At a trial by jury in a court of the United States, the judge
may express to the jury his opinion upon questions of fact which he
submits to their determination.
A claim of the United States against a railroad corporation for
taxes on undivided profits during a certain period was, after full
examination of the books of the corporation by officers of the
government and argument before the assessor of internal revenue for
the district, settled and adjusted by agreement between the
assessor and the corporation at a certain sum, which the
corporation paid and took the collector's receipt for. Nearly
twelve years afterwards, an internal revenue agent made another
examination of the books of the corporation, resulting, as he
testified, in charging it with a further sum for taxes during the
same period. In a suit to recover this sum, the judge, in charging
the jury, told them that the first assessment, the payment of money
in pursuance of it, and the acquiescence of the government for so
long a time since, raised a presumption that the assessment was
correct, and that the money paid covered the defendant's entire
liability; that the burden was thus cast upon the government of
proving, by such evidence as to fully satisfy the mind, that the
assessment was erroneous; that whether it had done so was for the
jury to determine, and that the judge did not desire to control
their finding, but was of opinion that under the circumstances they
should not return a verdict for the government.
Held, no
error.
Assumpsit for internal revenue taxes. Plea, "nonassumpsit,
payment and setoff, with leave &c." Verdict and judgment for
the defendant. The United States excepted to the judge's charge to
the jury and sued out this writ of error. The case is stated in the
opinion.
Page 123 U. S. 114
MR. JUSTICE GRAY delivered the opinion of the Court.
Trial by jury in the courts of the United States is a trial
presided over by a judge, with authority not only to rule upon
objections to evidence and to instruct the jury upon the law, but
also, when in his judgment the due administration of justice
requires it, to aid the jury by explaining and commenting upon the
testimony, and even giving them his opinion upon questions of fact,
provided only he submits those questions to their determination.
Vicksburg & Meridian Railroad v. Putnam, 118 U.
S. 545;
St. Louis &c. Railway v. Vickers,
122 U. S. 360. The
judge who presided at the trial of this action did not exceed his
rightful power in this respect.
The action was brought by the United States against a railroad
corporation to recover $40,844.19 for unpaid taxes on undivided
profits from June 30, 1864, to November 30, 1867, under the
Internal Revenue Act of June 30, 1864, c. 173, ยง 122, as amended by
the Act of July 13, 1866, c. 184. 13 Stat. 284; 14 Stat. 138. The
trial proceeded upon the rule established by previous decisions of
this Court that an assessment is not required by the act nor, if
made, conclusive upon either party, and that in an action to
recover the tax, the controlling question is not what has been
assessed, but what is by law due.
Savings
Bank v. United States, 19 Wall. 227;
Clinkenbeard v. United
States, 21 Wall. 65.
The president of the corporation testified that in 1868, the
United States made a demand upon the company for some $350,000
alleged to be due for such taxes for the same period; that the
company resisted the demand, and through him as its counsel
contended that it had already paid more than was due, and was
entitled to a considerable credit for items really belonging to
construction, though charged to income in the form in which its
accounts were made up; that the company opened all its books to the
officers of the government, and after full investigation by them
and arguments in behalf of both parties before the assessor of
internal revenue for the district, occupying several weeks, the
officers of the company and the assessor agreed upon a settlement
and adjustment of the demand for
Page 123 U. S. 115
the sum of $39,797.61, which the company thereupon paid, and for
which it took the following receipt:
"United States Internal Revenue, Collector's Office"
"District of Pennsylvania, July 28, 1868"
"Received of Philadelphia & Reading R.R. Co. forty-one
thousand eight hundred & seven 61/100 dollars, for excise tax
on --"
Gross receipts . . . . . . . . . . . $ 2,010.00
Profits over dividends . . . . . . . 39,797.61
----------
Total . . . . . . . . . . . . . . $41,807.61
"May, 1868, being amount assessed on June list for July 1, 1864,
to November 30, 1867."
JOSEPH G. KLINE, Deputy Collector
The only witness called by the United States was an internal
revenue agent who testified that in November, 1879, he examined the
defendant's books and accounts, the defendant giving him every
facility that he desired, and that the result of his examination
showed that the gross amount of the tax for the period in question
was $85,532.60, and that, deducting an overpayment of $4,890.80 in
1869 on the "renewal fund" (which the Commissioner of Internal
Revenue had since held not to be taxable) and deducting also the
payment of $39,797.61 in 1868, there was $40,844.19 still due; that
he made up the gross amount by charging the company with the total
receipts from its road, and with rent received from another
corporation, and crediting it with all the working expenses, the
"renewal fund," interest paid on mortgages of real estate and on
bonded debt, dividends paid to stockholders, and the United States
tax, and the state tax on such dividends, and that he did not know
how the sum of $39,797.61 was made up.
In the course of a long examination and cross-examination, he
testified that he made no allowance for interest paid by the
company on its funded debt, and that by his mode of statement, the
company was taxed upon every dollar expended for interest, even if
some of that interest was exempt from taxation; that when the
company paid a dividend to stockholders, and assumed the payment of
the government tax on
Page 123 U. S. 116
the dividend, he computed the dividend tax upon the whole
dividend declared, and not merely upon the amount actually paid to
the stockholders; that the fiscal year of the company ended with
November 30th, and that, in computing the tax for the five months
from June 30 to November 30, 1864, he credited the company with
five-twelfths only of the "renewal fund" for the year ending
November 30, 1864, and of the United States tax and the state tax
on dividends, and of the annual dividend estimated as aforesaid,
although, before June 30, 1864, there was no tax on surplus
profits, and money spent in construction was not taxable.
Each of these points was contested by the defendant. It is not
pretended that any of them has been determined by judicial
decision, and it might well be inferred that they had all been
taken into consideration in the settlement between the assessor and
the company in 1868. The bill of exceptions further states that the
government offered in evidence "all the books of the Philadelphia
& Reading Railroad Company referred to, as well as the
statements and reports, and closed." But it contains no description
of those books, statements, and reports, except as they are
mentioned in the testimony of the internal revenue agent.
Such being the case on trial, the judge, in charging the jury,
and referring them to the testimony given before them by the
president of the company on the one said and by the witness for the
government on the other, might justly and properly say to them, as
he did:
"From the assessment made by the government's officer in 1868,
the payment of the money in pursuance of it, and the acquiescence
of the government in what thus done for so long a period -- nearly
twelve years -- a presumption arises that the assessment then made
was correct, and that the money paid covered the defendant's entire
liability for taxes upon surplus earnings between the periods
embraced. The burden is thus cast upon the plaintiff to repel the
presumption by evidence that the assessment was erroneous, and in
view of the circumstances, the evidence should be such as to
satisfy the mind fully in this respect. Whether the government has
proved mistake by the testimony
Page 123 U. S. 117
of the witness referred to (there is no other testimony tending
to prove it) is for you to determine. In submitting this question,
it is proper to say that in the judgment of the court, it would be
unsafe and therefore unjust to find error in the assessment and
settlement under the evidence before you, and consequently to
render a verdict against the defendant for the large sum of money
claimed, as the plaintiff asks you to do. In other words, while the
court does not desire to control your finding, but submits the
question to you, it is of opinion that you should not, under the
circumstances, find for the plaintiff."
Judgment affirmed.