239 F. 568 | E.D. Pa. | 1917
This case was tried under, the provisions of the statutes by the court without the intervention of a jury. The main facts are few and not in dispute. There is but one question in the case, and that one of law. The formal findings of fact, which are necessary, are found in the answers to the requests submitted by the parties, leave to file which, together with requests for conclusions of law, after the views of the court upon the one question discussed at the argument had been made known to counsel, was allowed by the court.
“The entire net income from all property owned and every business,” etc., “carried on in the United States by persons residing elsewhere.”
No other question than the proper construction of the statute is involved. It is admitted (at least arguendo) that Congress could have lawfully imposed this tax upon the income of plaintiff. The sole question is: “Has it done so by this act ?”
There is always a temptation,- in the discussion of questions of this kind, to wander into the domain of economics or invade the realm of metaphysics. A yielding to this temptation would result in a discussion which would be well-nigh interminable. Two or more supposititious cases as crude illustrations will speed us to the point. A nonresident alien is the owner of omnibusses, which are run as public conveyances; the line being operated for the owner by his employes and agents. The income derived therefrom is admittedly subject to the payment of the tax. The same line of omnibusses belongs to a corporation, the stock of which is owned by the same alien. The dividends are asserted not to be subject to the tax.
Take two other cases to which the same distinction applies: A nonresident alien owns real estate (assuming alien ownership was permissible). The yield in rentals is conceded to be subject to the tax. The same alien recovers the same sum from the same property in the form not of rentals (in the sense before expressed), but in the form of ground rent. It is, of course, not asserted that the income is not subject to the tax, because the latter form of property is itself real estate, but this illustrates the distinction made in its double aspect. The argument is that the tax is payable in the one case, but not in the other, because in the one case Congress has imposed tire
The further assertion that property of this incorporeal, intangible kind is not here, but in the country in which the alien is domiciled, is backed by the maxim of the law that “personal property follows the person.” The admission that property, whether real or personal, owned by a nonresident alien, might be in this country, and, in consequence, be made taxable, by the act, enforces the argument because the distinction between the two kinds of property lays ground for the inference that Congress meant to tax the one and not the other.
The argument has more than plausibility; it has real force, not merely because of the language chosen by Congress in which to express its thought, but also because the considerations which may have moved Congress to make such a distinction are obvious. The distinction between a physical thing and the usufruct, or between what a corporation (assuming all its possession to be of the physical kind) and what a stockholder owns, is clear enough. The word “property” is used to designate not only the right of a person in or to a thing, but also is applied to the thing itself, at least when it can be visualized.. Property of the kind with which we are now concerned is not a thing' in any physical sense, but is an abstraction, a concept. The thought that it can have no abiding place other than that arbitrarily assigned to it by the quoted maxim appeals strongly to any one trained to think’ in terms of the principles of the law. The retort that the maxim is no maxim at all, but a mere fiction, is of no aid to us, because, granted that it be a fiction, there is no other fiction, and no maxim of the law which locates property of this kind elsewhere. As property of this kind’is merely a concept or a right, the truth is that it cannot be “in” any place other than the mind of the person to whom the right belongs. The phrase that the right of property is in a person, or in the owner, or even that it resides in him, is an allowable one. To ’give it any other abiding place requires the ipse dixit of the law. The quoted maxim really is a phrase which voices a principle of the law that, when the locus in quo of property of this kind is spoken of or becomes important to find, it is to be understood to be wherever the owner resides, and to be regarded as if it ha.d physical existence at that place.
The fictions which form part of the science of tire law have been the subjects of many a eulogy, and this is one which has been universally accepted and acted upon from time out of mind. ■ The accepted and conventional meaning of any expression used in a statute must, of course, yield to the legislative mandate; and it is urged that we must look in every law for what the lawmaker meant, and, when this is found, words which may before have been used in a different sense from' that in which he has used them must be given the meaning which he has attached to them. In this way, “white,” as it is argued, mav be even read to mean “black.”
