Apparently the Tarriff Law passed by the Republicans was not bringing in much revenue, since the primary payee's were now citizens of the Confederate States. To suppliment the lost revenue the U.S. Congress created a new tax called "An Act for the Collection of direct taxes in Insurrectionary Districts within the United States and for other purposes." and placed a direct land tax on all property within a seceded State- to be collected when possible. When the tax agents came and assessed the tax the land ownere had only several weeks to pay or pay the fine or lose the property.
From the American Law Review, Vol. II, 1867-68.
"The question of the validity of sales of land under the Act of Congress of June 7, 1862, entitled " An act to provide for the collection of direct taxes in insurrectionary districts within the United States, and for other purposes," is of so novel a character, and its determination affects the title to so large an amount of property, that, notwithstanding our limited space, we insert the following abstract of the cases of Partner v. Cazenove, Bennett v. Hunter, and Martin v. Snowden, heard together and decided by the Supreme Court of Appeals of Virginia, January term, 1868.
These suits were brought to recover lands which were claimed by the defendants under sales made by the commissioners of the direct tax, in pursuance of the Act of Congress passed June 7, 1862, entitled " An act to provide for the collection of direct taxes in insurrectionary districts within the United States, and for other purposes." The first section of this act provides that the lands within the States or parts of States in rebellion shall be charged with their respective portions of the direct tax apportioned to such State, according to the last assessment and valuation of lands under the law of the State. The second section provides that the President shall on or before the 1st July, 1862, declare by proclamation what States are in rebellion, and that the tax, with a penalty of fifty per cent, shall be charged upon the several parcels of land therein, and be a lien thereon without further proceedings. Section third provides that the tax may be paid, and the land thereby discharged, at any time within sixty days after the commissioners shall have fixed the amount of the tax. Section fourth is in the following words: "And be it further enacted, That the title of, in, and to each and every piece or parcel of land upon which said tax has not been paid as above provided, shall thereupon become forfeited to the United States, and upon the gale hereinafter provided for, shall vest in the United States, or in the purchaser at such sale, in fee simple, free and discharged from all prior liens, incumbrances, right, title, and claim whatsoever."
In these cases, the tax was not paid within sixty days, as provided by the third section. The lands were accordingly advertised for sale in pursuance of the seventh section, as amended by the Act of Feb. 6, 1863. After the advertisement and before the sale, payment of the tax, penalty, and costs was, in each case, tendered to the commissioners; but they refused to receive the money, because not tendered by the owner in person.
It was contended by the counsel for the plaintiffs (the original owners), that this tender put an end to the right of the commissioners to make a sale, inasmuch as Congress could not and did not authorize a sale, except for the purpose of obtaining payment of the tax. For the purchaser, it was contended, that, upon the true construction of the fourth section of the Act of June 7, 1862, land upon which the tax was not paid within sixty days after the amount of it was ascertained by the commissioner, became absolutely forfeited to the United States in such manner that the title became lost to the owner, and vested absolutely in the United States; that consequently the land, when sold by the commissioners, was sold as the property of the United States, already acquired by the forfeiture, so that Congress might attach any conditions it might see fit to the privilege of redeeming the land before a sale as well as after a sale, or might refuse the privilege altogether.
It was held by a majority of the court (rives, J., dissenting), that the construction thus contended for in behalf of the purchasers was not sound; that the title of the owner was not divested by the forfeiture, but only by the sale, the land being sold as the property of the delinquent owner, and for the purpose of raising the sum due for the tax, penalty, and costs; that a tender of the money, no matter by whom made, though after the expiration of the sixty days and after advertisement for sale, put an end to the right of the commissioners to sell; that Congress could only authorize a sale as a means, and for the purpose, of collecting the tax, penalty, and costs; and that so much of the seventh section as provided (substantially) that the land, after being advertised, shall be sold, unless redeemed by the owner in person, was unconstitutional.
