Pollock v. Farmers' Loan & Trust Co. 157 U.S. 429 and 158 U.S. 601 (1895)

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POLLOCK v. FARMERS' LOAN & TRUST CO. 157 U.S. 429 and 158 U.S. 601 (1895)

charles evans hughes called these decisions a "selfinflicted wound" comparable to the decision in dred scott v. sandford (1857). Here the Supreme Court held unconstitutional an 1894 act of Congress that fixed a flat tax of two percent on all annual incomes over $4,000. Pollock filed a stockholder ' ssuit against the trust company to prevent it from complying with the statute which, he claimed, imposed a direct tax without apportioning it among the states on the basis of population. The trust company, the party of record on the side of the tax, avoided the appearance of collusion by hiring the president of the American Bar Association, James Coolidge Carter; Richard Olney, attorney general of the United States, was on the same side as amicus curiae. Theirs was the easy task because history and all the precedents proved that the clause of Article 1, section 9, referring to direct taxes, meant only taxes on people or on land. The Court had so declared in hylton v. united states (1796) and in several other cases, especially springer v. united states (1881), a direct precedent; the Court there had unanimously sustained an earlier income tax as imposing an indirect tax and therefore not subject to the requirement of apportionment.

Counsel for Pollock, led by joseph h. choate, buttressed a weak case with an impassioned argument intended to provoke judicial fear and reflecting the panic felt by many conservatives. Choate warned that the Court had to choose between "the beginning of socialism and communism" and the preservation of private property, civilization, and the Constitution. He appealed to the Court to substitute its discretion for that of Congress.

justice howell e. jackson not having participated, an eight-member Court decided the case. All agreed that the federal tax on municipal bonds was unconstitutional, because government instrumentalities were exempt from taxation (see intergovernmental immunities). On the question of the validity of the tax on income from personal property, the Court divided evenly. But on the question of the validity of the tax on income from real estate, the Court voted 6–2 that it was a direct tax unconstitutionally assessed. Nothing favorable can be said about Chief Justice melville w. fuller's opinion for the majority. He took for granted the very proposition he should have proved, asserting that a tax on the income from land was indistinguishable from a tax on the land itself. Clearly, however, the income that may derive from rents, timber, oil, minerals, or agriculture is distinguishable from a tax on acreage or on the assessed value of the land itself. Fuller distinguished away the precedents: Hylton had decided only that a tax on carriages was not a direct tax, and Springer had decided only the narrow point that a tax on a lawyer's fees was not a direct one. Neither case, Fuller declared, dealt with a tax on the income from land, and he made much of the point that such a tax is unique because of the undisputed fact that a tax on the land itself is undoubtedly a direct tax. Justices edward d. white and john marshall harlan, dissenting, concluded that history and stare decisis demanded a different ruling, and they warned that when the Court virtually annulled its previous decisions on the basis of the policy preferences of a majority that happened to dominate the bench, the Constitution was in jeopardy.

The tie vote of the Court on all other issues meant that the decision of the circuit court prevailed, leaving in force the taxes on corporate income, wages and salaries, and returns from investments. Accordingly, Choate moved for a rehearing, which was granted, and Justice Jackson attended. The trust company, which was supposed to defend the income tax act, did not retain Carter or replace him, thus leaving Olney to defend it. He took half the time permitted by the Court for his presentation.

The arguments the second time focused on the validity of the tax on the income from personal property, mainly interest and dividends. Fuller, speaking for a bare majority, again read the Court's opinion. Six weeks earlier he had based his position on the uniqueness of a tax on the income from land; now he took the opposite view, reasoning that if a tax on the income from land is a direct tax, so is a tax on the income from personal property. Having found the statute void in significant respects, he reasoned next that the invalidity of some sections contaminated the rest: since the sections were inseparable, all were void because some were.

When Fuller finished his opinion, Harlan began to read his dissent; it sizzled in its language and delivery. He ended a systematic refutation by pounding his desk, shaking his finger in the face of the Chief Justice, and shouting, "On my conscience I regard this decision as a disaster!" (The Nation magazine described Harlan as an "agitator" who expounded "the Marx gospel from the bench.") He accused the majority of an unprecedented use of judicial power on behalf of private wealth by striking down a statute whose policy they disliked and by doing it against all law and history. He also pointed out, as did the other dissenters, Justices White, Jackson, and henry b. brown, that the parts of the statute that were not unconstitutional per se, and might be reenacted if Congress chose, taxed the income of people who earned their money from wages and salaries but who derived no income from land or invested personal property. The decision, said Brown, is "nothing less than a surrender of the taxing power to the moneyed class" making for "a sordid despotism of wealth." It "takes invested wealth," said White, and "reads it into the Constitution as a favored and protected class of property.…" It was, said Jackson, "the most disastrous blow ever struck at the constitutional power of congress" and made the tax burden fall "most heavily and oppressively upon those having the least ability" to pay.

Public opinion was opposed to the Court, though it had vigorous supporters especially among the Republican newspapers in the East. The New York Sun exclaimed in delight, "Five to Four, the Court Stands Like a Rock." The New York Herald Tribune hailed the Court for halting a "communist revolution." The Democratic party, however, recommended an amendment to the Constitution vesting Congress with the power denied by the Court. The sixteenth amendment was not ratified, though, until 1913, by which time the nation's maldistribution of wealth had intensified. For eighteen years, as edward s. corwin wrote, "the veto of the Court held the sun and moon at pause," while the great fortunes went untaxed. The government during that time raised almost all of its revenues from excise taxes and tariffs, whose burden fell mainly on consumers. In 1913 the average annual income in the United States was $375 per capita.

Leonard W. Levy


Corwin, Edward S. 1932 Court over Constitution. Pages 177–209. Princeton, N.J.: Princeton University Press.

King, Willard L. 1950 Melville Weston Fuller. Pages 193–221. New York: Macmillan.

Paul, Arnold M. 1960 Conservative Crisis and the Rule of Law: Attitudes of Bar and Bench, 1887–1895. Pages 159–220. Ithaca, N.Y.: Cornell University Press.

Shiras, George, 3 rd, and Shiras, Winfield 1953 Justice George Shiras Jr. of Pittsburgh. Pages 160–183. Pittsburgh: University of Pittsburgh Press.

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Pollock v. Farmers' Loan & Trust Co. 157 U.S. 429 and 158 U.S. 601 (1895)

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