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Veto of a Bill To Supply Deficiency and Supplemental Appropriations.

January 24, 1933

To the House of Representatives:

I return herewith without signature--

H.R. 13975, An Act making appropriations to supply urgent deficiencies in certain appropriations for the fiscal year ending June 30, 1933, and prior fiscal years, to provide supplemental appropriations for the fiscal year ending June 30, 1933, and for other purposes.

I disapprove of the bill with great regret, as the appropriations provided for relief and other purposes are urgently needed, and with the hope that the Congress may early amend the Act.

Attached hereto is the opinion of the Attorney General who has most carefully reviewed the subject.

The difficulty lies not alone in the unconstitutionality of the provisions for legislative determination of individual tax refunds, but the further fact that in the opinion of the Attorney General those provisions invalidate these appropriations themselves.

I recognize that refunds of taxes overpaid present a subject of constant discussion and that there is a natural desire for assurance that such refunds are correctly made. Such an assurance would, I am sure, be a relief to administrative officers having to deal with this difficult subject. I would suggest, however, that if the Congress deems the system provided by existing laws should be reinforced, it should be accomplished through the creation of additional auditing machinery and not by Congress undertaking executive and administrative functions.


The White House,

January 24, 1933.

Note: The House of Representatives referred the bill to the Appropriations Committee.

Attorney General William D. Mitchell's letter, dated January 24, 1933, follows: Sir:

I have your letter of January 23rd, relating to the urgent deficiency bill, H. R. 13975, recently passed by both Houses of Congress and submitted for your approval.

You call particular attention to the paragraph appropriating a lump sum for refunding taxes illegally or erroneously collected, and ask for my comment upon it. It is as follows:


Refunding taxes illegally or erroneously collected: For refunding taxes illegally or erroneously collected, as provided by law, including the payment of claims for the fiscal year 1933 and prior years, $28,000,000: Provided, That a report shah be made to Congress by internal-revenue districts and alphabetically arranged of all disbursements hereunder in excess of $500 as required by section 3 of the Act of May 29, 1928 (U. S.C., Supp. V, title 26, sec. 149), including the names of all persons and corporations to whom such payments are made, together with the amount paid to each: Provided, That no refund or credit of any income or profits, estate, or gift tax in excess of $20,000 shall be made after the enactment of this Act until a report thereof giving the name of the individual, trust, estate, partnership, company, or corporation to whom the refund or credit is to be made, the amount of such refund or credit, and the facts in connection therewith are submitted by the Commissioner of Internal Revenue to the Joint Committee on Internal Revenue Taxation and action thereon taken by said committee. The said committee or its duly authorized staff shall have full access to all the papers and shall examine into and pass upon the case, and no refund or credit in excess of $20,000 shall be made until the Joint Committee on Internal Revenue Taxation shall have so passed on such refund or credit, fixed the amount thereof, and made its report to the Commissioner of Internal Revenue; and no refund or credit in excess of $20,000 shall be made without the approval of said committee. This proviso shall not apply to refunds or credits made pursuant to a judgment of a court having jurisdiction over the subject matter, or a decision of the United States Board of Tax Appeals, which has become final."

Question arises at once whether the proviso authorizing the Joint Committee of Congress to make the final decision as to whether refunds over $20,000 shall be made and to fix the amount thereof presents constitutional objections.

By other existing legislation the Congress has set up in the Treasury Department an administrative system of examining into claims for refund of taxes alleged to have been erroneously or illegally collected, and authorizing the administrative allowance of such claims, and the system in force involves the appropriation from time to time of lump sums, not for any particular claim, but available generally for administrative repayment of taxes determined in the Treasury to have been illegally or erroneously collected. This legislation establishes administrative or executive functions, and the process of applying and executing the law involves administrative and executive action.

Under the proviso in the urgent deficiency bill the action of the executive officers in the Treasury Department charged with the duty of executing the law respecting refunds, would be subject to review by a joint committee of the Congress, and the members of that committee would exercise final authority and make the decisions as to whether refund should be made and in what amounts. The Constitution of the United States divides the functions of the Government into three great departments, the legislative, the executive, and the judicial, and establishes the principle that they shall be kept separate and that neither the legislative, executive, nor judicial branch may exercise functions belonging to the others. The proviso in the urgent deficiency bill violates this constitutional principle. It attempts to entrust to members of the legislative branch, acting ex officio, executive functions in the execution of the law, and it attempts to give to a committee of the legislative branch power to approve or disapprove executive acts. If the functions to be performed by the joint committee are administrative or executive in character, the bill is subject to the further objection that the selection of the personnel by the Congress is an infringement of the constitutional function of the executive to make appointments and is an attempt by the legislative branch to make appointments of officials performing administrative or executive functions.

