219 U.S. 250
UNITED STATES, Plff. in Err.,
CARL S. CHAMBERLIN, D. H. Rice, and Tyson S. Dines, as Executors of the Last Will and Testament of Winfield Scott Stratton, Deceased, Defendants in Error.
Argued December 16, 1910.
Decided January 3, 1911.
This case comes here on certiorari. The action was brought by the United States, in the district court of [219 U.S. 250, 251] the United States for the district of Colorado, against the executors of the estate of Winfield Scott Stratton, deceased, to recover the amount of stamp taxes claimed to be payable under the war revenue act of June 13, 1898. [30 Stat. at L. 448, chap. 448, U. S. Comp. Stat. 1901, p. 2286.]
The plaintiff alleged that in May, 1899, Stratton had conveyed to a corporation known as Stratton's Independence, Limited, certain lands in the state of Colorado by deed reciting a consideration of $4,850,000; that internal revenue stamps of the value of $4,850 were affixed to the deed, whereas the actual consideration of the conveyance and the value of the lands was $9,733,000, and by reason thereof there became due and payable to the United States from Stratton a revenue tax amounting to $9,733, of which the sum of $4,833 remained unpaid, internal revenue stamps therefor not having been attached to the deed or canceled; that the Collector of Internal Revenue of the United States for the district of Colorado had reported the facts to the Commissioner of Internal Revenue, who had determined that the sum of $9,733 should have been paid, and demand for payment having been made and refused, the said Commissioner had directed suit be instituted.
The district court sustained a general demurrer to the complaint, and its judgment was affirmed by the circuit court of appeals.
The applicable provisions of the war revenue act of June 13, 1898, chapter 448 (30 Stat. at L. pp. 448-470; 2 U. S. Rev. Stat. Supp. pp. 779- 804, U. S. Comp. Stat. 1901, pp. 2286-2311), are set forth in the margin, together with the amendment to 13, made by the act of March 2, 1901, chapter 806 (31 Stat. at L. 941, U. S. Comp. Stat. 1901, p. 2296).
___ ters, and things mentioned and described in schedule A of this act, or for or in respect of the vellum, parchment, or paper upon which such instruments, matters, or things, or any of them, shall be written or printed by any person or persons or party who shall make, sign, or issue the same, or for whose use or benefit the same shall be made, signed, or issued, the several taxes or sums of money set down in figures against the same, respectively, or otherwise specified or set forth in the said schedule. . . .
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the original be lost, to a copy thereof. But no right acquired in good faith before the stamping of such instrument, or copy thereof, as herein provided, if such record be required by law, shall in any manner be affected by such stamping as aforesaid.'
The foregoing section ( 13) was amended by the act of March 2, 1901, chapter 806 (31 Stat. at L. 941, U. S. Comp. Stat. 1901, p. 2296), by striking out the words 'schedule A of' in the fourth line of the section as above quoted, and also by inserting in the first proviso after the words 'bonds, debentures, or certificates of stock or of indebtedness,' the words 'or any instrument, document, or paper of any kind or description whatsoever, mentioned in schedule A of this act.'
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* 'Sec. 25. That the Commissioner of Internal Revenue shall cause to be prepared for the payment of the taxes prescribed in this act suitable stamps denoting the tax on the document, article, or thing to which the same may be affixed, and he is authorized to prescribe such method for the cancelation of said stamps, as substitute for or in addition to the method provided in this act, as he may deem expedient. The Commissioner of Internal Revenue, with the approval [219 U.S. 250, 255] of the Secretary of the Treasury, is authorized to procure any of the stamps provided for in this act by contract whenever such stamps cannot be speedily prepared by the Bureau of Engraving and Printing; but this authority shall expire on the first day of July, eighteen hundred and ninety-nine. That the adhesive stamps used in the payment of the tax levied in schedules A and B of this act shall be furnished for sale by the several collectors of internal revenue, who shall sell and deliver them at their face value to all persons applying for the same, except officers or employees of the internal-revenue service: Provided, That such collectors may sell and deliver such stamps in quantities of not less than one hundred dollars of face value, with a discount of one per centum, except as otherwise provided in this act. And he may, with the approval of the Secretary of the Treasury, make all needful rules and regulations for the proper enforcement of this act.
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[219 U.S. 250, 257] Messrs. D. P. Strickler and P. H. Holme for defendants in error.
