Opinion of the court.

to the collection of the bills and the employment of attor neys, they may do it by increasing the price to be paid for the work. Instead of favoring the contractors to the extent of $35,000, as is proposed in the present instance, they may give them unlimited favors. This idea is in hostility to the entire scheme of advertising for bids, contracting with the lowest bidder, fixing the amount of the debt and lien of each lot-owner. We think the contract as made must be abided by. It must be performed according to its terms.

2dly. The case fails to show any variation of the contract by authority of the city. No act of the common council appears giving sanction to the changes alleged to have been made. "The mayor and the city attorney," one of the attor neys employed testifies," were apprised of the extraordinary efforts we were making to effect collections without suit, and approved the same and urged us to make all possible efforts. My recollection is that the city attorney advised the same course." The city engineer, Mr. Ballard and Mr. Brown, all testify on this subject. In no instance is there any other evidence of authority than that the mayor and city attorney urged them to make great efforts in the collections, and advised them to retain counsel in looking up titles and to aid in bringing suits. It is not suggested even that the finance committee, which was the agent of the city in making the contract, advised or assented to any changé in its terms. We think that a contract entered into with the solemnities observed in the present instance cannot be modified upon the evidence of authority here referred to. There is no evidence that the city ever assented to the change.*

VII. It is also alleged as error that before the cause was ready for a decree, and without settling the rights of the parties, the court referred it to a master for an account, and the master took and stated the account under his own view of the law and the facts, and virtually decided the case instead of the court.

* Carroll v. St. Louis, 12 Missouri, 444; Butler v. Charlestown, 7 Gray, 12; Clough v. Hart, 11 American Law Register (N. S.), 95; Halstead v. Mayor of New York, 3 Comstock, 430.

Opinion of Field and Bradley, JJ., concurring in the judgment.

In November, 1870, Messrs. Brown & Co. moved for an order of reference upon the notice already set out [see supra, p. 297].

No exception was taken to the order of reference. No exception was taken before the master. All the evidence was presented that was desired by either party. Full justice in this respect was attained, and we are of the opinion that this allegation of error is not well grounded.*

The result of our opinion is that the judgment is correct, except as to the items herein before discussed-of $89,608 damages for the want of a sinking fund, of $10,000 for the services of attorneys, and $25,000 for the plaintiff's services in collecting the bills for paving. As to these there was

error.

DECREE REVERSED, and the case remitted to the Circuit Court with directions to enter a decree ir

ACCORDANCE WITH THESE VIEWS.

Justices FIELD and BRADLEY concurred in the judg ment of reversal, but dissented from the opinion, they holding that the contractors ought to be charged with the full amount of bonds received by them, inasmuch as the city of Memphis had no authority to sell its bonds for less than their par value.

* Field v. Holland, 6 Cranch, 25; Story v. Livingston, 18 Peters, 859; 2 Smith's Chancery Practice, 372; Troy Iron and Nail Factory v. Corning, 6 Blatchford, 328.

Statement of the case.

STOCKDALE v. THE INSURANCE COMPANIES.

1. The cases of Barnes v. The Railroad (17 Wallace, 294), and United States v. Railroad Company (Ib. 322), considered and compared.

2. Held, that whether the tax on dividends arising from the earnings of corporations for the year 1869 be viewed as a tax on the shareholder or on the corporation, it was intended to tax the earnings for that year by the section which limited the duration of the income tax.

3. Sce seventeen of the act of July 14th, 1870. construing certain sections of the Internal Revenue law of 1864 to extend the tax to the year 1870 is valid, because it is not an attempt to exercise judicial power by construing a statute for the court, but is a mode of continuing or reviving a tax which might have been supposed to have expired.

4. As this merely imposed a tax retrospectively, it was within the legisla tive power of Congress, and the case differs from an effort to invade private rights by construing a law affecting those rights, over which Congress had no power whatever.

