She premiums paid. Four years later the insured which, unlike the New York statute, the indemanded another form of policy and the surance would have continued in force. exchange was made on the old application This court held that while the policy was and medical examination, the terms of the clearly a Missouri contract the loan agreesecond policy being in strict accord with the ment was an independent contract made in obligations of the first policy. The new pol- New York and subject to New York law. In icy limited the right of recovery in case of the course of the opinion it is said (page 373 suicide "within one year from the date on [38 S. Ct. 339]): which this insurance begins." Six months "It should be noted that the clause in the after the change of policies, insured commit-policy providing 'cash loans can be obtained by ted suicide. The Tennessee court held that the insured on the sole security of this policy the two policies were in effect one and the on demand, etc.,' certainly imposed no obligasame contract, and that the insurance be- tion upon the company to make such a loan gan within the meaning of the suicide clause valid hypothecation of the reserve as security if the Missouri statute applied and inhibited in the second policy at the time the first pol- therefor as defendant in error maintains. icy was issued, since the dominant purpose cannot, therefore, claim anything upon the of the parties was to carry out the provisions theory that the loan contract actually consumof the contract contained in that policy. mated was one which the company had legally That time having run before the exchange, obligated itself to make upon demand." the clause was rejected as surplusage. The Gans Case, was distinguished upon several grounds, and especially upon the ground that there was nothing to show that the second Tennessee policy was an independent, complete and isolated contract, unconnected with the first policy; but on the contrary that it was expressly shown that they were connected, "and that the second was issued because of and in compliance with the require-"the company will ments of the first." See, also, McDonnell v. Alabama Gold Life Ins. Co., 85 Ala. 401, 412415, 5 So. 120; People v. Globe Mutual Life Ins. Co., 15 Abb. N. C. (N. Y.) 75; Barry v. Brune et al., 71 N. Y. 261, 268. While this court has not passed upon the precise question here presented, it had before it an analogous question in New York Life Ins. Co. v. Dodge, 246 U. S. 357, 38 S. Ct. 337, 62 L. Ed. 772, Ann. Cas. 1918E, 593, and Mutual Life Ins. Co. v. Liebing, 259 U. S. 209, 42 S. Ct. 467, 66 L. Ed. 900. The Dodge Case dealt with an insurance policy issued in Missouri to a resident and citizen of Missouri by a New York corporation with a Missouri *398 license. The policy provided *that "cash loans can be obtained by the insured on the sole security of this policy on demand at any time after this policy has been in force two full years," etc. It was provided that application for any loan should be in writing and that the loan would be subject to the terms of the company's loan agreement. Under this provision the insured procured a loan at the home office of the company in New York City, hypothecating the policy there as security. The loan agreement declared that it was made and to be performed in New York and under and pursuant to the laws of that state. Upon failure of the insured to pay a premium the entire reserve of the policy was applied to satisfy the loan and thereupon all obligation ceased under the provisions of New York law. The insured having died, suit was brought by the beneficiary upon the policy in reliance upon the Missouri nonforfeiture statute (Rev. Stats. 1899, § 7897), by the terms of *399 The decision proceeds upon the theory that the provision in respect of loans did not constitute an absolute promise to make a loan upon simple demand at all events, *and that the loan contract was an independent, subsequent agreement made in another state. In the Liebing Case, subsequently decided, the policy executed in Missouri provided that * a * loan amounts within the limits of the cash surrender value," etc., and this court, pointing out that the language of the policy in the Dodge Case was "cash loans can be obtained, etc.," said (pages 213, 214 [42 S. Ct. 468]): tive promise to make the loan if asked, where"The policy now sued upon contained a posias in the one last mentioned [the Dodge Case] it might be held that some discretion was reserved to the company." [4, 5] In the light of these decisions, then, we inquire whether the second policy issued to Dunken is to be controlled by Tennessee or Texas law. The contract contained in the original policy was a Tennessee contract. The law of Tennessee entered into it and became a part of it. The Texas statute was incapable of being constitutionally applied to it since the effect of such application would be to regulate business outside the state of Texas and control contracts made by citizens of other states in disregard of their laws under which penalties and attorney's fees are not recoverable. New York Life Ins. Co. v. Head, 234 U. S. 149, 34 S. Ct. 879, 58 L. Ed. 