now, March 8d, 1873, delivered, the judgment of the court in all the cases, dividing them, as they had been argued, into two classes; the first class being where the dividend was declared prior to the 1st of January, 1870, and made payable afterwards; the second where it had been both declared and made payable afterwards.
I. IN THE EIRST CLASS.
Power to lay and collect taxes for Federal purposes, being vested exclusively in Congress, it becomes necessary,.whenever the validity of such a tax is drawn in question, to examine the act imposing the tax, as the question in every case must necessarily. depend upon its true construction, unless it appears that the tax is not apportioned as requii’ed, or not uniform, or the object taxed is one not taxable for such a purpose.'
Railroad companies indebted for any money for which bonds or other evidences of indebtedness have been issued, payable in one or more years after date, subject to interest or with coupons representing interest, are by the 122d section of the act of the 13th of July, 1866, made liable to the infernal revenue tax imposed by that section.
Provisions upon the subject differing essentially from *300those contained in that section had previously been enacted; but the Congress, on that day, amended the corresponding section in the prior law by striking out all after the enactiug clause, and inserting in lieu thereof the section under consideration, which also provides that “ ány such company that may have declared any dividend in scrip or money, due or payable to its stockholders, including non-residents, whether citizens or aliens, as part of the earnings, profits, income, or gains of such company, and all profits of such company, carried to the account of any fund, or used for construction, shall be subject to, and pay a tax of 5 per centum on the amount of all such interest or coupons, dividends or profits, whenever and wherever the same shall be payable, and to whatsoever party or person the same may be payable, including non-residents, whether citizens or aliens.”*
By the act incorporating the railroad company it was provided that the dividends of so much of the profits of the company as it should appear advisable to the managers should be declared at least twice in every .year, payable to the stockholders subsequent to the expiration of ten days from the time it was so declared.
Apart from that it also appears that the railroad company, on the 22d of December, 1869, declared a dividend in money amounting in the whole to the sum of $1,527,531.59 on their capital stock, as part of their earnings, profits, incomes, and gains made, and which accrued between the 1st ot July of that year and the 1st of December of the same year. None of these matters are controverted, but .the dividend, though it accrued during the period described, and was declared at the date specified, was made payable to the stockholders on the 17th of January following, as appears by the record.
Due return of the said dividend, as required.by law, was made by-the railroad company to the assessor of the first collection district, and the proper revenue authorities assessed a tax of 5 per centum upon the. said dividend, amounting to the sum of $76,376.58, which the railroad company was required to pay within the period prescribed by law.
*301Payment of the tax having been refused, after due notice given and demand made, the collector, and the other two defendants as his deputies, distrained the goods and chattels mentioned in the declaration to secure and enforce the payment of the tax, penalty, and interest, as directed in the warrant from the assessor. Distraint was made in due form, but the corporation plaintiffs, denying the legality of the tax, brought an action of trespass against the collector and his deputies in the State court to test that question, and the record shows that the suit, on the petition of the defendants, was regularly removed into the Circuit Court of the United States for trial. Both parties appeared in the Circuit Court, and the plaintiffs having filed their declaration the defendants pleaded the general issue, and' also a special plea, in bar of the action, setting up substantially the same matters as those set forth in the preceding statement. Issue was joined upon the first plea, but the plaintiffs demurred to the second, insisting that the matters pleaded do not constitute any defence to the action which is the principal question in the case. Judgment'was rendered for the plaiutiffs in the Circuit Court, and the defendants sued out a writ of error and removed the cause into this court.
Questions of importance to the parties, it may be conceded, are presented in the record for the decision of the court, but it must be admitted that they are all mere questions as to the construction of the act imposing the tax, as it is not pi’etended that the object taxed is one not taxable for Federal purposes, nor that the regulations prescribed for. the assessment and collection of the tax are subject to any constitutional objections. Stripped of every difficulty of that kind, as the case confessedly is, the great central question which arises is, what did the lawmakers mean when they enacted that “ any such company that may have declared any dividend in scrip or money, due or payable to its stockholders, including non-resideuts, whether citizens or aliens, as part of the earnings, profits, income, or gains of such company, and all profits of such company carried to the account of any fund, or used for construction, shall be *302subject to and pay a tax of 5 per centum on the amount of all such interest or coupons, dividends or profits, whenever and wherever the same shall be payable ?”