It is further pressed upon our attention that it is proper to assume that Congress had in mind a practical purpose, and had no thought of an idle and fruitless enactment, and that when a law is open to two constructions, one of which is promotive of its main and general purpose, and the other wholly destructive of it, that construction should be accepted which gives the law real meaning and not one which emasculates it. This principle of construction is appealed to because of the statistical fact that a tax upon so-called investment and like sources of income would yield a substantial sum, but one confined to physical things would be negligible.
The at least doubt still remains of whether Congress did not at first either overlook the species of property now under consideration or accept the politico-economic view entertained by many minds that it is a futile thing to attempt to tax some species of property (as, for instance, moneys at interest), because the final result is to impose a double tax upon the interest payer, or work to the disadvantage of the country by retarding the inflow of capital. The fact that Congress afterwards discovered what they had at first overlooked, or changed its mind as to its taxing policy, throws no helpful light upon the first law, by which we are able to read it differently from what we otherwise would. It is thus seen that, no matter by what path we seek to reach an answer to the question involved, it leads back every time to the act of Congress.
This case was argued by counsel, not only with ability, but in that spirit of frankness and open-mindedness which is always the accompaniment of great abilities. Counsel for the United States feel free— indeed, feel compelled — to confess that there is such an ambiguity in the act as to malee its meaning doubtful. The differing constructions contended for by counsel are asserted with equal confidence. If a proposition of law be, as it has-cynically been defined to be “any proposition confidently advanced and plausibily supported,” we are not aided by the arguments, atye as they are, because we have been subjected to the allurements of two charmers equally enticing.
Human language is a living thing, and not an unyielding mummy cloth in which thoughts are enwrapped. Language changes and grows, and words shift in meaning with the changing ideas of the people out of whose expressions of their thoughts through the use of words the language is evolved. It is a familiar experience that things which exist at first and are spoken of as theories or mere concepts soon become recognized facts, and are given in thought and words body and substance. Physical science abounds in illustrations of this, and in both business affairs and in the law we meet with them. It is really the same tendency as the disposition to personify things, and to reduce the abstract to the concrete. This concept of property as an in
This, of course, is not the strictly scientific view, nor does a person speak with scientific accuracy when so speaking, but none the less they are expressing a definite thought clearly. Indeed, if a person were to speak in scientific terms of some of the commonest things of life, he would not merely be thought to be pedantic, but would be utterly unintelligible to many. A professor of economics would have difficulty in convincing persons who were indeed persons of intelligence that they did not have money in their pockets if they felt crisp bank notes crinkling in their fingers. The same person, if his ownership of bonds or stock was questioned, would think he had settled the dispute by producing the bonds or stock certificates. He would produce them, not as if he was bringing forth evidence of his ownership, but the very property which he owned. Taws, particularly those by which the common people are to be guided, are to be interpreted as the common speech is understood, and are not to be translated into scientific jargon.
The courts, in the interpretation of tax laws, have recognized this, and made the grasp upon the thing to be taxed turn upon the fact of jurisdiction rather than upon the character of the property. Property is “in” the United States when it can here be reached, whether that property be a house and lot, or whether it be bonds and mortgages. It may result in what in a sense and a very practical .sense is double taxation; but such may be the result of a law which taxes both a house and lot, and a ground rent issuing thereout or a mortgage théreon. The thought now in mind is a different thought from that which would be uppermost, if the attempt were made to tax a man on the personal property he owned, without regard to its situs, but merely because he owned it in a jurisdiction other than that of his domicile.
To return from these abstractions to the precise question before us, our conclusion is that this act of Congress, if read in the light of critical accuracy, does not tax the property on which this tax was levied; but if the language is interpreted in the light of'the commonly accepted meaning of the words used, it does tax it, and the tax was properly collected. This finding results in a judgment for the defendant, with costs, which judgment is directed to be entered.
