Evening star., 1936-01-22
TAX REFUND VIEW
! OF COURT UPHELD
New Dealers Seen in Error
/. When Charging Opinion
/. = Breaks Precedence.
BY DAVID LAWRENCE.

BY DAVID LAWRENCE.
: Prejudicing the press and the ccun-
try against the Supreme Court ap-
spareutly continues to be one OF the
New Deal methods of retaliattng
against the decisions OF the highest
court.
Just Why President Roosevelt
Thought the Supreme Court had by
It's decision in the rice millers case
last week reversed the case OF Bailey
VS.. George and the statute OF 1857
relating to the collection Of taxes.
can be explained otherwise only on
The ground that neither Mr.. Roose-
welt nor his advisers examined the
opinion of the court in the Bailey case
ind compared it with the unanimous
opinion Of the court in the rice mill
sers' case.
8 To understand the White House
comment on the reversal" by the
court it is necessary to state first
that in 1867 Congress passed a law
which reads as follows:
mo suit for the purpose Of restrain
ing the assessment or collection OF
any tax shall be maintained in any
court"
Legal Remedy Is Factor.
But this statute has always been
considered to mean that no suit
shall be entertained II the protesting
taxpayer has an adequate remedy
at law" Congress can, OF course.
remove all remedies at law BY refus-
ing to permit itself to be sued for
refund of taxes or it can so limit the
right to sue for q refund as prac-
tically to prevent the taxpayer from
recovery of illegally collected taxes.
It is the fact that Congress did SO
fmpair the attainment Of an adequate
remedy at law on processing taxes
which distinguishes the rice mlllers
case from Bailey vs.. George. Under
the Constitution. all judicial power"
ia vested in the Supreme Court. and
then judicial power is defined as fol-
lows in section Of article 3:
THE judicial power shall extend
to all cases. in law and equity. aris-
ing under the Constitution"
Matter Of Equity Involved.
So the Supreme Court has to decide
whether the judicial power shall be
interposed as matter OF equity to
prevent q tax from being collected
which might later be impossible to
recover.
Now in the so-called child labor
tax cases. the citizen petitioned the
court for an injunction on the ground
that the tax was illegal. Separately
the question of the constitutionality
of the tax itself was decided in a case
that was handed down on the same
day that the technical problem was
determined, namely, whether the tax
should or should not have been col
1ected and later refunded.
Chief Justice Taft, in handing down
the opinion of the court, now known
as the Bailey VS.. George case, pointed
out that while the petitioners had
averred that they had exhausted legal
remedies, there are no specific facts
set forth sustaining this mere con-
clusion." Mr.. Taft argued that while
section 1924 of the Federal law pro-
vides that no suit restraining assess
ment or collection of any tax (act of
1850 shall be maintained In any
court, the mere averment that some
statute imposing the tax Is invalid
doesn't take the case out OF the Sec
ton in question and beyond its juris-
diction.
But Mr.. Taft did say that there
must be some extraordinary and ex-
ceptional circumstances not here
averred or shown to make the pro-
visions of the section inapplicable."
He went on to remark that the amount
assessed could have been recovered In
q suit and that mo fact Is alleged
which would prevent them from avail
Ing themselves of this form Of remedy"
Claimed Lack Of Recourse.
Now the rice millers came into the
Federal courts and did allege that
they had no adequate remedy at law.
They pointed to the amendments OF
the agricultural act of 1888, known Is
the act of 1885, which specifically says
that illegally collected taxes could not
be recovered from the Federal Gov
eminent unless proof could be made
to the satisfaction of the commissioner
of internal revenue that the tax had
not been passed on to the consumer
or passed back to the producer.
The rice millers contended that they
couldn't make such . separation in
the pricing Of their articles and that
they had no adequate remedy at law.
The Supreme Court In directing the
entry Of an injunction merely agreed
with the rice millers' statement Of
facts and held that, in effect, the lat
ter had no adequate remedy 1t law.
Hence the suit to restrain collection
Of the tax was . proper exercise Of
equity power under constitutional law.
It Is true that the Supreme Court
IN rare instances has granted injunc-
tions against collection Of taxes and
that It has done 50 is apparent to any
one who has studied the record in the
Federal courts. Thus. IN 1882, the Su-
preme Court said Gin Miller ". Stand
ard Nut Margarine Coz that where
q complainant shows that In addition
to the nlegality Of an exaction in the
guise Of tax, there exist special and
extraordinary circumstances sufficient
to bring the case within some acknovi-
edged head Of equity jurisprudence, q
suit may be maintained to enjoin the
collection
Gold Clause Started It.
What are the special and extraor-
dinaxy circumstance these days? For
one thing. the Federal Government
has been Withdrawing the right It has
hitherto given to . citizen to sue to
recover moneys illegally extracted from
him by his Government. It began with
the withdrawal Of the right to sue to
recover On the gold clause Of Liberty
bonds and Il was repeated In the
agricultural oct Of 1885 after . pro-
longed controversy and finally . com