Mr. Justice Hughes, after making the foregoing statement, delivered the opinion of the court:
The question presented is whether an action lies by the United States to recover the amount of a stamp tax payable under the war revenue act of 1898 upon the execution of a conveyance.
If the statute creates an obligation to pay the tax, and does not provide an exclusive remedy, the action must be regarded as well brought.
At comon law, customs duties were recoverable by the Crown by an information in debt or an exchequer information in the nature of a bill in equity for discovery and account. These informations rested upon the general principle 'that in the given case the common law or the statute creates a debt, charge, or duty in the party personally to pay the duties immediately upon the importation; and that therefore the ordinary remedies lie for this, as for any other acknowledged debt due to the Crown.' United States v. Lyman, 1 Mason, p. 499, Fed. Cas. No. 15,647. See also Comyn's Dig. (title 'Debt' A, 9); Atty. Gen. v. Stranyforth, Bunbury, 97; Atty. Gen. v. Weeks, Bunbury, 223; Atty. Gen. v. Jewers, Bunbury, 225; Atty. Gen. v. Hatton, Bunbury, 262.
Applying this principle, it was held in the Lyman Case, supra, and in Meredith v. United States, 13 Pet. 486, 10 L. ed. 258, that the government was entitled to maintain an action to recover duties upon imports as a personal indebtedness of the importers. The duty to pay was there derived from the language of the act of April 27, 1816, chap. 107 (3 Stat. at L. p. 310), that 'there shall be levied, collected, and paid' the several duties mentioned, and in accordance with an [219 U.S. 250, 259] established rule of interpretation the charge of the duty on the goods was taken to mean a personal charge against the owner. In the case last cited the court, by Mr. Justice Story, said (p. 493):
A similar rule has been applied in the case of internal revenue taxes. United States v. Washington Mills, by Clifford, J., 2 Cliff. 601, 607, Fed. Cas. No. 16,647; Dollar Sav. Bank v. United States, 19 Wall. 227, 22 L. ed. 80; United States v. Pacific R. Co. by Miller and Dillon, JJ., 4 Dill. 66, Fed. Cas. No. 15,983; United States v. Tilden, by Blatchford, J., 9 Ben. 368, Fed. Cas. No. 16,519.
In Dollar Sav. Bank v. United States, supra, an action of debt was sustainad to recover the amount of the internal revenue tax imposed by the act of July 13, 1866 (14 Stat. at L. 138, chap. 184), on the undistributed gains carried to the surplus funds of the bank. It was objected that the act provided a special remedy for the assessment and collection of the tax, and that no other could be used. But the court, finding no prohibition of the remedy by action, held the argument untenable, saying (pp. 238-240):
The statute in the Savings Bank Case contained a provision (now in 3213, Rev. Stat., U. S. Comp. Stat. 1901, p. 2083) which expressly authorized the bringing of an action. But the court also found a sufficient basis for its judgment in the general power of the government to collect by suit taxes that are due, where the statute imposing the tax does not deny that remedy. [219 U.S. 250, 262] This point was presented, considered, and decided in the determination of the cause, and the decision is none the less authoritative because there was another ground for the ultimate conclusion. Florida C. R. Co. v. Schutte, 103 U. S. p. 143, 26 L. ed. 336; Union P. R. Co. v. Mason City & Ft. D. R. Co. 199 U. S. p. 166, 50 L. ed. 137, 26 Sup. Ct. Rep. 19.
Neither Lane County v. Oregon, 7 Wall. 71, 19 L. ed. 101, nor Meriwether v. Garrett, 102 U.S. 472 , 26 L. ed. 197, relied upon by the defendants, involved the question. In the former case it was held that the acts of Congress of 1862 and 1863 [12 Stat. at L. 345, 532, 709, chaps. 33, 142, 73], making United States notes a legal tender for debts, had no reference to taxes imposed by state authority. The legal tender acts expressly provided that the notes should be receivable for national taxes, and the context forbade the conclusion that Congress intended to include state taxes under the term 'debts,' and there was hence no conflict with the statute of Oregon which required the taxes due the state to be collected in coin.
In Meriwether v. Garrett, supra, it was held that taxes levied before the repeal of the charter of a municipality, other than such as were levied in obedience to the special requiremant of contracts entered into under the authority of law, and such as were levied under judicial direction for the payments of juegments recovered against the city, could not be collected through the instrumentality of a court of chancery at the instance of the city's creditors. Such taxes could be collected only under authority from the legislature.
