Allen v. Smith

after making the above statement, delivered the opinion, of the court.

This case involves the question whether, under the act of Congress and the will of Bichard H, Allen, the bounty 6f eight tenths of one per cent per pound, granted by Congress to the “ producer ” of sugar', was payable to his widow or to his heirs at law.

In the course of the litigation in the state courts a large, number of questions were raised and decided which are not pertinent to this issue. So far as these questions depend upon the construction of state laws or of the will of Mr. Allen, they are beyond our cognizance. So far as the question of bounty depends upon the construction of that law, the decision of the. Supreme Court is equally binding upon us ;"-but so far as it depends upon the construction of the act of "Congress awarding such bounty, it is subject to reexamination here.

The course of legislation upon the subject of the sugar bounty is set forth at length in the opinion of this court in United States v. Realty Co., 163 U. S. 427 , and is briefly as follows:

By the tariff act of October-1, 1890, c. 1244, 26 Stat. 667 , it was provided in paragraph 2§1 that on and after July 1, 1891, and until July 1, 1905, there should be paid “ to the producer of sugar” a variable bounty, dependent upon polariscope tests, “ under such rules and regulations as the Commissioner' of Internal Bevenue ... . shall prescribe.” Then follow three paragraphs requiring the producer to give notice to the Commissioner of Internal Bevenue of the place of production, the methods employed, and an - estimate of the amount to be produced, together with an application. for a license and an •accompanying bond. The Commissioner was required to issue

At the time of Mr. Allen’s death, September 19, 1894, and for many years prior thereto, he was the owner of a valuable sugar plantation, upon which he was engaged in the- cultivation of cane and the manufacture of sugar. At this time there was standing in his fields a large crop of cane nearly ready for harvesting. In anticipation of this crop and of the manufacture of sugar"therefrom, Mr. Allen had complied with all the provisions of the bounty law, and would, but for the repeal of the act of 1894, about one month prior to his death, have been entitled to collect the bounty. While, then, there was no bounty provision in force at the- time of his death,

The material provisions of his will are as follows :

• 1. “I give to my wife, Bettie Allen, one half on my Rienzi plantation and one half of all tools, mules, etc.”

2. “My executors shall have from one to five years to sell and close up the estate.”

3. “I will.that my wife do have one half of everything belonging to Rienzi plantation, except the claim due me by the United States.” (This was not the claim for bounty.)

4. “ When it ” (the plantation) “ is sold half of all the proceeds, cash, notes, etc., is to belong to my wife, Bettie Allen.” “ As I fear property will be very low, I give my executors five years to work for a good price.”

5. “ In the meantime, that they are waiting to sell, the place can be rented or worked to pay all taxes and other charges, any over that to go to Mrs. Bettie Allen’s credit.”

Under the last clause of the will the executors, while awaiting . a favorable opportunity to sell the plantation, were authorized to work it so as to pay all' taxes and other charges, and to place the net proceeds to Mrs. Allen’s credit. In construing this clause the Supreme Court of Louisiana held, upon the first hearing, 48 La. Ann. 1036 , that Mistress Bettie was entitled to the net proceed of the crop of the Rienzi plantation for the years 1894-1895. At the time of the filing of their first account by the executors, the crop of 1894 had not been sold by them, and the bounty granted by the act of March 2, 1895, had not been collected; consequently these two items .were reserved to be afterwards accounted for by. the executors. A.further question, however, arose, and that was as to whether, in making up the net proceeds of the crop of. 1894, the expenses'incurred prior to the death of the tes

The Supreme Court was further of the opinion that, the bounty money which was collected from the Government, by. the executors formed no part of the crops of 1894. and 1895, nor of their proceeds; that it was not in esse at the -time those crops were grown and gathered; that the executors did. nothing- but make the -necessary proofs preparatory to its collection and received payment of the money, and that it should therefore be classed as an unwilled -asset of the: deceased, and not as part of the net proceeds of the crop of 1894, passing, under the will, to Mrs. Allen. 49 La. Ann. 1096 . But, upon a rehearing of this questiqn, 49 La. Ann, 1 -112,-. the -Supreme Court modified its views to-, a certain extent, treated the case as one depending upon, the question' who. was.the producer of the crop within the .meaning of the' act of Congress, and held that the producer of the cane was to be the first, to receive the benefit of the bounty on complying with certain formalities; that the act placed the manufacturer of the sugar, in the matter of the bounty laws, in a secondary position; but that both production and manufacture were essential in order, to enable the producer to recover the bounty; that to determine who was the producer it was necessary to consider the questions of title and' ownership; that the crop had been planted and cultivated by Allen, and all expenses to the date of his death were paid from his funds-; that he had earned the value of the crop on that date,

