United States v. Singer
ERROR to the Circuit Court for the Northern District of Illinois; the case being this:
The 20th section of the act of July 20th, 1868, entitled 'An act imposing taxes on distilled spirits and tobacco, and for other purposes,'  enacts:
'That on the receipt of the distiller's first return in each month, the assessor shall inquire and determine whether said distiller has accounted in his returns for the preceding month for all the spirits produced by him; and to determine the quantity of spirits thus to be accounted for, the whole quantity of materials used for the production of spirits shall be ascertained; and forty-five gallons of mash or beer brewed or fermented from grain shall represent not less than one bushel of grain, and seven gallons of mash or beer brewed or fermented from molasses shall represent not less than one gallon of molasses. In case the return of the distiller shall have been less than the quantity thus ascertained, the distiller or other person liable shall be assessed for such deficiency at the rate of fifty cents for every proof gallon, together with the special tax of four dollars for every cask of forty proof gallons, and the collector shall proceed to collect the same as in cases of other assessments for deficiencies; but in no case shall the quantity of spirits returned by the distiller, together with the quantity so assessed, be for a less quantity of spirits than eighty per centum of the producing capacity of the distillery as estamated under the provisions of this act.'
The 15th section of the same act required every distiller to provide a warehouse for the storage of spirits manufactured by him, and declared that such warehouse, when approved by the Commissioner of Internal Revenue, on report of the collector, should be a bonded warehouse of the United States, and should be under the direction and control of the collector of the district, and in charge of the internal revenue storekeeper assigned thereto by the commissioner. The 52d section of the same act enacted that the compensation of these storekeepers should be determined by the commissioner and be paid by the United States. On the 29th of March, 1869, Congress passed a joint resolution,  supplying omissions in the enrolment of certain appropriation acts, to which was annexed a proviso that, after the passage of the resolution, the proprietors of all internal revenue bonded warehouses should 'reimburse to the United States the expenses and salary of all storekeepers or other officers in charge of such warehouses,' and that the same should be paid into the treasury and accounted for like other public moneys.
In this state of the statutory law the United States brought suit against Singer and Bickerdike as principals, and certain other persons as sureties, on a distiller's bond which all the said parties had signed, and whereby they covenanted that the principals should 'in all respects, faithfully comply with the provisions of the law in relation to the duties and business of distillers, and pay all penalties incurred or fines imposed upon them for violation of any of the said provisions.'
The government assigned as a breach that the said Singer and Bickerdike, 'during the month of November, 1868, manufactured spirits at their distillery, and made return for that month to the assessor of the first collection district of the State of Illinois, of spirits so manufactured, and the quantity of spirits so returned was less than 80 per cent. of the producing capacity of said distillery, as estimated under the provisions of the internal revenue law, and, that thereupon, the said assessor, to wit, on the 10th day of February, A.D. 1869, proceeded to make an assessment against the said Singer and Bickerdike, for the deficiency in said return, which assessment, amounting to $26,089.60, the said Singer and Bickerdike had refused to pay.'
Plea, that the said Singer and Bickerdike, 'before the commencement of this suit, fully paid and satisfied all assessments lawfully made against them for spirits produced at their said distillery since the date of the said bond.'
The plaintiffs demurred, and thus raised the first point in the case.
By a second count the plaintiffs assigned as another breach of the bond that 'one C. W. Davis, an internal revenue storekeeper, appointed by the Secretary of the Treasury of the United States, and assigned by the Commissioner of Internal Revenue to the distillery warehouse of which said Singer and Bickerdike were proprietors, established by law, in connection with the said distillery, at a salary of $5 per day, had charge, as such storekeeper, of the said warehouse from the 4th to the 25th days, inclusive, of March, A.D. 1869, and became thereby entitled to the sum of $110 for the said services; which said last-named sum had been paid by the United States to the said Davis for his said services, and that it thereupon became the duty of Singer and Bickerdike, as such distillers and proprietors, to reimburse to the United States said sum; yet that though often requested, they had never paid it or any part of it.'
To this count also the defendants demurred.
Judgment was given by the Circuit Court of the United States for the defendants, and this writ of error was brought, the United States assigning as error:
1st. That by the already-quoted 20th section of the act of July 20th, 1868, the defendants, Singer and Bickerdike, were liable to be taxed for a quantity of spirits equal to 80 per cent. of the producing capacity of their distillery, whether the amount actually manufactured equalled that quantity or not.
