Central R. Co. of New Jersey v. Martin, 5184

• Decision Date: 14 December 1936
• Docket Number: No. 5184,5199-5206 (1934). No. 5490-5497 (1935).,5184
• Citation: 19 F. Supp. 84
• Parties: CENTRAL R. CO. OF NEW JERSEY v. MARTIN, State Tax Com'r of State of New Jersey, et al., and sixteen other cases.
• Court: U.S. District Court — District of New Jersey

19 F. Supp. 84

CENTRAL R. CO. OF NEW JERSEY

v.

MARTIN, State Tax Com'r of State of New Jersey, et al., and sixteen other cases.

Nos. 5184, 5199-5206 (1934). Nos. 5490-5497 (1935).

District Court, D. New Jersey.

December 14, 1936.

Maximilian M. Stallman, of Newark, N. J., and Robert J. Bain, of Jersey City, N. J. (A. H. Elder, of New York City, of counsel), for plaintiffs.

David T. Wilentz, of Trenton, N. J., and Duane E. Minard, of Newark, N. J. (John J. Solan, of Trenton, N. J., of counsel), for defendants.

FORMAN, District Judge.

Nine of the above-listed causes have to do with railroad taxes imposed for the year 1934 and eight of them for the year 1935.

In each year temporary restraining orders were issued by this court at the prayer of the plaintiffs which have had the effect of staying the collection of the taxes.

Now the defendants move to vacate the restraints imposed and the plaintiffs press for preliminary injunctions in each case pending final adjudication.

Counsel for the plaintiffs include in their last brief submitted herein a reference to the case of the Reading Company v. Martin et al. (No. 5200), but that plaintiff is not affected by the issues discussed herein because it is represented that it has paid the taxes against it for the years 1934 and 1935 in full.

The plaintiffs known herein as the railroads carried appeals from the assessments against them to the New Jersey State Board of Tax Appeals which found against them.

Pursuant to section 14 of the Railroad Tax Act (P.L.1888, p. 278 4 Comp.St. N.J.1910, p. 5271, § 458) the Attorney General of New Jersey applied in 1935 and 1936 to a Justice of the New Jersey Supreme Court for orders that the taxes, interest, and costs should be made a record of the Supreme Court and judgments should be entered thereon in the name of the State of New Jersey. Such orders were actually entered in 1935 and 1936, but no further action was taken thereunder after the issuance of the restraining orders herein dated July 9, 1935 and June 9, 1936, respectively.

In brief the defendants contend that the said restraining orders should be vacated because:

1. There are no facts before the court to support such interlocutory relief; that no irreparable injury is threatened to the railroads and that the bills of complaint in each case are not sufficiently verified;

2. This court has no jurisdiction to entertain the bills of complaint because the application for injunctions have not been presented to a court constituted as required by section 268 of the Judicial Code (28 U.S.C.A. § 380);

3. Any injunctions granted in these cases are violative of section 265 of the Judicial Code (28 U.S.C.A. § 379) for the reason that they stay proceedings in a state court, to wit, the State Board of Tax Appeals for the state of New Jersey; or they stay proceedings now pending before the New Jersey Supreme Court or a Justice thereof in aid of the enforcement of judgments of the said State Board of Tax Appeals or they stay proceedings now pending before the New Jersey Supreme Court or a Justice thereof for the entry of judgments and the issuance of executions for the collection of unpaid taxes.

4. The complaints on which the restraining orders were based fail to show that the railroads were without adequate remedies under the laws of the state of New Jersey;

The railroads repeat all of the grounds for the issuance of the preliminary injunctions urged by them in the 1932 and 1933 cases and the defendants repeat, in addition to the aforementioned reasons for the vacation of the restraining orders, the grounds they urged in opposing the 1932 and 1933 orders.

At this juncture in these proceedings the main difference in the status thereof and that of the 1932 cases is that here an additional step has been undertaken pursuant to Section 14 of the Railroad Tax Act, 4 Comp.St.N.J.1910, p. 5271, § 458 (supra).¹

This makes necessary the determination of whether the issuance of the order of the Justice of the New Jersey Supreme Court in each of these cases constitutes such a prohibition under section 265 of the Judicial Code, 28 U.S.C.A. § 379 (supra)² as prevents the issuance of the restraining orders.

The defendants contend that the decision of the United States Supreme Court in the recent Dorrance Case (Hill v. Martin, 296 U.S. 393, 56 S.Ct. 278, 80 L.Ed. 293) gives such a theory forceful support. In that case the executors of the Dorrance estate took an appeal from the assessment by the New Jersey Tax Commissioner for inheritance taxes to the prerogative court of New Jersey. That court affirmed the assessment, which was then reviewed by the New Jersey Supreme Court upon a writ of certiorari sued out by the executors. The latter court affirmed the prerogative court and dismissed the writ of certiorari. Then suits were brought in the federal court under section 266 of the Judicial Code (28 U.S.C.A. § 380) to enjoin the collection of the tax. The injunction was denied for want of jurisdiction because of the prohibition contained in Section 265 of the Judicial Code (28 U.S.C.A. § 379). Dorrance et al. v. Martin et al. (D.C.) 12 F. Supp. 746. This decision was affirmed by the United States Supreme Court because the proceedings were deemed judicial. It was stated in the decision that, "The prohibition of section 265 28 U.S.C.A. § 379 is against a stay of `proceedings in any court of a State.' That term is comprehensive. It includes all steps taken or which may be taken in the state court or by its officers from the institution to the close of the final process. It applies to appellate as well as to original proceedings; and is independent of the doctrine of res judicata. It applies alike to action by the court and by its ministerial officers; applies not only to an execution issued on a judgment, but to any proceeding...