If the process of examination and allowance of a claim for refund of taxes may be viewed as a legislative function, the proviso in this bill is equally obnoxious to the Constitution because a joint committee has not power to legislate, and legislative power cannot be delegated to it. These principles are settled by many decisions of the Supreme Court of the United States, to only a few of which need reference be made. In United States v. Ferreira, 13 Howard 39, 46-51, the Court considered a statute purporting to authorize a District Judge to pass upon claims arising under the Spanish Treaty, but which provided that the claims should only be paid by the Secretary of the Treasury if deemed by him to be just and equitable. The Court held that the functions of the judge under this statute were not judicial and could not be conferred upon him as a judge, but that he might be considered as acting as a commissioner, and said:

"The duties to be performed are entirely alien to the legitimate functions of a judge or court of justice, and have no analogy to the general or special powers ordinarily and legally conferred on judges or courts to secure the due administration of the laws. And, if they are to be regarded as officers, holding offices under the government, the power of appointment is in the President, by and with the advice and consent of the senate; and Congress could not by law, designate the persons to fill these offices. And if this be the construction of the Constitution, then as the judge designated could not act in a judicial character as a court, nor as a commissioner, because he was not appointed by the President, everything that has been done under the acts of 1823, and 1834, and 1849, would be void .... "

In Kilbourn v. Thompson, 103 U.S. 168, the Court held that duties which the House of Representatives attempted to confer upon a committee were judicial in character and not susceptible of exercise by the legislative department. See also Crenshaw v. United States, 134, U.S. 99; Myers v. United States, 272 U.S. 52. A very recent case is that of Springer v. Philippine Islands, 277 U.S. 189. The Organic Act, under which the Philippine Government operates, provides for separation of legislative, executive, and judicial functions, as does the Constitution of the United States, and vests in the executive the powers of appointment of executive officers. The Philippine legislature passed an act attempting to create a board of control, consisting of The Governor General, the President of the Senate, and the Speaker of the House of Representatives, to vote the stock in and have a voice in the management of the Philippine National Bank and other governmental corporations. The Court said:

"Legislative power, as distinguished from executive power, is the authority to make laws, but not to enforce them or appoint the agents charged with the duty of such enforcement. The latter are executive functions ....

"Not having the power of appointment unless expressly granted or incidental to its powers, the legislature cannot engraft executive duties upon a legislative office, since that would be to usurp the power of appointment by indirection; though the case might be different if the additional duties were devolved upon an appointee of the executive."

It held the act of the legislature violative of the Organic Act.

There are various ways in which refunds of illegally collected taxes may be provided for. Congress, if it chooses, acting under the power to make appropriations from the public Treasury and the power to maintain the immunity of the Federal Government from suit in the courts, may withhold the power to make refunds from the executive branch and from the courts, and itself deal with the subject by the method of making specific appropriations from time to time to pay specific claims which it deems just. Dealt with in that manner, the authorization of the refund constitutes a legislative act. If Congress confers jurisdiction on the courts to examine such claims and award judgment against the Government, the function of allowance becomes a judicial act although there still remains the necessity for legislative action in the form of appropriations to pay the judgments. Where, as under existing law, machinery has been set up in the Treasury Department for administrative examination and allowance of these claims by executive officers, the function of executing this law becomes an executive one and must be left with executive officers appointed, not by the legislative branch, but by the executive.

It will be seen, therefore, that the matter of making refunds may involve either legislative, executive, or judicial functions, depending on the system adopted, but in the present case it is unnecessary to make any close analysis of the nature of the function of refunding illegally collected taxes. If it be an executive or judicial function, clearly a joint committee of the Congress may not execute it, and if it is a legislative function it is equally clear that a joint committee may not perform it. Action by a committee is not legislation and a committee of the Congress cannot legislate.

If the process attempted by this bill were reversed and a joint committee were required merely to examine these claims and make recommendations to the Congress as to their allowance, to be followed by appropriate legislative action in the form of a statute for their payment, passed in the usual way and approved by the President or passed over his veto, a different situation would exist.

