Opinion · Supreme Court of the United States

United States v. Hudson

United States v. Hudson, 299 U.S. 498 (1937)

Type
Opinion
Court
Supreme Court of the United States
Jurisdiction
Federal
Date
1937-01-11
Topic
general

How later courts describe this case

  • considering application of tax on transfers of interest in silver bullion to transfers made before the adoption of the tax
  • upholding a one-month retroactive federal tax law against a due process challenge
  • “[I]t long has been the practice of Congress to make [income tax statutes] ... retroactive for relatively short periods so as to include profits from transactions eonsum-mated while the statute was in process of enactment_”
  • "[I]t long has been the practice of Congress to make [income tax statutes] ... retroactive for relatively short periods so as to include profits from transactions consummated while the statute was in process of enactment...."
  • retroactive period of 35 days

Citator

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Cited by
114 opinions

Headnotes

  1. Tax Law — Characterization of Tax A tax imposed on transfers of an interest in silver bullion, measured at 50% of the profit over cost and allowed expenses and applicable only where a profit is realized, is a special income tax, because the profit is both the occasion for the tax and the measure of it. 299 U.S. at 500
  2. Tax Law — Power to Impose Additional Taxes Congress has power to impose an increased or additional tax on profits even though those same profits are taxed along with other gains under the general income tax law, where Congress is satisfied that there is need for the additional exaction. 299 U.S. at 500 (citing Patton v. Brady, 184 U.S. 608, 620-622)
  3. Constitutional Law — Due Process As respects income tax statutes, Congress may make them retroactive for relatively short periods so as to include profits from transactions consummated while the statute was in the process of enactment, or within so much of the calendar year as preceded the enactment, and such retroactivity is consistent with the due process of law clause of the Constitution. 299 U.S. at 500-501 (citing Stockdale v. Insurance Cos., 20 Wall. 323, 331-332, 341; Brushaber v. Union Pacific R. Co., 240 U.S. 1, 20; Lynch v. Hornby, 247 U.S. 339, 343; Cooper v. United States, 280 U.S. 409, 411; Milliken v. United States, 283 U.S. 15, 21)
  4. Constitutional Law — Due Process A 35-day retroactive period in a taxing provision, reaching backward from the date of the Act to include profits from transactions completed while the legislation was under consideration, is not unreasonable, and is consistent with due process, where there had been strong pressure for the legislation and the bill was introduced in direct response to a presidential message recommending both the legislation and a tax on profits from private dealing in the commodity. 299 U.S. at 501
UNITED STATESv. HUDSON,299 U.S. 498(1937)
57 S.Ct. 309
UNITED STATESv. HUDSON.
CERTIORARI TO THE COURT OF CLAIMS.
No. 97.
Argued November 17, 18, 1936.
Decided January 11, 1937.
The Silver Purchase Act of June 19, 1934, imposed on transfers of any interest in silver bullion a tax of 50% of the profits over cost and allowed expenses, payable as to future transfers by attaching stamps to the memoranda of sale. Transfers made on or after May 15, 1934, and prior to the date of the Act were also subjected to the tax, payable, however, in a different way.Held:1. That the tax is a special income tax. P. 500. 2. Congress had power to impose this tax in addition to the tax imposed on the same profits, with other gains, under the general income tax law.Id. 3. Making the tax provision retroactive for a period of 35 days, to include profits from transactions consummated while the statute was in course of enactment, was consistent with due process.Id. 82 Ct. Cls. 15;12 F. Supp. 620;13 F. Supp. 640, reversed.
CERTIORARIfn*to review a judgment sustaining a claim
against the United States for a tax refund.
Assistant Attorney General Jackson, with whomSolicitorGeneral ReedandMessrs. Sewall Key, George H.Page 499Foster, Herman Oliphant, andLoren P. Oakeswere on the brief, for the United States.Mr. Bernhard Knollenberg, with whomMr. George de ForestLordwas on the brief, for respondent.

