Sunshine Anthracite Coal Co v. Adkins

• Decision Date: 20 May 1940
• Docket Number: No. 804,804
• Citation: 60 S.Ct. 907,84 L.Ed. 1263,310 U.S. 381
• Parties: SUNSHINE ANTHRACITE COAL CO. v. ADKINS, Collector of Internal Revenue for the District of Arkansas
• Court: U.S. Supreme Court

310 U.S. 381

60 S.Ct. 907

84 L.Ed. 1263

SUNSHINE ANTHRACITE COAL CO.

v ADKINS, Collector of Internal Revenue for the District of Arkansas.

No. 804.

Argued April 29, 1940.

Decided May 20, 1940.

[Syllabus from pages 381-383 intentionally omitted] Appeal from the District Court of the United States for the Eastern District of Arkansas.

Mr. Henry Adamson, of Terre Haute, Ind., for appellant.

[Arguments of Counsel from pages 383-384 intentionally omitted] Mr. Robert H. Jackson, Atty. Gen., for appellee.

[Argument of Counsel from Pages 384-386 intentionally omitted] Mr. Justice DOUGLAS delivered the opinion of the Court.

The labor provisions of the Bituminous Coal Conservation Act of 1935 (49 Stat. 991) were held unconstitutional by this Court in Carter v. Carter Coal Co., 298 U.S. 238, 56 S.Ct. 855, 80 L.Ed. 1160. The Bituminous Coal Act of 1937 (50 Stat. 72, 15 U.S.C.A. §§ 828—851) was thereupon enacted. It eliminated those provisions of the earlier Act and made other substantive and structural changes.¹ The basic problem here involved is the constitutionality of the 1937 Act.

That Act provides for the regulation of the sale and distribution of bituminous coal by the National Bituminous Coal Commission² with the cooperation of the bi- tuminous coal industry. Its aim is the stabilization of the industry primarily through price-fixing and the elimination of unfair competition. It is provided in § 4 (15 U.S.C.A. § 831) that the coal producers, accepting membership, shall be organized under the Bituminous Coal Code. Some twenty district boards of code members are provided for, which are to operate as an aid to the Commission but subject to its pervasive surveillance and authority. The statute specifies in detail the methods of their organization and operation, the scope of their functions, and the jurisdiction of the Commission over them. The Commission is empowered to fix minimum prices for code members in accordance with stated standards. Under § 4, II(a), 15 U.S.C.A. § 833(a), each board shall 'on its own motion or when directed by the Commission' propose minimum prices pursuant to prescribed statutory standards. These may be approved, disapproved, or modified by the Commission as the basis for the coordination of minimum prices. Somewhat comparable machinery is provided for such co-ordination of minimum prices 'in common consuming market areas upon a fair competitive basis', § 4, II(b), 15 U.S.C.A. § 833(b), and for establishment of rules and regulations incidental to the sale and distribution of coal by code members. § 4, II(a). The Commission is also given power by § 4, II(c), 15 U.S.C.A. § 833(c), to establish maximum prices for code members pursuant to standards prescribed therein. The sale, delivery, or offer for sale of coal below the minimum or above the maximum prices established by the Commission is made a violation of the code. § 4, II(e), 15 U.S.C.A. § 833(e). So are numerous practices, specified in § 4, II(i), 15 U.S.C.A. § 833(i), as unfair methods of competition. And contracts for the sale of coal at prices below the prescribed minimum or above the maximum are invalid and unenforceable. § 4, II(e). The Commission may, after hearing, revoke the code membership of any coal producer for willful violation of the code or of any regulation made thereunder. § 5(b), 15 U.S.C.A. § 835(b).

Sec. 3(a), 15 U.S.C.A. § 830(a), imposes an excise tax of 1 cent per ton of two thousand pounds upon the sale or other disposition by the producer of bituminous coal produced in the United States.³ Sec. 3(b), 15 U.S.C.A. § 830(b), imposes an additional 19 1/2% tax (based on sale price or in certain cases on fair market value) on sales of bituminous coal by producers 'which would be subject to the application of the conditions and provisions of the code provided for in section 4 (sections 831 833), or of the provisions of section 4-A (834)'.⁴ Producers who are members of the code are exempt from that tax. As we shall see, the interpretation of § 3(b) is a subject of controversy. But if, as the government contends, the 19 1/2% tax is applicable to sales by non-members, there are strong inducements for joining the code.

