RAINEY v. US , 232 U.S. 310 (1914)

[232 U.S. 310, 312]   Mr. C. Andrade, Jr., for Roy A. Rainey. [232 U.S. 310, 313]   Assistant Attorney General Adkins and Mr. Karl W. Kirchwey for the United States.

Mr. Chief Justice White delivered the opinion of the court:

The first two of the foregoing cases relate to a tax becoming due on the 1st of September, 1909, and the other two to a tax becoming due on the 1st of September, 1910, the taxes in all cases having been levied, pursuant to 37 of the tariff act of 1909 [36 Stat. at L. 112, chap. 6. U. S. Comp. Stat. Supp. 1911, p. 1197], on the British built yacht Cassandra, owned by the plaintiff in error. In these cases, as in those arising under the same act, which we have just decided, the certificates of the circuit court of appeals are here because of writs of error from that court prosecuted by the United States for the purpose of reviewing the action of the trial court in rejecting a demand for interest, and the two other cases are here on direct writ of error to the court below, to review its action in upholding the tax. In both the cases brought directly here, the pleadings of the government asserted the citizenship of the defendant, the use of the yacht during the taxing period, and the other statutory [232 U.S. 310, 314]   essentials to fix liability. The answers not traversing citizenship, ownership, or use, set up the same defenses as were urged in the cases we have just decided, somewhat however, reiterated and changed in form of statement, and other defenses not made in the previous cases. In the first direct case, judgment was rendered in favor of the government for the tax by submission on bill and answer. In the second a like judgment was rendered, the case having been submitted by stipulation to the court without a jury; and in that case the finding of fact made by the court as to the use of the yacht is as follows: 'During the period from the said 25th day of June, 1908, the date when the defendant purchased the said yacht, to the 1st day of September, 1910, the yacht was used by the defendant both in the waters of the United States and in the waters of foreign countries, as well as on the high seas; and in the year immediately preceding the first day of September, 1910, the said yacht was used by the defendant continuously in the waters of the United States, except for the period from June 20, 1910, to July 30, 1910, when she was used by the defendant on a cruise to the Gulf of St. Lawrence.'

Separate assignments of error were made in the two cases which are here on direct review, and are referred to and discussed in the arguments at bar. They are all, in both cases, however, embraced in the ten separate propositions stated in the argument, and both cases will therefore be disposed of by briefly considering and deciding them. In doing so we shall bring the several assignments under common headings, for the purpose of avoiding repetition. First, that the court erred in holding there was authority to bring an action in personam against the owner for the recovery of the tax. This is disposed of by the reasoning adopted in the Billings Case [ 232 U.S. 261 , 58 L. ed. --, 34 Sup. Ct. Rep. 421], in passing on the question of liability for interest. Second, that error was committed in holding the first instalment of [232 U.S. 310, 315]   the tax was due in September 1909, and in deciding that the six months' clause, under the section in question, 'applied only to the charterer, and did not apply to the owner of a foreign-built yacht.' Third, that error was committed in deciding that the tax did not violate the due process clause of the 5th Amendment, and was not in conflict with the uniformity clause of article 1, 8, of the Constitution. These grounds also are disposed of by the opinion in the Billings Case. Fourth, that error was committed in not deciding that 37 of the act of 1909, 'in so far as it lays a duty of 35 per cent ad valorem, is a direct tax and void because not apportioned, in contravention of article 1, 2, and article 1, 9, of the Constitution of the United States.' This proposition is concerned with the second paragraph of the act in question, which gives a right to the owner of foreign-built yachts to commutation, as follows:

'In lieu of the annual tax above prescribed the owner of any foreign- built yacht, pleasure boat, or vessel above described may pay a duty of thirty-five per centum ad valorem thereon, and such yacht, pleasure boat or vessel shall thereupon be entitled to all the privileges and shall be subject to all the requirements prescribed by sections forty-two hundred and fourteen, forty-two hundred and fifteen, forty-two hundred and seventeen, and forty-two hundred and eighteen of the Revised Statutes U. S. Comp. Stat. 1901, pp. 2845-2847, and act amendatory thereto, in the same manner as if said yacht had been built in the United States, and shall be subject to tonnage duty and light money only in the same manner as if said yacht had been built in the United States.'

