$489

000, $50 per million or any part thereof. In taxes legally due and owing, without discase the corporation shall fail to make re-tinction between the United States and the turn the state board shall ascertain and fix state, county, district, or municipality. the amount of the annual license fee or An argument is made as to the alleged in. franchise tax, and shall report to the comp-justice of this requirement, in that it may troller on or before the first Monday in take away from the local creditors in the June the basis and amount of the tax as re-state where the property of the corporation turned by each company to, or ascertained by, the board, which shall then become due and payable, and it shall be the duty of the state treasurer to receive the same. If the tax remains unpaid on July 1st after the same becomes due it shall thenceforth bear interest at the rate of 1 per cent per month. That the tax shall be a debt due from the company to the state, for which it may maintain an action at law for recovery thereof, after the same shall have been in arrears for the period of one month, and the tax shall be a preferred debt in cases of insolvency, and in cases of arrears for three months the state may apply for an injunction to restrain the company from exercising its corporate franchise; and that if any corporation shall be delinquent for two years its charter shall be void, unless further time be given for the payment of taxes.

It is contended for the appellee that these provisions do not entitle the state to the payment of its claim as a preferred tax within the meaning of the bankrupt act. It is insisted, in the first place, that a proper construction of the act of 1898 does not require the payment of taxes to a state wherein the bankrupt has no property, and the state no means of collecting the tax from property within its jurisdiction. And it is urged that the taxes to be paid are those legally due and owing to the United States, state, county, district, or municipality, which does not contemplate payment to any and al states, but only to THE state, which, it is insisted, should be interpreted with the limitation stated.

It is to be noted that there is a very significant difference in this respect, in the act of 1898, from the provisions of the bankrupt act of 1867 (14 Stat. at L. 530, chap. 176), the law in force last before, and doubtless in the view of Congress when the present law was drafted. That act of 1867 gave priority of payment to all debts due to the United States, and all taxes and assessments under the laws thereof, all debts due to the state in which the proceedings in bankruptcy were pending, and all taxes and assessments made under the laws of such state, and provided that nothing contained in the act should interfere with the assessment and collection of taxes by the authority of the United States or any state.

The requirement of the present law is a wide departure from the act of 1867, and specifically obliges the trustee to pay

is situated practically all the assets of the corporation in favor of the state where the corporation is organized, but has no business or property. And it is urged that to permit a state, under such circumstances, to have a preference in the payment of taxes, would give to it an advantage which it could not otherwise obtain for want of charge or lien upon the property. But considerations of this character, however properly addressed to the legislative branch of the gov. ernment, can have no place in influencing judicial determination. It is the province of the court to enforce, not to make, the laws, and, if the law works inequality, the redress, if any, must be had from Congress.

The question is, Is the claim a tax legally due and owing to the state of New Jersey! We have been cited to many cases in the state of New Jersey, some of which, it is alleged, maintain the theory of the appellant that this is a tax, and some the contrary view.

Without undertaking to analyze these numerous cases or to harmonize the views expressed by different judges, we think the weight of judicial decision in that state favors the view that this is a tax imposed upon the right of the corporation to continue to be a corporation, with power to exercise its corporate franchises, based upon the amount of its capital stock issued and outstanding.

In Hancock v. Singer Mfg. Co. 62 N. J. L 289, 42 L.R.A. 852, 41 Atl. 846, it was said:

"The act of 1884 (Pamph. L. p. 232) is entitled 'An Act to Provide for the Imposition of State Taxes upon Certain Corporations and for the Collection Thereof.'

"In this act this imposition is called a yearly license fee or tax.

"In a supplement passed to the act of 1884 (Pamph. L. 1891, p. 150) it is styled a tax'

"In a further supplement, passed in 1892 (Pamph. L. p. 136), it is called 'an annual license fee or franchise tax.'

"It is wholly immaterial what name may be given to it. The fact that it is called a license fee' or 'franchise tax' cannot validate it. It is levied under an act passed 'to au thorize the imposition of state taxes,' and it is none the less an interdicted imposition [having reference to the charter then being considered], and none the less a tax because it is given a new name.

