*1 TERM, 1927. 276 U. Statement of the Case. sell or in to Osborn was valid invalid the circumstances in made, it was whether reason its partial which Greyhair an performance while Was Osborn living became legally in such sense that the contract assignee equitably might against be enforced as the heirs. These questions necessarily inhered the suit and were resolved against the heirs No decree enforcement. effort any or was to have decree reviewed vacated The attack made present in the proceeding. direct no Certainly there was federal right was collateral: suit or an attack. it reexamined vacated on such to have
Judgment affirmed. ANDERSON, UNTERMYER, EXECUTRIX, et al. COLLECTOR. OF FOR THE TO THE CIRCUIT COURT APPEALS
CERTIORARI CIRCUIT. SECOND February April Argued 9, 1928. 1928.—Decided No. 221. approved Act, 2, 1924 gift provisions of the Revenue 1. The 142), Holden, must as be construed (see Blodgett any year. time that calendar gifts made at applying to P. anticipation not made in gifts fide applicable to bona far as So provi- prior to June those fully consummated death, under the Due Process Clause arbitrary and invalid are sions Id. Fifth Amendment. gift containing bill made while the fact that a was The mere progress through stage the last provisions was in questioned cause from the former enough to differentiate this Congress is arbitrary legislation of character. P. 445. its relieve the and to one (2d) reversed. 18 F. judgment to a the Circuit Certiorari, of the Dis- judgment which affirmed of Appeals
Court Collector, in an against action Court favor trict amount collected tax. him to recover UNTERMYER v. ANDERSON. Argumеnt for Petitioners.
Mr. Louis Marshall *2 petitioners. for A gift made during the calendar 1924 year and prior when 2, 1924, of 1924 became was not law, by Act; taxable that but if intended it should that be, the Act, in so far gift as it related to a so made, was void in because violation of the Fifth Amendment. Blodgett Holden, McNeir, v. Anderson 142; v. S. 16 F. (2d) 970; Doyle, Shwab v. S. Union 529; Wardell, Trust Wardell, Co. v. U. Levy S. 537; v. 546; S. Knox 542; McElligott,
U. v. Reynolds v. U. McArthur, Pet. 417; Field, United v. States 255 U. S. 257; Savings Bank, Smietanka v. First Trust & 602; Llewellyn Frick, Coolidge, v. Nichols 238; v. S. 531.
The tax
the Fifth
in
violates
Amendment
that
de
prives the donor of his
without due
of
property
рrocess
Wynehamer
law.
Y. 396;
13 N.
Sherman v.
People,
Elder, 24
Chicago
Y. 381;
Englewood
N.
etc. R. R. Co. v.
Ry. Co.,
Co.,
Jaynes
Ry.
Street
375;
v. Omaha
Ill.
Campbell,
53 Neb.
10 N. C.
Smith
Eaton v.
R.,
B. C. &
R.
Warley,
M.
51 N. H.
Buchanan v.
The rules which
to a
property,
right
inheritance,
to a
of
to a
or
or
so-called
to a
tax,
gift
estate
have no relation
inter vivos not made
Moore, 178
contemplation
death. Knowlton v.
U. S.
Savings
41; Magoun
Illinois
& Trust
Miller,
Section 319 based purpose preventing for the gift imposed tax is imposed by estate tax evading from donor based any predeсessor or acts Revenue theory. upon death,
If contemplation was made gift specified §in subject-matter, under the conditions a the estate part be (c), (d), would treated TERM, Argument Respondent. 276 TJ.S. decedent, taxable. The tax and, thus, upon gift inter vivos of death contemplation may and not not come provisions. Schlesinger of these scope within v. Wis- consin, 270 U. payable tax is not but donee,
donor, is, therefore, clearly succession, estate or inheritance tax or а death but a tax the exer- duty, right give away constitutional of the donor to cise of the his property. this stamp imposed upon
Nor is
tax similar to
is a
in a
The latter
crea
corporation.
transfer of shares
neces
ture of
The transfer of its shares is
government.
with
Hence the
*3
sarily
government.
made
the sanction
is
the idea that
stamp duty
upon
based
imposition
People
is
the transferror.
ex
privilege
conferred
Reardon,
431,
184 N.
152;
Y.
aff’d
rel. Hatch
States,
Nor it be sustained within the rule can laid Ames, 509, in Nicol v. which related to a down property pursuant the sale of to trans- imposed upon tax exchange or-board trade. actions at The is direct tax void because not imposed tax 3, Article required by I, § Clause apportioned the Constitution. Wheat, Assistant to the Special Attorney A.
