Hamilton v. Dillin, 88 U.S. 73 (1874)
U.S. Supreme CourtHamilton v. Dillin, 88 U.S. 21 Wall. 73 73 (1874)
Hamilton v. Dillin
88 U.S. (21 Wall.) 73
The government of the United States clearly has power to permit limited commercial intercourse with an enemy in time of war and to impose such conditions thereon as it sees fit; this power is incident to the power to declare war and to carry it on to a successful termination.
It seems that the President alone, who is constitutionally invested with the entire charge of hostile operations, may exercise this power, but whether so or not, there is no doubt that with the concurrent authority of the Congress, he may exercise it according to his discretion.
The Act of Congress of July 13, 1861, 12 Stat. at Large 257, prohibiting commercial intercourse with the insurrectionary states but providing that the President might, in his discretion, license and permit it in such articles, for such time, and by such persons as he might think most conducive to the public interest, to be conducted and carried on only in pursuance of rules and regulations prescribed by the Secretary of the Treasury, fully authorized the rules and regulations adopted March 37 and September 11, 1863, whereby, amongst other things, permission was given to purchase cotton in the insurrectionary states and export the same to other states upon condition of paying (besides other fees) a fee or bonus of four cents per pound.
The Act of July 2, 1864, 13 Stat. at Large 375, respecting commercial intercourse with the insurrectionary states recognized and confirmed these regulations.
The charge of four cents per pound required by these regulations was not a tax, nor was it imposed in the exercise of the taxing power, but in the exercise of the war power of the government. It was a condition which the government, and the President endued with the powers thereof, in the exercise of supreme and absolute control over the subject, had a perfect right to impose.
The condition thus imposed was entirely in the option of any person to accept or not. if any did accept it and engage in the trade, it was a voluntary act, and all payments made in consequence were voluntary payments, and on that ground alone (if there were no other), could not be recovered back.
The Internal Revenue Acts of 1862, 12 Stat. at Large 465, and 1864, 13 id. 15, in imposing specific duties by way of excise on cotton, were not inconsistent with or repugnant to the charge in question. The two charges were different things. One was a payment as a condition of trading at all, required by the war power; the other was an excise imposed by the taxing power.
Nashville, though within the National military lines in 1868 and 1864, was nevertheless hostile territory within the prohibition of commercial intercourse, being within the terms of the President's proclamation on that subject, which proclamation in that regard was not inconsistent with the Act of July 13, 1861, properly construed.
The civil war affected the status of the entire territory of the states declared to be in insurrection except as modified by declaratory acts of Congress or proclamations of the President.
Hamilton and others brought assumpsit in the court below
against Dillin, surveyor of the port at Nashville, Tennessee, to recover a charge of four cents per pound paid by them to the said defendant, from August, 1863, to July, 1864, for permits to purchase and ship to the loyal states large quantities of cotton, amounting to over seven millions of pounds. This payment was one of the fees or charges required by the regulations of the Treasury Department to be made as a condition of carrying on the said trade between those portions of the insurrectionary states within the lines of occupation of the Union forces and the loyal states.
The case was thus:
The Constitution ordains as follows:
"The Congress shall have power to lay and collect taxes, duties, imposts, and excises. [Footnote 1]"
"The President shall be commander-in-chief of the army and navy of the United States, and of the militia of the several states, when called into actual service of the United States. [Footnote 2]"
On the 13th of July, 1861, Congress passed an act [Footnote 3] by which the President was authorized, after certain preliminary measures for suppressing the insurrection, to declare by proclamation what states and parts of states were in a state of insurrection against the United States. The act proceeds:
"And thereupon all commercial intercourse by and between the same and the citizens thereof and the citizens of the rest of the United States shall cease and be unlawful so long as such condition of hostility shall continue, and all goods &c., coming from said state or section into the other parts of the United States, and all proceeding to such state or section by land or water, shall, together with the vessel or vehicle &c., be forfeited to the United States: provided however that the President may, in his discretion, license and permit commercial intercourse with any such part of said state or section, the inhabitants of which are so declared in a state of insurrection, in such articles, and for such time, and by such persons as he, in his discretion, may think most conducive to the public interest, and such intercourse,
so far as by him licensed, shall be conducted and carried on only in pursuance of rules and regulations prescribed by the Secretary of the Treasury."
