Source: https://supreme.justia.com/cases/federal/us/284/521/
Timestamp: 2019-04-19 04:22:13+00:00

Document:
1. Objection to the equity jurisdiction of the District Court held to have been properly raised by motion to dismiss the bill, and preserved by assignments of error in this Court. P. 284 U. S. 524.
2. The rule, emphasized by Jud.Code § 267, that suits in equity shall not be maintained in the federal courts in any case where a plain, adequate, and complete remedy may be had at law is of peculiar force in cases in which it is sought to enjoin the collection of state taxes. P. 284 U. S. 525.
3. That refusal to pay an allegedly unconstitutional state tax will result in civil and criminal penalties and irreparable damage to the plaintiff's business is not basis for a suit in the federal court to enjoin collection if the legal remedy of paying under protest and suing the collector to recover is afforded by the state law. P. 284 U. S. 526.
4. Such a legal remedy exists under the statutes and decisions of Mississippi. P. 284 U. S. 527.
5. Such legal remedy, although against the collecting officer, rather than the state or municipality, is to be deemed adequate, where the bill does not allege special circumstances showing inability of the plaintiff to pay the tax, or of the collecting officer to respond to judgment. P. 284 U. S. 528.
6. The equity jurisdiction of the inferior federal courts is that of the English Court of Chancery at the time of the separation of the two countries; it cannot be enlarged by state legislation creating new equitable remedies in the state courts. P. 284 U. S. 529.
7 Therefore, the fact that a state has provided a remedy against illegal state taxes by injunction does not authorize the federal courts to enjoin where the legal remedy is adequate. Id.
8. In general, the jurisdiction of equity to avoid multiplicity of actions at law is restricted to cases where there would otherwise b some necessity for the maintenance of numerous suits between the same parties, involving the same issues of law or fact. It does not extend to cases where there are numerous parties plaintiff and the issues between them and the adverse party are not necessarily identical. Id.
9. Where the alleged unconstitutionality of a state tax depend in the case of each of many taxpayers upon its effect upon his particular business in interstate commerce, a suit by or on behalf of all to enjoin the collector cannot be supported as one to avoid a multiplicity of actions. P. 284 U. S. 530.
Appeal from a decree of the District Court of three judges, which enjoined the county sheriff and ex officio tax collector and three members of the state Board of Tax Commissioners from collecting certain "privilege" taxes. The bill was filed by numerous plaintiffs on behalf of themselves and of all others similarly situated.
"for reargument, limited to the question of the jurisdiction of the District Court both with respect to the amount involved in the suit and the jurisdiction of the court as a court of equity;"
reargument has been had accordingly.
The bill of complaint assails the constitutionality of § 56, c. 88, 1930 Laws of Mississippi, as applied to appellees. The section imposes an annual license or "privilege" tax of $100, payable in advance by "every individual . . . engaged in the business of buying or selling cotton for himself." It also requires employers engaged in the business of buying or selling cotton to pay a similar "tax of twenty-five dollars ($25.00) for every employee engaged in their business as buyer or seller." Penalties are imposed in double the amount of the tax for its nonpayment. Section 225. Failure to make application for the license, or engaging in the business without having procured the license or paid the tax, are misdemeanors, punishable by fine not exceeding $500 or imprisonment not exceeding six months, or both. Section 242.
(3) That § 304 of Hemingway's Annotated Mississippi Code of 1927 has conferred on the appellees the right to proceed in equity in the state courts to enjoin the collection of an unconstitutional tax, and that that remedy is available in the federal District Court.
may be treated as waived if the objection is not presented by the defendant in limine. Duignan v. United States, 274 U. S. 195, 274 U. S. 199; Singer Sewing Machine Co. v. Benedict, 229 U. S. 481, 229 U. S. 484; Thompson v. Railroad Companies, 6 Wall. 134; compare Matson Navigation Co. v. United States, ante, p. 284 U. S. 352; Hilton v. Dickinson, 108 U. S. 165, 108 U. S. 168; Grace v. American Central Ins. Co., 109 U. S. 278, 109 U. S. 283-284; Boers v. Preston, 111 U. S. 252, 111 U. S. 255. Here, the objection to the equity jurisdiction of the district court was properly raised by appellants' motion to dismiss the bill, and is preserved by their assignments of error in this Court.
Section 16 of the Judiciary Act of 1789, 1 Stat. 82, perpetuated without material change as R.S. § 723, Jud.Code § 267 (28 U.S.C. § 384), declares that suits in equity shall not be sustained in the courts of the United States "in any case where a plain, adequate, and complete remedy may be had at law." The effect of this section, which was but declaratory of the rule in equity, established long before its adoption, is to emphasize the rule and to forbid in terms recourse to the extraordinary remedies of equity where the right asserted may be fully protected at law. See Deweese v. Reinhard, 165 U. S. 386, 165 U. S. 389; New York Guaranty Co. v. Memphis Water Co., 107 U. S. 205, 107 U. S. 214.
unconstitutionality of a state or municipal tax is not, in itself, a ground for equitable relief in the courts of the United States. If the remedy at law is plain, adequate, and complete, the aggrieved party is left to that remedy in the state courts, from which the cause may be brought to this Court for review if any federal question be involved, Jud.Code § 237, or to his suit at law in the federal courts if the essential elements of federal jurisdiction are present. See Boise Artesian Hot & Cold Water Co. v. Boise City, 213 U. S. 276; Shelton v. Platt, 139 U. S. 591; Dows v. Chicago, 11 Wall. 108, 78 U. S. 110-112.
