15 W

junction, in case the same shall be dissolved."
In the progress of the cause, Spain dismissed
his injunction as to the claim of the trustees of
the bank for the sum of $12,051.50. That
amount was paid to them, and they thereupon
released their claim under the injunction bonds.
By agreement of counsel the cases of Spain and
Butler were heard together. The court decreed
that there should be first paid to Wetmore the
principal and interest of his debt, amounting
together, including the cost of audit, to
$4,333.66. That there should be next paid to
Corcoran & Riggs the amount of their lien,
$30,000. And, thirdly, to the representatives
of Hill the debt due to his estate, found to be
then, with interest, $52,457.

The amount applicable to this demand, after
satisfying the demands of Wetmore and Cor-
coran & Riggs, was $38,171. This left a bal-
ance due Hill's estate of $14,285.54 unsatisfied
and unprovided for. The case was removed to
this court by appeal, and the decree of the
court below was here affirmed. Spain v. Ham-
ilton, 1 Wall. 604, 17 L. ed. 619. The James
River & Kanawha Company dismissed their
bill. Corcoran & Riggs subsequently collected
upon the bond executed by Ellis, Caperton, &
Ould the sum of $5,000. The penalty of the
bond of Butler, $2,500, was paid to the com-
plainant, J. Dick Hill.

This bill is brought by the executors of Wetmore, the executor of H. R. W. Hill, and J. Dick Hill, his devisee and only heir at law, against John F. May, William W. Corcoran, George W. Riggs, Hugh Caperton, and Henry Oelrichs. It gives sufficient reasons for not making additional parties whose presence would otherwise be necessary, though not in227*] dispensable, *in this litigation. The object of the bill is to enforce in favor of Hill's estate the liability for damages arising under the injunction bonds, and if need be to marshal the assets. The executors of Wetmore claim nothing except in trust for the benefit of Hill's estate.

The court below allowed Corcoran & Riggs
for damages, interest on the amount of their
lien during the time payment was delayed by
the injunction, being a period of four years,
eight months, and sixteen days.

The interest thus computed, makes the
sum of
The court also allowed them for counsel
fees in the adverse litigation.....

From this was deducted the amount they
received upon bond given in behalf of
the James River & Kanawha Co.,..

Balance..

$8,475 00

1,000 00 $9,475 00

5,000 00
$4,475 00
Of this sum, $2,455.94 was apportioned to
May's bond, and $2,019.06 to Oelrichs.
The damages awarded to Hill's estate were
as follows:

Loss of principal by reason of the fact

that part of the fund which would otherwise have been applied to it in part payment was absorbed for the interest upon the prior claims. Interest on $364214.35 for 4 yrs. 8 mos. 16 days

Counsel fees in the adverse litigation..

Balance

$827 41 10,230 55

1,500 00

$12,557 96
2,500 00
$10,057 96

Of this sum there was appropriated to May's bond $5,027.15, and to Oelrich $5,030.81. May and Oelrichs appealed, and the case is now before this court for final adjudication. It has been insisted by the counsel for the appellants that there is a complete remedy at law, and that the bill must therefore be dismissed. Such must be the consequence if the objection is well taken. In the jurisprudence of the United States this objection is [*228 regarded as jurisdictional, and may be enforced by the court sua sponte, though not raised by the pleadings nor suggested by counsel. Parker v. Winnipiseogee Co. 2 Black, 551, 17 L. ed. 337; Graves v. Insurance Co. 2 Cranch, 419; Fowle v. Lawrason, 5 Pet. 495; Dade v. Irwin, 2 How. 383.

The 16th section of the judiciary act of 1789 provides "that suits in equity shall not be sustained in any case where plain, adequate, and complete remedy can be had at law;" but this is merely declaratory of the pre-existing rule, and does not apply where the remedy is not "plain, adequate, and complete;" or, in other words, "where it is not as practical and efficient to the ends of justice and to its prompt administration, as the remedy in equity." Boyce v. Grundy, 3 Pet. 215.

Where the remedy at law is of this character, the party seeking redress must pursue it. In such cases the adverse party has a constitutional right to a trial of the issues of fact by a jury. Hipp v. Babin, 19 How. 278, 15 L. ed. 635.