In pursuance of this act, the President, on the 16th of August, 1861, issued a proclamation [Footnote 4] declaring that the inhabitants of certain states, including Tennessee, were in a state of insurrection against the United States, and that all commercial intercourse between them and the citizens of other states was unlawful, and that all goods &c., coming from said states without the special license and permission of the President, through the Secretary of the Treasury, or proceeding to any of said states &c., would be forfeited &c. This proclamation excepted from its operation, amongst other things, such parts of the enumerated states as might maintain a loyal adhesion to the Union and Constitution or might be from time to time occupied and controlled by forces of the United States. A subsequent proclamation, issued April 2, 1863, [Footnote 5] abrogated the exception as embarrassing "to the due enforcement of said act of July 13, 1861, and the proper regulation of the commercial intercourse authorized by said act;" such abrogation, however, not extending to West Virginia or the ports of New Orleans, Key West, Port Royal, or Beaufort, in South Carolina.
On the 28th of February, 1862, the insurrection not making at this time further headway, the President issued an executive order thus:
"Considering that the existing circumstances of the country allow a partial restoration of commercial intercourse between the inhabitants of those parts of the United States heretofore declared to be in insurrection and the citizens of the loyal states of the Union, and exercising the authority and discretion confided to me by the Act of Congress, approved July 13, 1861 &c., I hereby license and permit such commercial intercourse, in all cases within the rules and regulations which have been or may be prescribed by the Secretary of the Treasury for the conducting and carrying on of the same on the inland waters and ways of the United States. "
Under the authority of this and subsequent executive orders, the Secretary of the Treasury from time to time -- that is to say on the said 28th of February, 1862, on the 28th of August, 1862, on the 31st of March, 1863, and finally on the 11th of September, 1863 -- prescribed rules and regulations for carrying on the trade licensed by the President. Those last mentioned, and dated the 11th of September, 1863, being revised rules and regulations.
These last-dated regulations prohibited the transportation of goods or merchandise to or from any state or part of a state in insurrection except under permits, certificates, and clearances as provided therein, and the surveyors of the customs at Nashville and other places were designated as the officers to grant such permits. Authority to purchase and transport goods was to be granted only to those who should make the prescribed affidavit, and enter into bond to pay all fees required by the regulations, and no permit was to be granted for such purchase and transportation except upon the payment of such fees or the giving of a bond to secure the same. The fees referred to, and appended to the regulations and making part thereof, consisted of various items and charges to be paid, and, amongst others,
"For each permit to purchase cotton in any insurrectionary district, and to transport the same to a loyal state, per pound . . . four cents."
Accompanying the rules and regulations, dated March 31, 1863, was the following contemporary:
"LICENSE OF TRADE BY THE PRESIDENT"
"WASHINGTON, EXECUTIVE MANSION, March 31st, 1863"
"Whereas, by the Act of Congress approved July 13, 1861, entitled &c., all commercial intercourse between the inhabitants of such states as should by proclamation be declared in insurrection against the United States and the citizens of the rest of the United States was prohibited so long as such condition of hostility should continue, except as the same shall be licensed and permitted by the President, to be conducted and carried on only in pursuance of rules and regulations prescribed by the
Secretary of the Treasury; and whereas it appears that a partial restoration of such intercourse between the inhabitants of sundry places and sections heretofore declared in insurrection in pursuance of said act and the citizens of the rest of the United States will favorably affect the public interests,"
"Now, therefore, I, Abraham Lincoln, President of the United States, exercising the authority and discretion confided to me by the said act of Congress, do hereby license and permit such commercial intercourse between the citizens of the loyal states and the inhabitants of such insurrectionary states, in the cases and under the restrictions described and expressed in the regulations prescribed by the Secretary of the Treasury, bearing even date with these presents, or in such other regulations as he may hereafter, with my approval, prescribe."
These revised rules and regulations of September 11, 1863, were also approved in form by the President.
It was under the authority of these licenses and regulations that the four cents per pound, now sought by the plaintiffs to be got back, was levied and collected.
This license (a public document, perhaps), was not put in evidence.
By the bill of exceptions, it appeared that it was admitted on the trial that the defendant was acting surveyor of customs at Nashville during the period in question, and the only person that could grant the necessary permits; that the plaintiffs had in their possession, as owners or factors, various lots of cotton, specified in the bill, which had been purchased in pursuance of the license of the President and the regulations of the Secretary of the Treasury in that regard; that they applied to the defendant for permits to ship and transport said cotton from Nashville to a loyal state, and that the defendant, in obedience to said regulations and instructions, refused to grant such permits except on payment of the four cents per pound. It was also admitted that the regulations were well and publicly known at Nashville, and that they directed seizure and confiscation of all cotton shipped without such payment and permit, and that the
plaintiffs made no formal protest against the payment of the tax, but paid the same, and that the same was paid by the defendant into the Treasury of the United States before the commencement of this action. It was also admitted that during said term of time, Nashville was within the lines of military occupation of the United States.
