Hertz v. Woodman

Mr. Justice Lurton

delivered the opinion of the court.

This case comes to this court upon a certificate under § 6 of the act of 1891, creating Circuit Courts of Appeals. The action in the Circuit Court was one by the executor and legatees under the will of James F. Woodman, to recover an amount of money which had been paid, under protest, as a tax upon legacies under the will of the testator, by virtue of §| 29 and 30 of the act of June 13, 1898, and amendments, known as the War Revenue Act.

The facts certified are: That Woodman died at Chicago, March 15, 1902, leaving a will, which was- there duly probated on May 3, 1902, and that the Illinois Trust and Savings Bank qualified as executor. The clear value of legacies payable under the will to the defendants in error was $166,250. On January 17, 1905, and before the payment of these legacies, the collector claimed and collected, as the amount of duty and tax due and payable upon said legacies, under the act of Congress before mentioned, the sum of $2,812.49. After stating the facts, substantially as above, the certificate concludes .as follows:

“Upon the foregoing facts the question of law concerning which this court desires the instruction and advice of the Supreme Court is this: Does the fact that the testator dies within one year immediately prior to the taking effect of the repealing act of April 12; 1902 (U. S. Comp. *211Stát. Supp. 1903, p. 279), relieve from taxation legacies otherwise taxable under sections 29 and 30 of the act of June 13, 1898, as amended by the act of March 2, 1901?”

The form of this certificate has been criticised, but we think it sufficiently states both the question and the desire of that court for the instruction of this court that it may make a proper decision. It conforms, in substance, with the statute, and finds precedence' in a number of instances in matter of form. Helwig v. United States, 188 U. S. 605; United States v. Pridgeon, 153 U. S. 48; United States v. Ju Toy, 198 U. S. 253.

It is also urged that the Circuit Court of Appeals for the Seventh Circuit is. precluded from requesting the instruction of this court, because it had in two cases theretofore decided the very question now certified. United States v. Marion Trust Co., 143 Fed. Rep. 301; United States v. Stephenson, not yet reported. In both cases' the decision was adverse to the contention of the United States. The first was affirmed by this court without opinion, by an evenly divided court, 203 U. S. 594, and, in the second, an application by the United States for á writ of certiorari was denied. 212 U. S. 527. It is further contended that, if not concluded by its own decisions, it was bound to follow the judgmeiits of this court in Eidman v. Tilghman, affirming the judgment' of the Circuit Court of Appeals of .the Second Circuit, reported in 136 Fed. Rep. 141, the affirmance by this court being reported in 203 U. S. 580, and similar judgments of affirmance in Philadelphia Trust Co. v. McCoach, 142 Fed. Rep. 120, and 203 U. S. 539, and United States v. Marion Trust Co., supra.

All of these cases were affirmances by an equally divided court of the judgments of the court below in favor of the legatees or distributees who had sued to recover taxes páid upon legacies or shares which had passed to the plaintiff within one year after the death of the testator *212or intestate, the several lower courts having ruled that the tax had not been saved because it was not due and payable at the time of the repeal of the act under which, the tax was claimed.

The Circuit Court of Appeals was obviously not bound to follow its own prior decision. The rule of stare decisis, though one tending to consistency and uniformity of decision, is not inflexible. Whether it shall be followed or departed from is a question entirely within the discretion 'of the court, which is again called upon to consider a question oncé decided. The court below in this instance, when called upon to reconsider its former construction of the inheritance tax act, found itself confronted by the fact that this court had been equally divided in opinion as to the proper interpretation of the act, and for that reason alone obliged to affirm the ruling of that and other courts against the legality of the tax which had been collected. If the decision of the court under review had been in favor of the legality of the tax an affirmance' must likewise have resulted from an equal division. That court also found that its own former view of the'act had. not'been satisfactory to the Circuit Court of Appeals for. the Eighth Circuit, which court had decided contrariwise in Westhus v. Union Trust Co., 164 Fed. Rep. 795. In such circumstances the court below was not only free tó regard the question as one open for determination, but one which might well be certified to this court, that the question of law which had never been authoritatively decided by this court might be so determined by an instruction as to how it should decide the matter when thus presented for reconsideration.