But this principle has no application to the case before us. Upon looking into the record it is clear to our minds, not only that the remedy at law would not be as effectual as the remedy in equity, but we do not see that there is any effectual remedy at all at law. If the injunction bonds were sued upon at law and the judgments recovered, a proceeding in equity would still be necessary to settle the respective rights of the several obligées to the proceeds. The direct proceeding in equity will save time, expense, and a multiplicity of suits, and settle finally the rights of all concerned in one litigation. Besides, there is an element of trust in the case, which, wherever it exists, always confers jurisdiction in equity.

*

It has been urged that Hamilton's arrangement with the bank was illegal and void, and never fulfilled on his part, and that he had no title to the residuum of one tenth of the certificates to which his assignment related. It is a sufficient answer to say that the trustees of the bank were parties to the former suit, and that the court recognized and affirmed the validity of the claim by administering [*229 the fund arising from it. The appellants cannot go behind the decree in the case in which their bonds were given. The law and the facts of that case, as settled by the court, are conclusive of their rights in this proceeding. They cannot be permitted to raise any question as to either. The release given by the trustees of the bank cannot avail the defendants. If it were not by a sealed instrument, it would not be a technical bar, even in the suit at law. In what form it was given is not disclosed in the record. But if it were properly executed under seal, it cannot in equity affect the severable and sep

arate rights of parties to the bonds other than | more entitled to them, if he succeed, than is those by whom it was executed.

the defendant if the plaintiff be defeated. Why should a distinction be made between them? In certain actions ex delicto vindictive damages may be given by the jury. In regard to that class of cases this court has said: "It is true that *damages assessed by way of [*231 example may indirectly compensate the plaintiff for money expended in counsel fees, but the amount of these fees cannot be taken as the measure of punishment or a necessary element in its infliction." Day v. Woodworth, 13 How. 370, 371.

It is true that neither Hill nor his representatives were parties to either the bond of May or the bond of Oelrichs, and that they were not named in the writ of injunction issued upon the filing of the first bond. But Spain's bill averred that Wetmore held the fund in trust for Hill. Wetmore was an obligee in both bonds. The legal title to the entire fund was in him, and was never devested. It was extinguished by the payment of the money by the Treasury Department, and its distribution pursuant to the decree of the court. Wetmore during his The point here in question has never been exlifetime, and after his death, his legal repre-pressly decided by this court, but it is clearly sentatives, might have recovered upon the within the reasoning of the case last referred bonds at law to the full extent of the damages to, and we think is substantially determined by touching the entire fund. Such was his and that adjudication. In debt, covenant, and astheir legal right. Equity would have distrib- sumpsit, damages are recovered, but counsel uted the proceeds, if need be, according to his fees are never included. So in equity cases, rights and the equities of the other parties in where there is no injunction bond, only the taxinterest. In this case equity follows the law as able costs are allowed to the complainants. The regards the liability of the appellants and, hav- same rule is applied to the defendant, however ing the proceeds in hand, will distribute them unjust the litigation on the other side, and in this proceeding. Livingston v. Moore, 7 however large the expensa litis to which he Pet. 547; Riddle v. Mandeville, 5 Cranch, 322. may have been subjected. The parties in this The objection that proper releases were not respect are upon a footing of equality. There is filed in the Treasury Department is untenable. no fixed standard by which the honorarium can The proofs establish three facts: be measured. Some counsel demand much more than others. Some clients are willing to pay more than others. More counsel may be employed than are necessary. When both client and counsel know that the fees are to be paid by the other party there is danger of abuse. A reference to a master, or an issue to a jury, might be necessary to ascertain the proper amount, and this grafted litigation might possibly be more animated and protracted than that in the original cause. It would be an office of some delicacy on the part of the court to scale down the charges, as might sometimes be necessary.

The fund would have been paid over earlier but for the injunction. 230*] It was paid after the injunction was dissolved.

The delay caused by the injunction was the period for which interest was allowed by the court below.

Whether the payment was or would have been improperly made, is an inquiry which does not arise in this case, and with which the appellants have nothing to do.

We think the principle of disallowance rests on a solid foundation, and that the opposite rule is forbidden by the analogies of the law and sound public policy.

