UNITED STA,TES V. LOUISVILLE & N. R. CO.
whenever the same shall be payable." 13 St. 285. The act of 1862 is repealed by this act, but the 173d section provides that all the provisions of said act "shall be in force for levying and collecting all taxes * * properly assessed, or liable to be assessed, or accming under the, or former acts, * * * the right to which has already accrued, or'which may hereafter accrue." The actof July 13, 1866, amended section 122 of theadt,approved June 30,1864, by adding this ' , "Provided. that whenever any of the companies mentioned in this section shall unnble to pay the interest on their indebtedness, and shall in fact fail to pay such interest, that in sueh cases the tax levied by this section shall not, be paid to the United States until said company resilmethe payment of interest on their indebtedness." The fifteenth section of the act approved July 14,1870, enacts: "There shall he levied and collected for and during the year 1871 a tax of two and one-half per centtlm on the amount of all interest or coupons paid more on bonds or other evidences of debt issued and payable in one years after date by any of the corporations in this section hereinafter enumerated;"and railroad companies are thereafter enumerated.Seetion 17 of sawe, act provided that section 122 of the act of 1864 the taxes therein mentioned to the 1st, day of gust, 1870, but after that date no further taxes shall be levied or asses!led under said seytion. 16 St., pp.260, 261, § 17. The same section, bowever, provides that "this act shall not be construed to affect any act donlil, Ijght accrued, or penalty, incurred under former acts, but every such right is hereby sa\red." It will be seen, from these qnotations, that the acts of 1862 and act of 1864, as amended by the act of 1866, make , stibstantialiy the same provision as to the time when the tax shall be paid. The act of 1864providl;lsthat this tax shall be due whenevedhe interest is pQ,yablej but the act of 1866 amends this, and makes the tax due whenever the interest is paid. This is the act of 1862. The earlier to have construed this as a tax on the bondholders, and recases garded the,proyisions as to the payment by railroad and other companies as merely a ,convenient mode of collecting the tax. U. 8. v. Railroad 00., 17 Wall. 325; Ra,ilroad Co. v. Jacks(m, 7 Wall. 262; Haight v. Rauroad 00., 6 Wall. 17. But the later cases ofthe supreme court have distinctly decidecl.thi13 tax to be upon the business of the companies. The court say, in Railroad Co. v. Collector, 100 U. S. 598: "The tax, in our opinion, is essentially an excise on the business of the class of corporations mentioned in the statute. The section is a part of the system of taXing incomes, earnings, and profits. adopted during the late war, and abandoned as soon after that war was ended as it could be done safely. The corporationslllentioned in this section are those engaged in furnishing roadways and water-ways forthe transportation of persons and property, and the manifest purpose of the law was to levy the tax on the net earnings of such companies." "How these earnings, profits, incomes, or gains to be most certainly ascertained? In every well-conducted cQrporation of this character their 'profits were disposed of in one of four methods, namely, distributed to its 'stockholders asdividends, used in construction of its roads or canals, paid out for interest· on its funded debts, or carried to a reserve or other
fund reniaining in its hands. r..ooking to these mCides of distribution as the surestevidtmce of the earnings which congress intended to tax, and as less liable t() evasion than any otht3r, the ,tax is imposed upon all of.them. *, * * Of GourBe ft was competent for congress to tax earnings after deducting this interest paJd on their debts, or to treat the sum so paid as part of the net earnings, and paid out of them as dividends were. It adopted the latter pol"It results, from this course of observation that the tax' was not laid on the bondholder who received the interest, but on the earnings of the corpomtion which paid the interest." This decisioh is apprO\'ed in Railroad Co. v. U. S., 101U. S. 550; in U.S. v. Railway 'Go. , 106U. S. 330,1 Sup. Ot. Rep. 223;inRailroad Co. v. U. S., lOS U, S. 234, 2 Sup. Ct. Rep. 482. These decisions clearly determine that ihis tax is to be levied on the corporations, and that it is an income tax to be levied on the "earnings, profits, incom.es, or gains of the cpmpanies." These cases were under acts approved prior to the act ap14, 1870, but the reasoning applies equally well to that act. proved That a.ct provides, as we have seen, for the levying of a tax of 2! per centum olf the amount ofall interest on bonds