This proviso cannot be sustained on the theory that it is a proper condition attached to an appropriation. Congress holds the purse-strings and it may grant or withhold appropriations as it chooses, and when making an appropriation may direct the purposes to which the appropriation shall be devoted and impose conditions in respect to its use, provided always that the conditions do not require operation of the Government in a way forbidden by the Constitution. Congress may not, by conditions attached to appropriations, provide for a discharge of the functions of Government in a manner not authorized by the Constitution. If such a practice were permissible, Congress could subvert the Constitution. It might make appropriations on condition that the executive department abrogate its functions. It might, for example, appropriate money for the War Department on condition that the direction of military operations should be conducted by some person designated by the Congress, thus requiring the President to abdicate his functions as Commander-in-Chief. During the administration of President Buchanan, a bill provided for an appropriation for the completion of the Washington Aqueduct and prescribed that its expenditure should be under the superintendence of Captain Meigs. In a special message to the House (June 25, 1860) the President said:

"I deemed it impossible that Congress could have intended to interfere with the clear right of the President to command the Army and to order its officers to any duty he might deem most expedient for the public interest. If they could withdraw an officer from the command of the President and select him for the performance of an executive duty, they might upon the same principle annex to an appropriation to carry on a war a condition requiring it not to be used for the defense of the country unless a particular person of its own selection should command the Army."

Attempting to have committees of Congress approve executive acts, or executive administrative functions, or participate in the execution of laws is not a new idea. Carried to its logical conclusion it would enable Congress, through committees or persons selected by it, gradually to take over all executive functions or at least exercise a veto power upon executive action, not by legislation withdrawing authority, but by the action of committees, or of either House acting separately from the other. On May 13, 1920, President Wilson vetoed an appropriation act on the ground that it contained a proviso that certain documents should not be printed by any executive branch or officer except with the approval of the Joint Committee on Printing. Among other things, he said:

"The Congress and the Executive should function within their respective spheres. Otherwise efficient and responsible management will be impossible and progress impeded by wasteful forces of disorganization and obstruction. The Congress has the power and the right to grant or deny an appropriation, or to enact or refuse to enact a law; but once an appropriation is made or a law is passed, the appropriation should be administered or the law executed by the executive branch of the Government. In no other way can the Government be efficiently managed and responsibility definitely fixed. The Congress has the right to confer upon its committees full authority for purposes of investigation and the accumulation of information for its guidance, but I do not concede the right, and certainly not the wisdom, of the Congress endowing a committee of either House or a joint committee of both Houses with power to prescribe 'regulations' under which executive departments may operate ....

"I regard the provision in question as an invasion of the province of the Executive and calculated to result in unwarranted interferences in the processes of good government, producing confusion, irritation, and distrust. The proposal assumes significance as an outstanding illustration of a growing tendency which I am sure is not fully realized by the Congress itself and certainly not by the people of the country."

President Wilson then went on to call attention to other violations of the same principle and referred to the law creating the Public Buildings Commission, the membership of which included two senators and two representatives, acting ex officio-the senators appointed by the President of the Senate, and the representatives appointed by the Speaker of the House--and to the fact that, so constituted, the Commission was exercising administrative functions and that its members were performing executive acts; that members of Congress, as such, were engaged in executive functions as members of the Commission; and that the Congress under this statute was making appointments to executive offices.

In the Act of June 30, 1932, making an appropriation for the legislative branch of the Government for the fiscal year ending June 30, 1933, and for other purposes, and with a view to economy in the operation of the Government, the Congress gave authority to the President, by executive order to consolidate, redistribute, and transfer various government agencies and functions; and established a general formula for his guidance. By section 407 it was provided that the executive order should be transmitted to the Congress in session and should not become effective until after the expiration of sixty days from such transmission and that "if either branch of Congress within such sixty calendar days shall pass a resolution disapproving of such executive order or any part thereof, such executive order shall become null and void to the extent of such disapproval." It must be assumed that the functions of the President under this Act were executive in their nature or they could not have been constitutionally conferred upon him, and so there was set up a method by which one House of Congress might disapprove executive action. No one would question the power of Congress to provide for delay in the execution of such an administrative order, or its power to withdraw the authority to make the order, provided the withdrawal takes the form of legislation. The attempt to give to either House of Congress, by action which is not legislation, power to disapprove administrative acts, raises a grave question as to the validity of the entire provision in the Act of June 30, 1932, for executive reorganization of governmental functions.

Since the organization of the Government, Presidents have felt bound to insist upon the maintenance of the executive functions unimpaired by legislative encroachment, just as the legislative branch has felt bound to resist interferences with its power by the executive. To acquiesce in legislation having a tendency to encroach upon the executive authority results in establishing dangerous precedents. The first presidential defense of the integrity of the powers of the executive under the Constitution was made by Washington himself when the House of Representatives insisted on being recognized as part of the treaty making power, and in his message then to Congress he said:

"It is essential to the due administration of the Government that the boundaries fixed by the Constitution between the different departments should be preserved;" From that day to this the Presidents, with very few exceptions, have felt the necessity for refusing to overlook encroachments upon the executive power. John Adams, Jefferson, Madison, John Quincy Adams, in succession had occasion to resist interference with the executive power. On at least six occasions President Jackson found it necessary to resist encroachment. On one occasion he said:

"I deem it an imperative duty to maintain the supremacy of that sacred instrument (the Constitution) and the immunities of the department entrusted to my care."

