Mo. Pac. R.R. Co. v. Porter, 273 U.S. 341 (1927)

October 21,1920, at Earle, Arkansas, defendants in error delivered to plaintiff in error seventy-five bales of cotton for transportation to Liverpool, England. The carrier issued to the shippers an export bill of lading in two parts: the first covered the inland haul from Earle to Brunswick, Georgia, designated as port A, and the second covered the ocean carriage from Brunswick to Liverpool, designated as port B. The inland route specified was over the lines of railroad of plaintiff in error, the Mobile and Ohio, and the Atlanta, Birmingham and Atlantic. The inland rate for the railroads named was 98.5 cents per hundred pounds. The ocean transportation was to be by the Leyland Line for the rate of $1.95. The bill of lading contained, as applicable in respect of the service and delivery at Brunswick, a provision that, “ No carrier or party in possession of . . . the property, herein described, shall be liable for any loss thereof ... by fire . . .” After the bill of lading was issued, while the cotton was on the cars of the carrier and before they were moved from Earle, it was destroyed by a fire originating at the compress and which was not set by plaintiff in error. Sections 843 and 844, Crawford and Moses’ Digest of the Statutes of Arkansas, declare that it is unlawful for any railroad to enter into an agreement with any shipper for the purpose of limiting or abrogating its statutory and common law duties or liability as a common carrier; that all agreements made for that purpose and any rule or regulation limiting the common law rights of shippers are void. Defendants in error brought this p. 343action in the Circuit Court of Pulaski County, Arkansas, to recover the value of the cotton. Plaintiff in error contended—as it here insists—that these provisions of the Arkansas statute do not apply to the shipment in question; and that, if held to be applicable, they contravene the laws of the United States regulating interstate and foreign commerce. The Circuit Court applied the statute, and gave judgment for the shippers. The carrier took the case to the Supreme Court of the State, and there it was held that the Acts of Congress regulating bills of lading apply only to interstate commerce and to shipments from a point in the United States to an adjacent foreign country, and do not evince an intention to regulate bills of lading for shipments from a point in the United States to non-adjacent foreign countries. 168 Ark. 22. The case is here on writ of error allowed by the chief justice of that court. § 237, Judicial Code.

There is no claim that the loss was caused by any fault or negligence of the carrier; and, if the Arkansas statute does not apply to the shipment, the clause in the bill of lading exempting the carrier from liability is valid. Cau v. Texas & Pacific Ry. Co., 194 U. S. 427. The power of Congress under the commerce clause to regulate bills of lading in respect of such shipments is not questioned; and, if it has entered the field of such regulation, the state statute is thereby superseded. The Interstate Commerce Act extends to the plaintiff in error and to the other railroads named in the bill of lading over which the cotton was to -have been transported from Earle, Arkansas, to the port of Brunswick, Georgia, and it also extends to the interstate transportation over the inland route constituting a part of the movement in foreign commerce. § 1 (1), (2) and (3). 41 Stat. 474. Among other things, the Act requires all carriers subject to it to establish and enforce just and reasonable regulations affecting the issuance, form and p. 344substance of bills of lading. § 1 (6). 41 Stat. 475. It directs the Interstate Commerce Commission to keep informed as to the manner and method in which the business of carrier is conducted, and “ to execute and enforce the provisions of ” the Act. § 12. 25 Stat. 858. It provides that whenever, after hearing, the commission shall be of opinion that any “ regulation or practice whatsoever ” of the carriers is unjust or unreasonable it may determine and prescribe what is just, fair and reasonable, and may make an order requiring the carriers to observe the regulation or practice prescribed. § 15. 41 Stat. 484. The Act requires a carrier receiving property for transportation from a point in one State to a point in another State or from a point in the United States to a point in an adjacent foreign country to issue bills of lading therefor; and, to some extent, it regulates their provisions affecting the liability of carriers. § 20 (11)—Carmack and Cummins Amendments. 38 Stat. 1197. Section 25, added by the Amendment of February 28, 1920, 41 Stat. 497, was enacted to promote the business of common carriers by water in foreign commerce whose vessels are registered under the laws of the United States; it applies to shipments from points in the United States to non-adjacent foreign countries and requires the commission to do certain things in furtherance and regulation thereof. Subdivision 4 of that section requires a railroad carrier receiving a shipment to be delivered to such a vessel for further transportation to issue a through bill of lading which shall state separately the amount to be paid for railroad transportation, for water transportation and in addition, if any, for port charges. It requires the railroad as a part of its undertaking to deliver the shipment to the vessel and provides that it will not be liable after such delivery. The commission is expressly empowered, in such manner as will preserve for the carrier by water the protection of limited liability provided by law, to p. 345prescribe the form of such bills of lading. The section does not apply to shipments in such commerce where the ocean carriage is by a foreign vessel. The record does not disclose whether the vessel on which the cotton was to have been carried was registered under the laws of the United States; and, in favor of the shippers, we assume it was a foreign vessel.

