27 F. Cas. 397 | U.S. Circuit Court for the District of Eastern Missouri | 1877
orally. The
United States brings suit against the Pacific Railroad Company for the collection of a tax alleged to be due by the railroad company, and to enforce the lien of this tax upon the property of the company, which has passed into other hands. The railroad company sets up as one of its defences that it has a claim against the United States in excess of the amount of these taxes, for the use of the railroad and its appurtenances during the war, which has never been paid; and it alleges, also, that these claims have been presented to the proper auditing officers and rejected; and it is insisted that they come within the statutes of the United States upon that subject, which allows an equitable set-off where just claims have been rejected. And the defendant also claims that the government, being a plaintiff, and bringing this action in chancery in the nature of an action for a debt, the suit is liable to the principle of mutual set-off, which governs all suits in equity. 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. There is considerable conflict of authority on that subject. Not only is there such conflict in the courts other than these of the United States, but the supreme court of the United States, in at least two cases, has given what might appear to be conflicting decisions upon the subject. In the case of Lane County v. Oregon, 7 Wall. [74 U. S.) 71, which was a suit to recover taxes, the state of Oregon claimed that her taxes should be paid in gold, and that the legal-tender laws then in existence, and in existence long before, had no application to taxes, whether state or national, except as they were made receivable for dues to the United States by the act itself. And the question turned on whether the taxes which the state of Oregon assessed against her citizens was a debt within the meaning of the legal-tender laws, which provided in terms that they should be receivable in payment of all debts. The supreme court unanimously held that in that sense, at all events, and for that purpose, a tax was not a debt In other words, the meaning of it was that the congress of the United States did not, by the use of the word “debt” in that act, intend to include taxes of the states. Chief Justice Chase delivered the opinion, and he referred to several of the authorities cited yesterday on the subject whether a tax is a debt or not. On the other hand, in a later case [Dollar Sav. Bank v. U. S.) 19 Wall. [86 U. S.) 227, coming up from Pennsylvania, where the United States brought an action at law for some internal revenue taxes, a recovery was-stoutly resisted on the ground that a tax was not a debt, and as it was not a debt within the common law meaning of the-phrase, that it could not be so collected. In that case the supreme court held that, for the purposes of that collection, and in some