We think the reasons given in the comprehensive opinion of the lower court in ruling adversely on this proposition are so conclusive that we adopt them and make them our own. The court said:

'The owner is not required to pay this duty. He is merely given the option to pay it. In its nature it would [232 U.S. 310, 316]   seem to be a duty on imports, and such duties are not held to be direct taxes requiring apportionment. But it is unnecessary to pass upon this question. These actions are for the recovery of the annual tonnage tax, and the validity of the ad valorem tax is not involved. The provisions concerning that tax are separable from those concerning the annual tax. The one is not dependent upon the other, and there is no indication that Congress would not have adopted the one without the other. Under such conditions it is well settled that unconstitutional provisions may be separated from legal provisions and effect be given to the latter.' [190 Fed. 362.]

Fifth, that error was committed in not holding that enforcement of the tax 'would destroy rights vested in the defendant under the British treaty of July 3d, 1815 [8 Stat. at L. 228],' and would for such reason 'deprive the defendant of his property without due process of law.' The court below adequately disposed of this contention upon reasons which we also approve and adopt.

The court said:

'The defendant does not claim to be a British subject, and it is by no means clear that he is entitled to invoke the protection of the treaty. But, however that may be, it is well settled that when a treaty is inconsistent with a subsequent act of Congress, the latter will prevail. Taylor v. Morton, 2 Curt. C. C. 454, Fed. Cas. No. 13,799; and see Whitney v. Robertson, 124 U.S. 190 , 31 L. ed. 386, 8 Sup. Ct. Rep. 456; Head Money Cases (Edye v. Robertson), 112 U.S. 580 , 28 L. ed. 798, 5 Sup. Ct. Rep. 247; Cherokee Tobacco (Boudinot v. United States), 11 Wall. 616, 20 L. ed. 227; Ropes v. Clinch. 8 Blatchf. 304, Fed. Cas. No. 12,041.

'Treaties are contracts between nations, and by the Constitution are made the law of the land. But the Constitution does not declare that the law so established shall never be altered or repealed by Congress. Good faith toward the other contracting nation might require Congress to refrain from making any change, but if it does act, its enactment becomes the controlling law in this country. The other nation may have ground for complaint, but [232 U.S. 310, 317]   every person is bound to obey the law. And as a corollary it follows that no person acquires any vested right to the continued operation of a treaty.'

Sixth, that error was committed in not deciding that 37 of the act was void, 'as it is a bill for raising revenue, and it originated in the Senate and not in the House of Representatives, in contravention to article 1, 7, of the Constitution of the United States.' Without intimating that there is judicial power, after an act of Congress has been duly promulgated, to inquire in which House it originated, for the purpose of determining its validity, and upon the assumption, for the sake of the argument, that such power may be invoked, again we think the court below disposed of the contention upon a ground entirely satisfactory, which we adopt and approve, the court saying:

'I am also satisfied that the section in question is not void as a bill for raising revenue originating in the Senate, and not in the House of Representatives. It appears that the section was proposed by the Senate as an amendment to a bill for raising revenue which originated in the House. That is sufficient. Having become an enrolled and duly authenticated act of Congress, it is not for this court to determine whether the amendment was or was not outside the purposes of the original bill.'

Following the practice adopted in the cases previously decided, and treating, as we did in these cases, the United States as here on a cross writ of error complaining of the refusal to allow interest, it follows that the questions asked by the circuit court of appeals, covered by the certificates, need not be answered, and that the judgments of the court below in the cases on direct writ of error in so far as they rejected the claim of interest will be modified to the extent necessary to allow such claim, and in other respects will be affirmed. Therefore the order will be modified and affirmed.