Under the Act of July 14, 1870, c. 255, § 4, 16 Stat. 257, the
proprietor of friction matches who furnished his own dies was
entitled to a commission of ten percent payable in money upon the
amount of adhesive stamps over $500 which he at any one time
purchased for his own use from the Bureau of Internal Revenue.
Swift Company v. United States, 105 U.
S. 691, considered and affirmed.
A payment made to a public officer in discharge of a fee or tax
illegally exacted
Page 111 U. S. 23
is not such a voluntary payment as will preclude the party from
recovering it back.
A course of business and a periodical settlement between the
Commissioner of Internal Revenue and a regular periodical purchaser
of revenue stamps entitled by statute to commission on his
purchases payable in money, which shows that the Commissioner
asserted and the purchaser accepted that the business should be
conducted upon the basis of payments of the commissions in stamps
at their par value instead of in money, does not preclude the
purchaser from asserting his statutory right, if he had no choice,
and if the only alternative was to submit to an illegal exaction or
discontinue his business.
When the Commissioner of Internal Revenue adopted a rule of
dealing with purchasers of stamps which deprived them of a
statutory right to be paid their commissions in money, and obliged
them to take them in stamps, and made known to those interested
that the rule was adopted and would not be changed, the rule
dispensed with the necessity of proving, in each instance of
complying with it, that the compliance was forced.
In a course of dealing between a regular purchaser through a
series of years of stamps and the Commissioner of Internal Revenue,
where a separate written order was given for each purchase, and the
Commissioner answered each by sending the stamps asked for "in
satisfaction of the order," and where remittances were made from
time to time by the purchaser on a general credit, which the
Commissioner so applied, and where accounts were made and balanced
monthly between the parties, and where in each transaction the
Commissioner withheld from the purchaser a part of the commission
due him by law, the right of action accrued in each transaction as
the commission was withheld, and the statute of limitations in each
case began to run at that time.
This case was heard at October Term, 1881, on a demurrer to the
petition. The judgment of the Court of Claims sustaining the
demurrer was overruled, and the case remanded for a hearing on the
merits,
105 U. S. 105 U.S.
691. The Court of Claims found that the claimants from 1870 to
1878, were manufacturers of matches, furnished their own dies, and
gave bonds for payment of stamps furnished within sixty days after
delivery under the statute. Each order was for stamps of a stated
value. The Commissioner from the commencement held that the amount
allowed by statute was to be computed as commissions upon the
amount of money paid. All business between the parties was
transacted and all accounts stated and adjusted by the accounting
officers on that basis. The manner in which the parties did
business under that ruling is stated below in the opinion of the
Court. The Court of Claims held that the facts
Page 111 U. S. 24
showed an acquiescence by the claimant in the construction of
the statute by the Commissioner, and such repeated settlements and
voluntary acceptances of stamps in payment of their commissions in
lieu of money as to preclude them from recovering, and gave
judgment in favor of the United States. From this judgment the
corporation appealed. On the hearing in this Court, the argument
was on the following points: 1st, whether the former construction
of the statute was correct; 2d, whether the long acquiescence of
the company in the construction given to the statute by the
Commissioner, and its frequent and regular settlement of its
accounts on that basis and acceptance of stamps in lieu of money,
precluded it from disputing the legality of the transactions, and
3d, what was the effect of the failure to protest against the
settlements which it made under the rulings of the
Commissioner.
MR. JUSTICE MATTHEWS delivered the opinion of the Court.
On a former appeal in this case, a judgment of the Court of
Claims dismissing the claimant's petition on demurrer was reversed.
Swift Company v. United States, 105 U.