In 1877 President Grant vetoed an act of Congress which attempted to make the Clerk of the House of Representatives an officer to perform executive duties, on the ground that it was an encroachment upon the constitutional right of the executive branch to appoint officers of the United States. President Hayes vetoed appropriation bills containing riders attempting to interfere with the President's power as Commander-in-Chief of the Army. On June 4, 1920, President Wilson vetoed the Budget Bill which created the office of Comptroller General because it provided that the incumbent could only be removed by a joint resolution of Congress. In his message he said:

"I am convinced that the Congress is without constitutional power to limit the appointing power and its incident, the power of removal derived from the Constitution .... I can find in the Constitution no warrant for the exercise of this power by the Congress .... Regarding as I do the power of removal from office as an essential incident to the appointing power, I can not escape the conclusion that the vesting of this power of removal in the Congress is unconstitutional .... " A similar bill was enacted and approved in the next administration but the soundness of President Wilson's views on the constitutional question was subsequently established by the decision of the Supreme Court of the United States in Myers v. United States, 272 U.S. 52.

Many other instances might be referred to. An excellent historical account of these will be found in an address delivered by the Honorable Charles Warren on Presidential Declarations of Independence (Boston University Law Review, Volume X, January, 1930, Number 1). Each President has felt it his duty to pass the executive authority on to his successor, unimpaired by the adoption of dangerous precedents. You have not hesitated to act when occasion has arisen (United States v. George Otis Smith, 286 U.S. 6, 28 Note 3). The proviso in this deficiency bill may not be important in itself, but the principle at stake is vital. Encroachments on the executive authority are not likely to be deliberate but that very fact makes them all the more insidious. In the present instance there is no basis for suggesting that the Congress intentionally transgressed constitutional limitations. One House did not consider the point, and in the other it is not clear that any definite conclusion was reached respecting it.

During the Senate's consideration of this urgent deficiency bill, the constitutional objections to the proviso relating to tax refunds do not seem to have been mentioned. When the proviso was considered in the House, constitutional objections to it were presented in an able address by Congressman Wood whose views were supported by other members of the House, learned in constitutional law, and no serious attempt in debate appears to have been made to controvert the arguments thus advanced.

There is one other factor in the case bearing on the disposition you may make of this measure. If this bill is spread upon the statute books through receiving your approval of being passed over a veto, not only would the proviso respecting the power of the joint committee to authorize refunds be void, but the deficiency appropriation for payment of refunds would fall with it. Whenever a provision in a statute is found invalid, question arises as to whether the whole act falls or only the objectionable section. This depends on whether the unconstitutional provision is separable from the rest of the Act and in deciding that question the courts endeavor to ascertain from the terms of the Act and its subject matter whether Congress would have intended the balance of the Act to stand, without the obnoxious provision. Dorchy v. Kansas, 264, U.S. 286, 289. Under these principles the provision in this bill appropriating money for refund of taxes, together with the proviso respecting powers of the joint committee, are clearly separable from the rest of the Act, but not from each other. In my opinion the appropriation for tax refunds and the proviso attached to it must stand or fall together. Who can say that Congress would have made this appropriation without the proviso? I have no basis for such an assumption. If the Congress makes an appropriation attaching to it an invalid condition, we would hardly be justified in rejecting the condition as void and treating the appropriation as available. The safe course is to treat the two as inseparable.

The result is that if this bill should take the form of a statute the Secretary of the Treasury would be confronted with the fact that the appropriation for tax refunds, as well as the proviso attached to it, is void, and would not be available for payment of refunds, with the result that if no prior appropriations are available, payment of all refunds of any amount, would stop until further appropriations for that purpose were made by the Congress. This would be unfortunate, in that it would result in delay, and injustice to taxpayers, and the accumulation of interest charges against the Government.

It affords an additional reason why this measure may well be returned to the Congress without your approval to give that body the opportunity to eliminate the proviso, or if it be dissatisfied with the existing machinery it has established by law for the making of tax refunds, to substitute some other method not open to constitutional objections.
Attorney General

[The President, The White House.]

Herbert Hoover, Veto of a Bill To Supply Deficiency and Supplemental Appropriations. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/208048

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