A tax may or may not be a 'debt' under a particular statute, according to the sense in which the word is found to be used. But whether the government may recover a personal judgment for a tax depends upon the existence of the duty to pay, for the enforcement of which another remedy has not been made exclusive. Whether an action of debt is maintainable depends not upon the question who is the plaintiff or in what manner the obligation was [219 U.S. 250, 263] incurred, but it lies whenever there is due a sum either certain or readily reduced to certainty. Stockwell v. United States, 13 Wall. p. 542, 20 L. ed. 493.
Here the tax was a stamp tax, but the language as clearly imports the obligation to pay as did that of the statute before the court in the Meredith Case, supra. Section 6 of the war revenue act of 1898 provided that there should be 'levied, collected, and paid' in respect of the instruments mentioned, 'by any person or persons or party who shall make, sign, or issue the same, or for whose use or benefit the same shall be made, signed, or issued, the several taxes or sums of money' set forth in the schedule which followed. There is nothing in the nature of a stamp tax which per se negatives either the personal obligation, otherwise to be derived from the words imposing the tax, or its collection by action. The stamp is to be affixed to the instrument 'to denote said tax.' Secs. 7, 13, 14. Section 25 provided that the Commissioner of Internal Revenue should cause to be prepared 'for the payment of the taxes prescribed in this act suitable stamps denoting the tax on the document, article, or thing to which the same may be affixed.' The stamp is the evidence, and its purchase the convenient means, of payment. When a statute says that a person shall pay a given tax, it obviously imposes upon that person the duty to pay, and this may be enforced through the ordinary means adapted to the recovery of a definite sum due, unless that course is clearly prohibited.
The objection was made in the Savings Bank Case, supra, that the tax ahd not been assessed. The court held, however, that no other assessment than that made by the statute was necessary in order to determine the extent of the bank's liability. Following this rule, Judge Blatchford said in United States v. Tilden, 9 Ben. p. 386, Fed. Cas. No. 16,519, where the action was brought to recover unpaid taxes on income: 'The extent of the liability of the individual for [219 U.S. 250, 264] income tax is defined by the statute, equally with the extent of the liability of the bank for the tax on undistributed earnings. In each case it is necessary, in an action of debt for the tax, to resort to sources of information outside of the statute, to ascertain the amount on which the per centum of tax fixed by the statute is to be calculated. . . . The difference between the two cases, in that respect, if there be any, will be, in every case, one of degree merely, not of principle. The statute, in imposing the per centum of tax on the income of the individual, makes a charge on him of a sum which is certain for the purposes of an action of debt, because it can be made certain through the action of a judicial tribunal, by following the rules laid down in the statute. That is the principle of the decision in the case of the bank, and it controls the present case.' See also King v. United States, 99 U. S. p. 233, 25 L. ed. 374; United States v. Erie R. Co. 107 U. S. p. 2, 27 L. ed. 385, 2 Sup. Ct. Rep. 83; United States v. Philadelphia & R. R. Co. 123 U. S. p. 114, 31 L. ed. 139, 8 Sup. Ct. Rep. 77; and United States v. Snyder, 149 U. S. p. 215, 37 L. ed. 707, 13 Sup. Ct. Rep. 846. The statute now before us fixes a tax of a specified amount, according to the consideration or value of the lands conveyed.
It is insisted, however, that the provision for penalties excludes the idea of a personal liability. Thus it is made a misdemeanor to sign or issue one of the described instruments to which a stamp has not been affixed, punishable under 7 by a fine of not more than $100, and not exceeding $200 under 10, in the case of a bill or note. And under 13, where there is intent to evade the law, the offense is punished 'by a fine not exceeding $50, or by imprisonment not exceeding six months, or both, in the discretion of the court.' The unstamped instrument is made inadmissible in evidence ( 7, 14), is not allowed to be recorded ( 15,) and by the provision of 13 is to 'be deemed invalid and of no effect.' [219 U.S. 250, 265] But these penalties were provided in order to induce the payment of the tax, and not as a substitute for payment. It cannot be supposed that Congress intended, by penalizing delinquency, to deprive the government of any suitable means of enforcing the collection of revenue. In large transactions, as in the case at bar, the fine which could be imposed would be much less than the tax, and no reason is suggested why the government should forego the collection of that which, under the statute, is its due. Punishment by imprisonment, under 13, is imposed only where it can be shown that there was an 'intent to evade the provisions' of the act; and while this remedy is appropriate in such a case, and is for the obvious purpose of discouraging evasion, it is without application where, for any other reason, the tax has not been paid, and thereby the government has lost its revenue. The provision invalidating the instrument is likewise punitive. The object was not primarily to deprive instruments of effect, but to insure the discharge of the obligation to pay; and that obligation would still be undischarged, even though, by reason of the nonpayment, the instrument was deemed invalid.