It is sufficient for the purpose of this case that there was, in fact, such delay, and that it proceeded from the cause alleged in the bill. The decree of the court below was preceded by the report of a master, which the decree affirmed and followed. Upon looking into the report we find it clear and able, and we are en- The amount of the allowance in this case tirely satisfied with it, except in one particu-may be remitted here, as was done in the case lar. We think that both the master and the court erred in allowing counsel fees, as a part of the damages covered by the bonds.

In Arcambel v. Wiseman, 3 Dall. 306, decided by this court in 1796, it appeared "by an estimate of the damages upon which the decree was founded, and which was annexed to the record, that a charge of $1,600 for counsel fees in the courts below had been allowed." This court held that it "ought not to have been allowed." The report is very brief. The nature of the case does not appear. It is the settled rule that counsel fees cannot be included in the

in 3 Dallas, and the decree of the Circuit Court will thereupon be affirmed. Otherwise the decree will be reversed, and the cause remanded for the reformation of the decree in conformity to this opinion.

WILLIAM C. GRAY, Collector of Internal
Revenue, Piff. in Err.,

บ.

WILLIAM DARLINGTON.

(See S. C. 15 Wall. 63-67.)

profits.

1. The advance in the value of United States cost, realized by their sale, was not subject to taxabonds, during a period of four years, over their tion as gains, profits, or income of the plaintiff for the year in which the bonds were sold, under the act of Mar. 2, 1867.

damages to be recovered for the infringement Adrance in value of bonds, when not taxable as of a patent. Teese v. Huntingdon, 23 How. 2, 16 L. ed. 479; Whittemore v. Cutter, 1 Gall. 429; Stimpson v. The Railroads, 1 Wall. Jr. 164. They cannot be allowed to the gaining side in admiralty as incident to the judgment beyond the costs and fees allowed by the statute. The Baltimore, 8 Wall. 378, 19 L. ed. 463. In actions of trespass where there are no circumstances of aggravation, only compensatory damages can be recovered, and they do not include the fees of counsel. The plaintiff is no

2. The statute only applies to such gains, profits, and income as are strictly acquisitions made during the year preceding that in which the assessment is levied and collected.

3. Mere advance in value in no sense constitutes the gains, profits, or income specified by the stat

ute.

It constitutes and can be treated merely as one's property or labor, or such gains or profits increase of capital.

[No. 57.]

Submitted Nov. 19, 1872. Decided Dec. 9, 1872.

IN ERROR to the Circuit Court of the United

States for the Eastern District of Pennsylvania.

Suit was brought in the court of common pleas of Chester county, Pennsylvania, by the defendant in error, to recover back a sum of money paid by him under protest, as an in-two previous years. Another exception is imcome tax. Upon petition of the defendant, the case was removed to the court below, by which judgment was given in favor of the plaintiff. Whereupon the defendant sued out this writ of error.

The case is further stated by the court. Messrs. Geo. H. Williams, Atty. Gen. and C. H. Hill, Asst. Atty. Gen. for plaintiff in

error.

Messrs. M. Blair, F. A. Dick and William Darlington, in person, for defendant in error. Mr. Justice Field delivered the opinion of

the court:

as may be realized from a business transaction begun and completed during the preceding year. There are exceptions, as already intimated, to the general rule of assessment thus prescribed. *statute, and relates to profits upon sales [*66 of real property, requiring, in the estimation of gains, the profits of such sales to be included where the property has been purchased, not only within the preceding year, but within the plied from the provision of the statute which requires all gains, profits, and income derived from any source whatever, in addition to the sources enumerated, to be included in the estimation of the assessor. The estimation must, therefore, necessarily embrace gains and profits from trade and commerce, and these, for their successful prosecution, often require property to be held over a year. In the estimation of gains of any one year, the trader and merchant will, in consequence, often be compelled to include the amount received upon goods sold over their cost, which were purchased in a previous year. Indeed, in the estimation of the gains and profits of a trading or commercial business for any one year, the result of many transactions have generally to be taken into account which originated previously. Except, however, in these and similar cases, and in cases of sales of real property, the statute only applies to such gains, profits, and income as are strictly acquisitions made during the year preceding that in which the assessment is levied and collected.

