Source: https://casetext.com/case/great-lakes-co-v-huffman
Timestamp: 2018-12-19 02:04:01
Document Index: 366559059

Matched Legal Cases: ['§ 1607', '§ 24', '§ 41', '§ 400', '§ 1', '§ 2']

Great Lakes Co. v. Huffman, 319 U.S. 293 | Casetext
Great Lakes Co. v. Huffman
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U.S. Supreme CourtMay 24, 1943
319 U.S. 293•63 S. Ct. 1070•
City of Houston v. Standard-Triumph Motor Co.
…And second, this congressional adjustment of comity considerations is not a matter left to private parties to…
…Pp. 109-110. (c) The post-Act vitality of the comity principle is demonstrated by this Court&apos;s 1943 decision…
holding that comity barred federal declaratory action on behalf of Louisiana barge owners claiming that federal maritime law pre-empted Louisiana&apos;s business excise tax as applied to them
holding that comity also restrained federal courts from granting declaratory relief
Summary of this case from UTE MOUNTAIN UTE TRIBE v. GOODWIN
holding that a declaratory judgment was not available to obtain a determination of the constitutionality of a state tax
…319 U.S. 293, 298 (1943) the Supreme Court stated that interference with state internal economy and…
Argued May 5, 6, 1943. Decided May 24, 1943.
1. In the light of its opinion, findings, and conclusions of law, the District Court's dismissal of the suit rests wholly upon its declaration that as applied to the plaintiffs the state statute is constitutional; and its judgment is, in effect, a declaratory judgment. P. 295. 2. Where federal courts in the exercise of their jurisdiction to render declaratory judgments are called on to adjudicate what are essentially equitable causes of action, they are free upon equitable grounds to grant or withhold the relief prayed; and considerations which have led federal courts of equity to refuse to enjoin the collection of state taxes, save in exceptional cases, require a like restraint in the use of the declaratory judgment procedure. P. 300. 3. It is in the public interest that federal courts of equity should exercise their discretionary power to grant or withhold relief so as to avoid needless obstruction of the domestic policy of the States, and when asked to enjoin an unconstitutional state tax it is their duty to withhold relief when state law with the right of appeal to this Court affords adequate protection. P. 300. 4. In a suit in the federal district court against a state officer charged with the administration and enforcement of the Louisiana Unemployment Compensation Law, brought by plaintiffs engaged in navigation and operation of vessels used in improving navigable waters of the State, and praying a declaratory judgment that the state law as applied to them and their employees is unconstitutional, it was the duty of the court to withhold such relief, it appearing that under the state law a taxpayer who pays a challenged tax to the appropriate state officer may maintain a suit for reimbursement. P. 300. 5. The Acts of August 21, 1937 and August 30, 1935 do not require a result different from that here reached. P. 301. 134 F.2d 213, affirmed.
CERTIORARI, 318 U.S. 754, to review the affirmance of a judgment, 43 F. Supp. 981, dismissing a suit for a declaratory judgment.
Mr. R. Emmett Kerrigan, with whom Mr. James J. Morrison was on the brief, for petitioners.
Petitioners brought this suit in the district court against respondent, a state officer charged with the administration and enforcement of the Louisiana Unemployment Compensation Law (Act 97 of 1936, as amended by Act 164 of 1938, Act 16 of the First Extraordinary Session of 1940, and Acts 10 and 11 of 1940). The complaint alleges that petitioners have numerous classes of employees engaged in the navigation and operation of dredges and pile drivers and in the operation of quarter boats, tugs, launches, barges and other vessels, all used in deepening, dredging, extending and otherwise improving channels underlying the navigable waters of the state; and that the tax or contribution to the state unemployment insurance fund which the state law would exact from each of petitioners exceeded, when the suit was brought, the sum of $3,000. The relief prayed is a declaratory judgment that the state law as applied to petitioners and their employees is unconstitutional and void.
The Court of Appeals for the Fifth Circuit affirmed, 134 F.2d 213, holding that the statute, in exacting from employers contributions to the state unemployment compensation fund, is a valid exercise of the state taxing power (see Steward Machine Co. v. Davis, 301 U.S. 548; Carmichael v. Southern Coal Co., 301 U.S. 495); that the application of the Act to petitioners would not interfere with any characteristic feature of the general maritime law in its interstate and international aspects so as to fall under the ban of Southern Pacific Co. v. Jensen, 244 U.S. 205 and cases following it; and that the Federal Social Security Act, 26 U.S.C. § 1607 (c)(4), by exempting from its operation officers and crews of vessels, has not "preempted the field" or otherwise precluded the state from applying its law with respect to the employees in question.
The state act, as the court below held, exacts of employers payments into the state unemployment insurance fund, in the nature of an excise tax upon the exercise of the right or privilege of employing individuals and measured by a percentage of the wages paid. See Carmichael v. Southern Coal Coke Co., supra. Petitioners have challenged the state's right to collect the tax, and have interposed, as a barrier to the collection, the present suit in the federal court for a declaratory judgment. The district court, as we have indicated, has in substance given a declaratory judgment, which the Circuit Court of Appeals has sustained. Save for that purpose those courts had no occasion to entertain the suit, or pronounce any judgment in it. Neither court, nor any of the parties, has questioned the sufficiency of the pleadings to present a case for a declaratory judgment. Without raising that issue here we pass at once to the question, submitted to counsel, whether the declaratory judgment procedure may be appropriately resorted to in the circumstances of this case.