The plaintiffs then put in evidence the Treasury Regulations in force at the time of the shipment of the cotton in question.
So far as to the main case. In order, however, fully to understand things, it is necessary to advert to certain statutes passed by Congress at different times, and which the plaintiffs and defendants supposed bore much upon their respective positions.
On the plaintiffs' side of the case, as they argued, it appeared that by a general internal revenue act of July 1, 1862, an act of one hundred and nineteen sections, covering fifty-seven pages of the statute book and comprehending an immense list of articles taxed, Congress levied a tax of one-half cent per pound on all cotton, to be paid before its removal from the place of production. [Footnote 6] And again, that by an Act of March 7, 1864, it raised the tax to two cents per pound in lieu of the one-half cent, where no duty had already been paid, levied, or collected on the cotton. [Footnote 7]
On the defendant's side, as he conceived, the President having, on the 1st July, 1862, issued a proclamation declaring what states and parts of states were in insurrection, with a view to the provisions of an act imposing a land tax, and made no exception of any fractions of states, except the counties constituting West Virginia, Congress, on the 12th of March, 1863, passed what is known as the Captured and Abandoned Property Act, an act "to provide for the collection of abandoned property and for the prevention of frauds in insurrectionary districts within the United States."
The first section enacts:
"That it shall be lawful for the Secretary of the Treasury,
from and after the passage of this act, . . . to appoint a special agent or agents to receive and collect all abandoned property in any state or territory, or any portion of any state or territory of the United States, designated as in insurrection &c., by the proclamation of the President of 1st July, 1862."
The fourth section enacted:
"That all property coming into any of the United States not declared in insurrection as aforesaid, from any of the states declared in insurrection, through or by any other person than any agent duly appointed under the provisions of this act, or under a lawful clearance by the proper officer of the Treasury Department, shall be confiscated."
So, on the 2d July, 1864, [Footnote 8] Congress passed
"An act in addition to the several acts concerning commercial intercourse between loyal and insurrectionary states, and to provide for the collection of captured and abandoned property and the prevention of frauds in states declared in insurrection."
Its third section enacts:
"That all moneys arising from the leasing of abandoned lands, houses, and tenements, or from sales of captured and abandoned property collected and sold in pursuance of said act, or of this act, or from fees collected under the rules and regulations made by the Secretary of the Treasury, and approved by the President, dated respectively the 28th of August, 1862, 31st of March, and 11th of September, 1864, or under any amendments or modifications thereof, which have been or shall be made by the Secretary of the Treasury and approved by the President, for conducting the commercial intercourse, which has been or shall be licensed and permitted by the President, with and in states declared in insurrection, shall, after satisfying therefrom all necessary expenses, to be approved by the Secretary of the Treasury, be paid into the Treasury of the United States, and all accounts of moneys received or expended in connection therewith shall be audited by the proper accounting officers of the Treasury."
The counsel of the plaintiffs insisted and requested the court to charge, that the exaction of the four cents per pound was
illegal and void; that it was essentially a tax and not authorized by any act of Congress, which alone had the power to impose taxes; that even if it were authorized by law, the law itself was to that extent unconstitutional and void, and that under the circumstances and state of facts agreed upon by the parties, the payment was involuntary, and no protest was necessary to entitle the plaintiffs to recover back the money thus illegally exacted. The court refused to charge as requested by the plaintiffs, but charged as follows:
First. That the Act of July 13, 1861, conferred power upon the Secretary of the Treasury to authorize the exactions mentioned in said plaintiffs' declaration.
Second. That whether the said act conferred such power or not, the action of the Secretary of the Treasury in imposing, and of the defendant in making, said exactions was ratified and made valid by the Act of July 2, 1864, entitled
"An act in addition to the several acts concerning commercial intercourse between loyal and insurrectionary states, and to provide for the collection of captured and abandoned property, and the prevention of frauds in states declared in insurrection."
Third. That the plaintiffs could not maintain an action to recover back said exactions, even if they had been illegal, for want of having protested against them at the time of payment.
To this charge exceptions were taken, and the correctness of these propositions was the matter which this Court was now called on to decide.