When the highest court of a state, in rendering judgment,
decides a federal question and also decides against the plaintiff
in error upon an independent ground not involving a federal
question, and broad enough to support the judgment, this Court will
dismiss the writ of error without considering the federal
question.
A statute of a state imposed a tax upon the gross earnings of
railroad companies and provided that the tax upon a leased railroad
should be paid by the lessee and deducted from the rent. A lessee
paid the tax upon the railroad of its lessor, and deducted it from
the rent, and was sued in equity by the lessor for the rent,
without deduction for the tax. The highest court of the state gave
judgment for the lessee and held that the statute, so far as it
imposed a tax upon gross earnings derived from interstate commerce,
was contrary to the Constitution of the United States, but that the
provision for the payment of the tax by the lessee and its
deduction from the rent was constitutional, and further held,
independently of the question of constitutionality, that as between
the lessor and the lessee, it was the duty of the lessor to pay the
tax; that the lessee having been compelled by law to make the
payment to discharge an obligation of the lessor, the law implied a
promise to repay; that the lessor having made no suggestion that
the statute was unconstitutional, and no offer to indemnify the
lessee, the lessee could not, in prudence, do otherwise than pay
the tax, and was under no duty to incur the expense, delay and
perils of litigation to test the constitutionality of the statute,
and that the lessor, in a court of equity, could not have relief
for what, as between the parties, itself should have done, and
what, by its own lathes it had suffered to be done, professedly in
its behalf, by the lessee.
Held that this Court had no
jurisdiction to review the judgment.
These were two writs of error to review decrees of the court of
chancery for the County of Franklin and State of
Page 159 U. S. 631
Vermont denying, in accordance with mandates of the supreme
court of the state, the right of the Rutland Railroad Company,
which had leased its railroad to the Central Vermont Railroad
Company, to recover the amount of taxes assessed upon the gross
earnings of that railroad under the laws of the state, and paid by
the Central Vermont Railroad Company, and by it deducted from the
rent due to the Rutland Railroad Company under the lease. The case
appeared by the record to be as follows:
On December 30, 1870, the Rutland Railroad Company leased its
road, including a branch known as the Addison Railroad, for twenty
years, to the receivers of the Vermont Central and Vermont and
Canada Railroad Companies at a fixed rent, payable semiannually. On
June 21, 1873, the Central Vermont Railroad Company became the
receiver of the Vermont Central and the Vermont and Canada Railroad
Companies, and took possession of the Rutland Railroad under the
lease. Disputes arose between the parties, and on February 23,
1876, they made an agreement in writing, modifying the lease, and
by which the rent was made payable monthly, and was to be a certain
proportion of the gross earnings, which the lessee guaranteed
should be not less that $250,000 a year. Neither of the contracts
contained any provision for the payment of taxes.
Under the statutes of Vermont of 1874 and 1876, railroads were
taxed by the mile in the towns through which they passed, and the
Supreme Court of Vermont, at January term, 1878, in Rutland County,
in a case between these parties, not reported, but stated in the
opinion of the court below in this case, held that the lessor, and
not the lessee, was bound to pay such taxes.
See 63 Vt.
12, 25-26.
On November 28, 1882, the Legislature of Vermont passed a
statute entitled "An act to provide a revenue for the payment of
state expenses" which repealed all former statutes taxing the
property of railroad companies and required them to pay to the
state a tax of a certain proportion of their gross earnings, and
provided that the lessee of a railroad should pay this tax, and
might deduct the amount from any payments
Page 159 U. S. 632
due to lessor. The material provisions of this statute are
copied in the margin.
*
As required by this statute, blank returns of statements of
gross earnings were sent in August, 1883, by the commissioner of
state taxes to the Central Vermont Railroad Company, and that
company filled out the returns and paid the taxes on such earning
under protest.
A large part of the gross earnings so returned and taxed accrued
from the transportation of persons and property between other
states and countries through Vermont, and between Vermont and other
states and countries.
Page 159 U. S. 633
The Central Vermont Railroad Company paid the rents, when due
according to the agreement, until July 31, 1883, but afterwards
delayed such payments and deducted therefrom the sums paid for
taxes on gross earnings.