paid during the year 1871; In Railroad Co. v. U. S., 101 550, the question arose as to theliability to .thistax on interest coupolls paid February 1, 1872. The lower court deCided that the tax was leviable on the interest which accrued during the y(\ar1871 , although nbi paid until Februaryl,1872, thesupreme couit rev'ersed this, and in the' opinion says: . this case was neither payable nor paidln'1871, and as the tax is not ltiyiable or collectible unHi the interest is payable, we see no way in which the company can be charged On this amount.' The tax is not on the terest as it accrues, but when it is paid." , This in U. S. v: Railroad Co., 113'tr. ;S. 712,5 Sup. Ct. Rep. ' , These cases are, perhaps not decisive of the question under consideration, since the coupons were neither payable nor paid during the year 1871, and in the' case at bar the coupons for theiriterestmatured during the year 1871, 'but were not paid during that year, and never paid olit ofthe earnings of the road made during the year 1871, or, indeed; any. other year, as 'far as appears from any allegation of the petition. The only in.terestilpon which the tax of 2! per centum is leviable is that which is paid· . The language i8"That there shall be levied and collected for and during the year 1871 a tax of two and one-half percentll.m on the amount of all interest or coupons paid on bonds or other evidences' of debt issued. and payable in one or more years after date by any corporation intlais section hereinafter enumerated, and on the amount of all dividends of earnings, incomes, or gains hereafter declared by any ... * . . railroad," * · whenever and wherever the same shall be payable, * * * and on all undivided profits of allY corporation which have accrlled and been carried and added to any surplus, contingent, or other fund," etc; It is ,evi,dEmt that only the diVidends which a.re declared during the year 187.1 are intended to be taxed, and they are taxable whenever and wherever they. shall be payable. So, with the undivided profits which have accrued and been added to the surplus or other fund, these must
UNITE» STATES 'V. BURGESS.
S., 8 Sup. Ct. Rep. 319, it is decided that the earnings of the yearl871,
have accrued within the time specified in the act. In Railroad Co. v.
and used in constructing new works, are not taxable under this law, because not embraced in the language of this act. The act of 1870 was part of the general system of income taxation, and it fixes the time within which the tax should cease, hence the reason for limiting the tax on interest to that which is paid during the year 1871. Another section of this act. (seventeenth) repealed the law which authorized the levying and collecting income tax after August 1, 1870, on interest paid. Thes8ving of all rights, etc., which had or might accrue, as is done in this and other acts repealing previous law3, can have no effect on the interest which became payable during and prior to the year 1871, but was not paid as alleged until 1872, because, if we are correct in our views, no right of taxation has accrued to the United States under either the act of 1862, 1864, as amended by the act of 1866, or the act of 1870. The of the defendant to the petition, as amended, should be sustained; and it is so ordered.
UNITED STATES V. BURGESS.
w: D. South
(Jarolina. February t, 1888.,
INTERNAL REVENUE-ILLICIT DrflTILL!l'G-REV. ST.
U. S. § 3279. One whoerect8 a "8hanty" in which i8 put up an illicit 8till, doe8 not come . u.nder Rev.. S.t. U. S. \ 32.79, WhiCh. provide8 that. "every per80n who works in . any di8tillery * * on which no 8ign i8 placed and kept, * * * 8hall be fined, " etc.
Indictment for Working in an illicit Distillery, in violation of Rev. St. U. S. § 3279. a. M. Jilur'TIian, Asst. Dist. Atty., for the United States. A. Blythe, for defendant.
SIMONTON, J. The evidence in this case is that the defendant erected for one Sessions a shanty in which was put up an illlicit still. There is no' evidence that he ever worked in or about the distillery after the f;till was set up. The defendant asks that the jury be instructed to find a verdict of not guilty. The section of the Revised Statutes punishes "every person who works in any distillery * * * on which no sign is placed and kept." Section 3279. Evidently this means, working in any establishment or place in which distilled liquors are made. The fad that no sign is placed and kept on the distillery is the gist of the of. fense. The first part of this section requires the sign to be put up by 8 person engaged in distilling. The work that defendant did in putting up the shanty is not the work in a distillery forbidden by this section. The jury will find a verdict of not guilty. v.33F.110.14-53