When this court in the exercise of its appellate powers is called upon to decide whether that which has been done in the lower court shall be reversed or affirmed, it is obvious that that which-has been done must stand unless reversed by the affirmative action of a majority. It has *213therefore been the invariable practice to affirm, without opinion, any judgment or decree which is not decided to be erroneous by a majority of the court sitting in the cause. The earliest precedent is that of Etting v. United States Bank, 11 Wheat. 59, 78: Chief Justice Marshall said at the conclusion of the opinion:

“In the very elaborate arguments which have been' made at the bar, several cases have been cited which have been attentively considered. No attempt will be made to analyze them, or to decide on their application to the case before us, because the judges are divided respecting it. Consequently, the principles of law which, have been argued cannot be settled; but‘the judgment is affirmed, the court being divided in opinion upon it.”

In Durant v. Essex Company, 7 Wall. 107, 110, Mr. Justice Field, for this, court, said, in respect of the effect of the affirmance by a divided court:

“There is nothing in the fact that the judges of this court were divided in opinion upon the question whether the decree should be reversed or not, and, therefore, ordered an affirmance of the decree ?of the court below. The judgment of affirmance was the .judgment of the entire court. The division of opinion between the judges was the reason for the entry of that judgment; but the reason is no part of the judgment itself.”

To the same effect are Westhus v. Union Trust Co., 168 Fed. Rep. 617; Hartman v. Greenhow, 102 U. S. 672, 676. A different rule seems to have been sanctioned in the English courts. Calherwood v. Caslin, 13 Meeson & Welby, 261; Beemish v. Beemish, 9 H. L. Cases, 274.

Under the precedents of this court, and as seems justified by reason as well as by authority, an affirmance by an equally divided court is as between.the parties-a conclusive determination and adjudication of the matter adjudged-, but the principles of law' involved not having been agreed upon by a majority.of the court sitting *214prevents the case from becoming an authority for the determination of other cases, either in this or in inferior courts. The affirmance by a divided court in the second-case shows this, for if it was not so the second ec[ual division could not have happened, for the case would have been controlled by the first equal division.

We shall therefore proceed to determine the question of law presented by the certificate of the Circuit Court of Appeals, feeling free to decide it as our judgments may dictate.

The statutes involved and requiring consideration are the twenty-ninth section of the act of June 13, 1898, c. 448, 30 Stat. at Large, 464; the thirtieth section of the same act, as amended by § 11 of the act of March 2, 1901, c. 806, 31 Stat. at Large, 948, and §§ 7, 8 and 11 of the act of April 12, 1902, c. 500, 32 Stat. at.Large, part 1, page 97 et seq. So much of the sections referred to as is material to the present question is set out in the margin.1

*215The seventh setition of the act of April 12, 1902, which act we shall hereafter refer to as the repealing act, did not go into effect until July 1, 1902. That section explicitly repealed § 29 of the act of June 13, 1898, which was the only section imposing a tax upon inheritances and the only authority for the tax collected from the defendants in error. The claim of the United States was and is that, as the testator’s death occurred prior to July 1, 1902, the tax demanded had been imposed as an obligation before the repeal of the taxing section, and that. *216the liability thus imposed was saved by the eighth section of the repealing act. For convenience that section is here agáin set out:

“Sec, 8. That all taxes or duties imposed by section twenty-nine of the act of June thirteenth, eighteen hundred and ninety-eight, and amendments thereof, prior to the taking effect of this act shall be subject, as .to lien, charge, collection, and otherwise, to the provisions of section thirty of said act of June thirteenth, eighteen hundred and ninety-eight, and amendments thereof, which are hereby continued in force, as follows. . . . ”

The question for solution must therefore turn upon the inquiry whether the tax in question had been imposed prior to the going infio effect of the repealing act within the intent and effect of the saving clause just set out.