It was further held by the majority, that the construction of the fourth section contended for by the purchasers would make its provisions unconstitutional. This point was argued in the opinion of the court, delivered by Joynes, J., at great length. It had been contended in the argument, that the Constitution conferred upon Congress the same power to enforce the payment of taxes which the States then possessed and exercised, and a statute of Virginia, said by counsel to have been passed in 1785, was cited to show that the States then exercised the power of forfeiting the land as a means of compelling the payment of the tax due upon it. The court said that it would not follow that Congress possessed the power of forfeiting land, merely because the States exercised it before or after the formation of the Constitution; that Congress could only exercise such powers as were conferred by the Constitution; that the States were restricted only by the Constitution of the United States and by their own constitutions; . "the power belongs to the State, unless it has been denied to it; it does not belong to Congress, unless it has been conferred upon it;" that the only power of Congress in the premises is the power to lay and collect taxes, and to pass all laws necessary and proper to carry that power into execution; that, when the States have exercised the power of forfeiting land, it has not been as a means only of collecting taxes, but, as in Virginia, as a means of quieting titles and settling waste and abandoned lands; that the fprfeiture of the whole land in any case for mere non-payment of the tax is not " appropriate" as a means of collecting the tax, within the case of iTCulloch v. Maryland, i Wheat. 316, and that, on this construction, the evident object of the forfeiture was to get the land, not to get the tax.
It was said that this class of forfeitures rests on the ground of a breach of the implied condition on which every owner holds his land, for the breach of which the State, as the paramount owner, enters, and resumes the title by force of the forfeiture. But this principle cannot avail the United States as to land, the title to which was not derived from them, which is not held under their authority, and as to which they have not, either actually or in theory, the paramount title. If such a power as this had been claimed for the United States at the time the Constitution was adopted, it would have provoked opposition from the States, as touching on their local sovereignty, and their paramount jurisdiction over the lands within their limits.
It was said that an act divesting the title of the owner, by an absolute forfeiture, for the non-payment of the tax, would conflict with the provisions of the fifth article of the amendment to the Constitution, which declares that no person shall be deprived of life, liberty, or property, without due process of law. The court referred to Murray Lessee v. Hoboken Co., 18 How. 272, as deciding that, in order to ascertain whether any particular process or proceeding comes within the description of "due process of law" in this amendment, we must refer to the usages and modes of proceeding which prevailed in England before the emigration of our ancestors, and which they continued to practise, as not unsuited to their condition.
It was said that forfeiture had never been employed in England or in the colonies, as one of the usual and recognized modes of compelling the payment of taxes, and was not therefore "due process of law" for that purpose, according to the principle established by the case in 18 Howard.
It was said that the statute of Virginia cited in the argument was really passed in 1790, and not in 178.5, as supposed by counsel; that, if it had been passed in 1785, it would not have helped the argument; that it was necessary to show, according to the case in 18 Howard, that forfeiture was an accustomed and recognized mode of collecting taxes; and that an exceptional act of a single State, adopting a new system, would afford no support to the argument. The history of this act of Virginia was explained to show that the forfeiture was not imposed as an ordinary means of compelling the payment of taxes, and was imposed after all other means of collecting the tax had failed, when no other property liable for it could be found, when no owner of the land could be found who would pay the tax on it, and that it could hardly apply to any case in which the land had not been wholly abandoned by the owner.
It was said that the case was not altered by the fact that the Act of June 7, 1862, was passed during a period of civil war. Congress claimed that Virginia was still a State of the Union. It asserted that claim by the Act of Aug. 5, 1861, imposing the tax, and also by the Act of June 7, 1862, providing means for its collection. Congress was exercising a power given by the Constitution, and could only exercise it in conformity with the Constitution. The power to levy taxes, and the power to provide the means of collecting taxes, resulted from the Constitution, and the Constitution was the same in time of civil war as in time of peace; and the language of the court in Ex parte Milligan, 4 Wallace, 120, was quoted. ,
It was said that this forfeiture could not be sustained as a forfeiture for crime. It did not come within the principle of forfeiture under the revenue and navigation acts, where the thing forfeited is the instrument of an offence or the fruit of an offence, and itself in some sort the offender. Nor can it be held that Congress designed this forfeiture as a punishment for persons engaged in the Rebellion. It provided by the Acts of Aug. 6, 1861, July 17, 1862, and March 13, 1863, for the confiscation of property in certain cases arising out of the Rebellion; it could not be supposed that it was designed by the Act of June 7, 1862, to establish another system of confiscation covertly, under the disguise of a system for the collection of taxes, and one that would embrace those who were innocent, as well as those who were guilty, of participation in the Rebellion. Besides, on this view, the act would be, in effect, a declaration that the non-payment of the tax should be taken as sufficient evidence of participation in the Rebellion, and a legislative conviction and punishment, accordingly, of all who should fail to pay. This would be in violation of the provision of the Constitution which inhibits Congress from passing a bill of attainder, as expounded in Oummings v. Missouri, 4 Wallace, 277."