JAMES S. FRENCH, Appt.,

2.

SAMUEL M. SHOEMAKER.

(See S. C. 12 Wall. 86-102.)

Final decree, what is presumption of sufficient appeal bond-supersedeas, when not issuedto restrain punishment for contempt.

A decree in favor of complainant for a perpetual injunction with costs, is a final decree, although it Where nothing appears in the record to show that the indemnity given by a bond on appeal is insufficient, it must be presumed that the amount is sufficient.

does not in terms dismiss a cross-bill.

Authority to issue a supersedeas does not exist in this court except in cases where it is necessary to the exercise of its appellate jurisdiction.

Where a party has been perpetually enjoined, and the case is appealed, this court will not issue a supersedeas to restrain the court below from punishing him for violating such injunction.

the court:

Accurate conclusions in motions like the present, involving important questions of practice, are essential to the correct administration of justice in all judicial tribunals exercising appellate powers, but they are especially so in this court, whether the case is brought here from a state court or a circuit court, as the jurisdiction of the court is special and must in every case be tested by the Constitution and the laws of Congress.

Considerable importance is attached in this case to the motion for a supersedeas as well as to the motion to dismiss the appeal; but the court, in view of the circumstances, will first examine the motion to dismiss, as it is in its nature preliminary, and if granted will render it unnecessary to examine the other motion.

appellant, and upon the back of the one given to secure the payment of the money advanced is the following agreement and consent: "We, the undersigned, do hereby agree and consent to the terms and conditions of the within assignment" which expressly recites that it was executed to accomplish the two purposes already described. Reference to the record will show that the assignment is signed by the appellant and that the indorsement is signed by all the other parties supposed by him to have an interest in the assigned property.

Special reference is made in the instrument of assignment to the purposes and objects set forth in the other written agreement, in which it is stipulated, in substance and effect, as follows: (1) That the appellant and Walter Lenox will convey all their right, title, and interest in that railroad company to a new corporation, to be formed as therein specified, or to devote all of that interest to the common benefit of the therein specified, in case the old company should parties to the instrument, in the proportions be revived. (2) That they agree to assign to the new company, when the parties shall actually organize the same, all their interest as lessees of the Washington, Alexandria & Georgetown Railroad, or to hold the same for the exclusive use of the parties to the agreement, according to their respective interests. (3) That the appellee, for himself and the Adams Express Company, covenants to aid the new company, with *money and credits, to pay, [*97 settle or compromise certain specified liabilities, as set forth in the agreement. Certain other important conditions are also inserted in the instrument, but they are not material in this investigation.

Process was duly issued and served, and the appellant appeared and filed an answer setting up various defenses to the merits of the claim made by the appellee. Subsequent to the filing of the answer the appellee filed the general replication, and the cause being at issue proofs were taken by both parties. Before the final hearing, however, the appellant filed a cross-bill, in which he insisted upon the defenses set up in the answer, and also alleged that the other parties to the agreements were necessary parties to the bill of complaint. Due answer was made by the appellce, to the cross-bill, and the appellant filed to the same the general replication.

On the 16th of November, 1868, the appellee filed a bill of complaint against the appellant in the circuit court of the United States for the 96] district of Virginia, setting up *two writSuch being the state of the pleadings, the ten agreements therein described, and to which cause, on the 21st of June last, came on for special reference is made as exhibited in the recfinal hearing "upon the bill, answer, and repliord. They are both of the same date. With-cation, and upon the cross-bill, answer, and out entering much into details, suffice it to say that one purports to be an assignment by the appellant to the appellee of all his right, title, interest, claim and demand whatsoever in and to the property, stock, road, roadbed, franchise, and charter of the Alexandria & Washington Railroad Company, for two specific purposes: (1) To secure the payment to the appellee of the sum of $5,000 advanced by the appellee to the appellant; (2) to carry into effect the purposes and objects set forth in the other written agreement. Both agreements are signed by the

NOTE. What is "final decree" or judgment of state or other court from which appeal lics-see notes, 5 L. ed. U. S. 302; 17 C. C. A. 238; 28 C. C. A. 482; 32 C. C. A. 475.

replication, and upon the proofs," and the statement in the decree is that "the court is of the opinion that the equity of the case is with the complainant," and that the court "thereupon do order, adjudge, and decree that James S. French, the defendant in the original bill, be perpetually enjoined and restrained from any use of the name or title of the president of the Washington & Alexandria Railroad Company, under any election to that office heretofore held, and from any action by himself or any attor ney or agent to interfere with any proceeding for the re-organization of the said company under the contract mentioned in said bill, etc., and from any proceeding whatever not in accordance with the said contracts, without

1870.

