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Act Aug. 2, 1886, c. 840, 24 Stat. 210 [U. S. Comp. St. 1901, p. 2230], imposed a tax on the manufacture and sale of Oleomargarine. Section 6 of the act provided that:

“Every person who knowingly sells or offers for sale, or delivers or offers to deliver, any oleomargarine in any other form than in new wooden or paper packages as above described, or who packs in any package any oleomargarine in any manner contrary to law, or who falsely brands any package or affixes a stamp on any package denoting a less amount of tax than that required by law, shall be fined for each offense not more than one thousand dollars, and be imprisoned not more than two years."

Section 8, after declaring the amount of tax per pound to be paid by the manufacturer thereof, declares that:

"The tax levied by this section shall be represented by coupon stamps; and the provisions of existing laws governing the engraving, issue, sale, etc., relating to tobacco and snuff, as far as applicable, are hereby made to apply to stamps provided for by this section.”

And section 9 declares that whenever there shall be a sale "without the use of the proper stamps, it shall be the duty of the Commissioner of Internal Revenue, within a period of not more than two years after such sale," etc., to estimate the amount of the tax which has been omitted to be paid, and to make an assessment therefor and certify the same to the collector, and “the tax so assessed shall be in addition to the penalties imposed by law for such sale or removal." The absence of such a provision in the act of 1898, to the effect that the penalties and forfeitures shall be in addition to the amount of the tax to be paid, in respect of the stamps required to be placed on written instruments and the like, is significant. In respect of the articles above enumerated the assessment of the tax was made upon the thing itself, and created an obligation in personam for the tax after the assessment made by the collector, as provided by the statutes.

There are numerous reported cases under the war revenue tax acts wherein suits were instituted to enforce the collection of taxes under other provisions imposing an assessment upon the thing itself or the fund arising in a particular way. As every lawyer who was in active practice during the period when the stamp acts of 1864 and 1866 were in force will recall, the holders of instruments required by the acts to be stamped met with serious defeats in litigation where the unstamped instruments were rejected in evidence. While some state courts held that the act could not thus determine for the state courts the question of the competency of such instruments as evidence, a great majority of the state courts affirmed the validity of the act in this respect, and the federal courts uniformly enforced it. Notwithstanding the fact that failures in certain instances to place on the designated written instruments the required stamps was brought to public attention, there is not a reported case showing that the government conceived that it had a right of action to recover such tax as a debt. And there is but one reported case under the war revenue tax in question where such right of action has been asserted, and that is the case of Fleshman v. McClain (C. C.) 105 Fed. 610. That was a suit instituted against the collector of internal revenue to recover back a tax alleged to have been illegally exacted, growing out of the failure of a stock

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broker to affix revenue stamps to certain memoranda of sales. The Circuit Court overruled a demurrer to the petition, on the distinct ground that as the stamp duty imposed by the statute was collectible through the sale of stamps and in no other prescribed mode, and the statute having prescribed what penalties might be enforced and recovered, attaching other penalizing incidents for failure to affix the stamp, the right to maintain the suit, therefore, could not arise by implication. This ruling was affirmed by the Court of Appeals of the Third Circuit in 106 Fed. 880, 46 C. C. A. 15. While Gray, Circuit Judge, who spoke for the court, held that the tax was not demandable on other grounds as well, he took pains to say that the grounds upon which the court below based its opinion were "equally controlling and decisive of the case in hand,” and then proceeded to adopt the opinion of the district judge. He said, inter alia:

"Congress possessed the sole power to authorize this tax, and the sole power to prescribe the means by which it should be collected. No remedy by suit is given or implied by the act in question, nor is there to be discovered any authority to demand and accept money in lieu of the stamps that are required by law to be affixed.

A penalty for failure to obey this statutory requirement is provided, but I find no other remedy in the act."

It seems to us that a contrary view of the statute in question would be far-reaching in its consequences. There is no limitation imposed by the statute of 1898 limiting such suits, for the sufficient reason that the Congress, in our opinion, never for one moment conceived that the United States afterwards, when all the moneys had been realized under the statute for the exigencies of the war debt, and after it had repealed the statute, zealous inspectors or prowlers through ancient records might discover that some instrument had not been properly stamped, and the courts be flooded with suits for the recovery of the deficiencies. The tax sued for accrued in 1899. Mr. Stratton died in 1901. Under the laws of Colorado claims against estates of decedents are required to be presented for allowance within two years. This suit was not brought until after the lapse of about six years, and after the repeal of the statute and the calling in for cancellation by the Internal Revenue Department of all such stamps. The language of Mr. Justice Bradley, in Savings Bank v. United States, supra, would have a juster application to the situation of this suit:

"If the matter is left open so that any person or corporation may be prosecuted for taxes at any time, it leaves the citizen exposed to many hazards, and to the mercy of prying informers, when the evidence by which he could have shown his immunity or exemption has perished.”