S. 691. It was then held that the right construction of
the Internal Revenue Acts, Act of July 1, 1862, c. 119, § 102, 12
Stat. 477; Act of March 3, 1863, c. 74, 12 Stat. 714; Act of June
30, 1864, c. 173, 13 Stat. 294, 302; Act of July 14, 1870, c. 255,
§ 4, 16 Stat. 257, required the payment of the commission allowed
to dealers in proprietary articles purchasing stamps made from
their own dies and for their own use to be made in money,
calculated at the rate of ten percent upon the whole amount of
stamps furnished, and not in stamps at their face value calculated
upon the amount of money paid. In response to a suggestion in
argument by the Solicitor General, we now repeat the conclusion
then announced. We had no doubt upon the point at the time; we have
none now. The distinction was then pointed out between the rule
applicable to the sale of
Page 111 U. S. 25
other adhesive stamps and those sold to proprietors of articles
named Schedule C, made from their own dies. In the former, the
Commissioner of Internal Revenue had a discretion to fix the rate
of the commission so as not to exceed five percent, and in
exercising that discretion could make the commission payable in
stamps as an element in the rate itself. As to the latter, no such
discretion was given. The statute fixed the rate of the commission
absolutely. The practice of the bureau confused the two cases and
ignored the distinction between them. We do not perceive how the
substitution of the word "commission" in the act of 1863 for the
word "discount" in the proviso to § 102 of the act of 1862 affects
the question, for the latter obviously refers to a sum to be
deducted from the money paid for the stamps, and not from the
stamps sold, while the former equally denotes a sum to be paid to
the purchaser on a purchase of stamps at par, both being calculated
as a percentage upon the amount of the purchase money, and the
necessary implication as to both being that they are to be paid in
money. However the words in some applications may differ in verbal
meaning, they represent in the transactions contemplated by these
statutes an identical thing.
The present appeal is from a decree rendered in favor of the
United States upon a finding of facts upon issue joined, and
presents two questions: first, whether the course of dealing
between the parties now precludes the appellant from insisting upon
his statutory right to require payment of his commissions in money
instead of stamps, and second whether, if not, part of his claim
did not accrue more than six years before suit brought, so as to be
barred by the statute of limitations.
On the former appeal, we decided that the course of dealing set
forth in the petition, which was admitted by the demurrer, did not
bar the claimant's right to recover, holding that it did not appear
on the face of the petition that the appellant voluntarily accepted
payment of his commissions in stamps at par instead of money, nor
that he was willing to waive his right to be paid in that way, and
that "it would be incumbent on the government, in order to deprive
him of his statutory right not only to show facts from which an
agreement to do so" -- that is,
Page 111 U. S. 26
an agreement to waive his statutory right -- "might be inferred,
but an actual settlement, based upon such an understanding."
The decree brought up by the present appeal proceeds upon the
basis that the facts as found by the Court of Claims establish such
an agreement and such a settlement. The course of dealing found to
exist and to justify this conclusion may be briefly but
sufficiently stated to have been as follows:
The appellant gave the bonds from time to time necessary under
the statute to entitle it to sixty days' credit on its purchases of
stamps. The condition of this bond was that the claimant should, on
or before the tenth day of each month, make a statement of its
account upon a form prescribed by the internal revenue bureau
showing the balance due at the commencement of the month, the
amount of stamps received, the amount of money remitted by it
during the month, and the balance due from it at the close of the
month next preceding, and also that the company should pay all sums
of money it might own the United States for stamps delivered or
forwarded to it according to its request or order, within the time
prescribed for payment for the same according to law -- that is,
for each purchase within sixty days from the delivery of the
stamps.
Each purchase was upon a separate written order, specifying the
amount desired -- for example, $3,000 worth of match stamps. The
Commissioner thereupon forwarded stamps of the face value of
$3,300, with a letter stating that they were in satisfaction of the
order referred to, and enclosing a receipt on a blank form, but
filled up, except date and signature, which was an acknowledgement
of the receipt of the specified amount of stamps in satisfaction of
the order. The receipt was signed by the claimant and returned. The
claimant from time to time made remittances of money in authorized
certificates of deposit, in sums to suit its convenience, for
credit generally, and received in reply an acknowledgment stating
that credit had accordingly been given on the books of the internal
revenue office on account of adhesive stamps -- for instance, by
certificate of deposit, $2,500; commission at ten percent, $250;
total, $2,750, and authorizing the claimant to take credit therefor
on
Page 111 U. S. 27
the prescribed form for the monthly account current. These
accounts were made out by the claimant monthly on blank forms
prescribed and furnished by the Commissioner, in which the United
States were debited with all items of money remitted, and with
commissions calculated on each remittance at ten percent, and
credited with balance from previous month and stamps received on
order in the interval, and with the balance due the United States.