Congress, it is .insisted by the United States, intended to tax that accrued fund in the hands of the railroad company, in whatever form it might be; whether it existed as accumulated interest or in coupons representing interest, or in a dividend declared, or in a special fund of any kind, and without respect to the time of payment or the person or persons to whom it was ultimately payable. .Ev.ery element of that proposition is denied by the plaintiffs, and as a means of refuting it they have entered into an extended and critical review of all the principal features of the prior acts providing for the collection of internal revenue duties.
Where a section or clause of a statute is ambiguous, much aid, it is admitted, may be derived in ascertaining its meaning by comparing the section or clause in question with prior statutes in pari materiti, but it cannot be admitted that such a resort is a proper one where the language employed by the legislature is plain and free of all uncertainty, as the true rule in such a case is to hold that the statute speaks its own construction.
Much criticism is bestowed upon the corresponding provisions in the prior acts in order to show that Congress never intended to tax the railroad company at all, and that the tax, in view of the circumstances, cannot be sustained against the shareholder as a tax on income for the half-year specified in the statement, as the dividend was not made payable to the stockholder until the 17th of January of the succeeding year; and the court, if the tax could be regarded as one imposed upon the shareholder, would be inclined to concur with the plaintiffs that a dividend, neither due nor payable to the shareholder within a given year, could not be taxed to the shareholder as income of that year under the internal revenue laws which were in operation at the time the tax in question was assessed and collected.
Concede all that and still the court is of the opinion that *303the concession cannot benefit the plaintiffs, as the tax, by the very terms of the act imposing it, is a tax on the railroad company to be assessed and collected in the manner and by the means prescribed in the act imposing the tax, and having come to that conclusion it will not be necessary to examine very critically the machinery enacted in prior laws for the assessment and collection of income taxes against individuals, as the court is of the opinion that those regulations afford little or no aid in solving any material question involved in this record.
Attention was called during the argument to the fact that the railroad company is authorized, by the same section which imposes the tax, to deduct and withhold from all payments on account of any interest or coupons and dividends, due and payable as aforesaid, the tax of 5 per centum, and that the payment of the amount of the tax so deducted from the interest or coupons or dividends, and certified by the president or treasurer of the company, is made a discharge to the company for the amount of the tax so paid, deducted, and withheld, except where the company may have otherwise contracted.*
Attempt is made to invoke that provision as showing that, the tax is a tax on the shareholder and not a tax on the railroad company, but the court is unable to perceive that the argument has any foundation whatever, as the provision does not contain a word inconsistent with the preceding part of the section, which in terms imposes the tax upon-the railroad company.
Beyond doubt those two provisions should be construed together, and when so construed they are perfectly consistent and show to the entire satisfaction of the court that the plaintiffs are liable to pay the tax in controversy. They are so liable because it appears that they, as such company, having beeii indebted for money, issued bonds, or other evidences of indebtedness, payable with interest, or with coupons representing interest, in one or more years after date, *304and that they declared a dividend in money due or payable to their stockholders as part of the earnings, profits, income, or gains of such company, and the section provides that such a company under such circumstances shall be subject to and pay a tax-of 5 per centum on the amount of all such interest or coupons, dividends or profits, and authorizes the company to deduct and withhold the amount of the tax from the dividend due or payable to their stockholders.
Different regulations for the assessment and collection of the income taxes of every kind were prescribed in the prior laws imposing internal revenue duties, but. they were not in all respects satisfactory, and many controversies had arisen calling in question the action of the revenue officers in their efforts to enforce the collection of that branch of the public revenue. Contrariety of decision had resulted in some instances, and the Circuit Court had decided in one case that a railroad company could not deduct and withhold the amount of such a tax from a dividend due and payable to a non-resident alien, the presiding justice being of opinion" that the language of the prior act did not warrant the conclusion that Congress intended to include such holders of the bonds or certificates in the category of persons liable to such an assessment.*
Congress, accordingly,' in order to remove those difficulties, imposed the tax upon the railroad company, and enacted that the company should pay the same whenever and wherever the dividend should bo payable, and to whatsoever party or person the same should belong, showing beyond the possibility of doubt that Congress intended to hold the railroad company absolutely and solely liable for the tax, reserving to the company the right, which is equally unqualified, of deducting and withholding from the dividend the amount of the tax, whether the dividend was due or payable to the stockholder before or subsequent to tbe payment of the tax, and wholly irrespective of the question *305w'hether the stockholder was a resident or non-resident,'or' citizen or non-resident alien.