Mr. Alfred Mr. Mitchell and Solicitor General with whom General, Reeder, Attorney to Special Assistant Robert P. for respondent. brief, on the were General, Holden did not decide that the Blodgett Thе case Revenue Act 1924 were of the gift provisions gifts prior to all application or that its retroactive, unconstitutional. 1924, was law to make the here involved is not gift To tax had provision be unconstitutional. arbitrary as so months, for three had Congress discussion been under UNTERMYER v. ANDERSON. Argument Respondent.
been passed by Houses, both had been sent to conference, and the conference had reported the bill containing provisions. It was not until Untermyer then that Mr. gift. made the It not an unfair inferenсe that he had knowledge of and that these facts it was his intention avoid the if tax, possible, before the bill should become law by approval of the President. He had an un right payment doubted to seek avoid gift making before the Act took only effect. The question is, it arbitrary was and capricious confisca tory to tax a thus made? It would regarded not be so in England. Halsbury’s Laws of England, Yol. p. Hume Haig, (1799)
§ Bro. Parl. Cas. Pro visional Collection of Act, (3 Taxes 3). Geo. c. See also Vol. p. Halsbury’s England. Lаws of This case is not like that of Coolidge, Nichols v.
U. S. 531. Congress There the reached back and dealt with a transfer which took place years a dozen before the law passed was and attributed property its value long after the transfer.
Neither federal nor state is unconstitutional Bull, because it is retroactive. Calder v. Dall. Cases,
Peggy, Cranch, 103; Prize Black Johannes sen v. United S. 227; Satterlee v. Matthew *4 son, 2 Whitney, Pet. Curtis v. 380; 13 Ken 68; Wall. tucky Kentucky, v. 219 Union U. S. 140. Co.
This Court has sustained state tax laws which were
in scope. Carpenter
Pennsylvania,
v.
How.
Gilman,
456;
278;
Orleans,
Locke
Orr v.
Newv.
Kelleher,
Seattle
172;
Wall.
v.
U. S.
State v.
Bell,
It has sustained federal similar taxes. Stockdale v. Companies, in Insurance Wall. followed Railroad Rose, 95 S. 78. Billings Co. U. See v. United Co., Brushaber v. Union R. R. Pacific TERM, 1927. Opinion of the Court. ü. S. Collector, 100 U. S. Flint v. Railroad Co. 1; S.U. Malley, Hecht v. Stone-Tracy S.U. gift is a direct
A property transfers of upon only legal equivalent Apparently but an excise. tax, a tax on ownership property of a tax the general from property. the income such curiae Williams filed a brief as amicus Mr. Ira Jewell of Court. special leave opinion delivered the McReynolds Me. Justice Court. United States action commenced
By original York, District of New Isaac Court, District Southern Untermyer recover S. Collector sought the Act him, exacted of under Internal Revenue seq., account et §§ —on — May 1924. After death the cause which made his he petitioners in the name of the was revived executors — agreed then statement herein —and was heard Judg- a directed verdict. facts. Both sides moved for affirmed for the Collector and was ment went Appeals. Circuit Court of are presented now for consideration questions Holden, Blodgett involved to those
similar gifts were Blodgett’s causes differ this: The two for provisions before during January, the considera- were presented such transfers taxing gift May 23, Untermyer made his Congress; tion of provisions three months after those were first 1924, some report upon the bill and while the conference presented report May This went to Senate was pending. days finally passed thereafter the bill had 1924, and three *5 UNTERMYER v. ANDERSON. Opinion of the Court.
both houses. The President approved it on June the
Unless difference in circumstances stated is mate- rial, same rule of law must both cases. govern Two opinions were in Blodgett announced v. Holden. The one prepared by the present expressed the writer, views four of the eight Justices participated who the consideration of the cause. After quoting perti- nent provisions of the statute, etc., opinion declared: “ far So as the Revenue Act of 1924 undertakes to impose a tax because made gifts during January, 1924, it is arbitrary and under invalid the due clause of process the Fifth Amendment.” We need now further re- peat what was there set out.