Finding no express authority in the statute for such a proceeding, we are of opinion that the judgment of the district court should be affirmed. It is so ordered.

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HOOK, Circuit Judge (dissenting). The question in this case is whether the government is entitled to maintain an action for the recovery of stamp taxes imposed by the war revenue act of 1898. The government contends that it is because (a) the rule of Savings Bank v. United States, 19 Wall, 227, 22 L. Ed. 80, still prevails, and (b)

by express provision in the act itself Congress adopted and applied to the taxes therein levied all means of collection then authorized by law, and among them was the remedy of plenary action. I am not persuaded that Savings Bank v. United States has been overruled, or that the court's full discussion and decision that a right of action existed independent of statutory provision are obiter dicta. The Supreme Court based its conclusion upon two distinct and independent grounds, either of which was sufficient: First, general principles of law, and particularly those respecting the attributes of sovereignty; and, second, a provision of the statute then in question applying to the particular case. It is manifest that what was said upon either of these cannot be held to be obiter. Any doubt about this would be dispelled by Union Pacific Co. v. Mason City Co., 199 U. S. 166, 26 Sup. Ct. 20, 50 L. Ed. 134, wherein Mr. Justice Brewer said:

“Of course, where there are two grounds, upon either of which the judgment of the trial court can be rested, and the appellate court sustains both, the ruling on neither is obiter; but each is the judgment of the court, and of equal validity with the other."

This language was used in affirmance of our own decision in that case (128 Fed. 230, 64 C. C. A, 348), wherein Judge Sanborn said:

"Where a court places its decision of the ultimate legal issue before it upon its decisions of two legal questions, which were pertinent to the issue, debated at the bar, and considered and determined in the opinion, the decision of either one of which is sufficient to sustain the determination of the ultimate issue, the decision of each of the two questions and of every pertinent legal question decided in reaching either decision has the binding force of an adjudication, and is not a mere obiter dictum."

It is equally clear that Savings Bank v. United States has not been overruled by Meriwether v. Garrett, 102 U. S. 472, 26 L. Ed. 197, or its authority impaired by that case, or by the earlier case of Lane County v. Oregon, 7 Wall. 71, 19 L. Ed. 101. In the Lane County Case it was decided that the statutes of Oregon required certain taxes to be paid in gold and silver coin and that the term "debts" used in the legal tender acts of Congress had no reference to taxes imposed by state authority. Nothing more was decided. In the Meriwether Case, which is relied on as a departure from the rule of Savings Bank v. United States, the question now before us, namely, whether the government can maintain an action for the recovery of taxes levied by it, did not arise at all, and was not decided. Justice Field did not deliver the opinion of the court. In fact there was no opinion by the court. There was merely a brief statement of legal conclusions upon the facts involved without an expression of the reasons which induced them. Justice Field, on behalf of himself and Justices Miller and Bradley, merely wrote a statement of the reasons which controlled their concurrence. Three other justices, Strong, Swayne, and Harlan, dissented. But, as already observed, the question before us was not there involved. It is a curious fact that Justice Miller, for whom Justice Field spoke in the Meriwether Case, delivered the opinion in United States v. Pacific Railroad, which I will presently advert to again, in which he held that the government could maintain an action to recover a tax, and in referring to Savings Bank v. United States said:

"In that case the Supreme Court held that for the purposes of that collection and in some senses it was a debt; that the tax-which I presume was the same kind of a tax as this is—could be so collected.”

In Savings Bank v. United States the court referred to the established practice in England of actions and suits in the nature of debt being maintained by the crown for the recovery of taxes and duties, though such remedies were unauthorized by statute. The court also referred with approval to decisions in this country holding that the government was entitled to such remedy. United States v. Lyman, 1 Mason, 432, Fed. Cas. No. 15,647; Meredith v. United States, 13 Pet. 486, 10 L. Ed. 258. In the Lyman Case will be found an exhaustive discussion of the question by Justice Story and full reference to the English authorities.

The rule of Savings Bank v. United States finds abundant support, were any needed, in other decisions of the national courts. In Stockwell v. United States, 13 Wall. 531, 20 L. Ed. 491, it was said:

"Debt lies whenever a sum certain is due to the plaintiff or a sum which can readily be reduced to a certainty-a sum requiring no future valuation to settle its amount. It is not necessarily founded upon contract. It is immaterial in what manner the obligation was incurred or by wbat it is evidenced, if the sum owing is capable of being definitely ascertained.”