FRENCH V. SHOEMAKER.

prejudice," as therein recited. Omitting the | qualifications stated in the recitals, the decree continues as follows: "It is further ordered, adjudged, and decreed that the said defendant, French, pay the costs in this cause."

Final decrees in suits in equity passed in a 98] circuit court, where the matter in dispute exceeds the sum or value of $2,000, exclusive of costs, may be re-examined in this court, but the act of Congress does not define what is meant by the phrase "final decree." Objection is made that the decree is not final because it does not in terms dismiss the cross-bill; but the court is of the opinion that the statement contained in the decree, that the equity of the case is with the complainant, by necessary implication disposes of the cross-bill as effectually as it does of the answer filed by the appellant to the original bill of complaint. Leave, it is true, is given to either party to apply, at the foot of the decree, for such further order as may be necessary to the due execution of the same, or as may be required in relation to any matter not finally determined by it, but it is quite apparent that that reservation was superadded to the decree as a precaution, and not because the court did not regard the whole issue between the parties as determined by the decree. Such was, doubtless, the view of the Chief Justice who passed the decree, as the application for the appeal was made to him at the same term and was immediately granted without objection.

Several cases might be referred to where it is held that a decree of foreclosure and sale of mortgaged premises is a final decree, and that the defendant is entitled to his appeal without waiting for the return and confirmation of the sale by a decretal order, upon the ground that the decree of foreclosure and sale is final as to the merits, and that the ulterior proceedings are but a mode of executing the original decree. Whiting v. Bank U. S. 13 Pet. 15; Bronson v. Railroad Co. 2 Black, 524, 17 L. ed. 359.

Unquestionably, the whole law of the case before the court was settled by the Chief Justice in that decree, and as nothing remains to be done, unless a new application shall be made at the foot of the decree, the court is of the opinion that the decree is a final one, as it has conclusively settled all the legal rights of the parties involved in the pleadings. Forgay v. Conrad, 6 How. 202; Thomson v. Dean, 7 Wall. 342, 19 L. ed. 94; Curt. Com. § 188; Beebe v. Russell, 19 How. 283, 15 L. ed. 686.

99*] 2. *Beyond all doubt the appeal of the respondent in this case was allowed within ten days from the date of the decree, and the record shows that the bond to prosecute the writ to effect and answer all damages and costs if he fail to make his plea good was filed and duly approved within the same period, but it is denied by the appellee that the appeal operates as a supersedeas, because it is insisted that the bond given in the case is not in a sum sufficient to constitute indemnity for the whole amount of the decree.

Where the judgment or decree is for the recovery of money, not otherwise secured, the indemnity must be for the whole amount of the judgment or decree, including just damages for delay, and costs and interest on the appeal. Catlett v. Brodie, 9 Wheat. 553; Stafford v.

Union Bank of La. 16 How. 135; Same v. Same, 17 How. 275, 15 L. ed. 101.

But in all suits where the property in controversy necessarily follows the event of the suit, as in real actions, replevin, and in suits on mortgages, indemnity is only required in an amount sufficient to secure the sum recovered for the use of detention of the property and the other incidental items, as in cases where the What is judgment or decree is for money. necessary is that it be sufficient, and when it is desired to make the appeal a supersedeas, that it be filed within ten days from the rendering of the decree, and the question of sufficiency must be determined in the first instance by the judge who signs the citation, but after the allowance of the appeal that question as well as every other in the cause becomes cognizable here. It is, therefore, matter of discretion with the court to increase or diminish the amount of the bond, and to require additional sureties or otherwise as justice may require. Rubber Co. v. Goodyear, 6 Wall. 156, 18 L. ed. 763, rule 32; Slaughter House Cases, 10 Wall. 273, 19 L. ed. 915; 1 Stat. at L. 404.

