in due process; (4) that the privilege granted to individuals of deducting dividends for purposes of normal tax was a discrimination against corporations; (5) that the deduction of $3,000 or $4,000 to those who pay the nor mal tax and not to those with incomes over $20,000 was wanting in due process; (6) that the discrimination be tween married and single people and between husbands and wives living together and husbands and wives not living together was wanting in due process; (7) that the law involved a discrimination and want of due process in favor of house owners living in their own houses who were not compelled to estimate the rental value against those who paid rent and were not allowed to deduct it and in favor of farmers who might deduct products of the farm used by them in sustaining their famiiles whereas family expenses might not, as a rule, be deducted. In another case 18 it was held there exists a substantial difference between the carrying on of business by corporations and the same business by a private firm or individual, and the 1909 Law was, therefore, not unconstitutional on the ground of arbitrary discrimination. In another case the court held that the fact that the tax was levied on the income of mining companies without making adequate allowance for depletion did not amount to the taking of property without due process of law.19 In a case 20 arising under the law taxing foreign-built yachts it was stated by the court that the distinction between things foreign and things domestic, and their use, was apparent on the face of things and to tax them separately was not an arbitrary discrimination.

Uniformity. The Constitution exacts only a geographical uniformity of taxes and a lack of uniformity in other respects does not make the statute invalid.21

18 Flint v. Stone-Tracy Co., 220 U. S. 107.

19 Stanton v. Baltic Mining Co., 240 U. S. 103.

20 Billings v. U. S., 232 U. S. 261.

21 Knowlton v. Moore, 178 U. S. 41; Patton v. Brady, 184 U. S.

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Exempting Certain Corporations from Tax. The provision of the Sixteenth Amendment authorizing a tax on incomes from whatever source derived" does not require that the tax must be imposed upon all sources of income nor does it exclude the power to exempt certain classes of corporation.22

Retroactive Features. The right of Congress to impose a tax by a new statute, although the measure of the tax is governed by the income of the past year cannot be doubted; much less can it be doubted that Congress may impose a tax on income of the current year, though part of that year has elapsed when the statute is passed.23 A statute imposing a tax upon all income of a previous year, although one tax on that income has already been paid, is valid.24

608; Flint v. Stone-Tracy Co., 220 U. S. 107; Billings v. U. S., 232 U. S. 261; Brushaber v. Union Pacific R. R. Co., 240 U. S. 1.

22 Brushaber v. Union Pacific R. R. Co., 240 U. S. 1.

23 Brushaber v. Union Pacific R. R. Co., 240 U. S. 1; Billings v. U. S., 232 U. S. 261.

24 Stockdale v. Insurance Companies, 20 Wall. 323.

CHAPTER 43

CONSTRUCTION OF THE LAW

It is beyond the scope of this chapter to discuss at great length the numerous rules of statutory construction. The following paragraphs will indicate briefly rules especially applicable to revenue statutes which may be of assistance in the interpretation of such ambiguities as are encountered in our present system of income, excess profits and other tax laws. Wherever possible the citation of authorities has been confined to cases arising under various revenue laws of the United States.

Although a statute may be construed contrary to its literal meaning when a literal construction would result in an absurdity, inconsistency, or in glaring inequality, and palpable injustice, where its language is susceptible of more reasonable, though perhaps less natural, construction which carries out its spirit rather than letter, it is a wellsettled general rule that a legislative act must be interpreted according to the intention of the legislature apparent upon its face. Construction and interpretation have no place where the language of a statute is unambiguous and its meaning evident.3 Arguments as to the expediency of a tax law or the possible economic mistake or wrong involved

1 Stratton's Independence v. Howbert, 231 U. S. 399; Knowlton v. Moore, 178 U. S. 41, 77; Treat v. White, 181 U. S. 264; Sesnon Co. v. U. S., 182 Fed. 573, writ of certiorari denied 220 U. S. 609.

2 Wilkinson v. Leland, 2 Pet. 627; U. S. v. Union Pacific R. R. Co., 91 U. S. 72.

3 U. S. v. Ninety-Nine Diamonds, 139 Fed. 961, writ of certiorari denied 201 U. S. 645.

4

in the tax imposed thereby or the inequality thereof,5 are beyond judicial cognizance.