Paymeut of the tax by the company is an absolute requirement, just as much so as if the company was the actual holder of the bonds and the real owner of the dividends, whether they deduct and withhold the amount from the dividends or not, and the fact that the company is permitted to do so, if they see fit, does not ih the slightest degree change the relation of the company to the United States, as the taxpayei’s under that section of the law imposing internal revenue duties.
Confirmation of that view is also derived from the regulations'for the assessment and collection of the tax contained in the same section, which require that a return shall be made and rendered to the assessor or assistant assessor on or before the 10th day of the month following that in which said iuterest, coupons, or dividends become due and payable, and as often as every six months, and that the return shall contain a true and faithful account of the tax, with a declaration annexed thereto, of the president or treasurer of the company, verifying that statement under oath or affirmation.
All these regulations apply to the company, and the provision is that the company, if they make default, either in rendering the return or in the payment of the tax, shall forfeit as a penalty the sum of $1000, and that the tax and the penalty shall be assessed and collected as in other cases of neglect or refusal.
Special reference is made by the plaintiffs to the regulation enacted in the 119th section of the act of the 2d of March, 1867, that “taxes on income herein imposed” shall be levied on the 1st day of March in each year, and be due and payable on or before the 80th day of April in the same year, as inconsistent with the theory assumed by the United States, but the court is not able to perceive that the objection is entitled to any weight, as the i'ucome taxes therein imposed are required to be assessed on the incomes of individuals, and the 117th section of the same act expressly authorizes the individual to omit from his return of gains, *306profits, and income the amount of income received from institutions or corporations whose officers, as required by law, withhold a per centum of the dividends made by such institutio'ns-and pay the same to the officer authorized to receive such payments. Important amendments were made by that act to some of the sections of the prior act, but the 122d section, under which the tax in controversy was assessed, was left in full force and operation, without any change, alteration, or modification of any kind.
Such a dividend as that made by a railroad company is not required to be included in the return made by the shareholder of his gains, profits, and income, but is expressly required by law to be returned by the president or treasurer of the railroad company, as before explained, and the act of Congress in terms provides that the company shall be liable to and pay the tax, no matter when or where or to whatsoever party or person the dividend may be payable.*
Prior to that time the rule had been different, as the 116th section of the act of the 3d of March, 1865, expressly required that the amount of income received from such institutions by a shareholder should be included in his return to the.assessor, but the- power to lay and collect taxes for Federal purposes is vested in Congress, and Congress having repealed that provision and substituted another in its place, requiring the return to be made by the president or treasurer of the company, and having finally authorized the shareholders to omit the amouuts received from that source from their returns, the argument would seem to-be concluded unless it be assumed that some one or all of these regulations transcend the power of Congress under the Constitution, which is not pretended.†
Argument to show that a railroad company may be taxed for Federal purposes is certainly unnecessary, as the theory is not controverted, and the proposition that the dividends of such a eonipany are the proper objects of such taxation is also self-evident. Congress may tax such a dividend be*307fore it is paid to the holders of the securities, either as the property of the company or of the shareholders, at the election of Congress, nor can either party have any just ground of complaint if proper regulations are enacted to apportion and distribute the burden.
Power to tax either the company or the shareholder being admitted, the only question which can arise in this case is a question of construction, and the court is of the opinion that the act of Congress imposes the tax in controversy upon the railroad company. Having come to that conclusion it is not necessary to enter into any discussion of the question' whether the action of trespass will lie in such a case against the collector of the revenue. He acts under a warrant or other process from the assessor, and it may well be doubted whether he can be regarded as a trespasser unless it appears that he exceeds his jurisdiction. Several cases decide that the party taxed must pay the tax and bring assumpsit to recover back the money.*
Neither party, however, raised any such questions in the court below, nor has it been discussed in this court, and in view of those facts the court is not inclined to decide it at the present time.
•II. IN TH.E SECOND CLASS OR CASES.
Internal revenue taxes were assessed against the corporation plaintiffs by the assessor of the first collection district charged with that duty, and the plaintiffs denying the legality of the assessment refused to pay the tax, and the collector having distrained the goods and chattels mentioned in the declaration, as the means of enforcing payment, the plaintiffs brought an action of trespass against him and his deputy, claiming damages for the alleged unlawful seizure and detention of the goods and chattels.