All that is required in a case where the writ of error is not a supersedeas is that the bond shall be in an amount sufficient to answer the costs in case the judgment or decree is affirmed.

Nothing appears in the record to show that the indemnity given is insufficient, and inasmuch as nothing appears to the con- [*100 trary the court is of the opinion that it must be presumed that the amount is sufficient.

Appeals and writs of error are constituted a supersedeas in certain cases by virtue of the 23d section of the judiciary act, when the conditions there prescribed are fulfilled. Where those conditions are complied with the act of Congress operates to suspend the jurisdiction of the subordinate court and stay execution pending the writ of error or appeal, and un'til the case is determined or remanded. Hogan v. Ross, 11 How. 295.

Power to issue a supersedeas to a decree in a subordinate court does not exist in this court where the appeal was not taken and the proper bond given within ten days from the date of the order, except where an appeal was duly taken within ten days, and the aggrieved party is obliged to take a second appeal in consequence of the clerk below having neglected to send up the record in season, or where the granting of such a writ becomes necessary to the exercise of the appellate jurisdiction of the court, as where the subordinate court improperly rejected the sureties to the bond because they were not residents of the districts. gan v. Ross, 11 How. 296; Ex parte Milwaukee R. Co. 5 Wall. 188, 18 L. ed. 676; Stockton v. Bishop, 2 How. 74; Hardeman v. Anderson, 4 How. 640; Wallen v. Williams, 7 Cranch, 279; Saltmarsh v. Tuthill, 12 How. 389.

Ho

Appellate power in the controversy under consideration is conferred upon this court, and it is clear that this court may issue a supersedeas in such a case whenever it becomes necessary to the exercise of its appropriate jurisdiction. 1 Stat. at L. 81; Stockton v. Bishop, How. 75.

Attention will now be called to the grounds of the motion for a supersedeas, as shown in

271

the affidavit of the appellant. He states that | *CORNELIUS BRAINARD, Collector of [*1 he filed a bill in equity in the supreme court of this district against Oscar A. Stevens, Geo. W. Brent, W. Jackson Phelps, Richard T. Merrick, J. Dean Smith, and Walter Lenox; that the respondents demurred to the bill on the ground that the appellee before the court was a necessary party respondent in the case, and 101*] that the court where the bill was pending sustained the demurrer. Wherefore the appellant here amended his bill, and made the ap pellee a party respondent.

1870.

and a decision of said commissioner shall be had thereon, unless such suit shall be brought within six months from the time of said decision, or within six months from the time this act takes effect: Provided, that if said decision shall be delayed more than six months from the date of such appeal, then said suit may be brought at any time within twelve months from the date of such appeal."

to do an act contrary to duty or contrary to law." Such remedy as the plaintiff possessed, then, depended entirely upon statute, and remedy by suit existed only by necessary implication from the provisions of the internal revenue laws.

See, Philadelphia v. Collector, 5 Wall. 731, 18 L. ed. 616.

The authority to sue, conferred by those proThe particular provision of § 117 of the act visions, Congress could at any time modify, as of 1864, applicable to this case, is the follow-might be deemed expedient; or impose conditions and limitations upon its exercise; or take ing: it away altogether.

"All notes, bonds, and mortgages, or other forms of indebtedness, bearing interest, whether due and paid or not, if good and collectible, shall be included and assessed as part of the income of such person for each year, and the gains and profits of all companies, whether incorporated or partnership, other than the companies specified in this section, shall be included in estimating the annual gains, profits or income of any person entitled to the same, whether divided or otherwise."

The prosecution of the suit by the defendant in error was barred by the 19th section of the act of July 13, 1866, quoted above.

The statute, which is the supreme law of the land, extends to "any court," and necessarily includes by its terms all courts, state and national.

In Cary v. Curtis, 3 How. 254, Judge Story, referring to § 2 of the act of Mar. 3, 1839, then under consideration, remarked: "If it is a good bar in one court, it is good in all courts, under the provisions of that act.

