From the Mind of Abouna: TUESDAY LESSONS IN CIVICS-#19

LESSONS IN CIVICS & THE CONSTITUTION – M:

Part B:

Erie Railroad v. Tompkins, 304 U.S. 64 (1938)

To find a uniform rule the Court looked to the Federal Law Merchant – “Federal Courts have made similar decisions for themselves as to what the controlling rule is to be in other cases where the United States is a party issued by the United States.” “If an issue is controlled by Federal Common Law, this binding on both State and Federal courts. A case arising under Federal Common Law is a Federal question case, and is within the original jurisdiction of the Federal courts as such…”

It is often said that the Erie doctrine applies only in cases in which jurisdiction is based on diversity of citizenship. Indeed in an action for wrongful death caused by a maritime tort committed on navigable waters, the Court curtly dismissed Erie as “irrelevant,” since the district court was exercising its admiralty jurisdiction, even though it was enforcing a state created right.

“Despite repeated statements to the contrary, it is the source of the right sued upon, and not the ground on which federal jurisdiction is founded, which determines the governing law.” Obviously, the principal character Judge Friendly was referring to is the Admiral himself – enlarging his powers and jurisdiction as a result of the “public policy” of HJR-192 - - that being perpetual debt and limited liability for payment of debt under the Federal Law Merchant and the Law of Admiralty because of subject matter and nature of the cause. Victory Tax Act (1942)

It was well established, prior to the Erie decision, by many court decisions that wages were not income within the meaning of the 16^th Amendment. The Victory Tax Act was passed by congress in 1942, as an emergency war measure, authorizing income tax on wages. This act was to self-destruct, and did two years from its enactment.

QUESTION: It is common knowledge that “income taxes” on labor have continued to be collected since the expiration of the Victory Tax Act in 1944. What is the legal basis for a so-called “income tax on wages since 1944? The facts clearly show that it is NOT an income tax on wages, but, instead is an interest or premium payment to the maritime lender, the Federal Reserve. The 16^th Amendment does not apply to the Feds in this case - - just as Article I, Section 10, Clause 1, does not apply to the States! United States v. South-Eastern Underwriters Association, 322 U.S. 533, (1944).

In 1944, the U.S. Supreme Court decided the case of U.S. v. South-Eastern Underwriters Association holding insurance to be inter-state commerce. “The District Court takes judicial notice that, under a recent decision of the Supreme Court, insurance is now interstate commerce within the commerce clause.” McCarren Act (1945).

The McCarren Act was enacted by Congress in 1945, declaring “that the continued regulation and taxation by the several States of the business of insurance is in the public interest and that silence on the part of congress shall not be construed to impose any barrier to the regulation or taxation of such businesses by the several States.”

Beginning in 1963, the words “redeemable in lawful money” and “will pay to the bearer on demand” were removed from future issues of Federal Reserve Notes: further reflecting the public policy stated in HJR-192. And oddly enough, on October 28, 1977, HJR-192 was quietly repealed by public law 95-147. The joint resolution entitled “Joint resolution to assure uniform value to the coins and currencies of the United States” approved June 5, 1933 (31 U.S.C. 463), shall not apply to obligations issued on or after the date of enactment of this section.

The reason for the repeal of HJR-192 isn’t known exactly. After 44 years of unchallenged implementation, this public policy is clearly established by custom, usage and participation in the credit system by the American public. Those of us operating on the privilege of limited liability, via the public credit, are still bound by the rules of the giver of the privilege.

Next Week, October 2^nd, I will cover the Federal Reserve