There are cases which go so far as to say that the unqualified repeal of a law as effectually destroys rights and liabilities dependent upon it, not past and concluded, as if the statute had never existed. It is, however, putting it strongly enough to say, that an unqualified repeal operates to destroy inchoate rights, as a release of imperfect obligations and as a remission of penalties and forfeitures dependent upon the destroyed statute. United States v. Reisinger, 128 U. S. 398; Curtis v. Lovett, 15 N. Y. 9, 152 et seq.; Town of Belvidere v. Warner R. R. Co., 34 N. J. L. 193; 1 Lewis’ Sutherland Stat. Const., §§ 282 et seq.

There has been a marked legislative trend in the direction of escaping from, the serious consequence sometimes incident to this common-law rule of construction, indicated by general statutes saving liabilities, penalties and forfeitures incurred under repealed statutes. Such a general statute was. passed by Congress on February 25, 1871, ch. 71, 16 Stat. 431, the fourth section of which was carried into the revision of 1878 and is now in force as § 13, Rev. Stat. That section reads as follows:

“The repeal of any statute shall not have the effect to *217release or extinguish any penalty, forfeiture or liability incurred under such .statute, unless the repealing act shall so expressly provide, -and such statute -shall be treated as still remaining in force for the purpose of sustaining any proper action or prosecution for the enforcement of such penalty, forfeiture, or liability.”.

This provision has been upheld by this court as a rule of construction applicable, when not otherwise provided, as a general saving clause to be read and construed as a part of all subsequent, repealing statutes, in order to give effect to the will and intent of Congress. United States v. Reisinger, 128 U. S. 398; Great Northern Ry. Co. v. United States, 208 U. S. 452.

In the last case cited the court said of this section that—

“As the section of the Revised Statutes in question has only the force of a statute, its provisions cannot justify a disregard of the will of Congress as manifested either expressly or by necessary implication in a subsequent enactment. But while this is true the provisions' of § 13 are to be treated as if incorporated in and as a part of subsequent enactments, and therefore, under the general principles of construction requiring, if possible, that effect be given to all the parts of a law the section must be enforced unless either by express declaration or necessary implication, arising from the terms of the law, as a whole, it re-, suits that the legislative mind will be set at naught by giving effect to the provisions of § 13. For the sake of brevity we do not stop to refer to the many cases from state courts of last resoit dealing with the operation of general .state statutes like unto § 13, Rev. Stat., because we think the views just stated are obvious and their correctness is established by a prior decision of. this court concerning that section. United States v. Reisinger, 128 U. S. 398.”

This section is not alone applicable to penalties and for*218feitures under penal statutes. It extends as well to "liabilities,” and a liability or obligation to pay a tax imposed under a repealed statute is not only within the letter, but the spirit and. purpose of the provision. Therefore we must take that general saving clause into consideration as a part of the legislation involved in the determination of whether a "liability” had been incurred by the imposition of a tax prior to the act that destroyed the law under which-it had been imposed.

The repealing act here involved includes a saving clause, and if it necessarily, or by clear implication, conflicts with the general rule declared in § 13, the latest expression of the legislative will must prevail. In the case of Great .Northern Ry. Co., v. United States, cited above, the question was whether the saving clause in the Hepburn act was so plainly in conflict with the rule of construction found in § 13 as to limit the actions or liabilities saved to those enumerated therein, but the court held that as the later clause applied to remedies and procedure, it was not by implication in conflict with the general provision of § 13, which saved penalties, forfeitures and liabilities. 208 U. S. 466, 467.

The significance of § 13 is therefore this: That if prior to the repealing act the defendants iri error were under any liability or obligation to pay the tax or duty imposed by § 29 of the act of June 13, 1898, that obligation or liability was not relieved by the mere* repeal of that sec-tioh, nor as a consequence of the saving clause in the re-, pealing act, unless the special character of that clause by plain implication cuts down the scope and operation of the general rule in § 13.