“Although under our adjudications, it is

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The amount is fixed by the statute, to be paid on the outstanding capital stock of the corporation each year, and capable of being enforced by action against the will of the taxpayer. As was said by Mr. Justice Field, speaking for the court in [Meriwether v. Garrett] 102 U. S. 472, 26 L. ed. 197.

not a tax on property in a sense which brings it within article 4, § 7, paragraph 12, of our state Constitution, it is a tax on the capital stock of the corporation. Otherwise the act would be manifestly void for want of a title expressing its object, and the state would be deprived of all its revenue under the act of 1892. The franchise of the company is the right to hold property and exercise its corporate privileges. The Supreme Court of the United States has decided that where a corporation is exempted from tax-ed upon contract, express or implied. Taxes ation, it is not subject to a tax on its franchise. Wilmington & W. R. Co. v. Reid, 13 Wall. 264, 20 L. ed. 568."

"Taxes are not debts. It was so held by this court in the ease of Lane County v. Oregon, 7 Wall. 71, 19 L. ed. 101 Debts are obligations for the payment of money found

are imposts levied for the support of the government, or for some special purpose authorized by it. The consent of the taxpayer is not necessary to their enforcement. They operate in invitum. Nor is their nature affected by the fact that in some states-and we believe in Tennessee-an action of debt may be instituted for their recovery. The form of procedure cannot change their char. acter."

While we take this view of the decisions of the supreme court of New Jersey, and reach the conclusion that the claim in question is for a tax within the meaning of the law as construed by that court, the bankruptcy act is a Federal statute, the ultimate interpretation of which is in the Federal courts. It is doubtless true, as was said in the opin- It is urged by the appellee, and upon this ion of the learned judge speaking for the ground the case was decided in the circuit circuit court of appeals, in this case, that if court of appeals, that this is in no just the highest court of the state should decide sense a tax levied by the state, but is the that a given statute imposed no tax within result of a contract by which the corpora, the meaning of the law as interpreted by it, tion was brought into existence, the consida Federal court, in passing upon the bank-eration being the payment of annual sums ruptcy act, would not compel the state to for the privileges given it by the state, for accept a preference from the bankrupt's es- which no lien is given upon the property, es tate upon a different view of the law. Con- but only a right of action for their recovceding the doctrine that the meaning of aery. But this imposition is in no just sense statute is a state question, except where a contract. The amount to be paid, fixed by rights, the subject of adjudication by the the statute, is subject to control and change Federal courts, have accrued before its con- at the will of the state. It is imposed upon struction by the state court, or the question all corporations, whether organized before or of contract within the protection of the Fed-after the passage of the act. The corpora eral Constitution is involved, still a state court, while entitled to great consideration, cannot conclusively decide that to be a tax within the meaning of a Federal law providing for the payment of taxes, which is not so in fact. The section (64a) itself declares that, in case of disputes as to the The form of the collection of taxes is left amount or legality of any such tax, they to the discretion of the taxing power; someshall be heard and determined by the court. times a lien is provided, sometimes a sumThe state court may construe a statute and mary method of collection is awarded; in define its meaning, but whether its construc- other cases, an aetion for debt is given; and, tion creates a tax within the meaning of as in the present case, with the right of proa Federal statute, giving a preference to hibition of the exercise of corporate frantaxes, is a Federal question, of ultimate de-chises by injunction for failure to pay. cision in this court.

tion is not consulted in fixing the amount of the tax, and under the laws of New Jersey the charter of such corporations as this may be amended or repealed. Hancock v. Singer Mfg. Co. 62 N. J. L. 289–328, 42 L.R.A. 852, 41 Atl. 846.

We think, then, that, as denominated in the statute, this was a tax imposed by the state upon the corporation for the privilege of existence and the continued right to exercise its franchise.

The state which created this corporation had the right to fix the terms of its exist

We are of opinion that this claim was for a tax. The language of the act, as we have said, is very broad, and includes all taxes. It is not necessary to enter upon a discussion of the different forms which taxes may take. Generally speaking, a tax is a pecuniary burden laid upon individuals or prop-ence, and to provide, if it saw fit so to do, erty for the purpose of supporting the gov- that, for the continued existence of its franernment. We think this exaction is of that chise, the corporation should pay certain character. It is required to be paid by the sums to the state, fixed by the amount of its corporation after organization in invitum.yearly outstanding capital stock. New York

