Under Par. 20, of § 24, of the Judicial Code, the Court of
Claims has jurisdiction of a suit against the United States for
refund of money paid for documentary stamps affixed to charter
parties under § 25 of the War Revenue Act of 1898 and the district
court of the proper district has concurrent jurisdiction of claims
of that nature not exceeding ten thousand dollars.
Under the various refunding statutes, culminating in the Act of
July 27, 1912, c. 256, 37 Stat. 240, such claims are founded upon a
law of Congress within the meaning of the Tucker Act as now
incorporated in the Judicial Code.
Although the pendency of one class of claims may have induced
the passage of an act of Congress providing for their adjustment,
the act may embrace other claims if its terms are sufficiently wide
so to do.
While, under § 297 of the Judicial Code, § 5 of the Tucker Act
was saved from repeal and the district court having jurisdiction of
a claim against the United States is the one of the district in
which the plaintiff resides, that requirement may be waived, and if
no specific objection is taken before pleading to the merits, it
will be deemed to have been waived, and if the district court
otherwise has jurisdiction, the case may proceed.
Under the Refunding Act of July 27, 1912, protest at the time of
affixing
Page 237 U. S. 2
documentary stamps was not essential to recovery. Right to
repayment exists if the record shows that the sums sought to be
recovered were not legally payable and the claim was duly presented
within the time prescribed.
The constitutional freedom from taxation on imports assured by §
9, Art. I, of the federal Constitution means more than mere
exemption from taxes specifically laid upon the goods themselves.
It means that the process of exportation shall not be obstructed by
any burden of taxation.
Where a charter party is practically a bill of lading for the
entire cargo of the vessel, and is essential to the business of
exportation in shipload lots, a tax on the charter party is, in
substance, a tax on exportation and, as such, a tax on the exports,
and, if on charter parties of vessels exclusively for foreign
ports, is invalid under § 9, Art. I, of the federal
Constitution.
There is a distinction between tonnage taxes, as laid by the
federal government, and export taxes, and the fact that Congress
has power to lay a tonnage tax on entry does not authorize it to
lay taxes on exportation which practically amount to taxes on the
exports themselves.
The facts are stated in the opinion.
Page 237 U. S. 7
MR. JUSTICE Hughes delivered the opinion of the Court.
This is a writ of error to review a judgment of the district
court awarding a recovery against the United States for the amount
paid as stamp taxes upon certain charter parties under § 25 of the
War Revenue Act of June 13, 1898, c. 448, 30 Stat. 448, 460,
Comp.Stat. 1913, § 6144. These charter parties were exclusively for
the carriage of cargo from ports in the states of the United States
to foreign ports, and the imposition of the taxes was held to be in
violation of § 9, Article I. of the Constitution of the United
States, which provides: "No tax or duty shall be laid on articles
exported from any state."
The suit was brought under paragraph 20 of § 24 of the Judicial
Code, which confers jurisdiction, concurrent with the Court of
Claims, upon the district court, "of all claims not exceeding ten
thousand dollars founded upon the Constitution of the United States
or any law of Congress" (
see Act of March 3, 1887, c. 359,
§ 1, 24 Stat. 505), and the claim of the plaintiffs (defendants in
error) was based upon the Act of July 27, 1912, c. 256, 37 Stat.
240, which is as follows:
"That all claims for the refunding of any internal tax alleged
to have been erroneously or illegally assessed or collected under
the provisions of § twenty-nine of the Act of Congress approved
June thirteenth, eighteen hundred and ninety-eight, known as the
War-Revenue Tax, or of any sums alleged to have been excessive, or
in any manner wrongfully collected under the provisions of said Act
may be presented to the Commissioner of Internal Revenue on or
before the first day of January, nineteen hundred and fourteen, and
not thereafter."