It is insisted, however, that there is no provision for the removal of the ban from the instrument in case the tax were collected by suit, and that this shows the intention to bar the latter remedy; for it is said that the purpose could not be to destroy the effect of the instrument and at the same time to compel the payment of the tax.
This argument proceeds upon a misconception of the statute. The provision under which unstamped instruments are made invalid is found in 13, which also provides a method of validation on making the prescribed payment. The portion of this section which imposes the penalty is of comprehensive scope, and must be deemed to include a conveyance of land, as well as the other instruments within the purview of the statute. While the [219 U.S. 250, 266] language of the first proviso, in its original form, specifically referred to 'bonds, debentures, or certificates of stock or of indebtedness,' this was broadened by the amendment made by the act of March 2, 1901, chapter 806 (31 Stat. at L. 941, U. S. Comp. Stat. 1901, p. 2296), so as to embrace 'any instrument, document, or paper of any kind or description whatsoever mentioned in schedule A of this act.' This amendment, in extending an existing opportunity so as expressly to include all instruments mentioned in the schedule, must be construed to refer not only to instruments subsequently executed, but to those as well which had been previously made or issued. No different construction is required by the language of the statute, the obvious policy of which was both to supply a measure of relief from the punitive provision and at the same time to encourage the payment of the tax. The provisios of the section as amended are as follows:
Neither the punitive provision, nor the means thus afforded to escape it through a voluntary payment, indicate an intention to deprive the government of the right to compel payment by action. The party may pay the tax in the first instance, or he may subsequently make payment as the statute provides, and thus render the instrument effective. If he is unwilling or fails to avail himself of this opportunity, why should he be heard to insist that because the instrument is made invalid he should escape payment of what is due the government? In the face of the express requirement of the statute that he shall pay the tax, there is no basis for the contention that from the provisions affecting the validity of the instrument should be implied an intent to prohibit the enforcement or the tax by suit.
Further, as the obvious purpose is to vali date the instrument in case the prescribed payment is made, the satisfaction of a judgment for the recovery of the tax must be deemed the equivalent of the payment of the price of the stamps under the provisos above quoted. Section 3216 of the Revised Statutes (U. S. Comp. Stat. 1901, p. 2084) provides: 'All judgments and moneys recovered or received for taxes, costs, forfeitures, and penalties shall be paid to collectors as internal taxes are required to be paid.' If the case is not one within the second proviso permitting the remission [219 U.S. 250, 269] of the penalty, the additional payment of $10 will be required to meet the conditions of the first proviso. But so far as the tax is concerned, the person liable therefor, on satisfying the judgment, will have the same right to have the instrument stamped by the collector as though he had paid the taxes to the officer without suit. Such a case would present no administrative difficulty in accomplishing the intent of the statute.
We have examined the other statutory provisions to which our attention has been called in support of the defense, and we find none of controlling significance, or which, taken separately or together, detract from the force of the provision imposing the obligation to pay the tax, and deprive the government of the remedy here sought.
We are also of opinion that the statute itself provides that payment may be enforced by action. Section 31 makes 'all administrative, special, or stamp provisions of law, including the laws in relation to the assessment of taxes not heretofore specifically repealed,' applicable to the act. Within 'administrative' provisions must be included those which relate to the collection of the taxes imposed. For the administration of the statute may well be taken to embrace all appropriate measures for its enforcement, and there is no substantial reason for assigning to the phrase which is used in the section quoted a narrower interpretation. It therefore comprehends the authority conferred by 3213 of the Revised Statutes in the following words:
This provision authorizing suit, with the sanction of the Commissioner of Internal Revenue (Rev. Stat. 3214) [219 U.S. 250, 270] was originally enacted in 1866 (act of July 13, 1866, chap. 184, 14 Stat. at L. p. 111, U. S. Comp. Stat. 1901, p. 2084), as an amendment of the internal revenue act of June 30, 1864, chap. 173 (13 Stat. at L. 239), and included within its scope the stamp taxes then in force. It must be deemed applicable also to the taxes imposed by the act of 1898
Upon these grounds we conclude that the United States was entitled to maintain this action, and that the demurrer should have been orerruled. The judgment is therefore reversed.