II. It seems to have been the general design of Congress to tax the undivided gains and profits made by all corporations, as well as those which are divided among the stockholders. The corporations mentioned in § 120 are The action, in this case, was not commenced until Aug. 9, 1867, and no appeal had been pre- banks, trust companies, and insurance compaviously taken by the plaintiff to the commis-nies, and the tax is made thereby to cover not sioner.

only "dividends," but also "all undistributed This court, in Nichols v. U. S. 7 Wall. 130, sums, or sums made or added during the year 131, 19 L. ed. 128, remarks as follows: "The to their surplus or contingent funds." Those party aggrieved can test the question of the il- mentioned in § 122 are railroad, canal, turnlegality of an assessment or collection of taxes pike, canal navigation, and slack water compaby suit; but he cannot do this until he has tak-nies; and the tax is thereby made to cover not en an appeal to the commissioner of internal

revenue.

In the case of Braun v. Sauerwein, 10 Wall. 218, 19 L. ed. 895, it was observed in reference to the same provision: "The act, speaking from August 1, 1866, prohibited a suit until he, the claimant, should appeal to the commissioner of internal revenue, and until his appeal should be decided, unless the decision should be postponed longer than six months; in which case he was at liberty to sue within a year from the time when his appeal was taken."

It would appear that, conceding the illegality of the assessment, the plaintiff never had a right to recover the same back by suit in any court, derived simply from the principles of the common law, and founded upon what is termed an implied promise. The money claimed was not paid to the collector until Aug. 19, 1865; and by the 3d section of the act of Mar. 3, 1865 (13 Stat. at L. 483), collectors were required, from and after June 30, 1865, to pay daily in to the Treasury the gross amount of all duties, taxes, and revenue received and collected in virtue of the internal revenue acts, without any abatement or reduction on account of compen sation, etc., or claims of any description whatever. Now, according to Cary v. Curtis, 3 How. 236, and Curtis v. Fiedler, 2 Black, 461, 17 L. ed. 273, the effect of that provision was to bar any action to recover back duties paid subsequent to its passage, which rested merely upon the assumption of an alleged implied obligation on the part of the defendant; because, as was observed by the court in the case last cited, "the law never implies a promise to pay, unless some duty creates such an obligation, and, more especially, it never implies a promise

only gains and profits divided, but, in addition, "all profits of such company carried to the account of any funds, or used for construction." All other corporations not specified in those sections are covered by § 117, which expressly declares that the gains and profits thereof shall be included in estimating the annual gains, profits, or income of any person entitled to the same, whether divided or otherwise.

In all cases, the entire annual gains and profits of every corporation, divided or undivided, seem to be within the aim or purview of the statute, as objects of taxation.

To leave no doubt as to the object of the law Congress has, in subsequent acts, adopted phraseology differing in some respects from that employed in the act under consideration, but without essentially differing from its general scope and meaning.

Act of 1864, 13 Stat. at L. 282; act 1865, 13 Stat. at L. 480; act 1867, 14 Stat. at L. 478; act 1870, § 7, 16 Stat. at L. 258.

Mr. Chas. E. Perkins, for defendant in error:

1. Were these amounts gains and profits of these companies, within the fair construction of the act?

The 2d and 8th sections of the finding must be taken together, and from them it appears that, though these amounts were earned by the companies during the year, yet they were, during the same year, paid out again in the regular course of business, and were not profits in any usual sense of the term.

It is not found that their balance sheet in January, 1865, showed larger assets than that On the whole business of the made in 1864. year 1864, their net profits were only what was

273

in fact divided. They did not extend their | Conn. 351; McEwen v. Den, 24 How. 242, 16 L business or works in any way, and the compa- ed. 672. nies, after making their dividends, were worth no more in Jan., 1865, than in Jan., 1864.

If a company begins the year with $50,000 in debt for cotton on hand, and during the year works up and sells the cotton, from the proceeds pays its debts, and has $10,000 left over, has it made $60,000 or $10,000?

The object of these clauses of the internal revenue law was to tax dividends actually made, or money which ought to be divided, but was held back, either as a surplus or as an undistributed fund.

This clearly appears from the 120th, 121st, and 122d sections, relating to the taxes to be paid by the companies themselves.

Section 120 says, that they shall pay five per cent on "all undistributed sum or sums, made or added during the year to their surplus or contingent funds;" and § 122 says, on "all profits of such company carried to the account of any fund, or used for construction."