In answering it the nature of the remedy afforded to taxpayers by state law for the illegal exaction of the tax is of importance. Section 18 of Article 10 of the Constitution of Louisiana of 1921 directs that: "The Legislature shall provide against the issuance of process to restrain the collection of any tax and for a complete and adequate remedy for the prompt recovery by every taxpayer of any illegal tax paid by him." And Act 330 of 1938 sets up a complete statutory scheme to carry into effect the constitutional provision. By it the courts of the state are forbidden to restrain the collection of any state tax; and any person aggrieved and "resisting the payment of any amount found due, or the enforcement of any provision of such laws in relation thereto" shall pay the tax to the appropriate state officer and file suit for its recovery in either the state or federal courts. Pending the suit the amount collected is required to be segregated and held subject to any judgment rendered in the suit. If the taxpayer prevails in the suit, interest at two per cent per annum is added to the amount of taxes refunded.
This Court has recognized that the federal courts, in the exercise of the sound discretion which has traditionally guided courts of equity in granting or withholding the extraordinary relief which they may afford, will not ordinarily restrain state officers from collecting state taxes where state law affords an adequate remedy to the taxpayer. Matthews v. Rodgers, 284 U.S. 521. This withholding of extraordinary relief by courts having authority to give it is not a denial of the jurisdiction which Congress has conferred on the federal courts, or of the settled rule that the measure of inadequacy of the plaintiff's legal remedy is the legal remedy afforded by the federal not the state courts. Stratton v. St. Louis S.W. Ry. Co., 284 U.S. 530, 533-34; Di Giovanni v. Camden Ins. Assn., 296 U.S. 64, 69. On the contrary, it is but a recognition that the jurisdiction conferred on the federal courts embraces suits in equity as well as at law, and that a federal court of equity, which may in an appropriate case refuse to give its special protection to private rights when the exercise of its jurisdiction would be prejudicial to the public interest ( United States v. Dern, 289 U.S. 352, 359-360; Virginian Ry. Co. v. Federation, 300 U.S. 515, 549-53), should stay its hand in the public interest when it reasonably appears that private interests will not suffer. See Pennsylvania v. Williams, 294 U.S. 176, 185, and cases cited.
Interference with state internal economy and administration is inseparable from assaults in the federal courts on the validity of state taxation, and necessarily attends injunctions, interlocutory or final, restraining collection of state taxes. These are the considerations of moment which have persuaded federal courts of equity to deny relief to the taxpayer — especially when the state, acting within its constitutional authority, has set up its own adequate procedure for securing to the taxpayer the recovery of an illegally exacted tax.
Congress recognized and gave sanction to this practice of federal equity courts by the Act of August 21, 1937, 50 Stat. 738, enacted as an amendment to § 24 of the Judicial Code, 28 U.S.C. § 41 (1). This provides that "no district court shall have jurisdiction of any suit to enjoin, suspend, or restrain the assessment, levy, or collection of any tax imposed by or pursuant to the laws of any State where a plain, speedy, and efficient remedy may be had at law or in equity in the courts of such state." The earlier refusal of federal courts of equity to interfere with the collection of state taxes unless the threatened injury to the taxpayer is one for which the state courts afford no adequate remedy, and the confirmation of that practice by Congress, have an important bearing upon the appropriate use of the declaratory judgment procedure by the federal courts as a means of adjudicating the validity of state taxes.
The statutory authority to render declaratory judgments permits federal courts by a new form of procedure to exercise the jurisdiction to decide cases or controversies, both at law and in equity, which the Judiciary Acts had already conferred. Aetna Life Ins. Co. v. Haworth, 300 U.S. 227. Thus the Federal Declaratory Judgments Act (Act of June 14, 1934, 48 Stat. 955, as amended, 28 U.S.C. § 400) provides in § 1 that a declaration of rights may be awarded although no further relief be asked, and in § 2 that "further relief based on a declaratory judgment or decree may be granted whenever necessary or proper."
The jurisdiction of the district court in the present suit, praying an adjudication of rights in anticipation of their threatened infringement, is analogous to the equity jurisdiction in suits quia timet or for a decree quieting title. See Nashville, C. St. L. Ry. Co. v. Wallace, 288 U.S. 249, 263. Called upon to adjudicate what is essentially an equitable cause of action, the district court was as free as in any other suit in equity to grant or withhold the relief prayed, upon equitable grounds. The Declaratory Judgments Act was not devised to deprive courts of their equity powers or of their freedom to withhold relief upon established equitable principles. It only provided a new form of procedure for the adjudication of rights in conformity to those principles. The Senate committee report on the bill pointed out that this Court could, in the exercise of its equity power, make rules governing the declaratory judgment procedure. S. Rep. No. 1005, 73d Cong., 2d Sess., p. 6. And the House report declared that "large discretion is conferred upon the courts as to whether or not they will administer justice by this procedure." H.R. Rep. No. 1264, 73d Cong., 2d Sess., p. 2; and see Brillhart v. Excess Ins. Co., 316 U.S. 491, 494; Borchard, Declaratory Judgments (2d ed.) p. 312.