, county, or municipal -- yet that a receiver is not bound to pay taxes in his judgment unlawful unless by the order of the court whose officer he is, and that in the present proceeding, it was not competent for the court to go into the question of whether the tax was or was not illegal. The circuit court thereupon entered severally the following orders:

"This cause came on to be heard on petition, rules to show cause, return thereto, and affidavits, and on hearing the same, and upon due consideration thereof, it is"

"Ordered, adjudged, and decreed that an injunction do issue to M. V. Tyler, Sheriff of Aiken County, his deputies and agents, enjoining and restraining them from further intermeddling, interfering with, keeping, and holding the personal property distrained upon by him, belonging to the petitioner, as receiver of the South Carolina Railway Company, or in his care and custody as receiver and common carrier, and that this injunction remain of force until the further order of this Court."

"It is further ordered that the said property be restored to the custody of the receiver of this Court, and that the marshal put him in possession thereof."

"M. V. Tyler, Sheriff of Aiken County, having been served with two rules to show cause why he be not attached for contempt for the matters set forth in copy of petition to each rule attached, and sufficient cause not having been shown, and it further appearing that he, notwithstanding, continues to hold and detain said property, we adopt the precedent set in In re Chiles, 22 Wall. 157, by the Supreme Court of the United States."

"It is ordered, adjudged, and decreed that he is in contempt of this Court, and of its orders and process."

"It is further ordered that he do pay a fine of five hundred

Page 149 U. S. 170

dollars, and that the clerk of this court shall enter judgment thereon, and issue execution therefor, and that he also stand committed to the custody of the marshal of this court until he has paid said fine or purged himself of his contempt herein."

Among other averments in the petition for the writ of habeas corpus, it was alleged that by an Act of the General Assembly of South Carolina (No. 631), approved March 19, 1874, 15 S.C.Stat. 789, it is provided that in all cases where it is claimed that taxes have been erroneously or illegally charged upon taxable property within the state, the person so claiming may, by petition, submit a full statement of the facts in the case, and the Comptroller General may make such abatement thereof as in his judgment the same may demand, and that such relief so granted in cases for erroneous charges as aforesaid has not been sought by the receiver or the railroad company; that by the statutes of the state, it is also provided that the collection of taxes shall not be stayed or prevented by any injunction, writ, or order issued by any court, or judge thereof, Gen.Stats.C.C. sec. 171, and that in all cases where taxes are charged against any person, which he may conceive to be unjust or illegal for any cause, he shall pay the taxes notwithstanding, under protest, and upon such payment's being made, the person so paying may, within a time limited, by action against the county treasurer, recover such taxes as may in such suit be adjudged to have been wrongfully or illegally collected. It was further averred that by the Act of Congress approved March 3, 1887, and amended by the Act of August 13, 1888, the receiver appointed in this case was required to manage and operate the property situated in South Carolina according to the requirements of the valid laws of that state, in the same manner as if in possession of the owner thereof, and petitioner insisted that the action of the circuit court in appointing a receiver did not change the title or possession of the property or its relation to the sovereign power of the state to tax it, and was subject in like manner as the property would have been subject had it remained in the hands of its owners. Petitioner also referred to an Act of the

Page 149 U. S. 171

Legislature of South Carolina approved December 24, 1892, Acts S.C. 1892, p. 81, which provided that the assessment of property for taxation should be deemed and held to be a step in the collection of taxes; that certain enumerated sections of the General Statutes, thereby declared to be in full force and effect, should be construed to mean as giving full and complete power to the county auditor, independent of any rights conferred on county boards of assessors or other officers, in the matter of securing a full and complete return of property for taxation in all cases, and that the action of the auditor under those sections should not be interfered with by any court of this state by mandamus, summary process, or any other proceeding, but that the taxpayer should have the right to pay his tax on such return under protest, as now provided by law. Petitioner therefore insisted that an adequate remedy at law was given the taxpayer for unjust and excessive taxation, and that it was not competent for a court of the United States to grant the injunction in this case, any more than it would have been for a court of the state; that the receiver's possession is that of the court, only for the parties litigant in the suit, and to the extent only of the power to subject the property to the rights of suitors, subject to the paramount right of the state to tax the property according to its own laws; that the railway company was a citizen of South Carolina, and hence that the receiver, as plaintiff in his petition, represented a citizen of South Carolina, and proceeded against the petitioner, Tyler, who was also a citizen of that state; that the amount involved was less than gives jurisdiction to the circuit courts of the United States; that on the grounds indicated, the court had no jurisdiction, and its order was void, and that therefore the order of commitment and fine was void. In conclusion petitioner insisted:

"1st. That the injunction proceeding by the receiver is a suit against the State of South Carolina; that to enjoin the functionary is to forbid the function of the state to tax by its own laws, and fix and assess its amount by its own procedure, and that your petitioner, as the officer charged with this state function, is sued by the receiver, which is in fact a suit against

Page 149 U. S. 172

the state, and contrary to the Eleventh Amendment of the Constitution of the United States."

"2d. That under the laws of the United States and of the state, the remedy of the owner or taxpayer is ample by proceeding at law, and he can have none in equity, which is denied by the statute of the state, and on general principles of equity practice, and that the exigency which induced the appointment of a receiver does not in any respect change the legal aspect of the case, but makes the order of the court of the United States illegal, void, and without jurisdiction."

"3. That to fine and imprison your petitioner for action as a legal officer under and according to the valid laws of South Carolina is to deny the authority of the state itself by making it impossible for the state to execute its laws by agents, except under penalties which the United States courts cannot impose as an obstruction to the functions of the state itself."

"Wherefore your petitioner insists that he is held in custody against law and contrary to the Constitution of the United States, the supreme law of the land. "

Page 149 U. S. 180

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