Where the judgment of the state court rests on a matter of
general law strong enough to sustain the judgment, this Court
cannot consider the federal question involved; even if it were
actually considered by the state court and determined adversely to
plaintiff in error.
Hale v. Akers, 132 U.
S. 554.
Where a federal question was properly presented and necessarily
controls the determination of the case, this Court has jurisdiction
even if the decision is put by the state court upon some matter of
local law.
West Chicago R. Co. v. Chicago, 201 U.
S. 506.
Neither a statute imposing a tax, execution thereunder, nor mere
demand for payment, constitutes duress; but where the statute
contains self-operating provisions by which nonpayment of the tax
results in severe penalties and forfeiture of right to do business,
payment by one within the class affected is not voluntary, but
compulsory.
While a payment of the tax by one included in the class to which
a statute applies in order to avoid penalties and forfeiture is
compulsory, it is not so as to one not included in such class, and
payment thereof by such person is voluntary, and not under
duress.
Where the state court decides that a corporation which claims
that it only does an interstate business but paid a state tax
levied only upon corporations doing an intrastate business made the
payment not under duress, and the record shows that the question
was fairly in the case, the judgment rests upon a ground of general
law broad enough to sustain it.
52 Tex.Civ.App. 644 affirmed.
In this suit against Shannon, Secretary of State for Texas, for
the recovery of taxes paid under protest, the plaintiff, Gaar,
Scott & Company, alleged that it is a corporation chartered by
the laws of Indiana, in which state it has its principal place of
business, and where it manufactures
Page 223 U. S. 469
machinery; that in 1901 it paid the amount of franchise tax
required of foreign corporations, and obtained from the State of
Texas a permit to do business for ten years. This permit, it
alleges, was a contract which could not be impaired, but,
notwithstanding that fact, the legislature, in 1905, passed an act
requiring foreign companies doing business in Texas to pay a still
higher franchise tax, measured by their capital and surplus, and
provided that, if the same was not paid by May 1st, a penalty of
twenty-five percent should be added, and if not paid by July 1st,
the permit to do business in the state should be forfeited "without
judicial ascertainment," and the company deprived of the right to
sue in the courts. It alleged that the Secretary of State had
mailed to the company a circular calling attention to the
provisions of the act, and thereupon, and before May 1, 1905, and
again before May 1, 1906, under the duress of this statute, the
company had paid the tax demanded, under protest, and with written
notice that it reserved the right to sue for the recovery of the
amount exacted by an unconstitutional law.
The petition alleges that plaintiff
"only transacts an interstate business in the State of Texas in
the sale of its manufactured products. That it employs at Dallas
and Houston, Texas, agents who solicit and superintend the
soliciting of orders for the goods manufactured by it at Richmond,
Indiana, and that this applies to all goods sold by your petitioner
in the State of Texas, and your petitioner further alleges that it
was, at the time this permit was granted to do business in the
State of Texas, and that it now is, and has been ever since said
permit was granted to it, engaged in an interstate commerce
business."
The only prayer was for the recovery of the taxes paid for the
years 1905 and 1906. The defendant's general demurrer was
sustained.
52 Tex.Civ.App. 634
Page 223 U. S. 470
.
MR. JUSTICE LAMAR, after making the foregoing statement,
delivered the opinion of the Court.
On writ of error to a judgment sustaining defendant's demurrer
to the complaint for the recovery of taxes paid under protest, the
court of appeals of Texas considered all the assignments of error.
It held that the permit of 1901, to do business for ten years was
not a contract, and that therefore the state, during that period,
might demand an increased or additional franchise tax. It ruled
that foreign corporations might be altogether excluded, or required
to pay a discriminatory tax as the condition of the right to do
business in Texas. It further held that, even if there had been
merit in plaintiff's contention, it was not entitled to recover the
taxes for 1905 and 1906, because they had been voluntarily
paid.
1. If the record affords a basis for sustaining the last
proposition, this Court cannot consider whether the act violates
the Fourteenth Amendment, or the commerce and contract clauses of
the Constitution. For, as repeatedly ruled, where a state court has
decided against the plaintiff in error on a matter of general law
broad enough to sustain the judgment, this Court will not consider
the federal questions, even though they may have been actually
considered and determined adversely to his contention.
Hale v.
Akers, 132 U. S. 554,
132 U. S. 564.
The principle has been enforced in cases where the ruling of the
state court was based on the application of the doctrine of
res
judicata, laches, statute of limitations, and others
Page 223 U. S. 471
similar in kind to that involving the effect of a voluntary
payment.
