United States v. Hvoslef

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 únder § 25 of the War Revenue Act of June 13, 1898, c. 448, 30 Stat. 448 , 460. 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, wdiich 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 section twenty-nine of the Act of Congress approved June thirteenth, eighteen hundred and ninety eight, knowm 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

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 the action, and that the petition did not state facts sufficient to constitute a cause of action. The demurrer was overruled (217 Fed! Rep. 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 judginent 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

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 ,

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 , 497; McLean v. United States, 226 U. S. 374 , 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. 158 ; United States v. Jones, 236 U. S. 106 ; Thacker v. United States, 149 Fed. Rep. 902 ; United States v. Shipley, 197 Fed. Rep. 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, supra. The same rule must obtain

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 . 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

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 has 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

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 construation 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 , 154, 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

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

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 Fed. Rep. 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. 488 , 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 ship owner 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 ship owner 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 , 49, 50; Reed v. United States, 11 Wall. 591 , 600, 601; Leary v. United States, 14 Wall. 607 , 610; Richardson v. Winsor, 3 Cliff. 395 , 399; The T. A. Goddard, 12 Fed. Rep. 174 , 178; 1 Parsons on 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

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 serve 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. 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, c. 30); Rev. Stat., §4219; Acts Feb. 27, 1877, c. 69, 19 Stat. 240 , 250; June 26, 1884, c. 121, § 14, 23 Stat. 53 , 57; July 19, 1886, c. 421, § 11, 24 Stat. 79 , 81. See Transportation Co. v. Parkersburg, 107 U. S. 691 , 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 , 549), but Congress has not attempted to impose a tonnage tax for the privilege of leaving a staté 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 tó be paid on" all charter parties' of vessels having a ‘registered tonnage.’ But, aside^jrom aiiy question as to the scope of this provision, the tax as

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 tookjio part in the consideration and decision of this case.