On September 19, 1883, the treasurer of the Rutland Company, by
directing of its officers, wrote a letter to the treasurer of the
Central Vermont Railroad Company claiming that the tax was invalid
against the Rutland Company and demanding payment of the rent in
full, without deduction on account of the tax. The president of the
Rutland Company afterwards, in conversation with the president of
the Central Vermont Company, without intending to limit or being
understood to limit the grounds of objection of the Rutland Company
to the payment of the taxes, stated that it had no gross earnings,
and therefore could not be liable for the taxes. No other reason
for the denial of its liability for the taxes under the statute of
1882 was ever given to the Central Vermont Company.
By an order of court of January 19, 1884, the Central Vermont
Railroad Company was discharged of the receivership, and ordered to
transfer and make over all the property in its hands, including the
lease of the Rutland Railroad, to the Consolidated Railroad Company
of Vermont. On June 30, 1884, the transfer was made accordingly,
and on the same day the latter company leased all the railroads to
the Central Vermont Railroad Company, which afterwards continued in
possession and operation thereof.
On November 9, 1886, the Rutland Company filed in the court of
chancery a petition praying that the Central Vermont Company and
the Consolidated Railroad Company of Vermont be ordered to pay the
rent due in full, with interest and without deduction for taxes.
The two defendant companies filed an answer denying their
liability. The case was referred to a master, upon whose report,
embodying the facts above stated, the court of chancery, on January
1, 1889, dismissed the petition.
The petitioner appealed to the Supreme Court of Vermont, which
at October term, 1890, delivered an opinion, copied in
Page 159 U. S. 634
the record, and reported 63 Vt. 1, allowing the claim for
interest on rents, reversing the decree, and remanding the case to
the court of chancery with the following mandate:
"In the matter of the petition of the Rutland Railroad Company,
it is considered, adjudged, and decreed as follows:"
"The act of the Legislature of Vermont entitled 'An act to
provide a revenue for the payment of state expenses,' approved
November 28, 1882, so far as it imposes a tax upon the gross
earnings of railroads derived from interstate transportation of
persons or property, is unconstitutional and void as being in
conflict with that clause of the federal Constitution which confers
upon Congress the exclusive power to regulate commerce among the
states."
"That section 14 of said act, providing that taxes assessed
under said act upon the earnings of railroads operated by lessees
thereof shall be paid by such lessees and charged against and
deducted from the rents due to the lessor of such railroads is
constitutional and valid."
"That all taxes paid to the state by the respondent in
accordance with the provisions of said act of 1882, notwithstanding
its invalidity, as above held, were, as against the petitioner,
valid payments, and so,
pro tanto, payments in
extinguishment of rents due the petitioner."
"That the petitioner is entitled to recover interest upon the
deferred payments of monthly rent, mentioned in the master's
report, from the last day of the month on which it is held such
monthly installments of rent respectively fell due under the lease
and the modification thereof mentioned in said report."
"The decree of the court of chancery is reversed, and the cause
remanded."
In August, 1891, the court of chancery entered a decree
purporting to pursue the mandate, and allowed an appeal taken to
the supreme court of the state by the respondents, claiming that
decree did not conform to the mandate. The petitioner, on September
8, 1891, sued out a writ of error from this Court to review that
decree.
At October term, 1892, the Supreme Court of Vermont
Page 159 U. S. 635
affirmed that decree and remanded the cause. 65 Vt. 366. The
court of chancery, in August, 1894, entered a final decree
accordingly. The petitioner, on October 9, 1894, sued out a writ of
error from this Court to review this decree.
The defendants in error moved to dismiss both writs of error for
want of jurisdiction, the first because the decree which it sought
to review was not a final one, and both because no federal question
was involved.
Page 159 U. S. 638
MR. JUSTICE GRAY, after stating the case, delivered the opinion
of the Court.
It was hardly denied at that bar that the first writ of error
was prematurely sued out, before a final decree had been entered;
but it is unnecessary to dwell upon that, because in other respects
the questions arising upon the two writs of error are
identical.
The decree below, as appears by the mandate of the Supreme Court
of Vermont and still more clearly by its opinion, made part of the
record, and reported in 63 Vt. 1, did not proceed exclusively on
the decision of a federal question, but also upon grounds of
general law.
The conclusion of that court, following the decision of this
Court in
Philadelphia Steamship Co. v. Pennsylvania,
122 U. S. 326,
that the statute of Vermont of 1882, so far as it sought to tax the
earnings derived from interstate commerce, was unconstitutional was
in favor of the Rutland Railroad
Page 159 U. S. 639
Company, and therefore cannot be questioned on a writ of error
sued out by that company.