It may be assumed that, if appellees do not pay the challenged tax, and in consequence of that omission they are subjected, as it is alleged they will be, to the civil and criminal penalties for nonpayment, the resulting injury to their business will be irreparable, and can be avoided only by resort to equity to prevent the threatened wrong. But appellants insist that the appellees are under no such constraint, either to expose themselves to the penalties for failure to pay the tax or to seek equitable relief against its collection, since each of them may pay the tax to the collecting officer under protest, and, under the laws of Mississippi, may maintain a suit at law for its recovery on the ground that it was exacted in violation of the Constitution of the United States. That such a procedure saves to the taxpayer his federal right, and, if available, will defeat the jurisdiction of federal courts to enjoin the collection of the tax, has long been the settled rule in this Court. Henrietta Mills v. Rutherford County, 281 U. S. 121; Arkansas Building & Loan Assn. v. Madden, 175 U. S. 269; Atchison, Topeka & Santa Fe Ry. v. O'Connor, 223 U. S. 280; Shelton v. Platt, supra; Singer Sewing Machine Co. v. Benedict, supra; Allen v. Pullman's Palace Car Co., 139 U. S. 658; Indiana Mfg. Co. v. Koehne, 188 U. S. 681.
"Some of the cases refer to a notice to the collector that suit will be brought to recover the money back. That notice is necessary if the payer intends to sue the collector. After its receipt, if he pays it over to the proper treasury, he does so at his risk, and does not relieve himself from responsibility. If, however, he pays over the money without such notice, suit can only be brought against his principal, in this case, the City of Vicksburg."
"We do not think that the county can shield itself from repayment of money collected under an unconstitutional law, paid under protest on the ground that the county had disbursed the money so collected into various taxing districts, or has expended the money which it wrongfully collected. The fact that the county might not be able to recover from the taxing districts the amount of money paid to such districts would not exempt it from liability to the taxpayer from whom it wrongfully collected it. "
Such a suit, although against the collecting officer, rather than the state or municipality, affords an adequate legal remedy, in the absence of allegations in the bill, which are wanting here, of special circumstances showing inability of the taxpayer to pay the tax or of the collecting officer to respond to the judgment. See Arkansas Building & Loan Assn. v. Madden, supra, p. 175 U. S. 274; Atchison, Topeka & Santa Fe Ry. v. O'Connor, supra, p. 223 U. S. 285; Singer Sewing Machine Co. v. Benedict, supra, p. 229 U. S. 487, and is the rule in Mississippi: Coulson v. Harris, supra, p. 752; Richardson v. Scott, 47 Miss. 236.
Collection of the money by the collector in the name of the state, if wrongful, would not protect him. Atchison, Topeka & Santa Fe Ry. v. O'Connor, supra. The statutes, §§ 3289, 3290, Mississippi Code of 1930, which require payment over by the collector of taxes to the appropriate treasury, allow the penalties for nonpayment to be remitted on certificated of the Governor or Attorney General, if "they are satisfied that the delay has not been willful or avoidable by the collector," and § 3278 makes provision for the repayment to any sheriff or tax collector of taxes, "by mistake or oversight, erroneously paid" to the state treasurer. See Taylor v. Guy, 119 Miss. 357, 80 So. 786. These provisions would seem to contemplate suits against the collector for the recovery of the tax and to afford him some protection in the event of a judgment against him. Atchison, Topeka & Santa Fe Ry. v. O'Connor, supra, p. 223 U. S. 287. But, as no facts are presented to show that the suit against the collector in the present case will not be adequate, it is unnecessary to consider their precise scope and effect.
3 So. 37. In any case, the section cannot affect the jurisdiction of federal courts of equity. The equity jurisdiction conferred on inferior courts of the United States by § 11 of the Judiciary Act of 1789, 1 Stat. 78, and continued by § 24 of the Judicial Code is that of the English court of chancery at the time of the separation of the two countries. Payne v. Hook, 7 Wall. 425, 74 U. S. 430; In re Sawyer, 124 U. S. 200, 124 U. S. 209-210. While local statutes may create new rights, for the protection of which recourse may be had to the remedies afforded by federal courts of equity, if the remedy at law is inadequate and the other jurisdictional requirements are present, state legislation cannot enlarge their jurisdiction by the creation of new equitable remedies, nor can it avoid or dispense with the prohibition against the maintenance of any suit in equity in the federal courts, where the legal remedy is adequate. Henrietta Mills v. Rutherford County, supra, pp. 281 U. S. 127-128; Pusey & Jones Co. v. Hanessen, 261 U. S. 491, 261 U. S. 500.
Appellees' bill of complaint does not state a case within the jurisdiction of equity to avoid multiplicity of suits. As to each appellee, a single suit at law brought to recover the tax will determine its constitutionality, and no facts are alleged showing that more than one suit will be necessary for that purpose. See Boise Artesian Hot & Cold Water Co. v. Boise City, 213 U. S. 276, 213 U. S. 285-286; Dalton Adding Machine Co. v. State Corporation Comm'n, 236 U. S. 698, 236 U. S. 700-701.
numerous suits between the same parties, involving the same issues of law or fact. It does not extend to cases where there are numerous parties plaintiff or defendant, and the issues between them and the adverse party are not necessarily identical. St. Louis, Iron Mountain & Southern Ry. Co. v. McKnight, 244 U. S. 368, 244 U. S. 375; Kelley v. Gill, 245 U. S. 116, 245 U. S. 120; Francis v. Flinn, 118 U. S. 385; Scott v. Donald, 165 U. S. 107, 165 U. S. 115; Hale v. Allinson, 188 U. S. 56, 188 U. S. 77 et seq., and see Pomeroy, Equity Jurisprudence (4th ed.1918), §§ 251, 251 1/2, 255, 259, 268.

References: § 267
 § 56
 § 304
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 § 723
 § 267
 § 384
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 § 237
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 § 3278
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 § 11
 § 24
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