In the light arguments advanced in the counsel present cause, the matter has been considered all members and a Court, majority of them are of opinion gift tax provisions
here challenged must be gifts construed as applicablе year And, entire calendar further, far applicable that so to bona fide gifts not made in of death and anticipation fully prior consummated June 2, 1924, provisions those are and arbitrary invalid due process under the clause of the Fifth Amendment. that a gift
The mere fact was made while the bill con- questioned in the taining provisions stage was last of progress through Congress we think is not enough this from the differentiate cause former one and to relieve arbitrary character there ascribed accept contrary to it. To view would in- produce touching interpretation difficulties superable practical render statute, impossible application proper understanding of the burden to be imposed. intended may justly demand to taxpayer know when he liable for taxes —he cannot foresee and how becomes *6 TERM, J., 276U.S.
Brandéis, required to the outcome- guess pend- be ought of every The future while before Con- measures. bill ing lawmakers necessarily uncertain. will the gress has expressed until final action thereon definitely is not taken. judgment below must be reversed. Reversed. in the concurs result. Mr. Justice Sanford Holmes, dissenting. Mr. Justice the Act of June As I think the construction of Holden, Blodgett four us in v. adopted c. 234, § I the into one, go the shall not proper that I find beyond saying of constitutionality question for ground the articulately to myself it hard state all Congress lay tax. We denying power I year. a tax every suppose know that we shall bill get in the middle as law may passed act be taxing that year. may A be at of the fully beginning as for as well as protection past privileges levied Wagner Baltimore, 239 those to come. 282. Seattle United
Billings v.
Kelleher,
Stockdale Atlantic Insurance
Mr. opinion. with this Brandéis, Justice Justice with whom
Mr. Mr. Holmes and Mr. Justice Stone concur. I this. sаid,
To Holmes add what Mr. Justice has to all made gifts The Court construes the Act as applying UNTERMYER v. ANDERSON. J., dissenting. the calendar Then it void
during year. holds Act to a applied period the ten-day between of the Report submission Conference Congress and the President. approval It holds the Act void is, because the action of law-making body in its Tested opinion, unreasonable. standard of commonly reasonableness adopted by man —use and *7 appears wont —that action to be reasоnable. Tested by higher still standard to which all Americans must bow— long continued practice Congress repeatedly sanctioned after argument this Court full validity would have —its unquestionable, seemed but for views recently expressed. No other standard has been suggested.
For more than half a it century, has been settled that Congress a law of imposing tax may be in its operation. Stockdale v. Insurance Companies, 20 323, Wall. Rose, Railroad Co. v. S. 78, Railroad Co. v. United 543, 549; S. Flint Co., Tracy v. Stone 220 107; Billings U. S. v. United States, 232 261, U. S. Brushaber v. Union Pacific Co., R. R. U. 1, 20; Lynch 240 v. Hornby, 247 U. S. Malley, 339, 343; Hecht v. 144, Each of tax acts adopted fifteen income from time to time the last during sixty-seven years has retroactive, been in applied earned, income prior the passage during act, year.1 the calendar The Act of October August 5, 1861, 45, 309, Act of c. 292, applied 12 Stat. to all year preceding January 1, incomes the calendar next 1862. The July 1862, 432, 119, 473, higher 1, rates, c'. Stat. enacted year ending applicable 31, to incomes for the December 1862. The July 4, 1864, 77, imposed 417, Joint Resolution of No. Stat. an already tax of additional 5% incomes for which had taxed at the rates established the Act of 1862. The Act of June 223, 30, 1864, 173, applied c. 