ERROR to the Circuit Court for the District of Louisiana; the case being thus:

The 116th section of the act of June 30th, 1864, as amended by the 13th section of the act of March 2d, 1867,*

enacts:

"SECTION 116. That there shall be levied, collected, and paid annually upon the gains, profits, and income of every person residing in the United States, or of any citizen of the United States residing abroad, whether derived from any kind of property, rents, interest, dividends, or salaries, or from any profession, trade, employment, or vocation, carried on in the United States or elsewhere, or from any other source whatever, a tax of five per centum on the amount so derived over $1000, and a like tax shall be levied, collected, and paid annually upon the gains, profits, and income of every business, trade, or profession carried on in the United States by persons residing without the United States, and not citizens thereof. And the tax herein provided for shall be assessed, collected, and paid upon the gains, profits, and income for the year ending the 31st day of December next preceding the time for levying, collecting, and paying said tax."

*13 Stat. at Large, 281; 14 Id. 477.

Statement of the case.

The 117th section of the same act, as amended in the same way, required that there should be included, inter alia, in the estimate of gains, profits, and income, which the act made it obligatory on the taxpayer to return, the share of any person of the gains and profits of all companies, whether incorporated or partnership, who would be entitled to the same if divided, whether divided or otherwise,

Except the amount of income received from institutions or corporations whose officers, as required by law, withhold a per centum of the dividends made by such institutions, and pay the same to the officer authorized to receive the same, and except that portion of the salary or pay received for services in the civil, military, or naval, or other service of the United States, including senators, representatives, and delegates in Congress, from which the tax has been deducted."

The 118th section related to the manner of the party's making and the assessor's obtaining returns of that portion of the taxpayer's income which was to be paid by such taxpayer directly.

The 119th section, as amended by the already-mentioned section of the act of March 2d, 1867,* enacts:

"SECTION 119. That the taxes on incomes herein imposed shall be levied on the 1st day of March, and be due and payable on or before the 30th day of April in each year, until and including the year 1870, and no longer."

The 120th section, as amended by the 9th section of the act of July 13th, 1866,† enacts:

"That there shall be levied and collected a tax of five per centum on all dividends thereafter declared due, whenever the same shall be payable to stockholders, policy-holders, or depositors or parties whatsoever, as part of the earnings, income, or gains of any bank, trust company, savings institution, and of any fire, marine, life, or inland insurance company, in the United States, and on all undistributed sums, or sums made or

* 18 Stat. at Large, 283; 14 Id. 480.

† 13 Ib. 283; 14 Id. 188.

Statement of the case.

added during the year to their surplus or contingent funds. And said banks, trust companies, savings institutions, and insurance companies shall pay the said tax, and are hereby authorized to deduct and withhold from all payments made on account of any dividends or sums of money that may be due and payable as aforesaid, the said tax of five per centum. And a list or return shall be made and rendered to the assessor. And for any default in the making or rendering of such list or return, with such declaration annexed, the bank, trust company, savings institution, or insurance company making such default, shall forfeit as a penalty the sum of $1000."

The 121st section enacted that any bank of issue which should not make a dividend or add to its surplus fund as often as once in six months should make a return to the assessor of the district, where it was, of its profits during every six months preceding the 1st of January and July, &c.

The 122d section, as amended by the 9th section of the act of July 13th, 1866, after enacting that any railroad, canal, turnpike, canal navigation, or slack-water company, indebted by bonds &c., upon which interest is to be paid, or any such company that may have declared any dividend, due or payable to its stockholders, as part of the earnings, profits, income, or gains of such company, and all profits of such company carried to the account of any fund, or used for construction, shall be subject to and pay a tax of five per centum on the amount of all such interest, dividends, or profits, whenever the same shall be payable, proceeds:

"And said companies are hereby authorized to deduct and withhold from all payments on account of any interest,. . . and dividends, due and payable as aforesaid, the tax of five per centum; and the payment of the amount of said tax so deducted from the interest, or coupons, or dividends, and certified by the president or treasurer of said company, shall discharge said company."

The 123d section of the same act, as amended by the 13th section of the act of March, 1867, enacted:

"SECTION 128. That there shall be levied, collected, and paid on all salaries of officers, or payments for services to persons, in