In 1865 the plaintiff, being the owner of certain United States Treasury notes, exchanged them for United States five-twenty bonds. In 1869 he sold these bonds at an advance of $20,; 000 over the cost of the Treasury notes, and upon this amount the assistant assessor of the United States for the collection district in 65*] Pennsylvania, *within which the plaintiff resided, assessed a tax of five per cent, alleging it to be gains, profits, and income of the plaintiff for that year. On appeal to the assessor The mere fact that property has advanced in of the district, and to the Commissioner of In-value between the date of its acquisition and ternal Revenue, this assessment was affirmed, sale does not authorize the imposition of the and it was transmitted to the defendant, as collector of the district, for enforcement. Upon the latter's demand the tax was paid by the plaintiff under protest, and the present action was brought to recover back the money.

The question presented is whether the advance in the value of the bonds, during this period of four years, over their cost, realized by their sale, was subject to taxation as gains, profits, or income of the plaintiff for the year in which the bonds were sold. The answer which should be given to this question does not, in our judgment, admit of any doubt. The advance in the value of property during a series of years can, in no just sense, be considered the gains, profits, or income of any one particular year of the series, although the entire amount of the advance be at one time turned into money by a sale of the property. The statute looks, with some exceptions, for subjects of taxation only to annual gains, profits, and income. Its general language is "that there shall be levied, collected, and paid annually upon the gains, profits, and income of every person," derived from certain specified sources, a tax of five per cent, and that this tax shall be "assessed, collected, and paid upon the ggins, profits, and income for the year ending the 31st of December next preceding the time for levying, collecting, and paying said tax." 14 Stat. at L. pp. 477, 478, § 13. This language has only one meaning, and that is that the assessment, collection, and payment prescribed are to be made upon the annual products or income of

tax on the amount of the advance. Mere advance in value in no sense constitutes the gains, profits, or income specified by the stat ute. It constitutes and can be treated merely as increase of capital.

The rule adopted by the officers of the revenue in the present case would justify them in treating as gains of one year the increase in the value of property extending through any number of years, through even the entire cen tury. The actual advance in value of property over its cost may, in fact, reach its height years before its sale; the value of the property may, in truth, be less at the time of the sale than at any previous period in ten years, yet, if the amount *received exceed the actual [*67 cost of the property, the excess is to be treated, according to their views, as gains of the owner for the year in which the sale takes place. We are satisfied that no such result was intended by the statute.

Judgment affirmed.

Dissenting, Mr. Chief Justice Chase, Mr. Justice Clifford, and Mr. Justice Bradley. RUFUS CHENEY, late Collector of Internal Revenue, Plff. in Err.,

v.

GEO. T. VAN ARSDALE et al.
(See S. C. 15 Wall. 68-75.)
Thimble skeins and pipe boxes, taxable.
Under the act of 1866, thimble skeins and pipe

boxes, whether made of steel or iron, cast or thimble skeins, and pipe boxes, articles never wrought, were subject to taxation.

not be admitted that the same act which taxed
specifically certain varieties of iron in one sec
tion, expressly exempted them in the next.
Such inconsistency is not to be attributed to
Congress. Nor is it at all necessary. The im-
position of taxes and the declared exemptions
are perfectly consistent with each other if the
exempting clause is construed, as it may be, to
include only articles made of steel. Thus steel
itself is taxed when made directly from muck
bar, blooms, slabs or loops, and exempt when
made from more advanced iron. Bars and rails
are taxed when made of iron, as are sheet iron,
plate iron, iron coil, and wire, but they are ex-
empt when made of the described variety of
steel. Such a construction, and such alone,
preserves the consistency of the act and gives
effect to every part. And it is the natural con-
struction. The excepting clause includes three
classes of articles. The first is steel made from
iron in an advanced state, whether, when made,
it be ingots, bars, rails for railroads, sheet,
plate, coil, or wire, or hoop-skirt wire, whether
covered or uncovered. The second class is car-
wheels, thimble skeins, and pipe boxes, and
springs, tires, and axles, made of steel, used ex-
clusively for vehicles, cars or locomotives. The
third class is clock springs, faces, and hands.
*But why, it is asked, if only steel ar- [*74
ticles were intended to be embraced in the
words "springs, tires, and axles," the superflu-
ous words, "made of steel?" The reason will be
evident when the whole act is considered. It
is to be observed that the articles mentioned in
the first class are those made of a particular
kind of steel, namely: that made of iron ad-
vanced beyond muck bar, blooms, slabs, or
loops. Upon such steel no tax was imposed by
the 9th section, though one had been by the act
of 1864. It is true, as we have said, the 9th
section levied a tax upon steel, but it was upon
such steel only as was made directly from
muck bar, blooms, slabs, or loops, not from
iron in a higher state of advancement. The sec-
ond class embraces articles made of steel gener-
ally, used exclusively for vehicles, cars, or loco-
motives. They are exempt if made of steel, no
matter what the kind of steel may be, whether
made from muck bar, blooms, slabs, or loops, or
from iron advanced beyond those stages. It
was therefore necessary to repeat the qualifica-
tion "made of steel," for had it not been re-
peated, only those car-wheels, thimble skeins,
and pipe boxes, and springs, tires, and axles,
or the last three named of them, which were
made of a particular kind of steel, would have