In,its opinion upon the rehearing the Supreme Court adjudged that under thé will of Allen the proceeds of the manufacture of sugar carried on after his death were for the account of Mrs. Allen ¿nd not for that of the.estate, and that asa consequence of this construction Mrs. Allen was the manufacturer of the sugar made in the sugar house; that is to say, that whilst thé executors may have manufactured the sugar they did so as the agents and for the account of Mrs. Allen, and she was therefore the producer of the. sugar, in so far as the manufacture thereof was concerned. In delivering the opinion the court used the following language: “ But there: are other Clauses of the will which, in our view, extend her right and show that she was the producer after the death of Mr. Allen. She paid all the expenses, of the crop; she was to receive the proceeds under the terms of the will; indeed, she was the owner of the crop. She can well be considered, as we think, the producer. We desire it to be well understood that, in our opinion, the bounty money is no part of the crop or proceeds of the crop. The question was: Who was the owner and producer of the crop after the death of the testator ? ” ' .

Having thus determined that - under the will of Mr. Allen she, through the executors, was entitled to all the proceeds of the manufacture of sugar in the sugar house, the court proceeded, to take away from Mrs. Allen a part of these proceeds upon the theory that, by the act of Congress, the bounty was given, not to the manufacturer of the sugar, but to. the producer of the cane. In doing this it necessarily took from Mrs.

.The correctness of this construction is the question presented for our consideration. In the final production of sugar there are two distinct processes involved: (1) The raising of the cane; (2) the manufacture of th¿ sugar from the cane so raised. If the cane be raised and the sugar be manufactured by the same person, he,is beyond peradventure the “producer” of the sugar within the meahing of the statute; but if the cane be raised by one person and the sugar manufactured by another, which is the producer within the intent of the act ? Or, if, as in this case, the. cane be raised by the testator and he die while the crop is growing, and his executors reap it and convert it into sugar, which is the producer and which is entitled to the net proceeds of the crop? Conceding the question of what are. the net proceeds of the crop is one determinable by the state courts alone, it is.so commingled with the Federal question, who, under the act of Congress, was the producer of this crop, that it is scarcely possible to. give a construction to the

It is quite evident that Allen himself was not the producer of the sugar. He had planted the crop of cane upon his own plantation. He had given notice and a bond to the Commissioner of Internal Revenue, and had applied for a license ;but he had done nothing toward the production of the sugar at the time of his death beyond raising the cane, which certainly would not have entitled him to be considered a producer of the sugar. The word “ producer ” does not differ essentially in its legal aspects from the word “ manufacturer,” except that it is more commonly used to denote a person who raises agricultural crops and puts them in a condition for the market. In the case of sugar a process of strict manufacture is also involved in converting the cane into its final product. In a number of cases arising in this court under the revenue laws, it is said that the word “ manufacture ” is ordinarily used to denote an article upon the material of which labor has been expended to make the finished product. That such product is often the result of several processes, each’ one of which is a separate and distinct manufacture, and usually receives a separate name; or, as stated in Tide Water Oil Co. v. United States, 171 U. S. 210 , 216: “ Raw materials may be and often are subjected to'successive processes Of manufacture, each one of which is complete in itself, and several of which may be required to make the final product.^] Thus logs are first manufactured into boards, planks, joists, scantling, etc., and then by entirely different processes are fashioned into boxes, furniture, doors, window sashes, trimmings and the thousand and one articles manufactured wholly or in part of wood. The steel spring of a watch is made ultimately from iron ore, but a large number of processes or transformations, each successive step in which is a distinct process of manufacture, and for

Neither can "Mrs. Allen, nor the heirs of her husband, be said to be the direct producers of the sugar. Neither of them was the owner of the crop, which belonged to the plantation while growing, and would, as hereinafter stated, have passed to the purchaser, had a sale been made while the cane was still uncut. One half of the plantation passed under.the will "to Mistress Bettie, and the other half to the heirs o'f her. husband.

There remain only the executors who, as between the estate of Allen and the Government, must be deemed the producers of the sugar. By the will they were authorized to rent or work the plantation as they pleased, to pay all taxes and other charges, and to put the residue to the credit of Mrs. Allen. The inchoate right to the bounty obtained by Allen before his death was a personal assetj which undoubtedly passed to the executors, who subsequently perfected that right and received the money.

