In which the first two points adjudged in the preceding case,
and the points adjudged in Insurance Company v.
5 Wall. 541, are affirmed, including the
point adjudged in this last case, to-wit, that where jurisdiction
depends wholly on a statute, suits brought during the existence of
the statute fall with its repeal.
In this case, which came on error from the Circuit Court for the
Northern District of New York, the same condition of enactment and
repeal of statutes presented itself as in the last case. It is set
pp. <|76 U.S. 560|>560-562. It makes
the fundamental part of this case as of that. And the reader who
desires to read the report of this case as well as the report of
that will please to recall it thence or refer to it there.
Page 76 U. S. 568
In the present case, D. & J. Osborne, manufacturers, brought
suit to June Term 1866, against one Gates, assessor of internal
revenue, to recover damages for his having illegally assessed
against them taxes upon certain articles manufactured by them. A
case was stated for the judgment of the court. In one clause of it,
it was agreed that
"The plaintiffs, for several years past, have been manufacturers
of reaping and mowing machines at the City of Auburn and within the
24th Collection District of the State of New York,"
and in another clause that "the defendant, as the assessor of
the 24th district, did require of the plaintiffs that they should
return &c., the number of tons," &c.
In the declaration, a similar representation was made as to the
citizenship of the parties. It alleged that the plaintiffs bring
"their certain declaration against Joseph Gates, the Assessor of
Internal Revenue for the 24th District of the State of New York,
which is in and within the said Northern District of New York," and
it thus began:
"And whereas the said D. M. Osborn & Company, so being the
exclusive manufacturers &c., at their said manufacturing
establishment in the said City of Auburn and within the said 24th
Collection District of the said state. . . ."
The court gave judgment for the plaintiffs, and the government
brought the case here on error.
Page 76 U. S. 569
MR. JUSTICE CLIFFORD stated the particulars of the case and
delivered the opinion of the Court.
Damages are sought to be recovered by the plaintiffs of the
defendant, as the Assessor of Internal Revenue Taxes for the
Twenty-fourth District in the State of New York, because, as they
allege, he illegally assessed against them certain internal revenue
taxes upon certain articles which they manufactured during the
period specified in the declaration.
They brought their suit on the twentieth of July, 1866, and the
declaration contains forty-one counts. Twenty-eight of the counts
relate to certain internal revenue taxes alleged to have been
illegally assessed by the defendant against the plaintiffs upon
certain iron castings of two classes therein described. One class
consisted of castings of iron exceeding ten pounds in weight for
each casting, and the other class consisted of castings of iron of
ten pounds weight for each casting or less, as more fully set forth
in the first fourteen counts.
Machines in a finished condition for reaping and mowing were
also manufactured by the plaintiffs during the same period, and the
remaining thirteen counts relate to assessments made by the
defendant against the plaintiffs upon reaping and mowing machines
which were in a finished condition, and the charge is that the
last-named assessments were also illegal and that the defendant, as
such assessor, transmitted the lists to the collector of the
district, and that the plaintiffs paid the taxes under protest, as
in the case of the assessments upon the castings of iron, which
were in fact used as component parts of the finished machines.
For several years prior to the assessment of the taxes in
question, the plaintiffs had been manufacturers of the Kirby
Page 76 U. S. 570
and Mower at Auburn, within that collection district. They were
the exclusive licensees for the manufacture and sale of those
machines under the several patents granted for that invention, and
the agreed statement shows that they make the castings used as
parts of the machines as well as the machines in their organized
and finished condition, and it is admitted that the castings which
they make cannot be used for any other purpose than as component
parts of their machine, nor as parts of any different machine made
by any other manufacturers.
Castings manufactured by the plaintiffs are made from pig iron,
upon which the internal revenue duties imposed under the acts of
Congress have been fully paid. All of the castings, after being
taken from the moulds, require to be polished, examined, and tested
to see if they are perfect and fit for the purpose before they can
be used as component parts of a reaper or mower, and many of them
have also to be painted and varnished.
Reapers and mowers, when sold by the plaintiffs, include as
parts thereof all the necessary pieces of castings and of woodwork
to constitute a complete working machine; but they do not put all
of the several parts together until the purchaser is ready to use
the machine in the field, as it is much more convenient to
transport the several parts in their separate condition than the
Prior to the year 1865, the plaintiffs had never made any
returns to the assessor or assistant assessor of any castings which
they manufactured, nor had they ever been required to make any such
return, either by the assessor, assistant assessor, or
commissioner; but the commissioner, in March of that year, directed
the defendant, as such assessor, to require of the plaintiffs such
a return, specifying the number of tons of such castings which they
had manufactured of the two classes mentioned in the declaration
for the six months next preceding the month of March of that year
and also the number of finished machines which they had
manufactured and sold during the same time, in order that the same
might be separately taxed, as follows:
(1) That the castings of ten pounds weight or less each casting
might be taxed at the rate of five percent ad valorem.