Machinery is provided in § 4-A for obtaining exemptions. A producer who believes that any commerce in coal is not, or may not be made, subject to the provisions of § 4 may file an application for exemption with the Commission. Subject to qualifications not material here, the filing of such application 'in good faith' exempts the applicant from any 'obligation, duty or liability' imposed by § 4 pending action by the Commission on the application. The Commission shall grant the application or after notice and opportunity for hearing, shall deny or otherwise dispose of it. An applicant aggrieved by such denial or other disposition may obtain a review of the order in the Court of Appeals for the District of Columbia or in the Court of Appeals in the circuit where he resides or has his principal place of business. § 6(b), 15 U.S.C.A. § 836(b). The findings of the Commission as to the facts, if supported by substantial evidence, are conclusive.

Appellant is lessee of coal lands in Arkansas and is engaged in the business of mining and shipping coal. It has not subscribed to or accepted the provisions of the Bituminous Coal Code provided for in § 4 of the Act. In August 1937 it filed an application for exemption on the grounds that its coal was not bituminous coal as defined in § 17(b) of the Act, 15 U.S.C.A. § 847(b). ⁵ The Commission held a public hearing on that application in October 1937. ⁶ Appellant appeared, introduced evidence, and was heard on oral argument before the Commission.⁷ In August 1938 the Commission handed down an opinion with findings of fact and conclusions of law and entered an order denying appellant's application for exemption on the grounds that its coal was bituminous within the meaning of § 17(b). Appellant obtained a review of this order in the Circuit Court of Appeals. That court held that the Commission had jurisdiction to determine the status of coal claimed to be exempt and that the Commission's decision was based on substantial evidence. It accordingly affirmed the order. Sunshine Anthracite Coal Co. v. National Bituminous Coal Commission, 105 F.2d 559. We denied certiorari. 308 U.S. 604, 60 S.Ct. 142, 84 L.Ed. —-.

In May 1938, while the above proceeding was pending before the Commission, appellee demanded that appellant pay the taxes, penalties and interest accruing under § 3(b) of the Act for the period ending February 1938; and filed a notice of tax lien against appellant's property. Thereupon appellant filed its complaint in this suit to enjoin the collection of the tax. A three-judge court was convened, which issued a temporary injunction. Apparently no further action was taken in this case until after the decision of the Circuit Court of Appeals in Sunshine Anthracite Coal Co. v. National Bituminous Coal Commission, supra, when appellee filed a supplemental answer stating that the decision in that case was res judicata as to the status of appellant's coal under the Act and that the district court had no jurisdiction over that subject matter. The court below denied appellant's motion to strike that portion of the answer. 31 F.Supp. 125. The case was tried. The court held the Act to be constitutional and dismissed the bill on the merits.⁸ The case is here on appeal (50 Stat. 752; 28 U.S.C.A. § 380a).

I. Appellant argues that it is not subject to the 19 1/2% tax imposed by § 3(b) because that section does not ap- ply to producers who are not members of the code. Its argument rests on the construction of s 3(b) and § 4. As we have seen, the former places the 19 1/2% tax on the sale or other disposition of coal 'which would be subject to the application of the conditions and provisions of the code provided for in section 4 (sections 831 833), or of the provisions of section 4-A (834).' Sec. 4 provides that the 'provisions of such code shall apply only to such code members.' Appellant therefore contends that the tax is not applicable to its coal, since the coal produced by a non-code producer such as appellant is not subject to the provisions of the code.

But if the 19 1/2% tax is not applicable to non-code members, it is not applicable to anyone since § 3(b) exempts code members from that tax. That construction would read the 19 1/2% tax out of the Act. The essential sanction of the Act would then disappear and its effectiveness would be seriously impaired. That alternative will not be taken where a construction is possible which will preserve the vitality of the Act and the utility of the language in question. See Armstrong Paint & Varnish Works v. Nu-Enamel Corp., 305 U.S. 315, 333, 59 S.Ct. 191, 200, 83 L.Ed. 195, and cases cited. Only a highly strained construction of § 3(b) would lead to the conclusion that non-code members are exempt from the 19 1/2% tax. It seems that Congress made a deliberate choice of words when it said that the tax applied to the sale or other disposition of coal which 'would be' subject to § 4 and § 4-A. Sec. 4 is made expressly applicable 'only to matters and transactions in or directly affecting interstate commerce in bituminous coal.' Hence it seems plain that the tax was intended to apply only to those sales by noncode members which 'would be' subject to regulation under § 4. Appellant's coal plainly falls in that class since practically its entire output is sold to purchasers outside the state of Arkansas. To sustain appellant's position we would not only have to substitute 'is' for 'would be'; we would have to override the express Congressional plan to make the 19 1/2% tax 'in aid of the regulation of interstate commerce' in bituminous coal.⁹ That would be not only to rewrite § 3(b) but to remake the whole statutory scheme. Obviously such a task is not for the courts.

II. Appellant challenges the constitutionality of the Act...