This account way by a memorandum at the foot stated to be correct,
complete, and true, and signed by the claimant. These returns, with
corresponding statements by the Commissioner, were settled and
adjusted by the accounting officers of the Treasury Department
every quarter, and notice of the settlement given to the claimant.
The remittances were so made that while not corresponding to any
particular order for stamps, they nevertheless covered all stamps
the orders for which had been given sixty days or more previously,
so that the claimant was always indebted to the United States for
all stamps received within the past sixty days, but not for any
received more than sixty days previously.
It must be admitted that this course of dealing and periodical
settlement between the parties, whether the accounts be regarded as
running merely or stated, shows clearly enough that the business
was conducted upon the basis that the claimant was to receive his
commissions in stamps at their par value, and not in money, and
that this was asserted by the internal revenue bureau, and accepted
by the appellant. But in estimating the legal effect of this
conduct on the rights of the parties, there are other circumstances
to be considered. It appears that prior to June 30, 1866, the
leading manufacturers of matches, among whom was William H. Swift,
who, upon the organization of the claimant corporation in 1870,
became one of its large stockholders and treasurer, made repeated
protests to the officers of the internal revenue bureau against its
method of computing commissions for proprietary stamps sold to
those who furnish their own dies and designs, although it did not
appear that anyone in behalf of the claimant corporation ever,
after its organization, made any such protest
Page 111 U. S. 28
or objection, or any claim on account thereof, until January 8,
1879. On that date, the appellant caused a letter to be written to
the Commissioner asserting its claim for the amount, afterwards
sued for, as due on account of commissions on stamps purchased. To
this, on January 16, 1879, the Commissioner replied saying that the
appellant had received all commissions upon stamps to which it was
entitled,
"provided the method of computing commissions, which was
inaugurated with the first issue of private-die proprietary stamps
and has been continued by each of my predecessors, is correct. I
have heretofore decided to adhere to the long established practice
of the office in this regard until there shall be some legislation
or a judicial decision to change it."
And the claim was therefore rejected.
From this statement it clearly appears that the internal revenue
bureau had at the beginning deliberately adopted the construction
of the law, upon which it acted through its successive
Commissioners, requiring all persons purchasing such proprietary
stamps to receive their statutory commissions in stamps at their
face value, instead of in money; that it regulated all its forms,
modes of business, receipts, accounts, and returns upon that
interpretation of the law; that it refused, on application, prior
to 1866, and subsequently, to modify its decision; that all who
dealt with it in purchasing these stamps were informed of its
adherence to this ruling, and finally that conformity to it on
their part was made a condition without which they would not be
permitted to purchase stamps at all. This was in effect to say to
the appellant that unless it complied with the exaction, it should
not continue its business, for it could not continue business
without stamps, and it could not purchase stamps except upon the
terms prescribed by the Commissioner of Internal Revenue. The
question is whether the receipts, agreements, accounts, and
settlements made in pursuance of that demand and necessity were
voluntary in such sense as to preclude the appellant from
subsequently insisting on its statutory right.
We cannot hesitate to answer that question in the negative. The
parties were not on equal terms. The appellant had no
Page 111 U. S. 29
choice. The only alternative was to submit to an illegal
exaction or discontinue its business. It was in the power of the
officers of the law, and could only do as they required. Money paid
or other value parted with under such pressure has never been
regarded as a voluntary act within the meaning of the maxim
volenti non fit injuria.
In
Closs v. Phipps, 7 M. & Gr. 586, which was a
case of money paid in excess of what was due in order to prevent a
threatened sale of mortgaged property, Tindal, C.J., said:
"The interest of the plaintiff to prevent the sale by submitting
to the demand was so great that it may well be said the payment was
made under what the law calls a species of duress."
And in
Parker v. Great Western Ry. Co., 7 M. & Gr.