281, Stat. to incomes for the then year. 1865, 469, 3, 78, current calendar The Act of March c. 13 Stat. year 479, again applied raised the which income for the end- rates, TERM, 276 TJ.S. J., all which taxed incomes 166, 16, 114, 38 Stat. 3, 1913, c. 1, 1913, specifically upheld was after March received 20, 1, Union R. R. Brushaber v. Pacific acts 339, 343. Some Hornby, Lynch v. The Joint year. in an earlier income earned have taxed 417, imposed 13 Stat. July 4, 1864, No. Resolution earned the calendar on incomes additional after the imposed being additional year 1863, this In Insur- Stockdale v. paid. had been year taxes for the Miller Mr. Justice Companies, 323, 331, 20 Wall. ance at- validity of the tax or “No one doubted said: February 24, 1919, c. The Act to resist it.” tempted in- 1057, 1058-1088, which taxed II, Title Stat. without applied, was year for the calendar comes in United States v. constitutionality, to its question a§ cases. Robbins, 315, and numerous other August 5, 6, § Tax Act of c. Corporation calen- to all net income for the applying 36 Stat. Co., 220 Tracy Stone Flint v. was sustained year, dar *8 2, 1867, 169, 14 Stat. March c. 31, The Act of ing 1865. December year. The the current calendar applied income 471, 477, also for 257, for the 256, taxed incomes July 14, 1870, C. 16 Stat. 255, Act of 1864, 1870, though 30, Acts of commencing January 1, June year 138, July 1866, 184, 98, 14 and 223, 283, of c. Stat. Í73, 13, 13 c. Stat. 471, 480, provided had income 1867, 169, 14 2, c. Stat. of March from tax. The Act of January 1, was to be free arising 1870, after 509, 553, applied in to inсomes August 27; 1894, 349, c'. 28 Stat. 3, 1913, year ending 31, 1894. The Act of October December calendar applied subsequent incomes received 114, 166, 16, c. 38 Stat. 756, September 8, 1916, 463, c. 39 Stat. 1, 1913. The Act March year. The increased rates established all income of that applied to applied 3, 1917, 63, 300, 40 Stat. to incomes c. the Act of October commencing January year The 1, the calendar 1917. received February 1919, 18, 1058, 1918, 24, 1057, c. 40 Stat. Revenue year Later been for 1918. Revenue Acts have applied incomes respect to the income tax: Act of November similarly with retroactive 1924, 234, 43 136, 2, 42 Act c. Stat. 23, 1921, c. Stat. February 27, 9, 44 26, 1926, c. Stat. 10. 253, 254; Act of UNTERMYER v. ANDERSON. J.,
U.
107. The Acts of
3, 1917,
159,
S.
March
c.
39 Stat.
1000,
3, 1917,
63,
300,
of October
40 Stat.
im
c.
302,
posing
profits
profits
excess
taxes on the
earned during
in
were so
Iron
year,
applied
calendar
LaBelle
Works
States,
v. United
377, Greenport
S.
Basin & Con
U.
struction
v.
Co. United
other
512,
The validity
cases.
of the Act
February 24,1919,
18,
c.
III, 40
1057, 1088, taxing
Title
Stat.
excess
earned
profits
during the
year
questioned.
calendar
has never been
1918,
Compаre
Dairy Co.,
Willcuts v. Milton
July 1, 144, 164, held were to validate provisions these taxes under an earlier act erroneously assessed before paid of the Act of passage for Except involved Nichols peculiar v. Cool no federal idge, revenue.measure has ever retroactivity. the score of held invalid on need has for revenue hitherto of the Government been deemed a tax making justification measure retro sufficient imposition whenever the seemed consonant with active *9 were not such conditions as would ordi justice the On hardship. this broad narily ground involve rest the upon special in which a assessment real estate cases has although the benefit resulting from upheld been the im enjoyed had been and the cost thereof provement had any legislation attempting to paid prior been authorize' 318° 28--29— TERM, 1927. 276 U. S. J., also S. Baltimore, v. assessment, Wagner
the
real estate
assessments
special
in which
the cases
had
conferred
benefit
although
upheld
have been
awas
before
paid
had been
thereof
and the cost
there
or оf
improvement
either
authorization
valid
Ry.
Northern
Harbor &
Compare Charlotte
assessment.
legislation
8. Such retroactive
Welles,
v.Co.
statute was
validating
sustained, although
has been
had passed
the property
until after
not enacted
benefited
any claim that
without notice of
purchaser
fide
to bona
v.
for a benefit. Seattle
be,
or
assessed
been, might
had
Bank
Compare Citizens National
Kelleher,
S. 351.
195 U.
right
Philip
Kentucky,
S.
duties laid
import
export
to retain
Government
pine
was
where
authority,
without
sustained
and collected
legislation
Congress by
confirmed
thereafter
United,
collecting
action
duties.
the unlawful
Co.,
Smith,
Rafferty
v. Heinszen &
States
Liability
and This often ingenious? recognized Court has that a a may necessary adjunct measure valid as to matter be legislative standing that lies even power, within though, subject have alone, constitutionality its to might Rup doubt. Extract Co. v. Purity Lynch, S. pert Caffey, Everard’s Breweries v. Day, legislature 560. If the may prohibit confessedly articles in to insure sale of innocent order I it others, why see no prohibition effective reason may spread period not a over a advance its enact long ment to insure the tax sufficiently will not be evaded anticipating passage Comparе act. emus, Dor United States v. 249 U. S. In taxation, “ matters, as well as other the law a penumbra allows object to be that goes beyond embraced the outline of its object in order may that the be See Mr. secured.” Justice Wisconsin, Holmes, in Schlesinger Under now applied, the rule even framed to measure prevent evasion of tax from a date when it practically is certain that the act will is law, become deemed unreason arbitrary. able and problem loss of revenue trans- preventing intervening
actions between date when final enactment, one; introduced and its is not a new nor to is it one tax. Other have peculiar nations met .aby to that which the holds method similar Court Congress. England be denied to long ago adopted the making customs excise practice duties retroactive of the fiscal or to year to the when beginning date government’s agreed resolutions were the House of sitting Ways Commons as Committee and Means.2 only practice aрplies to tariff measures, excise but impositions. examples all lands of For compare: practice, (a) excises, May 25, 1855, as to tariffs Acts of Viet., & 19 cc. 1855;. 21, 22, April, July dates in retroactive Act of 31, 1894, 57 & 26-29, April 58 Viet., 17, 1894; April c. §§ TERM, J., Ireland, A in all self- similar practice prevails *11 in France governing Dominions,4 and to some extent In of Italy.5 operation the United retroactive the by tariff Tariff repeatedly the has been recommended Secretary the of Commerce.6 Legis Commission on repоrted by Ways lation to that end was the Committee No Representatives.7 the sug and Means of House of to have been made that such gestion seems process its retroactive feature violate the due would clause.8 84, 29, 1910, 7, 8, 81, 82, April 30, 1909; 10 Edw. c. retroactive to §§ 5, 5 23, 1915, 89, 1-12, of 6 Geo. c. Act December & retroactive §§ 1915; July 29, September, 1927, dates in Act of 17 5,
to & 18 Geo. 12, 1927; (b) 10, April as to tax, c. retroactive to income Act of June 35, April Viet., 5 & to 22, 1842, 5, May 6 c. retroactive Acts of ' 10, 24, 16, 1854, Viet., April 17 & 18 cc. 6, 12 and June retroactive to May 25, 1855, 20, Act of 18 19 c. Viet., April & retroactive to July 31, 1894, Viet., 5, 30, 33, Act 57 & 58 c. of retroactive § April 1910, April 6, 1894; 7, 8, 65-66, Act of 10 29, to Edw. c. §§ July 29, April 6, 1915, 5, to Act of 62, retroactive 5 & Geo. c. April 6, 1915; 10, 23, Act of December 1915, retroactive to & 6 § raising by 5, 89, 20, c. 40% the rates last six Geo. months § (c) tax, year; as to of the current income inheritance Act of 30, April 29, 54, April c. 1910, 7, 8, retroactive to Edw. § proposed provisionally are collected date of taxes from the of of As to and excises resolution the House Commons. customs this usаge. Highmore, said to have rested on The Customs is ancient Parliamentary Laws, 61; May, Practice, ed., ed., 3d 11th In Bowles v. Bank passage of the of Finance England, Act a [1913] tax-payer 1 Ch. 57, was under no it was held that legal until obli- provisionally assessed gation pay- to sum as income Treasury. Act-, 5, 3, By the Provisional Collection of Taxes 3 Geo. c. Ways and Committee on Means of the House of a resolution of the imposition any declaring to the of tax and to be relative Commons statutory effeсt, public resolution should have in the interest provisional given Parliament, act of is the same force the tax. final enactment of May 21, See, g., April retroactive e. Act (a) Canada, July 19, 1924, April 11, as to retroactive See 1924; (b) 9, 1926, as to of June Newfoundland, Act
ÜNTERMYER v. ANDERSON. J., For nearly century after the of the Consti- adoption tution, this Court approached great with reluctance the of its high exercise prerogative invalid an act declaring Ogden Saunders, In Congress. Wheat. “ it said respect with to stаte It but a decent statute: is respect wisdom, integrity, patriot- due ism of the legislative body, by which any law is passed, presume validity, favour its until its violation proved constitution all beyond reasonable doubt.” Cases, In Sinking Fund S. 700, this Court May 1926; (c) Australia, as to amendment to the tariff effective provisionally on 25, 1927, yet finally approved; November and not (d) as to New Zealand, 1927, giving October force *12 purporting impose law all resolutions passed duties customs Representatives September the of 13, 1927; (e) House on or after as of Africa, Finance, South motion of the Union Minister of “ April subject passed 5,1926, present to an to be that, Parliament, duty session of and to such or rebates remissions of as may provided therein, be customs duties on articles as the accompanying set forth in be Schedule increased to the extent shown therein.” This motion published was embodied in Act No. Extraordinary the Union Gazette of 1926. Of&ciel, p. 13,749; Journal December 31, 1926, Legis 5 See Interim Report by Tariff lation, pp. a 34-36. Commission, Legislation, Report Interim See submitted the Tariff Com Ways mission the Chairman of the Committee on of and Means Representatives, April 16, of the House 1917. The recommendation repeated Reports has Annual of the Commission: First Report, 1917, p. Report, 1919, p. Annual Third Annual Fourth Report, 1920, p. Report, p. Annual Annual The Sixth 8. Secretary made a similar in a of Commerce recommendation letter Ways May and Means to the Chairman Committee. Cong., 86, p. Report, Sess., House 67th 1st No. Res., Cong. 67th 1st Cong., Sess., H. No. Ree. J. 1592, 1618; Report, Cong., Sess., House 67th 1st No. 8 May 31, Ways 1921, a member of the and Means Committee On minority objected proposed he filed a statement in which to the ground delegation legisla that on the it amounted to Cong. power Representatives. to a of the House of tive committee Rec. 1927. TERM,
Syllabus. Congress:Every possible an act of respect said with validity of a statute, of the is favor presumption beyond a ra- contrary shown this continues until cannot government branch tional doubt. One danger. of another without on the domain encroach in no small on depends degree of our institutions safety rule.” The salutary presump- of this a strict observance Congress, of an act of often validity tion in favor of the recently acted as as adverted has been to, Jr., & Cases, 274 Hampton, Assigned Car States, ante, presumption 394. The should p. United Co. v. objection to where, here, particularly strong be prohibition limitation or specific arises not from act “ only vague out of but cоntours Congressional power depriving any Amendment, prohibiting the Fifth law,” process without due liberty property or person Hospital, in Adkins Children’s Holmes, Me. Justice thinking I find no reason for 525, 568. has been overcome. presumption MAIL STEAMSHIP v. PACIFIC WILSON et al. COMPANY et al. MAIL COMPANY
PACIFIC STEAMSHIP et al.
WILSON ET AL. THE THE CIRCUIT COURT OE APPEALS EOR CERTIORARI TO CIRCUIT. NINTH April January 6, 9, 1928. Argued 1928.—Decided 146 and 173. Nos. open sea, Newport, an iron smooth, In fine, weather, clear knots, rammed the passenger steamer, proceeding eastward at nine steaming schooner, north- port Svea, a wooden steam side of They approaching each eight knots. had been other ward at Twenty minutes before the half an hour. full view for more than leaving an Newport quitted bridge, the master collision,