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ex rel. Metropolitan Street R. Co. v. New | vides shall be paid in advance of the payYork State Tax Comrs. 199 U. S. 1-37, 50 ment of dividends to creditors-do not emL. ed. 65-75, 25 Sup. Ct. Rep. 705, et seq. brace an "annual license fee or franchise Coming to the specific objections to the tax" (the words of the New Jersey statute), claim for the year 1902, the claim was pre- which, strictly, is not a property tax, but, sented upon the basis of $40,000,000 of out-only an exaction by the state for the privi standing capital stock, when in fact there lege given to a corporation to do certain was only $10,000,000 of such stock, the as-business under its charter. We think the sessment by the state board being upon the former sum, and made upon the failure of the corporation to report. But we do not think the finding of the state board is conclusive. The tax is to be assessed upon capital stock actually outstanding. It may well be doubted whether the board had power to tax any other stock. But be that as it may, § 64a specifically provides that in case any question arises as to the amount or legality of taxes, the same shall be heard and determined by the court, with a view to ascertaining the amount really due. We do not think it was the intention of Congress to conclude the bankruptcy courts by the findings of boards of this character, and that the claim should have been upon the basis of the capital stock actually outstand-rupt, preference should be given to the ing.

bankruptcy act should be so construed. It cannot be otherwise construed without doing gross injustice to those creditors of the bankrupt corporation who have business transactions with it at its place of business. Here the bankrupt corporation did no business in New Jersey. So far as appears, it did not have, nor expect to have, any connection with that state except to become incorporated under its laws. It had its seat of operations and all its tangible property in the state of Illinois. It had no property in New Jersey. Its scheme was to get a charter from New Jersey and then go to another state for purposes of its business. We do not think that Congress intended that, in the distribution of the assets of a bank

claims of a state which have their origin in, The amount claimed for the year 1903, it and are wholly based upon, a bargain with is insisted, had not accrued at the time of the state whereby certain privileges are the adjudication in bankruptcy, which was granted in exchange for certain payments,— on April 23, 1903, the return being made on privileges which the state may grant or May 2, 1903, and the assessment was not withhold at pleasure. In our opinion the made until July 1, 1903; but the annual word "taxes" in the bankruptcy act was inreturn, required to be made to the board on tended to embrace only burdens or charges or before the first Tuesday in May, is upon imposed in invitum, and which were in their the basis of the capital stock issued and out- nature and in reality "taxes," as distinstanding the first of January preceding the guished from governmental exactions for making of the return. The bankrupt act re- privileges granted. The claim of New Jerquires the payment of all taxes legally due sey, whatever its true amount, should not and owing. We think the tax thus assessed be given priority, but should be placed upon upon that basis was legally due and owing, the same footing with claims of other credalthough not collectible until after the ad-itors. This view is consistent with the act judication.

We reach the conclusion that, under the bankruptcy act, these taxes, in the amounts hereinbefore indicated, were entitled to pref. erential payment in favor of the state of New Jersey, and that the Circuit Court of Appeals erred in reaching a contrary conclusion.

Its judgment will be reversed and the cause will be remanded to the District Court for further proceedings in conformity with this opinion.

Mr. Justice Harlan (with whom concurred Mr. Chief Justice Fuller and Mr. Justice Peckham) dissenting:

of Congress.

(203 U. S. 476) UNITED STATES ex rel. GEORGE A. LOWRY and Planters Compress Company, Plffs. in Err.,

V.

FREDERICK L. ALLEN, Commissioner of
Patents.

Patents-appeal from interlocutory decision.

An appeal from a decision of the primary examiner upon a motion to dissolve an interference, holding that the party had the right to make the interfering claims, The Chief Justice, Mr. Justice Peckham, may be prohibited by the rules of the Patand myself dissent from the opinion of the ent Office without infringing the right of court. In our judgment the "taxes" owing Stat. §§ 482, 483, 4904, 4909, U. S. Comp. appeal in interferences given by U. S. Rev. by a bankrupt to a state-which § 64a of the Stat. 1901, pp. 272, 3389, 3390, since the apbankruptcy act [30 Stat. at L. 563, chap. peal therein provided for must be deemed 541, U. S. Comp. Stat. 1901, p. 3447] pro-limited to final decisions upon the question

478

of priority of invention, which, under these statutes, is the sole question for determination in interference cases.