(2) That the castings exceeding ten pounds in weight each
casting might be taxed at the rate of three dollars per ton.
(3) That the finished machines sold during that time might be
Page 76 U. S. 571
percent ad valorem,
without any deduction's being made
for the castings used as component parts of the machines.
Pursuant to the directions of the commissioner, the plaintiffs
made the required return and paid the taxes to the collector under
protest, and brought this suit to recover compensation for the
illegal acts of the defendant. Process having been served, the
defendant appeared and pleaded that he was not guilty, which was
duly joined by the plaintiff, and the parties entered into
stipulation waiving a jury, and consenting that the cause might be
tried by the court without the intervention of a jury. [Footnote 1
Hearing was accordingly had before the court and judgment was
rendered for the plaintiffs in the sum of nine thousand eight
hundred and five dollars and twelve cents, besides costs and
charges. Whereupon the defendant sued out a writ of error and
removed the cause into this Court.
Besides the first assessment, which included the month of July,
1864, and extended to February, 1865, both inclusive, there were
subsequent assessments for each month following, up to and
including May, 1866, and the agreed statement finds that the same
state of facts apply to every month thereafter until the passage of
the act of the thirteenth of July, 1866, which transferred reapers
and mowers to the free list. [Footnote 2
Where internal revenue taxes are illegally assessed, it is well
settled that the injured party, if he complies with the conditions
specified in the act of Congress upon that subject and pays the
taxes under protest, may maintain an action of assumpsit against
the collector to recover back the amount so paid. [Footnote 3
Collectors in such cases are not required to reimburse
themselves for such liabilities, but the provision is that all such
judgments against them shall be paid by the commissioner, including
the costs and expenses of the suit. Such a judgment against the
collector is in the nature of a recovery against the United States,
and consequently the amount recovered is regarded as a proper
charge against the revenue collected from that source. Grant all
that and still the concession does not touch the question involved
in this case, as the suit in the case before the court is against
the assessor to recover back taxes paid to the collector, which
presents a question never adjudicated
Page 76 U. S. 572
in this Court. Assessors may perhaps be liable for an illegal
assessment in cases where they have no jurisdiction to make any
assessment, but the question whether an assessor is liable to an
action of assumpsit for taxes paid to a collector is a very
different question, and it is quite certain that such a theory
finds no support in any prior decision of this Court. [Footnote 4
Actions of the kind may under some circumstances undoubtedly be
maintained against the collector, and it may be that an assessor
acting in a case where he has no jurisdiction may be liable to the
injured party for an illegal assessment of internal revenue taxes,
but neither the collector nor the assessor can be sued in the
circuit court of the United States by any party who is a citizen of
the same state with such collector or assessor. Suits in such cases
-- that is, where the plaintiff and defendant are citizens of the
same state -- may be brought in the state courts, but such suits
cannot be maintained in the circuit courts under existing laws
unless the plaintiff and defendant are citizens of different
states. Consequently, where the parties are citizens of the same
state, the action must be brought in the state court, but the
defendant, if he sees fit and seasonably takes the proper steps,
may remove the cause into the circuit court for trial.
Cases arising under the revenue laws were declared to be
cognizable in the circuit courts by the Act of the second of March,
1833, unless where it appeared that other provisions for the trial
of the same had been previously made by law. Laws for the
assessment and collection of internal revenue duties were not in
existence at that time, but those provisions were extended by the
fiftieth section of the act of the thirtieth of June, 1864, to
cases arising under the acts of Congress providing for the
collection of internal revenue duties, and the same section
provides that all persons authorized to assess, receive, or collect
such duties or taxes under those laws shall be entitled to all
exemptions, immunities, benefits, rights, and privileges therein
enumerated or conferred. [Footnote
Page 76 U. S. 573
Such an action, to recover back internal revenue duties,
illegally assessed and paid under protest, might undoubtedly have
been maintained in the circuit courts while that provision remained
in force although both parties were citizens of the same state, as
the jurisdiction was made to depend upon the subject matter, but
the first proviso in the sixty-seventh section of the Act of the
thirtieth of July, 1866, expressly enacts that the original act,
to-wit, the Act of the second of March, 1833, shall not be so
construed as to apply to cases "arising under any of the internal
revenue acts nor to any case in which the validity or
interpretation of those acts shall be in issue." [Footnote 6
Unquestionably the effect of that proviso was to confine the
original act to the purposes for which it was passed and to limit
its scope and operation, standing alone and unaffected by the
fiftieth section of the subsequent act, to cases arising under the
acts of Congress providing for the collection of import duties. But
that proviso left the fiftieth section of the act of the thirtieth
of June, 1864, untouched and in full force, and if legislation had
stopped there, persons duly authorized to assess, receive, or
collect internal revenue duties would still have been entitled to
the same exemptions, immunities, benefits, rights, and privileges
under the original act as persons employed to assess, receive, or
collect import duties. Legislation, however, did not stop there,
but the sixty-eighth section of the Act of the thirteenth of July,
1866, repealed the fiftieth section of the Act of the thirtieth of
June, 1864, altogether, subject to the proviso contained in the
same repealing section, which enacts that any case removed, from a
state court, into the circuit court, under the former regulations
upon the subject, shall be remanded unless the justice of the
circuit court shall be of the opinion that the same, if pending in
the state court, might be removed into the circuit court under the
new provision contained in the sixty-seventh section of that
Since the passage of that act and the repeal of the fiftieth
section of the prior act, the circuit courts have no jurisdiction
of cases arising under the internal revenue laws to recover back
duties illegally assessed and paid under protest unless the
plaintiff and defendant therein are citizens of different states.