"SEC. 2. That the Secretary of the Treasury is hereby authorized
and directed to pay, out of any moneys of the United States not
otherwise appropriated, to such claimants as have presented or
shall hereafter so present their
Page 237 U. S. 8
claims, and shall establish such erroneous or illegal assessment
and collection, any sums paid by them or on their account or in
their interest to the United States under the provisions of the Act
aforesaid."
The government demurred to the petition upon the grounds that
the court had no jurisdiction of the defendant, or of the subject
of the action, and that the petition did not state facts sufficient
to constitute a cause of action. The demurrer was overruled (217 F.
680), and, after answer, the case was heard on the merits. The
court found in substance that the firm, of which the defendants in
error were the surviving members, had paid without protest certain
stamp taxes on charter parties of the character described; that, on
filing their claim under the Act of 1912, it had been certified by
the collector to be correct in its statement of facts, but that the
Commissioner of Internal Revenue had rejected it for the reason
that the act was not applicable. Holding the taxes to be
unconstitutional, and the claim to have been duly presented, the
court rendered judgment for the claimants.
The government contends that the court erred in deciding (1)
that the court had jurisdiction of the case, (2) that it need not
be averred or proved that the tax was paid under protest, and (3)
that the tax was invalid.
The first contention with respect to jurisdiction is that, the
claim having been rejected, the remedy of the claimants was an
action against the Collector of Internal Revenue, and not against
the United States. The course of the pertinent legislation since
the passage of the War Revenue Act of 1898 may be briefly reviewed:
in 1900, Congress provided for the redemption of, or allowance for,
internal revenue stamps, including cases where "the rates or duties
represented thereby" had been "excessive in amount, paid in error,
or in any manner wrongfully collected." Act of May 12, 1900, c.
393, 31 Stat. 177. In
Page 237 U. S. 9
1902, various provisions of the War Revenue act, and amendments
thereof, including §§ 6, 12, 25, schedules A and B, with regard to
stamp taxes, and § 29 as to taxes on legacies and distributive
shares, were repealed. Act of April 12, 1902, c. 500, 32 Stat. 96,
97. The repealing act was to take effect on July 1, 1902, and,
shortly before that date, Congress made specific provision that
certain taxes collected under the repealed statute should be
refunded. Act of June 27, 1902, c. 1160, 32 Stat. 406. These taxes
were (1) those that had been paid upon bequests for uses of a
religious, literary, charitable, or educational character, etc.;
(2) the "sums paid for documentary stamps used on export bills of
lading, such stamps representing taxes which were illegally
assessed and collected;" and (3) taxes theretofore or thereafter
paid upon legacies or distributive shares to the extent that they
were collected "on contingent beneficial interests" which had not
become vested prior to July 1, 1902. It was also provided that no
tax should thereafter be assessed under the act in respect of any
such interest which had not become "absolutely vested in possession
or enjoyment" prior to the date mentioned.
The Act of 1902 was followed by other refunding statutes. In
United States v. New York & Cuba Mail S.S. Co.,
200 U. S. 488,
suit had been brought in the district court to recover taxes which
had been paid under the War Revenue Act upon manifests of cargoes
bound to foreign ports, and it was held (following
Chesebrough
v. United States, 192 U. S. 253)
that no recovery could be had because the payment had been
voluntarily made; the jurisdiction of the court was not impugned.
Thereupon Congress provided for the refunding of sums paid for
stamps "on export ships' manifests" representing taxes "which were
illegally assessed and collected," "said refund to be made whether
said stamp taxes were paid under protest or not, and without being
subject to any statute of limitations." Act of March 4, 1907, c.
2919, 34 Stat. 1371,
Page 237 U. S. 10
1373. Again, in 1909, the Secretary of the Treasury was directed
to pay to those who had duly presented their claims prior to July
1, 1904, the sums paid for stamps used "on foreign bills of
exchange" (drawn between July 1, 1898, and June 30, 1901)
"against the value of products or merchandise actually exported
to foreign countries, such stamps representing taxes which were
illegally assessed and collected, said refund to be made whether
said stamp taxes were paid under protest or duress or not."
Act of February 1, 1909, c. 53, 35 Stat. 590;
see also
Acts of August 5, 1909, c. 7, 36 Stat. 120; June 25, 1910, c. 385,
36 Stat. 779; August 26, 1912, c. 408, 37 Stat. 626.
It thus appears that the Act of 1912, upon which the present
claim is based, was the culmination of a series of statutes which
leave no question as to the intention of Congress to create an
obligation on the part of the United States in favor of those
holding the described claims, and it follows that these claims must
be deemed to be founded upon a "law of Congress" within the meaning
of the provisions of the Tucker act, now incorporated in the
Judicial Code.
See Medbury v. United States, 173 U.
S. 492,
173 U. S. 497;
McLean v. United States, 226 U. S. 374,
226 U. S. 378.
With respect to the refunding of taxes paid on the "contingent
interests" described in the Act of June 27, 1902,
supra,
it has been held that, upon the rejection of the claim, an action
lies against the United States in the Court of Claims, or in the
district court (where the amount is within the prescribed limit).
Fidelity Trust Co. v. United States, 45 Ct.Cl. 362, s.c.
222 U. S. 222 U.S.
158;
United States v. Jones, 236 U.
S. 106;
Thacher v. United States, 149 F. 902;
United States v. Shipley, 197 F. 265. And this is true not
only where such taxes were paid before the refunding act was
passed, but also where subsequently they were wrongfully collected
in violation of its provisions.
United States v. Jones,
236 U. S. 106. The
same rule must obtain
Page 237 U. S. 11
as to all claims described in the Act of 1912, and in this view
we are not concerned in the present case with questions arising
under the general provisions of the internal revenue laws.
It is urged by the government that Congress intended to limit
the Act of 1912 to the refunding of death duties erroneously or
illegally assessed under § 29 of the War Revenue act. Reference is
made to the legislative history of the statute, but the contention
lacks adequate support.
See House Reports, 62d Cong.2d
Sess., Report No. 848, June 6, 1912. While the pendency of claims
for the refunding of such taxes may have induced the passage of the
act, its terms were not confined to these. On the contrary, after
providing for the claims arising under § 29, Congress added the
further clause making express provision for the presentation of
claims for the refunding "of any sums alleged to have been
excessive, or in any manner wrongfully collected under the
provisions of said act;" and the Secretary of the Treasury is
directed to pay to those who duly present their claims and
establish the erroneous or illegal collection "any sums paid by
them . . . to the United States under the provisions of the act
aforesaid." We are not at liberty to read these explicit clauses
out of the statute.
Another objection to the jurisdiction of the district court is
that, under § 5 of the Tucker act (a provision which was saved from
repeal by § 297 of the Judicial Code), the suit was to be brought
"in the district where the plaintiff resides." 24 Stat. 506, c.
359. The petition alleged that petitioners were the surviving
members of a copartnership engaged in business in the City of New
York "within the district aforesaid," and that their "business and
partnership residence was and is in the Borough of Manhattan, City
of New York, in said district." It is said that the allegation was
insufficient to show the residence required by the statute, but it
does not appear that any such objection was
Page 237 U. S. 12
made in the court below. The general language of the demurrer
with respect to jurisdiction had appropriate reference to the
general authority of the court to entertain such a suit against the
United States and to the jurisdiction of the subject matter of the
action. But assuming that the subject matter was within the
jurisdiction of the court, the requirement as to the particular
district within which the suit should be brought was but a modal
and formal one, which could be waived, and must be deemed to be
waived in the absence of specific objection upon this ground before
pleading to the merits.
St. Louis &c. Ry. v. McBride,
141 U. S. 127,
141 U. S. 131;
Central Trust Co. v. McGeorge, 151 U.
S. 129,
151 U. S. 133;
Martin v. Baltimore & Ohio R. Co., 151 U.
S. 673,
151 U. S. 688;
Interior Construction Co. v. Gibney, 160 U.
S. 217,
160 U. S. 220;
Western Loan Co. v. Butte & Boston Mining Co.,
210 U. S. 368;
Arizona & New Mexico Ry. v. Clark, 235 U.
S. 669,
235 U. S.
674.
It is also apparent, in the light of the manifest purpose and
scope of the legislation to which we have referred, that the
contention based upon the absence of protest cannot be sustained.
Where taxes have been illegally assessed upon the "contingent
interests" described in the refunding Act of 1902, it has been held
that recovery may be had although the taxes were paid without
protest.
United States v. Jones, supra. In the Acts of
1907 and 1909,
supra, with respect to stamp taxes on
"export ships' manifests" and on foreign bills of exchange against
exports, Congress expressly provided for refunding whether the
taxes had been paid under protest or not. The fact that these
express words were not repeated in the Act of 1912 cannot, in view
of the nature of the subject, be regarded as evidencing a different
intent; rather must this act receive in this respect the same
construction as that which had been given to the Act of 1902. If it
appeared that the sums sought to be recovered were not legally
payable, and the claim was duly presented within the time fixed,
the right to
Page 237 U. S. 13
repayment was established by the express terms of the
statute.
The question, then, is whether the tax, so far as it was laid
upon charter parties which were exclusively for the carriage of
cargo from state ports to foreign ports, was a valid one. The
constitutional provision that "no tax or duty shall be laid on
articles exported from any state" has been the subject of elaborate
and authoritative exposition, and we need but to apply the
principles of construction which have been settled by previous
decisions.
The prohibition relates only to exportation to foreign countries
(
Woodruff v.
Parham, 8 Wall. 123;
Dooley v. United
States, 183 U. S. 151,
183 U. S. 154,
183 U. S.
162), and is designed to give immunity from taxation to
property that is in the actual course of such exportation (
Pace
v. Burgess, 92 U. S. 372;
Turpin v. Burgess, 117 U. S. 504;
Cornell v. Coyne, 192 U. S. 418).
This constitutional freedom, however, plainly involves more than
mere exemption from taxes or duties which are laid specifically
upon the goods themselves. If it meant no more than that, the
obstructions to exportation which it was the purpose to prevent
could readily be set up by legislation nominally conforming to the
constitutional restriction, but in effect overriding it. It was the
clear intent of the framers of the Constitution that
"the process of exporting the products of a state, the goods,
chattels, and property of the people of the several states should
not be obstructed or hindered by any burden of taxation."
Miller on the Constitution, p. 592. It was with this view that
Chief Justice Marshall, in
Brown v.
Maryland, 12 Wheat. 419, holding that a state tax
on the occupation of the importer was a tax on imports and that the
mode of imposing it merely varied the form without varying the
substance, drew the comparison between the two prohibitions:
"The states are forbidden to lay a duty on exports, and the
United States are forbidden to lay a tax or duty on articles
exported
Page 237 U. S. 14
from any state. There is some diversity in language, but none is
perceivable in the act which is prohibited. The United States have
the same right to tax occupations which is possessed by the states.
Now suppose the United States should require every exporter to take
out a license, for which he should pay such tax as Congress might
think proper to impose; would government be permitted to shield
itself from the just censure to which this attempt to evade the
prohibitions of the Constitution would expose it by saying that
this was a tax on the person, not on the article, and that the
legislature had a right to tax occupations?"
Id., pp.
25 U. S.
444-445. And in
Almy v.
California, 24 How. 169, applying the same
principle, the Court said, by Chief Justice Taney, that "a tax or
duty on a bill of lading, although differing in form from a duty on
the article shipped," was "in substance the same thing," for "a
bill of lading, or some written instrument of the same import" was
"necessarily always associated with every shipment of articles of
commerce from the ports of one country to those of another." There,
as was pointed out in
Woodruff v. Parham, supra, shipments
to foreign ports were not in fact involved, but this did not
detract from the force of the statement so far as it concerns the
effect of the tax described.
In
Fairbank v. United States, 181 U.
S. 283, the question of federal taxation of export bills
of lading was directly involved, and, after great consideration,
was definitely determined. In that case, there had been a
conviction under the War Revenue Act of 1898. It was the contention
of the government that no tax was placed upon the article exported;
that, so far as the question was as to what might be exported, and
how it should be exported, the statute imposed no restriction; that
the full scope of the legislation was to impose a stamp duty on a
document not necessarily, though ordinarily, used in connection
with the exportation of goods; that it was a mere "stamp
imposition
Page 237 U. S. 15
on an instrument," and similar to many such taxes which are
imposed by Congress by virtue of its general power of taxation not
upon these alone, but upon a great variety of instruments used in
the ordinary transactions of business. These arguments were not
convincing. The Court held that "the requirement of the
Constitution is that exports should be free from any governmental
burden." The language is "no tax or duty." "We know historically,"
said the Court,
"that it was one of the compromises which entered into and made
possible the adoption of the Constitution. It is a restriction on
the power of Congress, and as, in accordance with the rules
heretofore noticed, the grants of powers should be so construed as
to give full efficacy to those powers, and enable Congress to use
such means as it deems necessary to carry them into effect, so in
like manner a restriction should be enforced in accordance with its
letter and spirit, and no legislation can be tolerated which,
although it may not conflict with the letter, destroys the spirit
and purpose of the restriction imposed."
In answer to the contention that the sole purpose of the
prohibition was to prevent discrimination between the states, and
that there should be enforcement only so far as necessary to
prevent such discrimination, the Court said:
"If mere discrimination between the states was all that was
contemplated, it would seem to follow that an
ad valorem
tax upon all exports would not be obnoxious to this constitutional
prohibition. But surely, under this limitation, Congress can impose
an export tax neither on one article of export, nor on all articles
of export. In other words, the purpose of the restriction is that
exportation, all exportation, shall be free from national
burden."
The Court found an analogy in the construction which had been
given to the commerce clause in protecting interstate commerce from
state legislation imposing direct burdens (
Robbins v. Shelby
County, 120 U. S. 489,
120 U. S.
494), and legislative precedents for the tax were
held
Page 237 U. S. 16
to be unavailing in view of the clear meaning and scope of the
constitutional provision.
Following this decision, it was held by the district court that
the stamp tax on manifests of cargoes for foreign ports was
invalid. These manifests were essential to the exportation.
New
York & Cuba Mail S.S. Co. v. United States, 125 F. 320.
And while the case was determined in this Court upon another
ground, the correctness of this ruling as to the invalidity of the
tax was conceded by the United States.
200 U. S. 200 U.S.
488,
200 U. S.
491.
Under this established doctrine, we are of the opinion that the
tax upon these charter parties cannot be sustained. A charter party
may be a contract for the lease of the vessel, or for a special
service to be rendered by the owner of the vessel. Where, as is
very frequently the case, the shipowner undertakes to carry a
cargo, to be provided by the charterer, on a designated voyage, the
arrangement is, in contemplation of law, a mere contract of
affreightment. By such a charter, the shipowner is the carrier of
the goods transported by the ship, "for the reason that the charter
party is a mere covenant for the conveyance of the merchandise or
the performance of the stipulated service."
Marcardier
v. Chesapeake Ins. Co., 8 Cranch 39,
12 U. S. 49-50;
Reed v. United
States, 11 Wall. 591,
78 U. S.
600-601;
Leary v. United
States, 14 Wall. 607,
81 U. S. 610;
Richardson v. Winsor, 3 Cliff. 395, 399;
The T. A.