252, the wholesome principle was recognized that payments made to a
common carrier to induce it to do what by law without them it was
bound to do was not voluntary, and might be recovered back. Illegal
interest, paid as a condition to redeem a pawn, was held in
Astley v. Reynolds, 2 Stra. 915, to be a payment by
compulsion. This case was followed, after a satisfactory review of
the authorities, in
Tutt v. Ide, 3 Blatchf. 249, and in
Ogden v. Maxwell, 3 Blatchf. 319, it was held that illegal
fees exacted by a collector, though sanctioned by a long continued
usage and practice in the office under a mistaken construction of
the statute, even when paid without protest, might be recovered
back on the ground that the payment was compulsory and not
voluntary. And in
Maxwell v.
Griswold, 10 How. 242,
51 U. S. 256,
it was said by this Court:
"Now it can hardly be meant in this class of cases that to make
a payment involuntary, it should be by actual violence or any
physical duress. It suffices if the payment is caused on the one
part by an illegal demand, and made on the other part reluctantly,
and in consequence of that illegality, and without being able to
regain possession of his property except by submitting to the
payment. To the same effect are the
American Steamship Company
v. Young, 89 Penn.St. 186;
Cunningham v. Munroe, 15
Gray 471;
Carew v. Rutherford, 106 Mass. 1;
Preston v.
Boston, 12 Pick. 7. In
Beckwith v. Frisbie, 32 Vt.
559, 566, it was said: 'To make the payment a voluntary, one the
parties
Page 111 U. S. 30
should stand upon an equal footing.' If a person illegally
claims a fee
colore officii, the payment is not voluntary
so as to preclude the party from recovering it back.
Morgan v.
Palmer, 2 B. & C. 729. In
Steele v. Williams, 8
Exch. 625, Martin, B. said:"
"If a statute prescribes certain fees for certain services and a
party assuming to act under it insists upon having more, the
payment cannot be said to be voluntary."
"The common principle," says Mr. Pollock, Principles of
Contract, 523,
"is that if a man chooses to give away his money, or to take his
chances, whether he is giving it away or not, he cannot afterwards
change his mind, but it is open to him to show that he supposed the
facts to be otherwise, or that he really had no choice."
Addison on Contracts *1043;
Alston v. Durant, 2 Strobh.
257.
No formal protest, made at the time, is by statute a condition
to the present right of action, as in cases of action against the
collector to recover back taxes illegally exacted, and the protests
spoken of in the findings of the Court of Claims as having been
made prior to 1866 by manufacturers of matches and others requiring
such stamps are of no significance except as a circumstance to show
that the course of dealing prescribed by the Commissioner had been
deliberately adopted, had been made known to those interested, and
would not be changed on further application, and that consequently
the business was transacted upon that footing because it is well
known and perfectly understood that it could not be transacted upon
any other. A rule of that character, deliberately adopted and made
known and continuously acted upon, dispenses with the necessity of
proving in each instance of conformity that the compliance was
coerced. This principle was recognized and acted upon in
United
States v. Lee, 106 U. S. 196,
106 U. S. 200,
where it was held that the officers of the law, having established
and acted upon a rule that payment would be received only in a
particular mode, contrary to law, dispensed with the necessity of
an offer to pay in any other mode, and the party thus precluded
from exercising his legal right was held to be in as good condition
as if he had taken the steps necessary by law to secure his right.
For these reasons, we are of opinion that the Court of Claims
Page 111 U. S. 31
erred in rendering its judgment dismissing the appellant's
petition and thus disallowing his entire claim. But we are also of
opinion that he is not entitled to recover for so much of it as
accrued more than six years before the bringing of his, suit. There
was nothing in the nature of the business nor in the mode in which
it was conducted nor in the accounts it required that prevented a
suit from being brought, for the amount of commissions withheld, in
each instance as it occurred and was ascertained. The recovery must
therefore be limited to the amount accruing during the six years
next preceding November 21, 1878, which, according to the findings
of the Court of Claims, is $28,616, and for that amount judgment
should have been rendered by the court in favor of the
appellant.
The judgment of the Court of Claims is therefore reversed
and the cause remanded with directions to render judgment in favor
of the appellant in accordance with this opinion.