2d. That by the resolution of March 29th, 1869, the defendants were bound to repay to the United States what the latter had paid to Davis as storekeeper.
Messrs. Edward Roby, and H. S. Monroe, in support of the rulings below:
I. The demurrer admits that Singer and Bickerdike have paid the tax upon every gallon of spirits manufactured by them, and the question thus is, whether under the law they can be compelled to pay a tax upon what they have not manufactured, upon what in fact never had an existence. Now
1. Congress cannot have intended, in this enactment, to enable the government to collect a tax upon property not existing within its jurisdiction, or to compel the citizen to pay a tax upon what he has not produced, and on what perhaps he could not produce. The object was to enable the officers of the government to assess and collect a tax upon what should be actually produced, and upon that alone. And a careful inspection of the first nineteen and the last eighty-nine sections of this law will show that this was the real and only object.
2. If the construction above given to this section is not the true one, then it is void. 1st. Because Congress cannot levy a tax on nothing. 2d. Because the tax it seeks to levy is not and cannot be uniform. 3d. Because a deficiency is not a tax, but is a penalty, and cannot be enforced by an action upon the distiller's bond; and, 4th. Because the legislature attempted the exercise of a judicial power in excess of legislative authority.
1st. Congress cannot levy a tax upon nothing. It is admitted that this tax of $26,089.60 was levied upon nothing; for confessedly the spirits, upon which the assessor sought to impose it, never had an existence. Now a tax cannot exist without a subject. It cannot be imposed except upon person or property. Congress can no more tax nothing than it can create the subject of taxation out of nothing. This is not a tax upon the person. It is not a tax upon property, and it does not come within any legal definition of duty, impost, or excise.
2d. The Constitution requires that taxes shall be uniform. If the construction set up by the government is the true one, this is not and cannot be uniform. The tax on spirits is (say) 50 cents per gallon and $4 per barrel. Had the distiller in this case produced the full amount of 20 per cent. more than the estimated capacity of his distillery, his tax would have been 50 cents a gallon and $6 per barrel. He made say only 50 per cent. of the estimated capacity, and the tax he had to pay is $1 on every gallon and $8 on every barrel of what he actually manufactures. This result inevitably follows, if the imposition is considered as a tax.
3d. This imposition upon a deficiency is a penalty and not a tax within the meaning of the law. Congress, in effect says to the distiller, 'You have a distillery here, with which, by proper care and skill, you ought to make say 2000 gallons of spirits per day. You can certainly make 1600 gallons. If you do not make but 1000 gallons, you shall be punished for your want of skill, and shall pay $300 on account of this 600 gallons you ought to have made, and $4 per barrel besides.' Is it not the same as though Congress had in terms imposed a penalty upon the distriller who should not succeed in making 80 per cent. of what his distillery was, in the opinion of the efficers of the government, capable of producing? If it is a penalty, it cannot be enforced against the distiller in this action. It can only be enforced, if at all, by information or some proper proceeding for its collection.
But can it, as a penalty or a tax, be sustained? Can Congress impose a penalty upon the citizen because he has not the same skill and knowledge that others have? Can it, by legislation, punish the citizen because he is unable to conduct his business with the same success that others do? If so, it has the power to destroy every interest of business in the nation, because it is safe to say that while one man may make large amounts yearly in carrying on his business, nine in the same business may make but little more than a living.
4th. If the section is to receive the construction set up by the government the legislature will exercise judicial power; for the assessor will have power to decide upon the rights of distillers without an opportunity on their part to be heard. The property of the citizen is forfeited and transferred without trial and judgment in the courts.
II. The second question arises upon the demurrer to the second count of the declaration, and is whether the defendants are liable under the bond sued on for the payment of the storekeeper's wages, amounting to $110.
We do not propose to discuss the question as to whether Singer and Bickerdike, in some other form of action, might not be liable for this sum, though it seems to us they would not. Our position, which is sufficient for this case, is that these sureties cannot by any possibility be held liable for it; that they cannot by an ex post facto resolution of Congress, operating upon the condition of this bond executed before the date of this resolution, be held liable under it.
Mr. G. H. Williams, Attorney-General, and Mr. C. H. Hill, Assistant Attorney-General, for the United States, contra.
Mr. Justice FIELD delivered the opinion of the court.
^1 15 Stat. at Large, 133, 134.
^2 16 Ib. 52.