By leave of Court,Messrs. Kingman Brewster, O.R.Folsom-Jones, A.H. Conner, andJohn Ward Cutlerfiled a brief, asamici curiae, urging affirmance of the decision below.
MR. JUSTICE VAN DEVANTER delivered the opinion of the Court.
Respondent bought on May 3 and sold on May 23 and 29, all in 1934, certain futures contracts for the delivery of 500,000 ounces of silver, and realized therefrom, after deducting allowed expenses, a profit of $8,621.96. He paid a tax of 50% of this profit in obedience to the taxing provision of the Silver Purchase Act of June 19, 1934,1duly but unsuccessfully sought to have the amount of the tax refunded, and then brought suit in the Court of Claims to recover the same. The court held the tax invalid, as retroactively applied to respondent's sales, and gave judgment accordingly.12 F. Supp. 620;13 F. Supp. 640. The case is here on certiorari.

The Silver Purchase Act, in § 8, imposes on all transfers of any interest in silver bullion, where the price for which such interest is transferred exceeds the total cost and allowed expenses, a tax of 50 per centum of such excess, and requires that the tax be paid by affixing to a memorandum of the sale lawful stamps in the amount of the tax. The section further provides that the tax, besides reaching transfers thereafter made, shall be applicable to transfers made on or after May 15, 1934, and prior to the date of the act, with the qualification thatPage 500as to such prior transfers the tax shall be paid in such manner and at such time as the Commissioner, with the approval of the Secretary of the Treasury, may by regulation prescribe.

The question presented for decision is whether, in view of the restraints of the due process of law clause of the Constitution,2the retroactive provision under which the tax was exacted from the respondent is an admissible exertion of the power to tax.

Examination of the taxing provision and of pertinent decisions shows, as we think, that the answer must be in the affirmative.

The taxing provision does not impose a tax in respect of all transfers, but only in respect of such as yield a profit over cost and allowed expenses. If there be no profit there is to be no tax. If there be a profit the tax is to be 50% of it. Thus a profit is made the occasion for the tax and also the measure of it. Because of this, counsel for the Government contend that the tax is a special income tax; and we think the contention is sound.

It is not material that such profit is taxed, along with other gains, under the general income tax law, for Congress has power to impose an increased or additional tax if satisfied there is need therefor.Pattonv.Brady,184 U.S. 608,620-622.

As respects income tax statutes it long has been the practice of Congress to make them retroactive for relatively short periods so as to include profits from transactions consummated while the statute was in process of enactment, or within so much of the calendar year as preceded the enactment; and repeated decisions of this Court have recognized this practice and sustained it as consistent with the due process of law clause of the Constitution.Stockdalev.Insurance Cos., 20 Wall. 323, 331,Page 501332, 341;Brushaberv.Union Pacific R. Co.,240 U.S. 1,20;Lynchv.Hornby,247 U.S. 339,343;Cooperv.UnitedStates,280 U.S. 409,411. And seeMillikenv.UnitedStates,283 U.S. 15,21. The cases on which the Court of Claims partly rested its decision were both examined and distinguished inCooperv.United StatesandMillikenv.United States.

The period of retroactivity prescribed for this taxing provision reaches backward from June 19, 1934, the date of the act, to and including May 15, 1934, — 35 days. For some months prior to this period there was strong pressure for legislation requiring increased acquisition and use of silver by the Government, and several bills providing therefor were presented in the Senate and House of Representatives. On May 22 the President sent to Congress a message3recommending legislation for increasing the amount of silver in our monetary stocks and further recommending the imposition of a tax of at least 50% on profits accruing from private dealing in silver. The bill which became the Silver Purchase Act was introduced May 23 in response to this message. In these circumstances we think the period of retroactivity fixed in the act is not unreasonable, but consistent with the practice sustained by this Court in the cases already cited.

It results that the Court of Claims erred in holding the retroactive provision invalid as applied to respondent's sales.Judgment reversed.

MR. JUSTICE STONE took no part in the consideration or decision of this case.Page 585
  1. Page 498 See Table of Cases Reported in this volume. ↩
  2. Page 499 C. 674, § 8,48 Stat. 1178. ↩
  3. Page 500 The Fifth Amendment contains the due process of law clause applicable to the United States. ↩
  4. Page 501 Hearings on H.R. 9745, Silver Purchase Act of 1934, pp. 1 and 2. ↩