1259; Overby v. Gordon, 177 U. S. 214, 222, 20 S. Ct. 603, 44 L. Ed. 741. The second policy here was issued in pursuance of, and was dependent for its existence and its terms upon, the express provisions of the contract contained in the first one. By those provisions, upon the simple application of the insured, the new policy must issue. Nothing was left to future agreement. The terms of the new policy were fixed when the original policy was made. In effect, it is as though the first policy had provided that upon demand of the (45 S.Ct.) insured and payment of the stipulated in- sources, including foreign business, and on only crease in premiums that policy should, auto- such income of foreign corporations as is dematically, become a 20-payment life commerrived from sources within the United States, cial policy. It was issued not as the result *400 held not in violation of Const. U. S., art. 1, § 9, par. 5, providing that no tax or duty shall be laid on articles exported from any state. In Error to the District Court of the Unit York. of any new negotiation or agreement but *in discharge of pre-existing obligations. It merely fulfilled promises then outstanding; ed States for the Southern District of New and did not arise from new or additional promises. The result in legal contemplation was not a novation but the consummation of an alternative specifically accorded by, and enforceable in virtue of, the original contract. If the insurance company had refused to issue the second policy upon demand, the insured could have compelled it by a suit in equity for specific performance. See Tayloe v. Merchants' Fire Ins. Co., 9 How. 390, 405, 13 L. Ed. 187. Action by the National Paper & Type Company against Frank K. Bowers, Collector of Internal Revenue for the Second District of New York. Judgment of dismissal, and Affirmed. plaintiff brings error. Messrs. Porter J. McCumber, of Washington, D. C., and Franklin Grady, of New York City, for plaintiff in error. Mr. James M. Beck, Sol. Gen., of Washington, D. C., for defendant in error. Mr. Justice MCKENNA delivered the opinion of the Court. The case displayed by the amended complaint, omitting verbal circumlocutions, is as follows: Plaintiff (plaintiff in error here) is, and was at all of the times mentioned, a corporation organized and existing under the laws of New Jersey. It is engaged in New York in the business of exporting, which is defined to be the purchase of personal property within the United States, and the *sale thereof without the United States, and has under the Revenue Act of 1921 (42 Stat. 227) been required to pay an income tax on its net income, part of which is derived from such foreign business. *374 At the same time and times there were foreign corporations engaged in like business NATIONAL PAPER & TYPE CO. v. BOW- of buying personal property within the Unit ERS, Collector of Internal Revenue for Second District of New York. (Argued Nov. 24, 1924. Decided Dec. 15, 1924.) No. 320. 1. Constitutional law 283-Internal revenue 2-Tax on total net income of domestic corporation and on only part of foreign corporation's income as earned by business within country held not violative of due process clause. Revenue Act Nov. 23, 1921, imposing income tax on net income of domestic corporation, though part is derived from foreign business, and though foreign corporations doing business within country are required, under sections 217, 233 (Comp. St. Ann. Supp. 1923, §§ 6336hh, 6336%p), to pay tax only on that part of income derived from business done within the country, held not violative of due process clause of Fifth Amendment. 2. Commerce 77-Revenue Act held not violative of constitutional provision prohibiting tax or duty on articles exported from state. Revenue Act Nov. 23, 1921, imposing tax on net income of domestic corporations from all ed States and exporting and selling it without the United States. Under sections 217 and 233 of the Revenue Act of 1921 (Comp. St. Ann. Supp. 1923, §§ 6336hh, 6336%p) these corporations were wholly exempted from payment of the tax on the net income or profits accruing or derived from such business. On the 15th of March, 1922, the defendant (defendant in error here), being Collector of Internal Revenue, and acting as such, in pursuance of sections 205 and 230 of the Revenue Act of 1921 (Comp. St. Ann. Supp. 1923, §§ 6336%d, 6336%nn) demanded of plaintiff the sum of $4,203.91, as due and payable from the plaintiff as one-fourth part of its income tax for the fiscal year ending March 31, 1921, that is, for the months of January, February, and March, 1921, and threatened to enforce payment of that sum together with penalties and interest thereon provided for by the laws of Congress. Plaintiff, on the 15th of March, 1922, solely to prevent distraint and sale of its property, and protesting that no tax was due, and that For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes defendant was without authority to exact or collect the same or any part thereof, paid the tax. if we were to concede, as we cannot, that the Fifth Amendment in enjoining due process of law requires as part thereof equality of tax *376 On or about the 6th