To ascertain the intention of the legislature the first resort is to the grammatical sense and the natural, ordinary and familiar meaning of the words employed, and it is particularly true that terms used in statutes describing objects of taxation should be construed according to the popular acceptation of the terms they employ rather than by refined or strained analogies. The presumption is that language has been employed with sufficient precision to disclose the intention of the legislature and unless this presumption is overthrown, nothing remains but to enforce the statute as written.8 If, however, it is apparent on the face of the statute, or from its context, that a term of common use and meaning is intended to bear some other signification, it may be interpreted accordingly. Thus, the word "false" may be construed to mean either incorrect but in good faith 10 or incorrect with fraudulent intent.11 Words having a fixed legal meaning are presumed to have been used in such sense. 12 Commercial and trade terms, which belong exclusively to the vocabulary of merchants and traders or which are shown to have a certain, uniform and general meaning in commerce and trade different from their ordinary meaning, will be interpreted

4 Brushaber v. Union Pacific R. R. Co., 240 U. S. 1.

5 Billings v. U. S., 232 U. S. 261.

6 Treat v. White, 181 U. S. 264; Schriefer v. Wood, 21 Fed. Cas. No. 12,481; U. S. v. Isham, 17 Wall. 496; U. S. v. Chesbrough, 176 Fed. 778; Seldon v. Equitable Trust Co., 8 Fed. Cas. No. 4,508, affirmed 94 U. S. 419.

7 Nix v. Hedden, 39 Fed. 109, affirmed 149 U. S. 304; De Ganay v. Lederer, 239 Fed. 568.

8 Mannington v. Hocking Valley R. R. Co., 183 Fed. 133.

9 U. S. v. Chesbrough, 176 Fed. 778.

10 National Bank of Commerce v. Allen, 223 Fed. 472; Eliot National Bank v. Gill, 218 Fed. 600.

11 U. S. v. Ninety-Nine Diamonds, 139 Fed. 961.

12 U. S. v. Fidelity Trust Co., 222 U. S. 158; Nat. Life & Accident Ins. Co. v. Craig, 251 Fed. 524.

F. T.-43

accordingly.13 Generally, a descriptive trade term used in the act will be given the special meaning attaching to it at the time the act was passed,14 but in some cases a later and broader meaning may be adopted if warranted by commercial usage and the general language of the statute.15

General terms following special terms are, as a rule, limited in scope and meaning to the same general class as the special terms; in other words, the particular words are presumed to describe certain species and the general words to be used to include other species of the same genus.16 But this is only a rule of construction to aid in arriving at the real legislative intent. It is not a cast-iron rule, overriding all other rules of construction, and it will never be applied to defeat the real purpose of the statute as gathered from its entire context. While the rule is aimed to preserve a meaning for the particular words, it should not be permitted to render meaningless the general words. Therefore, where the particular words exhaust the class, the general words must be construed as embracing something outside of that class. If the particular words exhaust the class, there is nothing ejusdem generis left, and in such case the general words must be given the meaning outside of the class indicated by the particular words, otherwise the meaning of the general words would be sacrificed to preserve the particular words and the rule would defeat its own purpose.17

The general rule of construction applicable to all statutes and written instruments that words should be given the meaning naturally attaching to them from their context

13 Maddock v. Magone, 152 U. S. 368; Sonn v. Magone, 159 U. S. 417.

14 Dennison Mfg. Co. v. U. S., 72 Fed. 258; Rossman v. Hedden, 145 U. S. 561; Hedden v. Richard, 149 U. S. 346; Mutual Benefit Ins. Co. v. Herold, 198 Fed. 199, affirmed 201 Fed. 918.

15 Pickhardt v. Merritt, 132 U. S. 252; Newman v. Arthur, 109 U. S.

132.

16 U. S. v. 1,150%1⁄2 pounds of Celluloid, 82 Fed. 627; Reiche v. Smythe, 13 Wall. 162; U. S. v. Weise, 28 Fed. Cas. No. 16,659. 17 U. S. v. Mescall, 215 U. S. 26.