[No. 56.]

bia, requiring the Commissioner of Patents to direct the board of examiners in chief to reinstate and take jurisdiction of the appeal of petitioners from the decision of the primary examiner, refusing to dissolve an in

Argued October 24, 25, 1906. Decided De- terference between a patent granted to Low

IN

cember 10, 1906.

IN ERROR to the Court of Appeals of the District of Columbia to review a judgment which reversed a judgment of the Supreme Court of that District, granting a mandamus to require the Commissioner of Patents to direct the board of examiners in chief to take jurisdiction of an appeal from a ruling of the primary examiner, upon a motion to dissolve an interference. Af firmed.

See same case below, 26 App. D. C.,8. The facts are stated in the opinion. Messrs. Oliver Mitchell, Edmund Wetmore, and Meyers, Cushman, & Rea for plaintiffs in error.

Assistant Attorney General McReynolds, and John M. Coit for defendant in error.

ry and an application for a patent by one William L. Spoon. The supreme court granted the mandamus. Its judgment was reversed by the court of appeals.

The question in the case is whether the rule of the Patent Office which denies an appeal from a ruling of a primary examiner, upon motion to dissolve an interference, is contrary to the Revised Statutes, and therefore void. Rule 124 provides that "from a decision of a primary examiner affirming the patentability of the claim or the applicant's right to make the same, no appeal can be taken."

Plaintiffs in error attack the rule as inconsistent with the sections of the Revised Statutes which provide for interferences. These sections are inserted in the margin.t

The facts are as follows: Lowry was granted a patent for a bale of fibrous ma.

Mr. Justice McKenna delivered the opinion terial January 29, 1897. An interference was of the court: declared between his patent and application This is a petition for mandamus, filed in of one William Spoon, to which interference the supreme court of the District of Colum-'Lowry was made a party. He moved to

Rev. Stat. Sec. 4904, U. S. Comp. Stat. Sec. 9. (Act of February 9, 1893 [27 1901, p. 3389. Whenever an application is Stat. at L. 436, chap. 74, U. S. Comp. Stat. made for a patent which, in the opinion of 1901, p. 3391].) That the determination of the Commissioner, would interfere with any appeals from the decision of the Commispending application, or with any unexpired sioner of Patents, now vested in the general patent, he shall give notice thereof to the term of the supreme court of the District applicants, or applicant and patentee, as the of Columbia, in pursuance of the provisions case may be, and shall direct the primary of section seven hundred and eighty of the examiner to proceed to determine the ques- Revised Statutes of the United States, retion of priority of invention. And the Com-lating to the District of Columbia, shall missioner may issue a patent to the party who is adjudged the prior inventor, unless the adverse party appeals from the decision of the primary examiner, or of the board of examiners in chief, as the case may be, within such time, not less than twenty days, as the Commissioner shall prescribe.

Rev. Stat. Sec. 4909, U. S. Comp. Stat. 1901, p. 3390. Every applicant for a patent or for the reissue of a patent, any of the claims of which have been twice rejected, and every party to an interference, may appeal from the decision of the primary examiner, or of the examiner in charge of interferences in such case, to the board of examiners in chief, having once paid the fee for such appeal.

Rev. Stat. Sec. 4910, U. S. Comp. Stat. 1901, p. 3391. If such party is dissatisfied with the decision of the examiners in chief he may, on payment of the fee prescribed, appeal to the Commissioner in person.

Rev. Stat. Sec. 4911, U. S. Comp. Stat. 1901, p. 3391. If such party, except a party to an interference, is dissatisfied with the decision of the Commissioner, he may appeal to the supreme court of the district of Columbia, sitting in bane.

hereafter be, and the same is hereby, vested in the court of appeals created by this act; and in addition, any party aggrieved by a decision of the Commissioner of Patents in any interference case may appeal therefrom to said court of appeals.

Rev. Stat. Sec. 482, U. S. Comp. Stat. 1901, p. 272. The examiners in chief shall be persons of competent legal knowledge and scientific ability, whose duty is shall be, on the written petition of the appellant, to revise and determine upon the validity of the adverse decisions of examiners upon applications for patents, and for reissues of patents, and in interference cases; and, when required by the Commissioner, they tensions, and perform such other like duties shall hear and report upon claims for exas he may assign them.