Of course this money did not belong to the executors personally. They held it for the benefit pf the estate and as agents for all persons interested therein; and the question as-between the different hqirs and legatee who shall be deemed the producer of the sugar remains to be settled. We are all of opinion that this question \nust be answered in favor of Mistress Bettie. If the cane “when cut had been sold, .the proceeds, over and above all expenses incurred since her husband’s death, would have belonged to her, but not the bounty eo nomine, since the sugar had not been produced nor the bounty earned. But if such sale had been .made, the cane undoubtedly would have fetched a price largely increased by the fact that the purchaser would receive a bounty upon the manufacture of thjs sugar. It is impossible to suppose that the price of the cane would not be seriously affected by the'promise' of the bounty, though perhaps not to the full amount of such

The difficulty with the position of the Supreme Court of Louisiana is this: That if A should raise the cane and sell it to B, who manufactured it into sugar, A and B would be entitled to share in the bounty, although A may have received a much larger price for his cane than he would have received if there had been no bounty. Under the terms of the will Mistress Bettie was entitled to receive the entire proceeds of the crop, over and above the expensés, taxes and other charges; and whether these came from a price received from the cane increased by the offer of a bounty, or from the bounty actually received upon the production of the sugar, is wholly immaterial; To give to one who raises the cane and sells it to a manufacturer any part of the bounty, is in reality to give him a double bounty, since he must necessarily receive one in the enhanced price given for the cane. On the other hand, the manufacturer of the sugar is entitled to the proceeds of his sugar and to whatever the law has annexed thereto as an incident.

To return to the illustration of manufactures. Can it be possible that, if a bounty were offered for the manufacture of furniture, th'e manufacturer of the finished product would be obliged to share such bounty with the owner of the trees, or the manufacturer of the lumber cut from such trees, from which the furniture was made? Or, under similar circumstances, would the manufacturer of 'watches be compelled to share the bounty with the scores of prior manufacturers who contributed directly or indirectly to the production of the various articles of mechanism which go to make up the finished watch ? To state this question is to answer it; and yet, if the producer of the cane be entitled to any portion of the

The Supreme Court of Louisiana held that the widow-was not Chargeable with any part of the expense of the crop incurred prior to her husband’s death, but that does not changher attitude to the sugar as its actual producer, nor deprive her of the benefit of the bounty; nor do we think that her right to such bounty is affected by the fact that the, bounty law in existence when Allen applied for his- license was repealed before his death, and another law passed in thó following spring renewing the bounty applicable to the crop of the previous year. Such act was passed, as was held by this court, in United States v. Realty Co., 163. U. S. 427, in recognition of a moral obligation to those who had put in their crop the previous year upon the faith of the bounty law then in existence. It was not so much a gift by the Government. as a reward paid in consideration of expenses incurred by the planters upon the faith of the Government’s promise to pay a bounty to the manufacturers and producers of sugar. As applied to this case, we think the act of 1895 should -be construed as a continuation of the prior bounty. To say that it is an “ unwilled asset ” is practically to hold that it is a gift from the Government “ without anything in .the .nature of a consideration,” and that the amount; of sugar , produced is only to be considered as the measure of the bounty. This dissociates the bounty altogether from the motive which actuated Congress in granting it, and turns it into a mere dionatioh of so much money, which it cannot be presumed to have made, even if it had the power. Bounties granted' by a government are never pure donations, but are allowed either in consideration of services rendered or to be rendered, objects qf public interest to be obtained, production or manufacture tb be stimulated, or moral obligations to be recognized. To- grant "a bounty irrespective altogether of these considerations would be an act of pure agrarianism; and to determine who is entitled to the benefit of the bounty is but little more than to determine who has- rendered the consideration.

We do not undertake to say that the crop of growing or maturing cane passed to Mrs. Allen at the date of her husband’s death, since if the executors had chosen to sell the plantation the next day, this cane would have passed to the vendee. In this the common law and the civil law agree. (1 Washb. on Real Prop. 5th ed. 11; Code Napoleon, art. 520.) The same principle is incorporated in the Civil Code of Louisiana,: “ Art. 465. Standing crops and the fruits of trees not gathered, and frees before they are cut down, are likewise immovable, and are considered as part of the land to which they are attached. As soon as the crop is cut, and the fruits gathered, or the trees cut down, although not yet carried off, they are movables.” But what she did own was the proceeds of the crop; the right in case the plantation was not sold to have this crop harvested for her benefit, and if manufactured into sugar, to have the proceeds of such sugar and all the incidents thereto placed to her credit.

For the reasons above given, we think she must be considered as the producer of the sugar, and that it is immaterial that she

It results from this that the decree of the Supreme Court of Louisiana must he reversed., and the cases remanded to that court for further proceedings i/n consonance with this opinion.