The thought is that, notwithstanding the legal maxim, or fiction, or fact (call it what you will), that the situs of intangible personal property is the domicile of the owner, the state may nevertheless give to property (such as corporate stocks, bonds, and the like) a special or particular situs for the purposes of taxation, and this power is limited only by the jurisdiction of the taxing power over the rem as a practical fact. Corry v. Baltimore, 196 U. S. 466, 25 Sup. Ct. 297, 49 L. Ed. 556; In re San Antonio Co. (D. C.) 228 Fed. 984; In re Berthoud (D. C.) 231 Fed. 529; Lynch v. Turrish, 236 Fed. 653, -C. C. A. -; Pullman’s Co. v. Pennsylvania, 141 U. S. 22, 11 Sup. Ct. 876, 35 L. Ed. 613; Buck v. Beach, 206 U. S. 392, 27 Sup. Ct. 712, 51 L. Ed. 1106, 11 Ann. Cas. 732; Van Allen v. Assessors, 70 U. S. (3 Wall.) 573, 18 L. Ed. 229; Liverpool v. Orleans, 221 U. S. 354, 31 Sup. Ct. 550, 55 L. Ed. 762, L. R. A. 1915C, 903.
_ _ Nor do we think the cases cited by plaintiff to be in conflict with the conclusion reached, if the distinction between taxing jurisdiction exercised because of jurisdiction of the person and that exercised because of jurisdiction of the rem be kept in mind. Kirtland v. Hotchkiss, 100 U. S. 491, 25 L. Ed. 558, may be distinguished on this ground.
The opinion in Cleveland v. Pennsylvania, 82 U. S. (15 Wall.) 300, 21 L. Ed. 179, undoubtedly contains expressions which support the argument of counsel for plaintiff here. The case was, however, ruled upon the principle of the inviolability of the obligations of contracts, and upon the power to tax, not upon whether the law did tax. The case, therefore, if the argument is pushed to its logical limits, rules that Congress was without the power to levy this ‘tax. This conclusion is not only not pressed, but the question before us was expressly limited to whether Congress had taxed, not whether it could. It is interesting to note (what was before not observed) that Mr. Justice Field, who delivered the opinion of the court, recognized that not only tangible personal property might have a situs different from that of the domicile of the owner, but that state and municipal bonds and other forms of intangible property were recognized as in themselves physical property, and known as such in common speech, and therefore also capable of having a situs of their own. He distinguishes between municipal bonds, and the other property of like kind enumerated by him, and corporate bonds. This opinion was delivered in 1872. What was recognized by him as true of municipal bonds in 1872 seems to be equally true of corporate bonds- and stocks in 1913. It would be an interesting confirmation of the truth of the observations hereinbefore made if public usage, which in 1872 included state and municipal bonds and bank notes among tangible possessions, had progressed in 1913 to the point of embracing all stocks and bonds in the same classification.
Union Co. v. Kentucky, 199 U. S. 194, 26 Sup. Ct. 36, 50 L. Ed. 150, 4 Ann. Cas. 493, would seem to be rather in accord with the con
Provident v. Kentucky, 239 U. S. 103, 36 Sup. Ct. 34, 60 L. Ed. 167, L. R. A. 1916C, 572, was the case of an attempt by the state to tax a corporation for the privilege of doing business within the state. It was recognized that a state had the power to so tax, if the corporation was so doing business, but was held that the state could not tax if the corporation -was not so doing business, and that the mere collection of premiums before earned, although still unpaid, was not such doing of business. We see no command in this case to find for the present plaintiff.
The question before us is recognized as a close one. Where the meaning of a statute is doubtful, and either of two constructions may be given it, the choice is always more or less an arbitrary one, and the ruling made partakes too much of the “rescript” character to be entirely satisfactory. The choice, however, must be made, and we have made the best choice we could.
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