In the light of these principles of interpretation we come then to the question as to whether, at the date of the repeal of § 29 of the act of June 13, 1898,' the legacies to the defendants in error w.ere subject to any tax or duty under the repealed section which constituted a “liability” under *219§ 13, or to a tax or duty “imposed,” under the saving clause of the repealing act.

The only section which imposes any tax upon inherit-. anc.es is the twenty-ninth. Any legacy or distributive share, or gift in anticipation of death, “passing after the passage of the act,” is by the express terms of that section “made subject to a duty or tax to be paid to the United States, as follows,” etc.

Section 30 of the same act deals only with the return, payment and procedure for the collection of “the tax or duty aforesaid,” referring to the tax imposed by §29.

Now, what is the property, right or thing which is made subject to the tax? This has been most conclusively answered by Knowlton v. Moore, 178 U. S. 41, 56, where the section in question is construed as laying a tax upon the transmission, or the right to succeed to a legacy or distributive share or gift in contemplation of death, passing after the act.

For reasons and upon grounds not necessary to be restated it has-been also conclusively decided in Vanderbilt v. Eidman, 196 U. S. 480, that the tax or duty does not attach to legacies or distributive shares until the right of succession becomes an absolute right of immediate possession or enjoyment. It was therefore held in the case cited that a legacy upon conditions which might never happen was not subject to the tax or duty prior to the time, if ever, when the right of possession or enjoyment should become absolute.

To repeat then: The subject of the tax or duty exacted by § 29 is the right of succession which passes by. death to. a vested beneficial right of possession or enjoyment to a legacy or distributive share.

Upon the facts certified the right of succession which passed by the.death of the testator was an absolute right to the immediate possession' and enjoyment, a right neither *220postponed until the falling in of a life estate, as in Mason v. Sargent, 104 U. S. 689, nor subject to contingencies, as in Vanderbilt v. Eidman, supra. No further event could make their title more certain nor their possession and enjoyment more secure. The law, then unrepealed and in .full force, operated to fasten, at the moment this right of succession passed by death, a liability for the tax imposed upon the passing of every such inheritance or right of succession. The time for scheduling or listing was practically identical with the time for payment, and the listing or scheduling was required to be done by the executor charged with payment, but might be and was postponed for reasons of grace and of convenience. That is almost universal under any taxing system. The liability attaches at some time before the time for payment. But the liability for the payment of the tax exacted under § 29 of the act of June 13, 1898, accrued or arose the moment the right of succession by death passed to the defendants in error, and the occurrence of no other fact or event was essential to the imposition of a liability for the statutory tax upon the interest thus acquired.

Much has been urged because the tax was not “due and payable” when the repealing act took effect, and the contention is that because not “due and payable” no tax had been theretofore imposed within the intent of the saving clause. What we have already said answers this. But let us see the very unreasonable result which would ensue if we are required to say that by “tax or duty imposed under section twenty-nine” Congress meant a tax or- duty due and payable when the repealing act should go into effect.

No one questions but that one effect of this saving clause would be to save any such tax as was “due and payable” one year before July 1, 1902. This being so, it would be very unjust if the tax in the latter case is saved, and the Other remitted, inasmuch as the thing made subject to *221the tax would in each case be the samé, namely, the transmission of a beneficial right to the possession and enjoyment of a legacy or distributive share, at the death of a testator or intestate. In the one case the tax paid upon the right passing by death would be preserved. In the other a tax upon a like inheritance would be remitted. The only difference would be that in one case the time for payment had arrived, while in.the other it had not, though in the later case the ultimate obligation to pay was equally as certain and fixed as in the first cáse.