Northern Pacific R. Co. v. Ellis, 144 U.
S. 458;
Hale v. Lewis, 181 U.
S. 473;
Moran v. Horsky, 178 U.
S. 205;
Pierce v. Somerset, 171
U. S. 648;
Rector v.
Ashley, 6 Wall. 142.
It is, however, equally well settled that, if the federal
question is properly presented and necessarily controls the
determination of the case, the appellate jurisdiction of this Court
is not defeated, because the decision is put upon some matter of
local law.
West Chicago R. Co. v. Chicago, 201 U.
S. 506,
201 U. S. 520.
And the plaintiff in error insists that, under this rule, the
constitutionality of the statute must be decided, because the facts
stated in the complaint, and admitted by the demurrer, do not
afford any basis for holding that the money was voluntarily
paid.
2. Neither a statute imposing a tax, nor the execution
thereunder, nor a mere demand for payment, is treated as duress. It
does not necessarily follow that there will be a levy on goods. Or,
if there is, the citizen, to avoid the consequences of the levy,
may pay the money, regain the use of his property, and maintain a
suit for the recovery of what has been exacted from him. The legal
remedy redresses the wrong. But he has the same right to sue if he
pays under compulsion of a statute whose self-executing provisions
amount to duress. An act which declares that, where the franchise
tax is not paid by a given date, a penalty of twenty-five percent
shall be incurred, the license of the company shall be cancelled,
and the right to sue shall be lost, operates much more as duress
than a levy on a limited amount of property. Payment to avoid such
consequences is not voluntary but compulsory, and may be recovered
back.
Swift Co. v. United States, 111 U.
S. 29;
Robertson v. Frank Bros. Co.,
132 U. S. 23;
Oceanic Navigation Co. v. Stranahan, 214
U. S. 329;
Atchison, Topeka & Santa Fe R.
Co.
Page 223 U. S. 472
v. O'Connor, decided this day,
post, p.
223 U. S. 280.
Otherwise plaintiff might be without any remedy whatever. For, in
Arkansas Building & Loan Ass'n v. Madden, 175 U.
S. 269, it was held that a taxpayer was not entitled to
an injunction against the enforcement of a similar statute of the
State of Texas unless he could show that there was no adequate
remedy at law. And, as payment under such an act was treated as
compulsory, for which suit might be maintained, and as there was
nothing to indicate inability of complainant to pay, or of the
defendant to respond to a judgment, the bill was dismissed without
prejudice. That necessarily recognized that the plaintiff had the
right to pay under protest, sue the officer for the amount exacted,
and recover it back in case it should be made to appear that the
statute was void.
3. If therefore the plaintiff had been included in the class to
which this statute applied, and, under the duress of its
automatically enforced provisions, had paid the tax to avoid the
disruption of its business, it could have maintained an action to
recover the amount thus exacted. In that suit, it would have been
entitled to a decision on the question as to whether the statute
was constitutional, and to a review of the judgment if it had been
adverse to the company's contention. But the company did not, in
any sense, come within the purview of the act. The plaintiff
alleged that it was engaged only in interstate commerce. If so, the
statute did not require from it the payment of the tax. For the
Supreme Court of Texas, in
Allen v. Tyson-Jones Buggy Co.,
91 Tex. 22, and
Miller & Co. v. Goodman, 91 Tex. 41,
had held that the franchise tax act had no application to
corporations doing an interstate business. The duress of its
provisions therefore operated only on those doing intrastate
business, and if the plaintiff, on a mere demand, paid the tax
imposed by a statute applicable only to other corporations, it had
no more right to recover than would a drygoods merchant who
voluntarily
Page 223 U. S. 473
paid a tax illegally imposed on those engaged in the selling of
liquor.
To permit those not affected by a statute to pay the sum thereby
assessed, and then sue for its recovery on the ground that the act
was void, would reverse the rule that
"one who would strike down a state statute as violative of the
federal Constitution must bring himself by proper averments and
showing within the class as to whom the act thus attacked is
unconstitutional. He must show that the alleged unconstitutional
feature of the law injures him, and so operates as to deprive him
of rights protected by the federal Constitution."
Southern Railway Co. v. King, 217
U. S. 534.
What we have said shows that the question as to voluntary
payment fairly arose out of the record, and was not arbitrarily
injected into the case.
Leathe v. Thomas, 207 U.
S. 99. A decision on that nonfederal point could
properly dispose of the plaintiff's suit to recover back what it
had paid. The judgment of the Civil court of appeals must therefore
be
Affirmed.