cially for locks, safes, looms, spinning machines, steam-engines, hot-air, and hot-water furnaces, and sewing-machines, and not sold or used for any other purpose, and upon which a tax was assessed and paid on the article of 72*] *which the casting was a part. All these were exempted from tax by the 10th section, and special provision was therefore made for them. It is therefore clear that castings made for thimble skeins and pipe boxes, between September 1, 1866, and March 1, 1867, were subject to a tax of $3 per ton, unless they were specially exempted. This we do not understand to be controverted. But it is insisted that they were exempted by the 10th section of the act. That section, it should be borne in mind, had reference to the provisions of the revenue act of June 30, 1864, as amended by the act of March 3, 1865, which imposed taxes upon most, if not all, of the articles which, in 1866, it was proposed to put upon the free list. It carried out the design avowed in the title, a reduction of taxation. It mentioned in detail and in alphabetical order, certain products, articles, and classes of articles which had been previously taxed, and it declared that they should be exempt from internal taxation. Among these was "steel made from iron, advanced beyond muck bar, blooms, slabs, or loops, in ingots, bars, rails made and fitted for railroads, sheet, plate, coil, or wire, hoop-skirt wire, covered or uncov-clause, repeat the qualification? Why add to the ered, car-wheels, thimble skeins, and pipe boxes, and springs, tires, axles made of steel used exclusively for vehicles, cars, or locomotives, and clock springs, faces, and hands." But was this an exemption of all thimble skeins and pipe boxes, as ruled in the court below, or only of those articles when made of steel? Waiving consideration of the question whether the exempting clause did not refer to the ad valorem tax of five per cent, which the act imposed on all manufactures not otherwise provided for, wholly or in part of cotton wood, iron, steel, or other materials, rather than to the specific tax upon the materials of which those manufactures, when finished, were wholly or in part composed, we think the exemption cannot be construed beyond thimble skeins and pipe boxes made of steel and used for vehicles, cars, or locomotives and, consequently, that it did not include thimble skeins and pipe boxes made of iron. It is quite evident to us that all the ar73*] ticles enumerated in this clause of the exempting section were steel articles. If this is not so, the act is plainly self-contradictory. Its 10th section must be construed in connection with its other sections, and so construed, if pos-been exempted. The repetition enlarged the list. sible, that effect shall be given to every part. But if we look at the 9th section it will be seen that the act imposed a specific tax upon bars, upon rails for railroads, upon sheet iron, plate iron, coil, and wire, upon castings of iron for which no special provision was made, as also upon all steel made directly from muck bar, blooms, slabs, or loops. The act of 1864 had taxed all steel, but the act of 1866 was, in this particular, less comprehensive. It, however, imposed a tax upon all steel made directly from muck bar, blooms, slabs, or loops. It is in view of these provisions of the 9th section, and in harmony with them, that the exemptions made by the 10th section are to be construed. It can

Thus there is no force in the argument that the use of the words "made of steel" was superfluous and unmeaning, if the exempting clause was designed to include only steel articles.

It is further said that when the act was passed thimble skeins and pipe boxes were not made of steel, and witnesses testified that they never knew that material employed for such articles. From this it is argued that Congress must have intended to exempt them when made of iron, for they must be presumed to have intended an exemption of something that had an existence. There is some plausibility in the argument, but it is more specious than sound. Congress must have known that of late years