Now, did Congress intend to make such an unjust distinction as would result from such an interpretation of the saving, clause in question as shall make the time limit for payment the test as to whether one tax shall be preserved and the other remitted in a situation otherwise identical? . The saving clause does not in terms limit the right saved to a tax or duty which should be due and payable at the date of the repeal. It is perhaps an obvious suggestion that if that had been the purpose of Congress, it would have been easy to make that purpose clear.

But in place of saying in so many words that “ all taxes or duties which should be due and payable prior to the taking effect of the act” should be subject to the provisions of § 30, etc., the Congress said that “all taxes or duties imposed by section twenty-nine,”, etc., prior to the taking effect of this act, should be subject to the provisions of § 30. Now it is to be noticed that this § 30, which is the remedial or procedure section, is not one of the sections repealed. The twenty-ninth section, which alone imposes any tax, is the one which is repealed. The plain purpose of the. saving clause was to preserve some liability which had been imposed under § 29, which would otherwise be lost. This it did by providing that all taxes “imposed” prior to the going into effect of the act should, notwithstanding the repeal of the section which originated the tax, be preserved, and as to collection lien, etc., be *222subject to the unrepealed § 30. It must also be borne in mind that this time limit for payment to “one year after the death of the testator” came into the thirtieth section only by the amendment of March 2, 1901. Up to the time of that amendment the only provision as to time was that still found in the later parts of the same section, namely, that “before payment and distribution to the legatees” the executor, administrator or trustee “shall pay to the collector . .. . , the amount of the duty or tax. assessed upon such legacy or distributive share, and shall also make and render (to the collector) a schedule, list or statement, in duplicate, of the amount of such legacy or distributive share, together with the amount of duty which has accrued, or shall accrue thereon, verified,” etc. The. same original section also provided that in case of negleet to so pay or deliver the statement required “ within the time hereinbefore provided,” certain penalties should be incurred; and that the collector should make out schedules, etc. This reference to the “time hereinbefore provided” is in the original section, and must, therefore, refer to a time before “payment and distribution” to the legatees and distributees.

It would seem to follow that the purpose and effect of the amendment making such tax “due and payable in one year after the death of the testator,” was to advance the time of payment so as to require payment within one year if there should be longer delay in paying legacies and distributive shares, leaving in full force the requirement that the tax should be paid before the payment of legacies and distributive shares, if such payment and distribution should be made in less than one year. We have not passed over the fact that this tim eit in terms applies only to the tax due under wills and to the uncertainty as to the time for the payment of the tax upon distributive shares. It, however, seems quite obvious that that time limit was intended to apply to shares in intestate estates, as well as *223to legacies from testators, and that the omission may be supplied by necessary implication.

It has been suggested that the Men given by § 30 only attaches when the tax is due and payable. The Men was in the section before the amendment, and, in view of its purpose, would attach with the obligation or liability for the tax. There is no reason which would justify the assumption that the. Men only attached when the day of payment might arrive, a date most indefinite before the insertion of the time Mmit by the amendment of 1902.

But it has been urged that any conclusion which saves a tax from the effect of a repealing act which was not actually due and payable is in conflict with Mason v. Sargent, 104 U. S. 689. That case arose under the inheritance tax law of 1864. The pláintiff’s testator died while the law was in force, it having been repealed October 1, 1870. The legacy to the plaintiff, which was in that case held to have been illegally taxed, was one payable after the death of the widow of the testator, which did not occur until 1872, and after the repeal of the law under which the tax was claiméd. But that case is distinguishable from this in more than one particular. The legacy sought to be taxed did not vest in possession and enjoyment before the repeal of the act under which it was supposed to be taxable. If, therefore, no taxable succession occurred during the existence of the inheritance tax law of 1864, the right to the tax would fail under the very test which this court in Vanderbilt v. Eidman made the test of whether a tax had been imposed during the operation of the act of June 13, 1898, and the very test which is appllied in the present case.

