Court Opinion

ID: 9643048
Source: CourtListenerOpinion
Date Created: 2023-08-22 18:16:47.32717+00
Date Added: 2024-06-11T12:07:15.778374
License: Public Domain

DENMAN, Circuit Judge
(dissenting).
The sole ground on which the judge below rested his dismissal of the bill is that R. S. § 3224 (26 USCA § 154) prevents enjoining the collection of a tax assessed under the Agricultural Adjustment Act. The merit of this decision is one of the paramount questions to be argued on the appeal.
I am unable to concur with my brethren in the denial of the temporary relief prayed for. In effect the denial of the restraint of the collection of the processing tax for the months of April and May, which it is alleged will be collected immediately through process of distraint or otherwise, may well frustrate entirely the ultimate injunctive remedy of this litigation and prevent a consideration of the merits of the appeal when the case is called for hearing. The collector of internal revenue may then be able to show that the action sought to be enjoined has been performed and that the appeal, regardless of the merits, must be dismissed so far as injunction is the remedy sought. The right to certiorari to the Supreme Court may also be lost.
The argument of the collector disclosed, and we are otherwise properly informed, that a large number of similar bills are pending in the circuit. In some of them the District Judges have decided that the injunctive remedy should be granted and in others that it should be denied. We are advised that the Circuit Court of Appeals for the Tenth Circuit has recognized the propriety of the injunctive relief we are here denying. It is my opinion that a sufficient showing has been made of the debatable character of the question whether R. S. § 3224 (26 USCA § 154), as follows: “Restraining assessments or collection of taxes. No suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court” — prevents the use of the injunction in the instant cases, and that therefore the merits of the contention should be given full exploration at the hearing of the appeal. Furthermore, I am of the opinion that opportunity should be afforded to the litigants in the pending cases in the District Courts of the circuit, whose litigation may be frustrated by the denial of this temporary injunction, to present their views on the merits of the error assigned to the decision below.
I agree with my confreres that there is no validity in the contention that the court should govern its action with reference to a possible future enactment of Congress which would prevent litigation for the recovery of these processing taxes. Even if there were a method of determining such future action, I would regard it as improper for a judicial branch of the government to hasten the processes of litigation to frustrate such definitely ascertained future action of the legislative branch. However, I regard is as entirely illogical and inconsistent to assume that, having refused to consider possible future congressional enactments, the taxing statute in question .will not continue in the future in its present form.
The applicability of R. S. § 3224 (26 USCA § 154), prohibiting injunctive relief, is challenged on the claim that this case falls within two of the exceptions recognized by the Supreme Court in Miller v. Standard Nut Margarine Co., 284 U. S. 498, 509, 52 S. Ct. 260, 263, 76 L. Ed. 422. That case states:
■ “Independently of, and in cases arising prior to, the enactment of the provision (Act of March 2, 1867, 14 Stat. 475) which became Rev. St. § 3224 (26 USCA § 154), this court, in harmony with the rule generally followed in courts of equity, held that a suit will not lie to restrain the collection of a tax upon the sole ground of its illegality. The principal reason is that, as courts are without authority to apportion or equalize taxes or to make assessments, such suits would enable those liable for taxes in some amount to delay payment or possibly to escape their lawful burden, and so to interfere with and thwart the collection of revenues for the support of the government. And this court likewise recognizes the rule that, in cases where complainant shows that in *895addition to the illegality of an exaction in the guise of a tax there exist special and extraordinary circumstances sufficient to bring the case within some acknowledged head of equity jurisprudence, a suit may be maintained to enjoin the collector. Dows v. Chicago, 11 Wall. 108, 20 L. Ed. 65; Hannewinkle v. Georgetown, 15 Wall. 547, 21 L. Ed. 231; State Railroad Tax Cases, 92 U. S. 575, 614, 23 L. Ed. 663. Section 3224 is declaratory of the principle first mentioned and is to be construed as near as may be in harmony with it and