93 F.2d 902 (10th Cir. 1937), 1568, Vidal v. Stahmann Farms

• Docket Nº: 1568.
• Citation: 93 F.2d 902
• Party Name: VIDAL, Collector of Internal Revenue, v. STAHMANN FARMS.
• Case Date: December 27, 1937
• Court: United States Courts of Appeals, Court of Appeals for the Tenth Circuit

Page 902

93 F.2d 902 (10th Cir. 1937)

VIDAL, Collector of Internal Revenue,

v.

STAHMANN FARMS.

No. 1568.

United States Court of Appeals, Tenth Circuit.

December 27, 1937

Rehearing Denied February 5, 1938.

F. E. Youngman, Sp. Asst. to the Atty. Gen. (James W. Morris, Asst. Atty. Gen.,

Page 903

Sewall Key and James E. Murphy, Sp. Assts. to the Atty. Gen., and Warner W. Gardner, Atty., United States Department of Justice, of Washington, D.C., on the brief), for appellant.

W. C. Whatley, of Las Cruces, N.M., for appellees.

Before BRATTON and WILLIAMS, Circuit Judges, and SYMES, District judge.

SYMES, District Judge.

Plaintiff below (Stahmann Farms), a copartnership, recovered judgment for $13,064.52 against the appellant (defendant below), in the District Court of the United States for the District of New Mexico, alleged to have been paid as taxes under the so-called Bankhead Cotton Act, Act of April 21, 1934, c. 157, 48 Stat. 598, 7 U.S.C.A. §§ 701-725 notes. The defendant appeals. Two questions are briefed and argued: (1) Is the plaintiff the proper party to maintain this action; (2) is the so-called Bankhead Cotton Act, supra, constitutional.

A jury trial was waived and the case heard by the court upon the facts admitted by the pleadings and a written stipulation filed by the parties.

It appears that during the crop year 1934-35 appellee, Stahmann Farms, was engaged in the growing of cotton in Dona Ana county, N.M., and had been, for many years prior thereto, cultivating over 2,000 acres. During the above year it produced a quantity of cotton in excess of the allotment it was entitled to exemption certificates to cover. It delivered this cotton to the Santo Tomas Gin Company to be ginned. The latter ginned it and filed the required monthly returns with the Collector, which showed a tax due of $13,064.52, of which amount $11,193.99 was assessed against the gin company in December, 1934, and the balance $1,870.53, in the January following. The gin company declined to deliver the ginned cotton to the appellee until the assessments against it were paid. Whereupon appellee paid these sums to the Collector with its four checks drawn to his order. He applied the same against the assessments outstanding on his books against the Santo Tomas Gin Company.

The lower court held the act unconstitutional; that the tax was attempted to be imposed against the producer and not the ginner; was illegally assessed and collected; and should be returned to the Stahmann Farms.

1. The Bankhead Cotton Act (since repealed) imposes a tax upon cotton ginned in excess of certain exemptions allowed by the Act.

Section 4(a): 'There is hereby levied and assessed on the ginning of cotton hereafter harvested during a crop year with respect to which this Act is in effect, a tax at the rate per pound of the lint cotton produced from ginning, of 50 per centum of the average central market price per pound of lint cotton, ' etc. 48 Stat. 599.

Subsection (c) of section 4 requires the ginner to make monthly returns of all cotton ginned to the Collector, and makes him liable for the payment of the tax. Furthermore, the regulations of the Commissioner of Internal Revenue say (article 13): 'Liability for the tax attaches to the ginner immediately upon ginning of the cotton.'

The Collector made no attempt to collect the assessment from the appellee, and there is no provision in the statute imposing liability therefor upon the producer, except under circumstances not here...