Anniston Mfg Co v. Davis

• Decision Date: 17 May 1937
• Docket Number: No. 667,667
• Parties: ANNISTON MFG. CO. v. DAVIS, Collector of Internal Revenue. *
• Court: U.S. Supreme Court

301 U.S. 337

57 S.Ct. 816

81 L.Ed. 1143

ANNISTON MFG. CO.

v DAVIS, Collector of Internal Revenue.^*

No. 667.

Argued April 2, 1937.

Decided May 17, 1937.

[Syllabus from pages 337-339 intentionally omitted] Messrs. Joseph B. Brennan and William A. Sutherland, both of Atlanta, Ga., for petitioner.

Messrs. Stanley F. Reed, Sol. Gen., and James W. Morris, Asst. Atty. Gen., for respondent.

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, 56 S.Ct. 312, 80 L.Ed. 477, 102 A.L.R. 914) 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, 7 U.S.C.A. § 623 note, 644—659), petitioner amended its complaint, asserting the 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, sections 901—917, of the Revenue Act of 1936 (7 U.S.C.A. § 623 note 644—659) provided a new administrative procedure for the recovery of amounts collected under the Agricultural Adjustment Act. Section 901 (7 U.S.C.A. § 623) note) repealed sections 21(d), 21(e), and 21(g), of the amendments of 1935 (49 Stat. 771—773). Section 902 (7 U.S.C.A. § 644) prescribed the conditions on which refunds should be made. Section 903 (7 U.S.C.A. § 645) related to the filing of claims. Sections 904 and 905 (7 U.S.C.A. §§ 646, 647) 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 (7 U.S.C.A. § 648) prescribed the procedure on claims for refunds of processing taxes. Section 907 (7 U.S.C.A. § 649) established certain rules of evidence or presumptions to be observed in the administrative proceeding. Section 908 (7 U.S.C.A. § 650) related to allowance of interest. Section 909 (7 U.S.C.A. § 651) denied review of the administrative ruling by any other administrative or accounting officer. Section 910 (7 U.S.C.A. § 652) undertook to free collectors from liability for moneys collected by him and paid into the Treasury in performance of his official duties. Section 913 (7 U.S.C.A. § 655) 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 the amounts collected and that section 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 section 910 need not now be considered. We had occasion to deal with a cognate question in Burrill, Treasurer, v. Locomobile Company, 258 U.S. 34, 42 S.Ct. 256, 257, 66 L.Ed. 450. That decision was rendered in suits brought by foreign corporations in the federal court to recover taxes alleged to have been paid to the defendant, the treasurer of Massachusetts, under duress and in obedience to statutes held by this Court to be unconstitutional in International Paper Co. v. Massachusetts, 246 U.S. 135, 38 S.Ct. 292, 62 L.Ed. 624, Ann.Cas.1918C, 617, and Locomobile Company v. Massachusetts, 246 U.S. 146, 38 S.Ct. 298, 62 L.Ed. 631. A statute (G.L.Mass.1921, c. 63, § 77) of Massachusetts provided that any corporation aggrieved by the exaction of the tax could apply by petition to the Supreme Judicial Court and that the remedy so provided should be exclusive. As the statute contained a provision for repayment of any sum adjudged to have been illegally exacted, it was contended that it constituted a bar to a personal suit against the Treasurer who had collected the tax. This Court agreed with the defendant upon that point. The state had substituted an exclusive remedy against itself for the remedy against the treasurer and had guaranteed payment of the amount found to be due. The validity of the statute was sustained. We said that we did 'not perceive why the State may not provide that only the author of the wrong shall be liable for it, at least when, as here, the remedy offered is adequate and backed by the responsibility of the State.'

The same reasoning is applicable here. The government has not denied its obligation to refund the amounts found in the authorized proceeding to be recoverable, but has recognized that obligation. In such a case, the substitution of an exclusive remedy directly against the government is not an invasion of constitutional right. Nor does the requirement of recourse to administrative procedure establish invalidity if legal rights are still suitably protected. The immediate question is whether the authorized proceeding affords a fair and adequate remedy. We accordingly inquire whether the prescribed procedure gives an opportunity for a full and fair hearing and determination of all questions of fact and adequately provides for the protection of the legal rights of the claimant, embracing whatever right of refund the claimant is entitled to assert under the Federal Constitution.

Second.—With respect to floor stock taxes, no serious question is presented as to the adequacy of the remedy. The remedy by suit is expressly preserved. If the Commissioner refuses refund, suit may be brought against the United States in the Court of Claims or in the District Court for the recovery of the amount claimed to have been illegally exacted. Section 905 (7 U.S.C.A. § 647).

Third.—With respect to the refunding of processing taxes, a special and exclusive administrative procedure is provided. Section 906, (7 U.S.C.A. § 648). Disallowance by the Commissioner of a claim of refund, in whole or part, is made final unless within three months the claimant files a petition for hearing upon the merits by a Board of Review which the act establishes in the Treasury Department. The Board is composed of nine members who are officers or employees of the Department and are designated by the Secretary of the Treasury. The Board is 'to determine the amount of refund due any claimant with respect to such claim.' The Commissioner is required to 'make refund of any such amount determined by a decision of the Board which has become final.' Section 906(b), 7 U.S.C.A. § 648(b). The hearing, upon notice, before the Board is to be open to the public and 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. The proceedings are to be in accordance with the rules of practice and procedure prescribed by the Board with the approval of the Secretary of the Treasury save with respect to rules of evidence which are to be in accordance with those applicable in courts of equity of the District of Columbia. The claimant and the Commissioner are entitled 'to be represented by counsel, to have witnesses subpoenaed, and to examine and cross-examine witnesses.' Provision is made to compel the attendance and testimony of witnesses and the production of books and papers from any place in the United States and to require the taking of depositions. Section 906(c)(d), 7 U.S.C.A. § 648(c, d). The presiding officers are to recommend findings of fact and a decision to the Board or the proper division thereof within six months after the conclusion of the hearing. Briefs with respect to such recommendations may be submitted within a specified time. The Board or a division is to make its findings of fact and decision in writing as quickly as practicable. The findings and decision of a division are to become those of the Board within thirty days unless the chairman has directed that they be reviewed by the Board. Copies of the findings and decision are to be mailed to the claimant and the Commissioner. Section 906(e), 7 U.S.C.A. § 648(e). There is a further provision as to costs and fees. Section 906(f), 7 U.S.C.A. § 648(f). The decision of the Board is to become final in the same manner as decisions of the Board of Tax Appeals under section 1005 of the Revenue Act of 1926 as amended. Section 906(g), 7 U.S.C.A. § 648(g); 26 U.S.C. 640 (26 U.S.C.A. § 640).

Judicial review of the decision of the Board is provided. That review may be had by a Circuit Court of Appeals or by the United States Court of Appeals for the District of Columbia, according to the residence or place of business of the claimant, or by any such court as may be designated by the Commissioner and the claimant by stipulation. Upon petition for review the Board is to certify and file in the appropriate court a transcript of the record upon which the...