Evening star., 1935-09-16
.GUFFEy ACT VOID,
WOOD ASSERTS AS
COURT TEST OPENS
U. S. to Reply That Suit Is
Premature, Fighting
Injunction.
TAX A PENALTY LEVY,
CARTER COUNSEL SAYS
Upholding Statute Would Give
Congress Too Broad Powers,
Attorney Holds

If the Guffey coal act is held valid,
Congress, without a change in the
Constitution, could transform this
Nation into a national socialistic state"
Frederick H. Wood. New York attor-
ney, charged today, as the first legal
test of this latest New Deal measure
got under way in District Supreme
Court
Wood. the attorney who successfully
argued the Schechter N. r. A. case
before the Supreme Court, is repre-
senting James Walter Carter, presi-
dent Of the Carter Coal Co. of this
city. He asked Justice Daniel w.
O'Donoghue to grant temporary in
junction preventing application Of the
act to the Carter company.
AS the hearing began In court
room crowded with Government ON
! Gals, Wood launched a vigorous at
tack on the constitutionality Of the
| Guffey act. He based his argument
on two principal grounds:
! First, that the IS per cent gross tax
provided in the act is. in fact, not a
true tax, but penalty for non-com-
pliance, and cannot be justified as an
exercise Of the Governments taxing
power.
Cites Schecter Ruling.
Second, the act cannot be upheld as
a proper regulation of interstate COM
merce. The Schechter case. he said,
definitely settled the point that pro-
duction is not commerce and cannot
be regulated by the Federal Govern
ment under the interstate commerce
clause of the Constitution.
Meanwhile. Assistant Attorney Gen.
eral John Dickinson sat at the counsel
table waiting to present the Govern
ment's answer, which avoids constitu-
| tional issues. merely contending the
suit is premature and a temporary in
| junction is not necessary at this time.
Referring to remarks President
Roosevelt made after the Supreme
Courts decision in the Schecter case.
invalidating N. r. A, Wood said that
decision does not go back to the
horse and buggy days but was fore
shadowed by every Supreme Court de-
cision having to do with the interstate
commerce clause" Wood contended
he had only to show there was rea-
sonable doubt as to the constitution
atty of the Guffey act TO support his
plea for a temporary injunction.
Holds Act Invalid.
But on its face. this act indubitably
| In ehNYffod
In support of his argument that
the Guffey act cannot be supported
as an exercise Of the taxing power,
Wood cited the child labor case ann
Chicago Board of Trade case, in both
of which the Supreme Court held So
called penalty taxes unconstitutional.
Recognizing its limitations under
the commerce clause and the NTH
amendment, Congress did not attempt
directly to impose regulations on the
coal industry. but sought to coerce
coal producers to surrender their con-
stitutional rights by means of a con-
fiscatory tax" he declared. Pro
ducers' profits never have amounted
to Is per cent of their gross sales,
and the Carter company has not made
more than per cent profit on its
gross sales in the last five years"
Would Prohibit Code.
In addition to attempting to enjoin
the Government from attempting to
enforce the Guffey act against the Car
ter Coal Co.. Carter also seeks q court
order prohibiting his company fror:
subscribing to the code authorized
under the act.
Wood contended that submission BY
the directors of the Carter Coal Co
to the act would constitute an abdi-
cation Of their corporate powers.
In asking that the request for an
injunction be denied, Government at
torneys headed by Dickinson, pre-
sented the following contentious:
l. The act is not effective until the
National Bituminous Coal Commission
has been set up to enforce 1t.
2. No taxes have been levied OF
assessed under the act.
Time Held Inadequate.
8. 1t is impossible for the court to
determine now if the act will injure
the company or is an abuse.
4. The act provides complete and
adequate statutory form of remedy
and acceptance does not stop the COM
pany from "contesting the constitu-
tionality of any provision of said code. "
S. The Government, party to the
case, has not agreed to be sued.
AS the court arguments proceeded
committee of two Appalachian pro-
ducers and two United Mine Workers