Miles v. Graham/Opinion of the Court

The defendant in error is a judge of the Court of Claims. He assumed the duties of that office September 1, 1919, when the statute (Act Feb. 25, 1919, c. 29, 40 Stat. 1156 1157) declared that judges of that court should be entitled to receive 'an annual salary of $7,500, payable monthly from the treasury.' He was required to pay to plaintiff in error, Collector of Internal Revenue, the income taxes for 1919 and 1920 prescribed by 'An act to provide revenue, and for other purposes,' approved February 24, 1919 [the Revenue Act of 1918] c. 18, 40 Stat. 1057. In computing these his judicial salary was treated as part of his 'gross income.'

'Sec. 213. That for the purposes of this title (except as     otherwise provided in section 233) the term 'gross income'--

'(a) Includes gains, profits, and income derived from     salaries, wages, or compensation for personal service      (including in the case of the President of the United      States, the judges of the Supreme and inferior courts of the      United States, and all other officers and employees, whether      elected or appointed, of the United States, Alaska, Hawaii,      or any political subdivision thereof, or the District of      Columbia, the compensation received as such), of whatever      kind and in whatever form paid, or from professions,      vocations, trades, businesses, commerce, or sales, or      dealings in property, whether real or personal, growing out      of the ownership or use of or interest in such property; also from interest, rent, dividends, securities, or the      transaction of any business carried on for gain or profit, or      gains or profits and income derived from any source whatever. * *  * ' Comp. St. Ann. Supp. 1919, § 6336 1/8 ff.

After payment and the necessary preliminary steps, he instituted this proceeding to recover, upon the ground that the exactions on account of his salary were without authority of law. Judgment went for him in the trial court. It was there said:

'Unless he was taxable under the [Revenue] Act of 1918     [approved February 24, 1919] he was not taxable at all. If he     is taxable under the statute, he is so by virtue of a clause      which applies to all the federal judges, irrespective of the      time they came upon the bench. That clause as written has     been held invalid. * *  * When the clause which has been      declared invalid is out of the act, no other imposes the tax. What the court here is asked to do is to rewrite the     pertinent portion of the statute in question so that it will      read as did the provisions of the Acts of 1913 and 1916      relative to this general subject. But that would be for the     court to do what Congress expressly decided not to do. With     its eyes wide open to the possible consequences, it made up      its mind to seek uniformity by imposing the tax upon all      judges. Whether it would or would not have been willing to     tax the minority, if the majority were immune, nobody knows,      perhaps not even the members of that Congress itself, for      upon that question they never were called upon to make up      their minds.'

Plaintiff in error now insists that, although the challenged provision of the Act of February 24, 1919, has been adjudged invalid as to all judges who took office prior to that date, it is obligatory upon those thereafter appointed.

Section 1, art. 3, of the Constitution provides:

'The judicial power of the United States, shall be vested in     one Supreme Court, and in such inferior courts as the Congress may from time to time ordain and establish. The judges, both of the supreme and inferior courts, shall     hold their offices during good behavior, and shall, at stated      times, receive for their services, a compensation, which      shall not be diminished during their continuance in office.'

Evans v. Gore, 253 U.S. 245, 40 S.C.t. 550, 64 L. Ed. 887, 11 A. L. R. 519, arose out of the claim that Judge Evans was liable for the tax upon his salary as prescribed by the act now under consideration, although appointed before its enactment. We there gave much consideration to the purpose, history, and meaning of the above-quoted section of the Constitution and, among other things, said:

'These considerations make it very plain, as we think, that     the primary purpose of the prohibition against diminution was      not to benefit the judges, but like the clause in respect of      tenure, to attract good and competent men to the bench and to      promote that independence of action and judgment which is      essential to the maintenance of the guaranties, limitations,      and pervading principles of the Constitution and to the      administration of justice without respect to persons and with      equal concern for the poor and the rich. Such being its     purpose, it is to be construed, not as a private grant, but      as a limitation imposed in the public interest; in other      words, not restrictively, but in accord with its spirit and      the principle on which it proceeds.

'Obviously, diminution may be effected in more ways than one. Some may be direct and others indirect, or even evasive as     Mr. Hamilton suggested. But all which by their necessary     operation and effect withhold or take from the judge a part      of that which has been promised by law for his services must      be regarded as within the prohibition. * *  *

'The prohibition is general, contains no excepting words, and     appears to be directed against all diminution, whether for one purpose or another; and the reasons for its      adoption, as publicly assigned at the time and commonly      accepted ever since, make with impelling force for the      conclusion that the fathers of the Constitution intended to      prohibit diminution by taxation as well as otherwise-that      they regarded the independence of the judges as of far      greater importance than any revenue that could come from      taxing their salaries. * *  *

'For the common good-to render him [the judge], in the words     of John Marshall, 'perfectly and completely independent, with      nothing to influence or control him but God and his      conscience'-his compensation is protected from diminution in      any form, whether by a tax or otherwise, and is assured to      him in its entirety for his support. * *  *

'Here the Constitution expressly forbids diminution of the     judge's compensation, meaning, as we have shown, diminution      by taxation as well as otherwise. The taxing act directs that     the compensation-the full sum, with no deduction for expenses      be included in computing the net income, on which the tax is      laid. If the compensation be the only income, the tax falls     on it alone; and, if there be other income, the inclusion of      the compensation augments the tax accordingly. In either     event the compensation suffers a diminution to the extent      that it is taxed.

'We conclude that the tax was imposed contrary to the     constitutional prohibition, and so must be adjudged invalid.'

Does the circumstance that defendant in error's appointment came after the taxing act require a different view concerning his right to exemption? The answer depends upon the import of the word 'compensation' in the constitutional provision.

The words and history of the clause indicate that the purpose was to impose upon Congress the duty definitely to declare what sum shall be received by each judge out of the public funds and the times for payment. When this duty has been complied with, the amount specified become the compensation which is protected against diminution during his continuance in office.

On September 1, 1919, the applicable statute declared:

'The Chief Justice [of the Court of Claims] shall be entitled     to receive an annual salary of $8,000, and each of the other      judges an annual salary of $7,500, payable monthly.' Comp. St. Ann. Supp. 1919, § 1127.

The compensation fixed by law when defendant in error assumed his official duties was $7,500 per annum, and to exact a tax in respect of this would diminish it within the plain rule of Evans v. Gore.

The taxing act became a law prior to the statute prescribing salaries for judges of the Court of Claims, but if the dates were reversed it would be impossible to construe the former as an amendment which reduced salaries by the amount of the tax imposed. No judge is required to pay a definite percentage of his salary, but all are commanded to return, as a part of 'gross income,' 'the compensation received as such' from the United States. From the 'gross income' various deductions and credits are allowed, as for interest paid, contributions or gifts made, personal exemptions varying with family relations, etc., and upon the net result assessment is made. The plain purpose was to require all judges to return their compensation as an item of 'gross income,' and to tax this as other salaries. This is forbidden by the Constitution.

The power of Congress definitely to fix the compensation to be received at stated intervals by judges thereafter appointed is clear. It is equally clear, we think, that there is no power to tax a judge of a court of the United States on account of the salary prescribed for him by law.

The judgment of the court below is affirmed.

Mr. Justice BRANDEIS dissents.