There can be no pretense that, in any such companies, the amount of earnings used in paying their debts or replacing worn out machinery, should be taxed.

It would be grossly unjust for us to apply this rule. At the time this act was passed, we had a suit pending in the United States circuit court. It was not reached for trial until June 1, 1867, more than six months after the act took effect. Judge Nelson then dismissed the case, because the act took away his jurisdiction, and we were deprived of any redress.

A construction which would bring about any such result should be avoided.

2. The act only refers to proceedings in the courts of the United States.

Carpenter v. Snelling, 97 Mass. 452; Griffin v. Ranney, 35 Conn. 239.

3. It is a kind of statute of limitations for state courts. Congress has no power to pass acts relating to actions in state courts arising at common law.

4. It does not appear in the case that any regulations have ever been made by the Secretary of the Treasury, providing for any appeal, or for any hearing or decision by the commissioner.

Mr. Justice Clifford delivered the opinion of the court:

The department has held in accordance with this view: "In determining the amount of tax- Suits to recover back moneys illegally exactable gains, such losses as have been ascertained ed as internal revenue duties cannot, under exand settled during the return should be deduct-isting laws, be commenced in the circuit courts, ed."

except in cases where the taxpayer and the deBump, Int. Rev. Laws, p. 302, 5 I. R. 74. fendant, whether the assessor or collector, are In no possible sense of the word is a stock-citizens of different states. Phila. v. The Col holder entitled, as income, to moneys spent by the corporation during the year in paying its debts, and preparing for its future business. This is a Connecticut corporation, and the right of a stockholder to his property should be and is fixed by Connecticut law.

In Phelps v. Bk. 26 Conn. 269, the court says, p. 272: "The profits of a bank, no matter when made, until separated from the stock by declaring a dividend, are mere increment and augmentation of the stock. They are properly stock themselves, composing a part of the stock of the bank, and will pass with the stock under that name, either by contract, bequest or levy

of execution."

See, also, Spencer v. Higgins, 22 Conn. 521;
Pratt v. Pratt, 33 Conn. 446.

The rule is the same in other states.
Minot v. Paine, 99 Mass. 101; Goodwin v.
Hardy, 57 Me. 143.

A person who would be entitled to a share in profits, if divided, should return the same as income, whether divided or not.

Bump, Int. Rev. Laws, 288; 1 Int. Rev. Rec. 157; 7 Int. Rev. Rec. 50.

It is claimed, however, that even if this money was improperly taken from us, we have no remedy because the act of 1866 says, no suit shall be maintained until after appeal to the commissioner.

1. This act was only prospective. It was not intended to affect the rights of parties already vested.

"Courts refuse to give statutes a retroactive construction, unless the intention is so clear and positive as, by no possibility, to admit of any other construction."

Sedgw. Stat. L. 193; Plumb v. Sawyer, 21

lector, 5 Wall. 728, 18 L. ed. 615. Such suits under any other circumstances must be commenced in the state courts, as the circuit courts have no jurisdiction to hear and determine the same, except when they are removed

from a state court into the circuit court for the same district, on motion of the defendant. Hornthall v. The Collector, 9 Wall. 564, 19 L. ed. 561. Where the parties are citizens of the same state the action must be brought in the state court, but the defendant, if he sees fit, and seasonably takes the proper steps, may remove the case into the circuit court for trial. The Assessors v. Osborne, 9 Wall. 572, 19 L. ed. 750. *Both parties in this case were citizens of [*9 the same state, and the action was accordingly commenced by the plaintiff in the state court, and the collector, as the defendant, not having taken any steps to remove the suit into the circuit court, the same was heard and determined in the state court in which it was commenced.

Taxes were assessed against the plaintiff, under the internal revenue laws, in the sum of $1,597, and the findings of the court show that the assessor duly returned his assessment list to the collector; that the collector demanded of the plaintiff the amount of the tax assessed, and that he threatened if the plaintiff refused to pay the same that he would coerce the collection of the whole amount; that the assessor gave due notice to the plaintiff when and where appeals from the assessment would be heard, but that the plaintiff did not appeal from the same, either to the assessor or to the commissioner of internal revenue, and that he paid the whole amount of the assessment under pro

test.

Pursuant to the practice in that jurisdiction, 79 U. S.