See, also, Chaffee v. United States, 18 Wall. 516, 21 L. Ed. 908.

United States v. Pacific Railroad, 4 Dill. 66, Fed. Cas. No. 15,983, was a suit in equity to recover the amount of taxes claimed to be due from the railroad company under the internal revenue law and to enforce the lien of the taxes upon its property. Mr. Justice Miller, with whom Judge Dillon was associated, said:

A good deal of argument on both sides has been presented to us upon the question whether an action to recover taxes is an action of debt, and whether an obligation to pay taxes to the government is a debt.

In the view that all of us here take I think, however, that this discussion is immaterial. It is immaterial what you call the obligation of a citizen to pay his taxes. It is very clearly an obligation which may be enforced by the courts."

The doctrine of Savings Bank v. United States was recognized as controlling by Justice Clifford and the district judge who sat with him in United States v. Hazard, Fed. Cas. No. 15,337. In United States v. Cobb (C. C.) 11 Fed. 76, it was said that the settled rule that import duties were personal debts of the importer for which action would lie had been applied to the internal revenue acts. In United States v. Dodge, 1 Deady, 124, Fed. Cas. No. 14,973, the Meredith Case, supra, is cited as authority for a personal liability of importer and consignee for import duties, and in the Meredith Case the liability was sustained upon general principles of law. United States v. Tilden, 9 Ben. 368, Fed. Cas. No. 16,519, was an action to recover income taxes; but it involved the questions now before us—whether the remedies specified in the act imposing the tax were exclusive, and whether an action in debt would lie. Judge Blatchford, after an exhaustive discussion of the Savings Bank Case, said that it decided every question before


him. He also disposed of the contention that certain portions of the opinion in that case were obiter. United States v. Washington Mills, 2 Cliff. 601, Fed. Cas. No. 16,647, was an action to recover a revenue tax under the act of June 30, 1864. Justice Clifford said:

"Objection is also made to the right of the plaintiffs to recover in this case, because it is insisted that the remedy by distraint as given in the act of Congress is the exclusive remedy in the case.

Extended argument upon this subject, however, is unnecessary, as the question is regarded as settled by the decisions of the Supreme Court. The same objection was made in the case of Meredith v. United States, 13 Pet. (38 U. S.) 493, 10 L. Ed. 258, which was a suit for duties on imports. Duties due upon all goods imported, say the court in that case, constitute a personal debt due to the United States from the importer, independently of any lien on the goods or any bond given for the duties.

Assumpsit for taxes imposed under the acts of Congress providing for internal revenue is also the proper form of action."

In King v. United States, 99 U. S. 229, 25 L. Ed. 373, a case not involving the question before us, Justice Miller, in speaking for the court, said:

"The court held explicitly (in the Savings Bank Case) that the obligation to pay the tax did not depend on an assessment made by any officer whatever, but that, the facts being established on which the tax rested, the law made the assessment, and an action of debt could be maintained to recover it, though no officer had made an assessment.

In United States v. Erie Railway Co., 107 U. S. 2, 2 Sup. Ct. 83, 27 L. Ed. 385, the court adverted to what had been decided in the Sayings Bank Case, and not with disapproval; also in United States v. Reading Railroad, 123 U. S. 113, 8 Sup. Ct. 77, 31 L. Ed. 138, and in United States v. Snyder, 149 U. S. 210, 13 Sup. Ct. 846, 37 L. Ed. 705.

There is no decision of the Supreme Court which, when rightly regarded, impairs the controlling authority of Savings Bank v. United States. The state courts are in conflict; the majority favoring the contrary doctrine. Judge Dillon, in his work on Municipal Corporations (volume 2, § 815), says:

"When the power to levy the tax is plainly given, the right to collect by suit should not be taken to be impliedly denied, unless the intention of the Legislature, that the special mode prescribed should be the only mode, appears with reasonable certainty."

Defendants rely upon Crabtree v. Madden, 54 Fed. 426, 4 C. C. A. 408, McClain v. Fleshman, 106 Fed. 880, 46 C. C. A. 15, and Fleshman v. McClain (C. C.) 105 Fed. 610. In the first of these it is said that taxes are not debts; but it should be observed that the case was an attempt to collect in the courts of one sovereignty taxes levied under the laws of another. The other case was an action to recover from a collector of internal revenue moneys alleged to have been illegally demanded and received by him under claim that they were due by virtue of section 6 of the war revenue act. To secure payment the collector threatened the plaintiff with "proceedings." The Circuit Court and the Court of Appeals of the Third Circuit held that the penalties specifically prescribed in the act were the sole means of enforcing payment and that there was nothing in the act giving or implying author

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