The court did declare that the provision of the statute which
requires the lessee to pay the tax and deduct the amount from the
rent does not impair the obligation of a contract, because both
railroad companies, as well as the rent due from the one to the
other, were proper subjects for taxation under the laws of Vermont,
and the method to be adopted for the collection of the tax was
purely a question of legislative discretion.
But the decision of this part of the case (the only part decided
against the plaintiff in error) was not put upon that consideration
alone. On the contrary, the court went on to say:
"But it by no means follows, because the defendant has paid to
the state taxes, under a law afterwards held to be void, by
withholding the amount thereof from the rent, that the Rutland
Company can now claim the balance of the rent for this reason."
And this proposition was rested on several distinct grounds.
The first of those grounds, as summed up by the state court, was
as follows:
"Down to May 27, 1887, the date on which the decision in
Philadelphia Steamship Co. v. Pennsylvania, 122 U. S.
326, was promulgated, the doctrine of the cases decided
by the supreme court upheld the constitutionality of the taxation
in question.
State Tax on Railway Gross
Receipts, 15 Wall. 284;
Delaware Railroad
Tax, 18 Wall. 206. . . . The Supreme Court of the
United States is the supreme arbiter when a federal question is
involved. Down to 1887, that court had ruled the federal question
now under consideration in a way that upheld the legislation in
question. Its decisions then promulgated were the supreme law of
the land, absolutely binding upon both parties to this cause.
Hence, all payments of taxes made under our law, which down to that
time must be treated as valid for present purposes, were made in
strict conformity to law. The subsequent change in the decisions of
the United States supreme court is only operative prospectively,
and all acts done in obedience to the former decisions are valid,
and cannot be disturbed. "
Page 159 U. S. 640
But the conclusion that "the defendants are not liable to pay as
rent the amount paid by them as taxes upon the earnings of the
Rutland Road" was also put upon other grounds -- namely, that the
taxes upon the earnings of the Rutland Railroad were taxes which,
as between the Rutland Company and the Central Vermont Company, it
was the duty of the Rutland Company to pay; that, the lease being
silent, the duty to pay, under the common law, rested upon the
lessor; that this question had been decided in the former suit
between the parties; that by the statute of 1882, the thing taxed
was the property of the Rutland Company, and the Central Vermont
Company was but the collector of the tax; that, the Central Vermont
Company having been compelled by law to make the payments to
discharge an obligation of another, the law implied a promise to
repay, and the Central Vermont Company would have an action to
recover the amount from the Rutland Company, and a court of equity
would avoid circuity of action; that the Rutland Company, in its
treasurer's letter of September 19, 1883, had simply objected that
the tax was invalid, and had made no suggestion that the statute
was unconstitutional, and no offer to indemnify the General Vermont
Company, and the latter could not, in prudence, do otherwise than
pay the taxes, and was under no duty to incur the expense and
assume the perils of delay and of litigation, to test the
constitutionality of the statute, and that the Rutland Company, in
a court of equity, could not have relief for what, as between the
parties, itself should have done, and what, by its own laches, it
had suffered to be done, professedly in its behalf, by the Central
Vermont Company.
These grounds involved no federal question, and were broad
enough to support the judgment without regard to the question
whether the provision of the statute under which the Central
Vermont Company paid the taxes and deducted them from the rent was
or was not constitutional.
Such being the case, the conclusion is inevitable that this
Court has no jurisdiction to review the decision of the state
court.
It is well settled by a long series of decisions of this
Court
Page 159 U. S. 641
that where the highest court of a state, in rendering judgment,
decides a federal question and also decides against the plaintiff
in error upon an independent ground, not involving a federal
question, and broad enough to support the judgment, the writ of
error will be dismissed without considering the federal question.
Murdock v.
Memphis, 20 Wall. 590;
Jenkins v.
Loewenthal, 110 U. S. 222;
Beaupre v. Noyes, 138 U. S. 397;
Walter A. Wood Co. v. Skinner, 139 U.
S. 293;
Hammond v. Johnston, 142 U. S.
73;
Tyler v. Cass County, 142 U.
S. 288;
Delaware Co. v. Reybold, 142 U.
S. 636;
Eustis v. Bolles, 150 U.
S. 361, in the last two of which many other cases to the
same effect are cited.