Rev. Stat. Sec. 483, U. S. Comp. Stat. 1901, p. 272. The Commissioner of Patents, subject to the approval of the Secretary of the Interior, may, from time to time, establish regulations, not inconsistent with law, for the conduct of proceedings in the Patent Office.

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patent. If it should at any time be decided that Spoon is entitled to the patent, Lowry will have the right of appeal, but until such final decision is rendered the statute gives

dissolve the interference upon the ground, I been decided which party is entitled to the among others, that Spoon's press was inoperative. The primary examiner granted the motion and Spoon appealed to the board of examiners in chief, who confirmed the decision. Upon petition of Spoon the Commis-him no right of appeal. sioner of Patents remanded the case to the primary examiner for further consideration, and the latter officer, upon the filing of additional affidavits, decided that Spoon's application disclosed an operative device. From this decision an appeal was taken to the board of examiners in chief, which was dismissed by that board for want of jurisdiction. Thereupon Lowry petitioned the Com-fects his claimed right to a patent, and if it missioner to direct the board to issue an appeal. The petition was denied, the Acting Commissioner remarking:

"It would seem upon general principles of law that Lowry could then present for determination by his appeal any question which, in his opinion, vitally affects the question which party is entitled to the patent. The only ground upon which he can reasonably claim the right of appeal on this motion is that the question vitally af

does that, he can raise it at final hearing and contest it before the various appellate tribunals, including the court of appeals.

"The refusal to permit the present appeal on motion is therefore not a denial of an opportunity to have the matter reviewed by the several appellate tribunals mentioned in the statute."

"The rule prohibiting an appeal from a decision upon a motion holding that a party has the right to make the claim of the issue is in accordance with the practice which has prevailed in this office for many years, and has the support of all decisions of the courts which have been rendered on the subject. There seems to be no reason for regarding it as inconsistent with the statute. It seems very clear that the decision in this case is not a final adverse decision, since it is not a ruling that Lowry is not entitled to his patent. That is a matter which may be deter-attorneys practising before the office for the mined in the further proceedings, and there- last quarter of a century." fore it is clear that the decision relates to a mere interlocutory matter.

"The petition is denied.”

Lowry filed another petition, appealing to the Commissioner "in person," to direct the board of examiners in chief to entertain his appeal. The petition was considered and denied. In passing on the petition the Commissioner said:

And further: "No good reason is seen for changing the provisions in Rule 124 here in controversy, which was adopted and approved by a long line of Commissioners of Patents, among whom have been some of the ablest patent lawyers in the country, and which rule has been acquiesced in by patent

"There is quite a sharp controversy between the parties as to the effect of the ruling of the Commissioner. Plaintiffs in error are apparently convinced that the ruling of the primary examiner involves a fundamental right which, if not decided on Lowry's appeal, will be forever foreclosed to him for review. A different view is expressed by defendant in error. However this may

is in quite narrow compass. The statutes involved are not difficult of interpretation. The determining sections are 482, 483, 4904, and 4909 (U. S. Comp. Stat. 1901, pp. 272, 3389, 3390). Plaintiffs in error put especial stress upon §§ 482 and 4909. Section 482 provides for the appoint. ment of examiners in chief, "whose duty it shall be, on the written petition of the appellant, to revise and determine upon the validity of the adverse decisions of examiners

"Under the express provisions of rule 124 | be, we think the question in the case there is no appeal to the examiners in chief from such decision rendered on an interlocutory motion. It is believed that there is nothing in that rule inconsistent with law, and that therefore it has the force of law. The right of appeal in interferences given in general terms in the statute is a very different thing from the right of appeal on all motions in the interference. To permit appeals on motions would multiply litigation and extend the proceedings in interferences beyond all reasonable limits. It would work great hardship to parties. The appellate tribunals of this office are no more required to give cases piecemeal consideration than are the appellate courts. The whole case should be ready for appeal when the appeal provided for by the statute is taken.

in interference cases." Section 4909 provides that "every party to an interference may appeal from the decision of the primary examiner or of the examiner in charge of interferences in such case, to the board of examiners in chief." The contention is that this section gives the right of appeal unreservedly and any limitation of it by a rule is void. Such might not be the result, even if there was no qualification of those sections in other sections. As said

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