Enough appears in the record to show that the plaintiffs are a railroad company; that being indebted for money to *308a large amount they issued bonds for the same, or other evidences of indebtedness, payable with interest, or with coupons representing interest, in one or more years subsequent to their date. On the 10th of January, 1870, the railroad company declared a dividend in money amounting to the sum of §43,567.63 on their capital stock as part of their income and gains niade, and which accrued between the 1st of July, 1869, and the 1st of January following.
Apart from the dividend an instalment of semi-annual interest also fell.due at the same time, amounting to $21,000, which accrued during the same six months for which the dividend of the income and gains was declared.. Due return was made by the railroad company of the amount of the dividend and interest to the assessor of internal revenue for the first collection-'district, and a tax of 5 per cent, on the amount was assessed by the proper revenue authorities, which is the tax in controversy, and for which the distraint was made, as alleged in the pleadings.
Detailed statement of the pleadings is unnecessary, as they are the same as in the preceding case, and all the questions presented for decision are the same except one, which will be made the subject of special examination. Judgméut was rendered for the plaintiffs in the Circuit Court, and the defendants brought a writ of error and removed the cause into this court.
Such a dividend, declared by such a company, in mcr ey, due or payable to their stockholders as part of the earr gs, profits, income, or gains of the company, it was decided'in the preceding case rendered the company liable to the tax of 5 per cent, on the amount of such income or gains, as more fully explained in the opinion delivered in that' case, and the court is of the opinion that the tax on the semiannual instalment of interest is within the same principle, ■and that it must be governed by the same rule.
Suppose that is so, still it is insisted by the plaintiffs that the rule there adopted is not applicable in this case, as the dividend was not declared within the six months speei*309fied in the pleadings, and because neither the dividend nor the interest was due or payable to the stockholders until the 10th of January following. Beyond doubt the two cases differ in that respect, and the question in this case is whether the admitted fact that the dividend was not declared within the half-year during which the income and gains were made takes the case out of the rule adopted in the other case.
Much weight would be due to that suggestion if the tax' was a tax upon the shareholder, but the. court has already decided that the tax imposed by that provision is a tax upon the railroad company, and the court adheres to that conclusion, which is confirmed by the fact that the object made taxable by that section is not only “any dividend declared,” but the language also extends to “ all profits of such company carried to the account of any fund, or used for construction,” showing that Congress intended that such'company shall be subject to and pay a tax of 5 per centum.on the amount.of all such interest or coupons, dividends or profits, whenever and wherever the same shall be payable and to whatsoever party or person the saíne may ultimately belong. ...
Tested by these considerations it is quite clear that it is the fund which accrued within the half-year which Congress intended to tax, and-the record shows that every dollar of the fund taxed in this case accrued within the last six months of the year preceding the- time when- the dividend- was actually declared. . -
Although the dividend was not declared until the 10th of-January, 1870, yet it is true that.-the object taxed is the fund which accrued within the last six mouths of the preceding-year, and it is certain that the fund taxed does not include a. dollar of the income or gains of the company for the. succeeding year. Concede that, and still.it is insisted by the plaintiffs that- the dividend cannot be regarded ;as income and gains of the company for the six.months specified in the pleadings, because it was not actually declared as such bji the company within that period, but the court is not able to adopt that construction of the act, as it would enable the *310company to postpone the payment of such a tax for six months or even for a year whenever they pleased, by omitting to declare a dividend, which would be inconsistent with the plain intent of' Congress as manifested by the language employed in the section imposing the tax.
Taxes illegally exacted under the revenue laws of the United States may be recovered back, if paid under protest, in an action of assumpsit against the collector, but the person taxed cannot enjoin the collector from enforcing payment, and very grave doubts are entertained whether trespass against the collector is a proper remedy under existing laws. No su.ch error, however, having been assigned in the case the court will not decide the point at the present time.*
Judgment reversed in each class of cases, and the causes ' remanded for further proceedings in conformity to the opinion of the court.
14 Stat. at Large, 139.
14 Stat. at Large, 139.
Railroad Co. v. Jackson, 7 Wallace, 269; Jackson v. Railway Co., 2 Internal Revenue Record, 174.
14 Stat. at Large, 139 and 478.
13 Id. 479; 14 Id. 478.
Philadelphia v Collector, 5 Wallace, 731; Assessor v. Osbornes, 9 Id. 574.
14 Stat. at Large, 475, § 10.