the reasons upon which it rests. Cumberland Telephone & Telegraph Co. v. Kelly (C. C. A.) 160 F. 316, 321, 15 Ann. Cas. 1210; Baker v. Baker, 13 Cal. 87, 95; Bradley v. People, 8 Colo. 599, 604, 9 P. 783; 2 Sutherland (2d Lewis Ed.) § 454. The section does not refer specifically to the rule applicable to cases involving exceptional circumstances. The general words employed are not sufficient, and it would require specific language undoubtedly disclosing that purpose, to warrant the inference that Congress intended to abrogate that salutary and well-established rule. This court has given effect to section 3224 in a number of cases. Snyder v. Marks, 109 U. S. 189, 191, 3 S. Ct. 157, 27 L. Ed. 901; Dodge v. Osborn, 240 U. S. 118, 121, 36 S. Ct. 275, 60 L. Ed. 557; Dodge v. Brady, 240 U. S. 122, 36 S. Ct. 277, 60 L. Ed. 560. It has never held the rule to be absolute, but has repeatedly indicated that extraordinary and exceptional circumstances render its provisions inapplicable. Hill v. Wallace, 259 U. S. 44, 62, 42 S. Ct. 453, 66 L. Ed. 822; Dodge v. Osborn, supra, page 121 of 240 U. S., 36 S. Ct. 275; Dodge v. Brady, supra. Cf. Graham v. Du Pont, 262 U. S. 234, 257, 43 S. Ct. 567, 67 L. Ed. 965; Brushaber v. Union Pacific R. Co., 240 U. S. 1, 36 S. Ct. 236, 60 L. Ed. 493, L. R. A. 1917D, 414, Ann. Cas. 1917B, 713.”
The case of Hill v. Wallace, cited in the Miller Case, arguably recognizes that a tax which creates a profound business disturbance is excepted from R. S. 3224. The cases of Dows v. Chicago, 11 Wall. 108, 20 L. Ed. 65; Hannewinkle v. Georgetown, 15 Wall. 547, 21 L. Ed. 231; State R. R. Tax Cases, 92 U. S. 575, 614, 23 L. Ed. 663, support the proposition that the creation of a multiplicity of suits constitutes an exception from the prohibition of that statute.
As it now stands, the processing tax statute, as administered, imposes a tax of 30 cents a bushel on wheat milled in the far flung businesses of the companies moving for the temporary relief. With the diversity of opinion as to the constitutionality of the act, shown by the varying decisions of the courts, these great businesses are necessarily in apprehension of the price they shall charge for their product in every sale that they make and correspondingly in doubt as to the volume of purchases of raw material for their current and future business. We cannot assume that the price of flour is uniform throughout the United States, for this would be an assumption either that there was an illegal combination fixing a uniform price or that the capitalistic competitive system had ceased to function in the United States. It is arguable that the creation of such doubt and uncertainty as to price in each sale is not an usual incident of tax legislation under Hill v. Wallace, 259 U. S. 44, 62, 42 S. Ct. 453, 66 L. Ed. 822. So much for the effect on this one of the great and fundamental industries of the country in the process of its manufacture and sales.
When we come to the administrative features of the statute, we find it unusual in that there is required a monthly return and payment to the collector. Thus there accrues each month a right of demand and suit in the event that the tax be improperly assessed or in the event that the claimed unconstitutionally should ultimately be sustained. The possible accrual in one year of twelve causes of action against the government, is an uncommon feature of tax measures. Such a situation cannot be dismissed cavalierly as presenting no question of multiplicity of causes.
What this court is doing is to decide finally on a preliminary motion and without hearing on the merits of the appeal that the exceptional circumstances of this case as affecting these industries above described are not within the rule of Miller v. Standard Nut Margarine Co., 284 U. S. 498, 509, 52 S. Ct. 260, 263, 76 L. Ed. 422, regarding “extraordinary and exceptional circumstances” which “render * * * inapplicable” the provisions of R. S. § 3224.
For the purposes of the application for a temporary restraint to keep alive and make possible the exercise of the *896injunctive relief sought, it is my opinion that sufficient doubt is raised as to the correctness of the decision below to warrant an order for the temporary injunction pending appeal until that appeal can be heard on its merits.
This is not to indicate what, my opinion would be on the question whether or not R. S. § 3224 (26 USCA § 154) prevents injunctive relief in the instant cases. That question should be determined on the hearing of the merits of the appeal when, as suggested, all the litigants in the many cases pending in the District Courts of the circuit should be given an opportunity to present their views.
Supplement to Dissenting Opinion.
The decision rendered by a majority of this court was accompanied by a brief statement to the effect that the showing made by the applicants for temporary injunction was insufficient. My dissenting opinion was next filed, followed by an opinion of the' majority. In that opinion the argument presented in my dissent regarding the unusual incident of the processing tax legislation, in that it gave rise to twelve causes of action against the government in a year in a continuous processing business, is treated as if it were of significance that the point was not made in the pleadings or in the briefs. The fact that there are so many other cases, similar to those just decided, pending throughout the circuit, all of which would be affected by ignoring the plain provisions of the processing statute itself for a monthly return, assessment, and payment of tax, reinforces the suggestions I have made regarding the danger in hastily frustrating, in a preliminary proceeding, the rights of appellants to their day in court on the merits of the appeal. In a case of this importance no doubt the combined assistance of many of the members of the bar interested in the merits of the lower court’s decision would be available to this court.
What my dissent stated was that the monthly payment of the processing tax gave rise under the statute to twelve causes of action a year, an unusual incident in the federal taxation of business, and hence arguably one of the exceptions to R. S. § 3224 (26 USCA § 154) recognized in Miller v. Standard Nut Margarine Co., 284 U. S. 498, 509, 52 S. Ct. 260, 76 L. Ed. 422. Each one of the companies affected is forced to conserve the evidence of the steps taken in the administrative requirements of the statute to make effective its right to sue. It must be prepared to prove, along with other facts of the month, the volume of the monthly processing to meet any adverse contention of the Treasury Department. In other words, each must take all the preliminary steps necessary to maintain its position in twelve lawsuits a year.
I do not believe it is any answer to this to say another statute avoids a multiplicity of suits if the taxpayer will give up his right to sue at once and combine at the. end of six years, as suggested in the majority opinion, his seventy-two causes of action. Assuming that this remedy is “plain,” I am unable to see how, under any theory, a six-year or a two-year delay is the “adequate” remedy at law referred to in 28 USCA § 384. It is certainly not a “speedy” relief, and promptitude of the legal redress is a part of its “adequacy.”
In one of the cases before us a month’s tax is $125,857.30. At the end of six years, at this rate, the seventy-two causes of action would amount to $9,061,451.00. The holding of the majority opinion is that the delay in'suing for these, gradually increasing huge amounts to avoid a multiplicity of suits is plainly not such an unusual feature in the taxation of business that we need wait for its further discussion at a hearing on the merits of the appeal. I am convinced the litigants in these and the other pending cases, if we had not denied them the opportunity, could have presented strong arguments that the claim of multiplicity of suits is not answered by the fact they may be consolidated after such delay, and such deprivation of the legal right to sue when each cause of action arises.
In many statés all contract causes of action or all causes arising out of the same transaction may be joined in a single suit. The majority opinion seems to hold that, as to causes of action so joinable, equity could never consider them as constituting a multiplicity of causes where, in the absence of the consolidating statute, their number would warrant equitable relief. I believe this principle is not so clearly established that it should have been so declared, without argument, on a preliminary hearing.
From the suggestion that the law regarding the right to injunctive relief, which we are now deciding for all the cases in the circuit, should be affected by *897the consideration that the litigants here claim they have passed on the burden of the tax to the consumer, and that therefore repayment might lead to “unjust enrichment,” two questions arise. One is: What becomes of the cases where, under competition, all of the tax has not been passed on? The other is: Is it of concern here, if the litigants have a legal right to the return of the tax, that the contracts made with the purchasers of the flour may or may not permit the retention of the money by the processors? If the cause had been heard on the merits, quite likely some counsel would have appeared who would have offered the suggestion that, while Congress may properly withdraw the right to reclaim taxes for any reason it pleases, courts, sitting in equity, are not permitted to change an existing legal right to recover a tax, and an interesting and possibly pertinent discussion might have ensued.
I concur in the statement of the majority opinion that a mere claim of unconstitutionally does not warrant equitable relief. This does not answer the point raised in my first opinion that, where the taxing act affected every purchase and every sale of the businesses taxed, it is arguable that this is an unusual incident of taxation. Like the multiplicity of suits per annum in its effect upon the businesses taxed, it seemed a proper matter for deliberate consideration upon a hearing of the appeal on the merits of the right to injunctive relief.
All of this, of course, does not purport to state what my opinion would be on the merits of the decision below denying injunctive relief if the matter had been fully presented, and has nothing to do with the constitutionality of the Agricultural Adjustment Act or the right of these litigants to have their taxes refunded.