Haffin v. Mason

ERROR to the Circuit Court for the Southern District of New York; the case being thus:

The act of June 30th, 1864, 'to provide internal revenue to support the government,' &c., makes it the duty of distillers to make and return to the assessor of their district, a list of the merchandise made or sold by them; and if they make a list which in the opinion of the assessor is false or fraudulent, or contains any unerstatement or undervaluation, it is made the duty of the assessor-it being made 'lawful' for him first to give notice to the party, and summon such party before him to give testimony and to answer interrogatories respecting his trade and sales, and in case of a neglect of the party on such notice to come before him, then to have him summoned before the judge of the district whose duty it is made by himself or his commissioner, on the parties being brought before him, to hear the case-to make, according to the best information he can obtain, a true list, according to a form which the statute prescribes, 'of the property, goods, wares, and merchandise, and all articles or objects liable to duty or tax,. . . and assess the duty thereon,' adding in certain cases penalties prescribed; 'and the amount' so added to the duty 'shall in all cases,' says the act, 'be collected by the collector at the same time and in the same manner with the duties; and the lists or returns so made. . . shall be taken and reputed as good and sufficient lists or returns for all legal purposes.' Other parts of the act authorize distress and sale of the party's property for non-payment of duties lawfully assessed.

With this act in force Hyatt, assessor of internal revenue for one of the districts of New York, being, or professing to be, of the opinion that Haffin and Wagner, distillers there-who had made certain returns which they alleged to be true, and paid taxes upon them-had not in a list rendered by them, made a true return of liquors which they had distilled during a term specified, made out-in a form somewhat peculiar, and purporting to be an assessment upon 'deficiency on returns,' and without giving to the distillers any notice of the increased enumeration or of his action, and so without giving them any opportunity to be heard-a new list, which, having duly certified, he gave to one Mason, the collector of the district, that he might collect the amount charged. Mason made a demand at the distillery for payment of the sum, and payment being refused, he distrained upon the distillery and other property of the distillers and sold it at auction; the distillers being present and protesting against the sale. Hereupon they brought an action of trespass against both Hyatt and Mason, on the ground that the whole proceeding was wrongful, as they had made correct returns of their business, paid all the taxes properly chargeable upon it, and done nothing which justified the action of the assessor. Plea, 'not guilty.' On the trial the plaintiffs having given evidence tending to show, as they considered a non-compliance by Hyatt, the assessor, with requisitions made by the internal revenue act, requisitions (as they considered) precedent to any lawful levy on a new list-and the new list in this case being in evidence without objection, and without any point raised as to its form or sufficiency-requested the court to charge 'that the defendants were liable in this action, and that the plaintiffs were entitled to judgment for the value of the property seized and sold by the defendant, Mason, as aforesaid.'

The court refused so to charge, and directed the jury to find for the defendants, which they did. Judgment having been entered accordingly, the plaintiffs brought the case here.

Messrs. J. Hubley Ashton and H. F. Averill, for the plaintiffs in error:

1. The only authority which Mason had for seizing and selling the property, was the 'list' given him by Hyatt. In this 'list' he must find justification, or he is a trespasser. Now this list affords him no protction, unless under the Internal Revenue Act Hyatt had the power to make it. And these statutes, so far as they operate to take away the rights of the citizen, must be construed strictly. They cannot have an equitable construction, nor be extended by implication. Every substantial requisite of the law must be shown to have been complied with. No presumption can be raised in behalf of a collector who sells property for taxes to cover any radical defect in the proceedings. Now, here the assessor was bound to give notice to the distillers of his dissatisfaction with their returns, in order that they might show them to have been true. When it was made lawful for him to do this, it was made obligatory. The assessor is not to proceed inquisitorially, and to be at once detective, prosecutor, and judge. Suppose that in fact the returns which the plaintiffs made were true. What a case have we of oppression by a subaltern officer of the revenue. Undoubtedly their notice was a prerequisite.

2. The list was void on its face. It purports to be an assessment upon 'deficiency on returns' of distilled spirits. There is no tax known to the law 'on deficiency on returns.'

3. That both defendants are liable for the trespass, would seem from the case of Smith v. Shaw.

Mr. G. H. Williams, Attorney-General, and Mr. C. H. Hill, Assistant Attorney-General, contra.

Mr. Justice DAVIS delivered the opinion of the court.