In
Williams v. Weaver, the Court of Appeals of New York
held that assessors of taxes were not personally liable in damages
to the owner of national bank shares alleged to have been taxed in
violation of a statute of the United States. 75 N.Y. 30. A writ of
error to review the judgment was dismissed by this Court because,
as was said by Mr. Justice Miller in delivering the opinion,
"if the defendants, in assessing property for taxation, incur no
personal liability for any error they may commit, the fact that the
error committed is a misconstruction of an act of Congress can make
no difference."
100 U.S.
100 U. S. 547.
In
Young v. Steamship Co., 105 U. S.
41, it was held, in an opinion delivered by MR. JUSTICE
FIELD, that the question whether fees exacted in violation of a
statute of the United States and paid without objection could be
recovered back was not a federal question the decision of which by
the highest court of a state could be reviewed by this Court on
writ of error.
In
Tyler v. Cass County, above cited, an action was
brought against a county to recover back money paid at a sale for
taxes of lands alleged to be subject to a lien of the United
States, and therefore exempt from taxation. The Supreme Court of
North Dakota (while holding that, in view of the decision of this
Court in
Northern Pacific Railroad v. Traill County,
115 U. S. 600, the
lands were not taxable, and nothing passed by the sale) gave
judgment for the defendant.
Page 159 U. S. 642
1 N.D. 369. In support of a writ of error sued out by the
plaintiff from this Court, it was argued that the assessor had no
jurisdiction to decide whether the lands in question were or were
not taxable, and that the state court, in holding that the act of
the assessor in assessing the lands against private parties in
possession, though they in fact belonged to the United States,
would not be without jurisdiction, decided against the immunity
from the jurisdiction of the assessor. But this Court dismissed the
writ of error and, speaking by THE CHIEF JUSTICE, said:
"The question arising for determination in the state court was
whether the money which had been paid by the purchaser of the lands
at the tax sale could be recovered back, either at common law or
under the Dakota statute in that behalf. The ground upon which the
tax title was held to have failed was that the United States had a
lien upon the lands, and that therefore they could not, under the
laws of the United States, be sold for taxes, but that fact did not
impress with a federal character the inquiry as to the right of
recovery."
142 U.S.
142 U. S.
290.
That case cannot be distinguished in principle from the case at
bar. In this case as in that, it was argued that the state court,
while it declared the statute to be unconstitutional, yet by its
decision gave effect to the unconstitutional statute. But in each
case, the decision of the federal question was not an essential
element in determining whether the plaintiff was entitled to
recover against the defendant.
Writs of error dismissed for want of jurisdiction.
*
"SEC. 8. A corporation, company, person, or persons failing to
pay the amount of any annual or semiannual tax within the time
required by this act shall forfeit to the state the sum of one
hundred dollars for each day's neglect to pay the same after the
expiration of the time limited by law."
"SEC. 11. Every corporation, person, or persons owning or
operating a railroad in this state, whether as owner, lessee,
receiver, trustee, or otherwise, shall pay a tax to the state on
the entire gross earnings of such railroad if such railroad is
situated wholly within the state. If such railroad is situated
partly within and partly without the state, the tax shall be upon
such proportion of the entire gross earnings of such railroad as
the mileage of trains run in this state bears to the mileage of all
the trains run on the entire main line of the road."
"SEC. 12. The tax upon such earnings shall be rated according to
the earnings per mile of road in this state, and is hereby assessed
at the rate of two percent on the first two thousand dollars a
mile, or total earnings if less than that sum; at the rate of three
percent on the first thousand or part thereof above two thousand
dollars a mile; at the rate of four percent on the first thousand
or part thereof above three thousand dollars a mile, and when the
earnings exceed four thousand dollars a mile at the rate of five
percent on all earnings above that sum."
"SEC. 13. Such tax shall be payable one-half semiannually in the
months of February and August, and shall be based upon the gross
earnings during the six months terminating with the last day of
December or June next preceding."
"SEC. 14. When a railroad is operated in this state by a
corporation, person, or persons by virtue of a lease or other
contract, the aforesaid tax shall be paid by the lessee of such
railroad or holder of such contract, as the case may be, and the
said tax shall be charged against and deducted from any payments
due or to become due the lessor of such railroad, or person,
persons, or corporation granting such contract, as the case may be,
on account of such lease or contract, unless in the provisions of
such lease or contract it is stipulated otherwise."