The precise question here involved, and upon which this case must turn, namely, whether a-tax is not at once “imposed,” by succeeding to an immediate right of possession and enjoyment, during the operation of the act of June 13, 1898, in such sense as to be within the *224intent of the saving clause in the act which repealed that act, was not and could not have been involved in the case cited. The terms, both of the act of 1864, as amended in. 1866, and of the act which repealed that act, arid of the saving clause in the repealing act, are in some important aspects to be differentiated from the acts here involved. It is enough, however,, to say of that case that no taxable succession having occurred before the repeal of the act, there was nothing to save by the saving clause in the repealing act. In the preserit case it is equally as clear that if no taxable succession actually vested prior to the repeal of the taxing act, no tax would be saved. If, however, there did occur such an absolute right to the possession and enjoyment of the legacies to the present defendants in error as made it subject at once to the imposition of a tax under the law in operation when, such succession occurred, a very different question must be decided from any decided in Mason v. Sargent.

The conclusion we reach is, that upon the passing by death of a vested right to the immediate possession. or enjoyment of a legacy or distributive share, there was imposed the tax or duty exacted upon every such right of succession which was saved by the saving clause of the repealing act.

The question certified must be answered in the negative.

Section twenty-nine of the act of June 13, 1898, is as follows:

.“That any person or persons having in charge or trust, as administrators, executors, or trustees, any legacies or distributive shares arising from personal property, where the whole amount of such personal property as aforesaid shall exceed the sum. of ten thousand dollars in actual value, passing, after the passage of this act, from Any person possessed of such property, either by will or by the intestate laws of. any State or Territory, or any personal property'or interest therein, transferred by deed, grant, bargain, sale or gift, made or intended to take effect in possession or érijoyment after the death of the grantor or bargainor, to any person or persons, or to any body or bodies, politic or corporate, in trust or otherwise, shall be, and hereby are, made subject to a duty or tax, to be paid to the. United States,- as follows, that is to say: . . .” 30 Stat.'464, chap, 448.

So much of section thirty of the act' of June 13, 1898,'as’amended by section eleven of the act of March 2, 1901, as is material, reads:

“That the tax or duty aforesaid shall be.due and.payable in One year after the death of the testator arid shall'be a lien and charge upon the property of every person who may die as aforesaid for twenty years, or until the. same shall, within that period, be duly paid to and dis*215charged by the" United States; and every executor, administrator, or trustee having in charge or trust any legacy or distributive share, as aforesaid, shall give notice thereof, in writing, to the collector or deputy collector of the district where the deceased grantor or bargainor last resided within thirty .days after he shall have taken charge of such trust, and every executor, administrator, or trustee, before payment and distribution to the legatees, “or any parties entitled to beneficial .interest therein, shall pay to the collector or deputy collector of the district of which the deceased person was a resident, or in' which the property was located in case of nonresidents, the amount of the duty or tax assessed upon such legacy or distributive share,” etc.

Sections seven, eight and eleven of the act of April 12, 1902, are as fellows:

“Sec. 7. That section four of said act of March second, nineteen hundred and one, and sections six, twelve,' eighteen, twenty, twenty-one, twenty-two, twenty-three, twenty-four, twenty-five, Schedule A, Schedule B, sections twenty-seven, twenty-eight and twenty-nine of the act of June thirteenth, eighteen hundred and ninety-eight, and all amendments of said sections and schedules be, and the same are hereby, repealed.
“Sec. 8. That all taxes or duties imposed by section twenty-nine of the act of June thirteenth, eighteen hundred and ninety-eight, and amendments thereof, prior ,to the taking effect of this act, shall be subject, as to lien, charge, collection and otherwise, to the provisions of section thirty of said act of June thirteenth, eighteen hundred and ninety-eight, and amendments thereof, which are hereby continued in force, as follows: . .
“Sec. 11. That this act, except as otherwise specially provided for -in the preceding section, shall take effect July first, nineteen himdred and two.” 32 Stat. pt. 1, pp. 97, 98, 99; chap. 500.