of December, 1922, plaintiff, in accordance with law, made a claim ation, it certainly could not be held to apply in writing to the Commissioner of Internal to a subject-matter not within this country. Revenue and demanded the repayment of the Regarding the purchase of articles of pertax on the ground that it was illegally as-sonal property within the United States and sessed, that more than six months had ex- the mere fact of exportation therefrom, dopired since the filing of the claim for refund mestic and foreign corporations may be proas provided for by section 1318 of the Rev-nounced alike-may seem to be in the same enue Act (Comp. St. Ann. Supp. 1923, §§ 5949, 5949a), and that no part of the claim had been remitted or repaid to plaintiff, or to any one, for its account. This action was then brought against the collector. amount of the tax. Motion was made by the district attorney to dismiss the amended complaint on the ground that it did not state facts sufficient to constitute a cause of action. The motion was granted on the authority of and upon the reasoning of National Paper & Type Co. v. Edwards, Collector of Internal Revenue (D. C.) 292 Fed. 633. Judgment was formally entered dismissing the complaint upon the merits. To review this action and judgment, this writ of error is directed. The difference in treatment of domestic and foreign corporations in respect to business of sales in foreign countries, it is contended, is a "hostile discrimination and confiscation of property." To sustain the charge, plaintiff asserts that its business and that of foreign corporations is done under exactly the same circumstances and conditions and that the discrimination hence resulting offends the "due process of law" provision of the Fifth Amendment. Cases are cited and the deduction from them is declared to be that "our whole system of law is predicated on the general fundamental principle of equality of application of the law." 1 [1] Here the discrimination, if such it can be called, is in favor of foreign corporations in respect to taxation of earnings from business done in foreign countries. Clearly as to such business Congress may adopt a policy calculated to serve the best interests of this country in dealing with citizens or subjects of another country, and may properly say that as to earnings from such business, the foreign subjects or citizens shall be left to the taxation of their own government or to that having jurisdiction of the sales. Even 1 Truax v. Corrigan, 257 U. S. 312, 42 S. Ct. 124, 66 L. Ed. 254, 27 A. L. R. 375. relation to taxing legislation. But there is something else to consider, and its effect. There may be benefit in the inviting of foreign corporations into the United Statesbenefit in their investments and activitiesand as counsel for the government points out, the domestic corporation gets the power of the United States to protect its interests and redress its wrongs in whatever part of the world its business may take it. And as the government further points out, the foreign corporation must look to the country of its origin for protection against injury and redress of losses occurring in that and other foreign countries, and not to the United States. The government, therefore, contends, and rightly contends, that domestic corporations are required to pay a tax on their incomes from all sources while foreign corporations are taxed only on their income from sources within the United States because, to repeat, only that income is earned under the protection of American laws. [2] And we understand a further contention to be that the discrimination is the fact that makes the tax on plaintiff a direct burden on and impediment to its business of exporting, "in violation of paragraph 5 of section 9 of article 1 of the Constitution of the United States, which provides that 'no tax or duty shall be laid on articles exported from any state." The alleged discrimination is said in some way to emphasize and increase the violation of that paragraph of the Constitution. So far as the invocation of paragraph 5 depends upon discrimination, what we have said disposes of it; if it be independent of Mr. James M. Beck, Sol. Gen., of Washing-pointments of trustees. A verdict of not ton, D. C., for defendant in error. guilty was directed by the court, and the United States brings error. Writ dismissed Mr. Justice MCKENNA delivered the opin- for want of jurisdiction. ion of the Court. Mr. Assistant Attorney General Donovan for the United States. Mr. Benjamin Slade, of New York City, for defendants in error. Mr. Justice HOLMES delivered the opinion of the Court. The plaintiff in error is a domestic corporation engaged in business as a manufacturer. It is subjected to an income tax from which foreign corporations are exempted. It charges invalidity on the same grounds as those set up in National Paper & Type Co. v. Bowers (No. 320) 266 U. S. 373, 45 S. Ct. This is a writ of error taken by the Unit133, 69 L. Ed. and brought suit to re-ed States under the Criminal Appeals Act of March 2, 1907, c. 2564, 34 Stat. 1246 (Comp. St. § 1704). The indictment is for a conspiracy to conceal assets in contemplation of