Goddard, 12 F. 174, 178; 1 Parsons, Shipping, p. 278. The
findings in the present case do not permit us to question the
character of the charter parties here involved. It appears that the
defendants in error, being ship brokers, engaged at various times
the vessels respectively, which are named in the schedule attached
to the findings, solely for the carriage of cargo from ports in the
United States to the foreign ports specified -- that is, we
understand the findings to mean that these charters were for
Page 237 U. S. 17
described voyages on which "cargoes of goods were to be, and
were in fact carried" to the places mentioned.
Instead of a contract for the carriage of a particular lot of
goods occupying less than the entire cargo space, as in the case of
an ordinary bill of lading, the charter party was a contract for
the carriage of a full cargo lot. In legal principle, there is no
distinction which can condemn the tax in the one case and save it
in the other. Whether the contract of carriage covers a small lot,
or a partial cargo, or an entire cargo, whether the goods occupy a
part of the cargo space or the whole cargo space, can make no
constitutional difference. The charters were for the exportation;
they related to it exclusively; they served no other purpose. A tax
on these charter parties was in substance a tax on the exportation,
and a tax on the exportation is a tax on the exports.
The government urges the analogy of tonnage taxes or duties. The
same argument was pressed unsuccessfully in the
Fairbank
case,
supra, p.
181 U. S. 305.
It should be observed that a tonnage tax, as it has been laid by
the federal government from the beginning, is a tax on entry. 1
Stat. 135 (July 20, 1790); Rev.Stat. § 4219; Acts Feb. 27, 1877, c.
69, 19 Stat. 240, 250; June 26, 1884, c. 121, § 14, 23 Stat. 53,
57; June 19, 1886, c. 421, § 11, 24 Stat. 79, 81.
See
Transportation Co. v. Parkersburg, 107 U.
S. 691,
107 U. S. 696.
A duty of tonnage under Article I, § 10, of the Constitution, has
been described as a charge "for entering or leaving a port"
(
Huse v. Glover, 119 U. S. 543,
119 U. S.
549); but Congress has not attempted to impose a tonnage
tax for the privilege of leaving a state port for a foreign port,
and we have no occasion to consider the question of the validity of
such a tax. Again, it is contended that the tax bore only
incidentally upon exportation. It was to be paid on all charter
parties of vessels having a "registered tonnage." But, aside from
any question as to the scope of this provision, the tax as
Page 237 U. S. 18
applied to the charter parties here in question was nothing else
than a tax on exportation, and to this extent was, in any event,
invalid. The same principle governs that has constantly been held
to obtain in cases where it has been sought to give effect to taxes
upon interstate commerce under general legislation of the states.
In
Robbins v. Shelby County, supra, it was strongly urged,
"as if it were a material point in the case," that no
discrimination was made "between domestic and foreign drummers," --
that is, between those of the state whose legislation was in
question and those of other states; that all were taxed alike. But
the court held that this did not meet the difficulty, inasmuch as
interstate commerce could not "be taxed at all, even though the
same amount of tax should be laid on domestic commerce." This had
been decided, as the Court pointed out, in the case of
The State Freight
Tax, 15 Wall. 232, and it has become one of the
commonplaces of constitutional law.
See Brennan v.
Titusville, 153 U. S. 289,
153 U. S. 304;
Caldwell v. North Carolina, 187 U.
S. 622,
187 U. S. 629;
Rearick v. Pennsylvania, 203 U. S. 507,
203 U. S. 510;
Crenshaw v. Arkansas, 227 U. S. 389. We
know of no ground upon which a different effect can be given to the
explicit constitutional provision which denies to Congress the
right to tax exportation from the states.
There is a further objection that the goods were not on the
vessel at the time the charter party was made, but, as the charters
related only to the exportation, this objection is plainly without
merit.
The judgment of the district court is affirmed.
Judgment affirmed.
MR. JUSTICE McREYNOLDS took no part in the consideration and
decision of this case.