Page 76 U. S. 574
actions must be commenced in the state courts if the parties are
citizens of the same state, but the defendant may, at any time
before the trial, upon petition to the circuit court of the
district in which he is served with process, remove the cause, upon
due proceedings therein, into such circuit court, and the provision
is that the cause thereafter shall be heard and determined as a
cause originally commenced in that court. [Footnote 7
Assumpsit for money had and received is the appropriate remedy
to recover back moneys paid under protest for internal revenue
duties illegally assessed, and, if commenced in a state court, the
action may be removed, on petition of the defendant, into the
circuit court for the district where the service was made, and in
that state of the case the jurisdiction of the circuit court is
clear beyond doubt, irrespective of the citizenship of the parties,
but if the action is originally commenced in the circuit court, the
cause must be dismissed for the want of jurisdiction unless is
appears that the parties were citizens of different states.
Three propositions are submitted by the plaintiffs as being
severally sufficient to take the case before the court out of the
operation of that rule:
(1) They contend that it does not appear that the case was not
removed from the state court into the circuit court, as required to
give the circuit court jurisdiction under existing laws.
(2) That it does not appear that the plaintiff and defendant in
the case are not citizens of different states, as required to
confer jurisdiction upon the circuit court.
(3) That the case was properly cognizable in the circuit court
at the time it was commenced, and that the subsequent repeal of the
provision conferring such jurisdiction does not impair the right of
the plaintiffs to maintain the suit.
Unsupported in fact as the first proposition is, it does not
seem to be necessary to enter into any argument to refute it.
Suffice it to say that the record shows that the suit was commenced
in the circuit court, and that it was not removed into that court
from the state court, which is all that need be said in reply to
the first proposition.
When the jurisdiction of the circuit court depends upon the
citizenship of the parties, it is not enough that it does appear
that they are not citizens of the same state, but the facts
Page 76 U. S. 575
to give the circuit court jurisdiction must be distinctly
alleged. Circuit courts are courts of special jurisdiction, and
therefore they cannot take jurisdiction of any case, either civil
or criminal, where they are not authorized to do so by an act of
Congress. [Footnote 8
Jurisdiction in such cases was conferred by an act of Congress,
and when that act of Congress was repealed, the power to exercise
such jurisdiction was withdrawn, and inasmuch as the repealing act
contained no saving clause, all pending actions fell, as the
jurisdiction depended entirely upon the act of Congress. [Footnote 9
Applying these principles to the present case it is clear that
the circuit court has no jurisdiction of this case. Usually where a
court has no jurisdiction of the case, the correct practice is to
dismiss the suit, but a different rule necessarily prevails in an
appellate court in cases where the subordinate court was without
jurisdiction and has improperly given judgment for the plaintiff.
In such a case, the judgment in the court below must be reversed,
else the plaintiff would have the benefit of a judgment rendered by
a court which had no authority to hear and determine the matter in
Judgment reversed and the cause remanded with directions to
dismiss the case for want of jurisdiction.
13 Stat. at Large 5.
14 Stat. at Large 149.
5 Wall. 731.
Barhyte v. Shepherd,
35 N.Y. 238; Weaver v.
3 Denio 117; Swift v. Poughkeepsie,
N.Y. 511; Dickinson v. Billings,
4 Gray 42; Railroad
8 Allen 245.
13 Stat. at Large 241.
14 Stat. at Large 172; Philadelphia v.
5 Wall. 728; Insurance
Company v. Ritchie,
5 Wall. 541.
14 Stat. at Large 171, § 67.
8 How. 449; Turner v.
4 Dall. 10; McIntire
7 Cranch 506; Kendall v. United
12 Pet. 616.
13 How. 438; Yeaton v.
5 Cranch. 281; The
6 Cranch 329; The
7 Wheat. 551; Maryland
v. Railroad Company,
3 How. 534; 1 Kent (11th ed)
465; Butler v. Palmer,
1 Hill 324.