the bankruptcy of Joseph Weissman, alleged to cover the amount of the tax. Its complaint was dismissed on motion of the district attorney upon the authority of National Paper & Type Co. v. Edwards, Collector of Internal Revenue (D. C.) 292 F. 633, and judgment went on the merits. The cause was submitted with No. 320, just decided. It presents the same contentions, based upon the same grounds. And upon the authority of our decision in that case, the judgment below is Affirmed. (266 U. S. 377) UNITED STATES v. WEISSMAN et al. (Argued and Submitted Dec. 5, 1924. Decided Dec. 15, 1924.) #378 have continued up to and including the day when a petition in bankruptcy was filed. There is also a count for concealing and causing to be concealed assets after the adjudication and the appointment of trustees. It is unnecessary to follow the vicissitudes and oscillations of the case before the time that the defendants in error were finally before a jury for trial. At that time the Court, after reciting to the jury some of the previous steps, stated that as it had concluded that the indictment was invalid because no offence was properly charged and therefore no valid conviction could be had, it would dispose of the case by directing a general verdict of not guilty. A verdict of not guilty was rendered, subject to exceptions, on 1. Criminal law 1024 (5) Direction of which the Government seeks to come here. verdict for defendants before opening state- Apart from other objections and without ment and introduction of evidence not re-going further, the Government is met by the viewable on writ of error brought by govern- proviso in the Criminal Appeals Act: "That ment. no writ of error shall be taken by or allowed the United States in any case where there has been a verdict in favor of the defendant." It is argued that the verdict is a nullity because nothing had been submitted to the jury, no evidence, not even an opening statement, and that the judgment should be No. 391. Under Criminal Appeals Act March 2, 1907 (Comp. St. § 1704), providing that no writ of error shall be allowed the United States where there has been a "verdict" in favor of defendant, writ of error will not lie at instance of government to review action of court in directing verdict for defendants while defendants were before jury, though no opening state-treated as in substance sustaining a demurIt is ment had been made and no evidence intro- rer to the indictment or quashing it. duced; direction of verdict having been within hard to see what good this would do the jurisdiction of court. Government, as even then, unless we go be For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes hind the judgment and what was said at the trial, and possibly in any event, the direction would seem to have been based on a construction of the indictment and not upon a construction of the statutes of the United States. [1] But we are of opinion that no such narrowing construction can be put upon the Criminal Appeals Act for the purpose of enlarging the Government's right of review. The words taken literally refer simply to the matter of fact that there "has been a verdict"-not qualified by any consideration of whether it was right or wrong. In like manner a writ of error from a judgment sustaining a special plea in bar is given only "when $379 the defendant has not been put in jeopardy." Furthermore if directing the verdict was wrong it certainly was not beyond the jurisdiction of the Court. The jury were there and the prisoners before them, and so far as jurisdiction is concerned it did not matter whether evidence had been put in or not. We stop at the point of jurisdiction, the want of which would be the only pretext that could be offered for going behind the literal meaning of the statute. But we do not mean to imply that an opening by counsel or the offer of evidence is necessary in order to justify directing a verdict of not guilty; there are other cases in which it is done. [2] It is suggested that the course adopted in this case offers to the lower court a means of escaping the review allowed by the act; and there is an innuendo that there was a desire of that sort below. But such considerations do not affect the construction of the act, and it is fair to say that while the judge should not have directed a verdict when he did so, and if he thought the indictment bad should have quashed it before the jury came in, and left the question in form to be taken up, still we see no sufficient reason for supposing that the direction was given with any notion of escaping the jurisdiction of this Court. Writ dismissed for want of jurisdiction. (266 U. S. 379) KANSAS CITY SOUTHERN RY. CO. et al. v. 1. Courts 394(10, 15)—Judgment upholding validity of road assessment as against contention that special act confirming assessment violated federal Constitution held reviewable on writ of error. Benefits to railroad property to warrant assessment may consist of gains from increased State Supreme Court's judgment, affirming traffic reasonably expected to result from imjudgment sustaining assessment of land in roadprovement. For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes |