301 U.S. 337 (1937), 667, Anniston Manufacturing Co. v. Davis

Docket Nº:No. 667
Citation:301 U.S. 337, 57 S.Ct. 816, 81 L.Ed. 1143
Party Name:Anniston Manufacturing Co. v. Davis
Case Date:May 17, 1937
Court:United States Supreme Court

Page 337

301 U.S. 337 (1937)

57 S.Ct. 816, 81 L.Ed. 1143

Anniston Manufacturing Co.



No. 667

United States Supreme Court

May 17, 1937

Argued April 2, 1937




1. The right to sue the Collector for recovery of taxes exacted under an unconstitutional statute may, consistently with the Fifth Amendment, be abolished if a fair and adequate remedy directly against the Government be substituted. P. 341.

2. With respect to the refunding of "floor stock taxes" collected under the Agricultural Adjustment Act of 1933, the Revenue Act of 1936, Title VII, § 905, preserves to the taxpayer the remedy by suit against the United States in the District Courts or the Court of Claims. P. 343.

3. With respect to the refunding of processing taxes collected under the Agricultural Adjustment Act of 1933, the Revenue Act of 1936, Title VII, § 906, establishes a special and exclusive administrative procedure before a Board of Review in the Treasury Department,

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and provides for a judicial review of the Board's decisions in which may be determined every question of law which. the claimant is entitled to raise, whether general, statutory, or constitutional, including questions as to the validity of any part of Title VII itself, and in which the reviewing court is empowered to direct the Board to enter any designated judgment, the Commissioner of Internal Revenue being required to refund any amount which may thus be found due the claimant. P. 343.

4. With respect to the refunding of such processing taxes, the Revenue Act of 1936, supra, provides, Title VII, § 902(2), that no refund shall be allowed unless the claimant establishes to the satisfaction of the Board of Review that he bore the burden of the amount paid as tax and "has not been relieved thereof nor reimbursed therefor nor shifted such burden, directly or indirectly" through the inclusion of the amount paid in the price of the product, through reduction of the price paid for the raw material, or "in any manner whatsoever."


(1) If the taxpayer has thus shifted the burden of the tax, he is no longer in a position to claim an actual injury, and the refusal of a refund in such a case cannot be regarded as a denial of constitutional right. P 348.

(2) The fact that the Act makes no provision for refunding to particular persons, to whom the burden of the invalid exaction may be found to have been shifted, is no concern of the taxpayer. P. 350.

(3) The statute should not be construed as denying a refund where, from the nature of the case, proof that the tax burden was not shifted is inherently impossible; but the existence of such impossibility is a question of fact which the claimant may raise before the Board; the claimant is required to present to the Board the facts pertaining to the subject, and thereupon it becomes the duty of the Board, upon findings supported by evidence, to make its determination in accordance with the legal rights of the claimant, subject to modification or reversal by the reviewing court if not in accordance with law. P. 351.

Constitutional questions are not to be decided hypothetically. When particular facts control the decision, they must be shown.

(4) Of two possible constructions of a statute, that one should be adopted which will save, and not destroy, it. An intent to defy the Fifth Amendment or even to come so near to doing so as to raise a serious question of constitutional law cannot be attributed to Congress. P. 351.

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(5) Section 902 is not too vague; it lays down the general principle governing the remedy afforded, leaving its applications to be determined by facts as they appear in particular instances. P. 353.

5. Section 907(a) of Title VII of the Revenue Act of 1936 provides that, in the administrative proceedings above mentioned, the fact that the average margin per unit of commodity processed was lower during the tax period than the average margin during the period before and after it shall be prima facie evidence that the burden of the processing tax was borne by the claimant taxpayer, and that, if the average margin during the tax period was not lower, it shall be prima facie evidence that none of the burden of such amount was borne by the claimant, but that it was shifted to others. "Tax period" and "period before and after the tax" are defined. Section 907(e) provides that either the claimant or the Commissioner may rebut the presumptions "by proof of the actual extent to which the claimant shifted to others the burdens of the processing tax." Held that the words "actual extent" are used in contradistinction to the presumed extent, according to the prima facie presumption to which the proof in rebuttal is addressed, and that complete opportunity is afforded the claimant to present any evidence which may be pertinent to the questions to be determined by the Board of Review and which may be appropriate to overcome any presumption which might be indulged either under § 907(a) or otherwise. P. 354.

6. Section 906(b) of the Act of 1936, Title VII, supra, provides that the hearing before the Board is to be conducted by a presiding officer who is either a member of the Board or an officer or employee of the Treasury Department designated by the Secretary of the Treasury, and § 906(e) that the presiding officer is to recommend to the Board, or a division, findings of fact and a decision; but the Board, or a division of it, is required to consider the evidence and make the findings and administrative decision, and the whole scheme of the administrative proceeding presupposes hearing and determination in accordance with the demands of due process. P. 356.

87 F.2d 773 affirmed.

Certiorari, 300 U.S. 649, to review the affirmance of a judgment of the District Court dismissing, on demurrer to the complaint, an action against the Collector

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to recover amounts paid as cotton "processing" taxes and as cotton "floor stock" taxes under the Agricultural Adjustment Act of 1933, which was held unconstitutional by this Court in United States v. Butler, 297 U.S. 1.

HUGHES, J., lead opinion

MR. CHIEF JUSTICE HUGHES delivered the opinion of the Court.

Petitioner brought this suit on November 22, 1935, against the collector of internal revenue to recover the amounts paid as cotton "processing" taxes (first cause of action) and as cotton "floor stock" taxes (second cause of action) under the Agricultural Adjustment Act of 1933, 48 Stat. 31, 35, 40. Petitioner alleged the unconstitutionality of the statute imposing the tax ( United States v. Butler, 297 U.S. 1) and that claim for refund had been rejected by the Commissioner of Internal Revenue on August 16, 1935. After the enactment of title VII of the Revenue Act of 1936, §§ 901-917 (49 Stat. 1747), petitioner amended its complaint, asserting the

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unconstitutionality of these provisions. Demurrer was sustained by the District Court (Lincoln Mills v. Davis, 15 F.Supp. 257), and its judgment of dismissal was affirmed by the Circuit Court of Appeals upon the ground that the court below was without jurisdiction to entertain the action. Anniston Mfg. Co. v. Davis, 87 F.2d 773. In view of the importance of the questions raised, we granted certiorari.

Title VII, §§ 901-917, of the Revenue Act of 1936 provided a new administrative procedure for the recovery of amounts collected under the Agricultural Adjustment Act. Section 901 repealed §§ 21(d), 21(e), and 21(g), of the amendments of 1935 (49 Stat. 771-773). Section 902 prescribed the conditions on which refunds should be made. Section 903 related to the filing of claims. Sections 904 and 905 prescribed periods of limitation and provided for the jurisdiction of the District Courts, concurrent with the Court of Claims, for the recovery of amounts collected as floor stock and compensating taxes. Section 906 prescribed the procedure on claims for refunds of processing taxes. Section 907 established certain rules of evidence or presumptions to be observed in the administrative proceeding. Section 908 related to allowance of interest. Section 909 denied review of the administrative ruling by any other administrative or accounting officer. Section 910 undertook to free collectors from liability for moneys collected by him and paid into the Treasury in performance of his official duties. Section 913 defined various terms employed. Other sections laid down administrative rules not requiring attention in the present discussion.

First. Petitioner contends that, at the time it brought this suit, it had a vested right of action against the collector to recover the amounts exacted under statutory provisions held to be invalid; that this right of action could not be destroyed without violating the Fifth Amendment; that the collector was personally liable for

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the amounts collected, and that § 910, which attempted to destroy that liability, is unconstitutional.

The government answers that the instant case "does not require a decision as to the power of Congress to withdraw suit entirely, both against the Collector and against the Government;" that Congress "has left a remedy against the Government which is fair and adequate in every respect." We agree with the government's contention that, if the administrative remedy is fair and adequate, other questions with respect to the liability of the collector and the validity of § 910 need not now be considered. We had occasion to deal with a cognate question in Burrill v. Locomobile Co, 258 U.S. 34. That decision was rendered in suits brought by [57 S.Ct. 819] foreign corporations in the federal court to recover taxes alleged to have...

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