The district court, sitting as a Court of Claims under § 24 (20
subd.) has jurisdiction over claims against the United States for
refunding taxes paid under the Corporation Tax Law under duress and
protest to the Collector and by him turned over to the United
States.
The great act of justice embodied in the Court of Claims is not
to be construed strictly and with an adverse eye.
A realty corporation simply collecting and distributing rent
from a specified parcel of land is not doing business within the
meaning of the Corporation Tax Law of 1909.
Zonne v.
Minneapolis Syndicate, 220 U. S. 170,
followed;
Cedar St. Realty Co. v. Park Realty Co.,
220 U. S. 107,
distinguished.
The facts, which involve the jurisdiction of the district court
sitting as a Court of Claims and also of the validity of a tax
imposed under the Corporation Tax Law of 1909, are stated in the
opinion.
Page 237 U. S. 30
MR. JUSTICE HOLMES delivered the opinion of the Court.
This is a suit under the Judicial Code of March 3, 1911, c. 231,
§ 24, par. 20, 36 Stat. 1087, formerly the Tucker Act of March 3,
1887, c. 359, §§ 1, 2, 24 Stat. 505, to recover the amount of taxes
paid under protest. It presents two questions: whether the district
court, sitting as a court of claims, had jurisdiction of this case,
and whether the claimant, the defendant in error, was "engaged in
business" or "doing business" within the meaning of the Corporation
Tax Law of August 5, 1909, c. 6, § 38, 36 Stat. 11, 112. The
district court asserted its jurisdiction and gave judgment for the
claimant. 198 F. 242.
The facts do not need lengthy statement. The Emery, Bird, Thayer
Dry Goods Company, a business corporation of Kansas City, Missouri,
occupied certain lands partly hired and partly owned by it, for the
purposes of its business. Eighteen months before the passage of the
Corporation Tax Law, its members decided that the claimant should
be organized, and it was, for the purpose of acquiring the Dry
Goods Company's lands and of letting the same to the Dry Goods
Company, the latter having
Page 237 U. S. 31
the management of the property and assuming the responsibilities
in respect of it. The only business done by the claimant was to
keep up its corporate organization and to collect and distribute
the rent received from its single lessee, and the court found as a
fact that it was not doing business within the statute, subject, of
course, to the question whether the activities stated constituted
such doing business as matter of law. The chartered powers of the
claimant included performing and enforcing the performance of the
respective covenants in the leases taken over and the sale of the
property or any part of it upon the vote of not less than two
thirds of the stockholders, who were very nearly the same as those
of the Dry Goods Company. It also covenanted to rebuild in case the
buildings were destroyed. But there has been no occasion to perform
any of these undertakings. The taxes in question were paid under
duress and protest, and were turned over by the collector to the
United States, which still retains them. A claim to have the taxes
refunded was submitted in due form to the Collector of Internal
Revenue, but repayment was denied.
The objection to the jurisdiction pressed by the government is
that the only remedy is a suit against the Collector. As the United
States has received and keeps the money, and would indemnify the
Collector if he had to pay. Rev.Stat. § 3220, the least that can be
said is that it would be adding a fifth wheel to the coach to
require a circuitous process to satisfy just claims. It is true
that this tax law provides that "all laws relating to the
collection, remission, and refund of internal revenue taxes, so far
as applicable," etc., are extended to this tax, c. 6, § 38, 36
Stat. 117, but that is far from the case of a statute creating a
new right and a special remedy to enforce it in such form as to
make that remedy exclusive. The right to sue the Collector for an
unjustified collection was given by the common law. The
jurisdiction over suits against the United
Page 237 U. S. 32
States under § 24 of the Judicial Code extends to "all claims
not exceeding ten thousand dollars founded upon the Constitution of
the United States or any law of Congress." However gradually the
result may have been approached in the earlier cases, it now has
become accepted law that claims like the present are "founded upon"
the revenue law. The argument that there is a distinction between
claims "arising under" (Judicial Code, § 24, First) and those
"founded upon" (
id., § 24, Twentieth) a law of the United
States rests on the inadmissible premise that the great act of
justice embodied in the jurisdiction of the Court of Claims is to
be construed strictly and read with an adverse eye.
Dooley v.
United States, 182 U. S. 222,
182 U. S. 228;
United States v. Hvoslef, March 22, 1915,
ante,
p.
237 U. S. 1.
Jurisdiction was taken for granted in
United States v. N.Y.
& Cuba S.S. Co., 200 U. S. 488, and
was upheld in
Christie-Street Commission Co. v. United
States, 136 F. 326;
United States v. Hyams, 146 F.
15, 18;
United States v. Finch, 201 F. 95, 97.
Being of opinion that the district court had jurisdiction, we
pass to the merits. They also may be disposed of without much
discussion. The line lies between
Cedar Street Co. v. Park
Realty Co., 220 U. S. 107,
220 U. S. 170,
and
Zonne v. Minneapolis Syndicate, 220 U.
S. 187, the latter case being carried perhaps a little
farther by
McCoach v. Minehill Railway, 228 U.
S. 295. We are of opinion that this case is governed by
the last two, and that the decision was right. The question is
rather what the corporation is doing than what it could do,
228 U. S. 228
U.S. 305,
228 U. S. 306,
but looking even to its powers, they are limited very nearly to the
necessary incidents of holding a specific tract of land. The
possible sale of the whole would be merely the winding up of the
corporation. That of a part would signify that the Dry Goods
Company did not need it. The claimants' characteristic charter
function, and the only one that it was carrying on, was the bare
receipt and distribution to its stockholders
Page 237 U. S. 33
of rent from a specified parcel of land. Unless its bare
existence as an intermediary was doing business, it is hard to
imagine how it could be less engaged.
Judgment affirmed.
MR. JUSTICE McREYNOLDS took no part in the consideration or
decision of this case.