In No. 367, respondent, February 28, 1917, filed his return of income taxes for 1916 and paid the amount shown due. Later an additional tax was assessed; and, more than five years after the return, the collector sought to enforce payment by distraint. Respondent brought suit to restrain the collection on the ground that it was barred by the limit fixed by § 250 (d), Revenue Act of 1921 (c. 136, 42 Stat. 227, 265), and that respondent had no adequate remedy at law. The district court denied p. 348relief and its decree was affirmed by the Circuit Court of Appeals. 297 Fed. 371. The latter expressed the view that distraint was barred, and held that respondent had an adequate remedy at law. Later the collector enforced payment by distraint.

The part of the subdivision that has a bearing is printed in the margin.1 The clause in controversy is: “ No suit p. 349or proceeding for the collection of any such taxes . . . shall be begun, after the expiration of five years after the date when such return was filed.” Petitioner insists that the word “ proceeding ” refers only to a proceeding in court and means the same as “ suit ”; and that the Act prescribes no limitation against the collection of such taxes by distraint.

He maintains that any ambiguity in the clause under consideration must be resolved in his favor. . Undoubtedly the United States will not be held barred by a general statute of limitation unless, upon a strict construction in its favor, the United States and the claim sought to be enforced fairly may be held to be within the terms and purpose of the statute. Dupont De Nemours & Co, v. Davis, 264 U, S. 456, 462, That rule rests upon p. 350the general principle of policy applicable to all governments that the public interest should not be prejudiced by the default or negligence of public officers. United States v. St. Paul, M. & M. Ry. Co., 247 U. S. 310, 314. The limitation, applies to petitioner and to the claims. It applies to suit; the only question is whether it also bars distraint. The provision is a part of a taxing statute ; and such laws are to be interpreted Uberally in favor of the taxpayers. Eidman n . Martinez, 184 U. S. 578, 583; Shwab v. Doyle, 258 U. S. 529, 536. There has been suggested no principle of public policy or other consideration that furnishes any reasonable support for the setting of a Umitation against only one of the two authorized methods of enforcing collection.

The provision is to be applied in harmony with the intention reasonably to be inferred from its terms and the circumstances of its enactment. Cf. United States v. Oregon Lumber Co., 260 U. S. 290, 299. Prior to the Revenue Act of 1918 there was no limitation against suit to collect income taxes. Section 250(d) of that Act (40 Stat. 1083) required assessment within five years after return, and prohibited the commencement of suit or proceeding to collect such taxes after that period. This bar was held to apply only in respect of taxes for 1918 anddater years. Then § 250(d) of the Act of 1921 made the limitation apply against collection of taxes under all the earlier Acts; and, in pursuance of a legislative purpose to require more prompt action upon the part of the commissioner and coUectors, prescribed the five-year period for determination and assessment of taxes under earlier Acts but allowed only four year as to those for 1921 and succeeding years. The same purpose is shown by the requirement that the commissioner, within one year after request by their personal representatives, shall make assessments on income received by deceased persons. These stricter limitations applicable to taxes for the later p. 351period make against the petitioner’s contention that the Act sets no bar against collection by distraint. A reasonable view of the matter is that it was the intention of Congress by the clause here in question to protect taxpayers against any proceeding whatsoever for the collection of tax claims not made and pressed within five years.