Evening star., 1935-09-01
GUFFEY BILL TEST
LAUNCHED IN SUIT
D. c. Supreme Court Orders
U. S. to Appear in In
junction Move.


Roosevelt signed the Guffey-Snyder
coal control bill, the "constitutionality
and economic soundness" OF the
measure was attacked yesterday In
District Supreme Court.
The complaint, lodged by Frederick
H. Wood of New York as counsel for
James Walter Carter of Stevenson,
Md, president of the Carter Coal Co.
of Virginia and West Virginia, asked
the court to enjoin enforcement OF
the act and its regulations.
Chief Justice Alfred A. Wheat
signed an order, returnable Septem-
ber Is, citing Government officials,
the coal company and its officers to
show cause why an injunction should
not be issued restraining them from
carrying out the acts provisions.
Wood, a member of the firm OF
Cravatt, De GerSdorf, Swaine &
Wood, was counsel in the Schechter
case which resulted in the Supreme
Court decision invalidating N. R. A.
He also was among the counsel for
the Government in the gold clause
cases that the Government won.
Specifically, Carter acting as a
stockholder, asked the court to re-
strain his own company from COM
plying with the act. He also sought
to restrain the Government from en-
forcing the act as far as that company
was concerned.
Independent Suit.
Wood told reporters the suit was
independent. although we know that
there are many other operators whose
attitude is just the same as ours, and
who want to test the law"
The suit attacked as unconstitu-
tional, particularly, the Is per cent
gross sales tax on coal producers, with
a 80 per cent rebate for those pro-
ducers complying with the acts mar
keting provisions.
THE purpose of the act on its face
Is thus to compel all members of the
industry to subject the conduct Of
their business to Federal regulation by
the imposition of this penalty" Wood
said in a statement.
1T thus represents an effort on the
part of Congress to do indirectly that
which the court held the N. r. A.
case it could not do directly.
Orderly Test" is Goal.
Throughout its course in Congress,
the bill was recognized to be of doubt
full conStitutionality The object of
the bill filed by Mr.. Carter is to bring
about an orderly test of this question"
The measure, officially known as the
mt nf
1885, was rushed through both Houses
of Congress in the closing days Of the
session as one of the administrations
must" bills. As an effort to restore
the defunct bituminouS coal code OF
N. r. A. and head-of a threatened
strike of bituminous coal miners sue
cessively postponed since last June,
the bill was occasion for the now me-
morable letter from President RooSe-
velt to Representative Samuel B. Hill,
Democrat, of Washington. chairman
of a subcommittee of the House Ways
and Means Committee. charged with
initial consideration of the bill.
In his letter the President suggested
that the question of the constitution
atty of the measure should not deter
its consideration by Congress. The
Hill subcommittee passed the respon-
sibility on to the full membership OF
the Ways and Means group, after
which the bill finally was brought up
in the House and passed, an action
subsequently concurred in by the
Senate.
Cite Bankruptcy Threat.
Briefly, the suit alleges the Carter
Coal Co. intends to comply with the
law and become member OF the
code" although its officers and direc-
tors believe the result will be serious
damage to its business, the sole reason
for such compliance being that the
Is per cent tax imposed on Ron-code
members would ruin the business of
the company and possibly force it
into bankruptcy.
The suit attacks the act as an at
tempt by the Federal Government to
regulate intrastate commerce by means
of penalty tax and charges that the
tax makes it practically obligatory on
coal companies to join the proposed
code, an N. r. A. for the coal indus
try, and agree to the regulation of
their prices, hours of labor and wages |
by the methods provided for in the |
act.
It charges that the Carter Coal |
Co. by joining the code would abdi-
cate il, power over its own business
and that the effect of the code regu-
lations would be to increase the costs
OF the company SO that it could no
longer sell coal profitably.
Thus. in bringing the suit Carter
proceeds as a stockholder as the result |
OF action of the Board of Directors of |
company August 80, when it was
formally voted to accept the code of |
fair competition provided in the new
act and comply with its provisions,
with the understanding of the direc-
tors that proper officers of company"
were authorized to take the court test |
action.
Summary Of Challenge.
The challenge of the acts consti- |
tutionality was summarized by the |
following clause in the bill Of COM |
plant:
IL. The said act is, In purpose, in |
essence and on its face, an attempt |
to regulate matters not committed to |
the Federal Government by the Con-
stitution, by means of the granting
or Withholding of q heavy penalty
called tax, and it cannot be sus-
tanned as an exercise of the taxing |
power Of the Federal Government.
q. The said act cannot be sus-
tanned under the commerce clause |
since the regulations to which Carter |
Coal Co. must submit as a condition |
10 the forbearance of the tax consti-
tutes regulation of its activity in the |
conduct of its wholly intrastate busi-
ness as Aforesaid, the regulation of |
which does not constitute regulation |
OF commerce among the several States. |
"3. The said act is violative of the |
tenth amendment to the Constitution |