Matthews v. Rodgers

• Decision Date: 15 February 1932
• Docket Number: No. 84,84
• Parties: MATTHEWS et al. v. RODGERS et al. Re
• Court: U.S. Supreme Court

284 U.S. 521

52 S.Ct. 217

76 L.Ed. 447

MATTHEWS et al.

v RODGERS et al.

No. 84.

Reargued Jan. 11, 1932.

Decided Feb. 15, 1932.

Mr. J. A. Lauderdale, of Jackson, Miss., for appellants.

Mr. Edward W. Smith, of Clarksdale, Miss., for appellees.

Mr. Justice STONE delivered the opinion of the Court.

This is an appeal, sections 238, 266 of the Judicial Code (28 USCA § 345, 380), from a decree of a District Court of three judges, for the Northern District of Mississippi, enjoining the collection from the several appellees of a state tax, as an unconstitutional burden on interstate commerce. After argument here on the merits, the cause was restored to the docket 'for reargument, limited to the question of the jurisdiction of the District Court both with respect to the amount involved in the suit and the jurisdiction of the court as a court of equity'; reargument has been had accordingly.

The bill of complaint assails the constitutionality of section 56, c. 88, 1930 Laws of Mississippi, as applied to appellees. The section imposes an annual license or 'privilege' tax of $100, payable in advance by 'every individual * * * engaged in the business of buying or selling cotton for himself.' It also requires employers engaged in the business of buying or selling cotton to pay a similar 'tax of twenty-five dollars ($25.00) for every employee engaged in their business as buyer or seller.' Penalties are imposed in double the amount of the tax for its nonpayment. Section 225. Failure to make application for the license, or engaging in the business without having procured the license or paid the tax, are misdemeanors, punishable by fine not exceeding $500 or imprisonment not exceeding six months, or both. Section 242.

The bill, which is in the form of a class bill, filed by the numerous appellees for the benefit of themselves and others similarly situated, alleges that they are engaged in interstate and foreign commerce, in the course of which they purchase cotton within the state and sell and ship it in interstate or foreign commerce to purchasers outside the state; that the business of each of the several appellees and the right to conduct it is of a value of more than $3,000, the jurisdictional amount for suits brought in a District Court of the United States; that the tax imposed by the state statute is, as to them, an unconstitutional burden on interstate commerce, and that appellants, state officers, charged with the duty of collecting the tax, thereaten to enforce its collection by criminal proceedings and the imposition of penalties. The bill states that resort to equity to prevent collection of the tax is either necessary or authorized for the following, among other, reasons:

(1) That the enforcement of the unconstitutional statute would irreparably injure or destroy the business of each of the appellees.

(2) That the taxes, if paid, cannot be recovered by any action or proceeding at law.

(3) That section 304 of Hemingway's Annotated Mississippi Code of 1927 has conferred on the appellees the right to proceed in equity in the state courts to enjoin the collection of an unconstitutional tax, and that that remedy is available in the federal District Court.

(4) That resort to equity is necessary in order to avoid a multiplicity of separate suits by the appellees and others similarly situated, three hundred in all, to enjoin collection of the tax, or otherwise necessary in order to recover it if paid or to prevent successive prosecutions for the violation of the act, in all of which suits or proceedings the issue of the constitutionality of the tax would be substantially the same.

The right of appellees, if any, to maintain the present suit, is conferred by section 24(1) of the Judicial Code, 28 U. S. C. § 41(1), 28 USCA § 41(1), which, regardless of the citizenship of the parties to the suit, vests in District Courts of the United States jurisdiction over suits at law or in equity arising 'under States,' where the matter in controversy exceeds States,' where the mater in controversy exceeds $3,000. Although the present suit arises under the Constitution of the United States, see Davis v. Wallace, 257 U. S. 478, 42 S. Ct. 164, 66 L. Ed. 325, and it be assumed, without deciding, that the jurisdictional amount is involved, it cannot be maintained if not within the equity jurisdiction of the District Court. The want of equity jurisdiction, if obvious, may and should be objected to by the court of its own motion. In other cases, this jurisdictional requirement, unlike the others men- tioned, may be treated as waived if the objection is not presented by the defendant in limine. Duignan v. United States, 274 U. S. 195, 199, 47 S. Ct. 566, 71 L. Ed. 996; Singer Sewing Machine Co. v. Benedict, 229 U. S. 481, 484, 33 S. Ct. 942, 57 L. Ed. 1288; Thompson v. Central Ohio R. Co., 6 Wall. 134, 18 L. Ed. 765; compare Matson Navigation Co. v. United States (January 4, 1932) 284 U. S. 352, 52 S. Ct. 162, 76 L. Ed. 336; Hilton v. Dickinson, 108 U. S. 165, 168, 2 S. Ct. 424, 27 L. Ed. 688; Grace v. American Central Insurance Co., 109 U. S. 278, 283, 284, 3 S. Ct. 207, 27 L. Ed. 932; Bors v. Preston, 111 U. S. 252, 255, 4 S. Ct. 407, 28 L. Ed. 419. Here, the objection to the equity jurisdiction of the District Court was properly raised by appellants' motion to dismiss the bill, and is preserved by their assignments of error in this Court.

Section 16 of the Judiciary Act of 1789, 1 Stat. 82, perpetuated without material change as Rev. Stat. § 723, Jud. Code § 267 (28 U. S. C. § 384, 28 USCA § 384), declares that suits in equity shall not be sustained in the courts of the United States 'in any case where a plain, adequate, and complete remedy may be had at law.' The effect of this section, which was but declaratory of the rule in equity, established long before its adoption, is to emphasize the rule and to forbid in terms recourse to the extraordinary remedies of equity where the right asserted may be fully protected at law. See Deweese v. Reinhard, 165 U. S. 386, 389, 17 S. Ct. 340, 41 L. Ed. 757; New York Guaranty Co. v. Memphis Water Co., 107 U. S. 205, 214, 2 S. Ct. 279, 27 L. Ed. 484.

The reason for this guiding principle is of peculiar force in cases where the suit, like the present one, is brought to enjoin the collection of a state tax in courts of a different, though paramount, sovereignty. The scrupulous regard for the rightful independence of state governments which should at all times actuate the federal courts, and a proper reluctance to interfere by injunction with their fiscal operations, require that such relief should be denied in every case where the asserted federal right may be preserved without it. Whenever the question has been presented, this Court has uniformly held that the mere illegality or unconstitutionality of a state or municipal tax is not in itself a ground for equitable relief in the courts of the United States. If the remedy at law is plain, adequate, and complete, the aggrieved party is left to that remedy in the state courts, from which the cause may be brought to this Court for review if any federal question be involved, Jud. Code § 237 (28 USCA § 344), or to his suit at law in the federal courts if the essential elements of federal jurisdiction are present. See Boise Artesian Hot & Cold Water Co. v. Boise City, 213 U. S. 276, 29 S. Ct. 426, 53 L. Ed. 796; Shelton v. Platt, 139 U. S. 591, 11 S. Ct. 646, 35 L. Ed. 273; Dows v. Chicago, 11 Wall. 108, 110, 112, 20 L. Ed. 65.

It may be assumed that, if appellees do not pay the challenged tax, and in consequence of that omission they are subjected, as it is alleged they will be, to the civil and criminal penalties for nonpayment, the resulting injury to their business will be irreparable, and can be avoided only by resort to equity to prevent the threatened wrong. But appellants insist that the appellees are under no such constraint, either to expose themselves to the penalties for failure to pay the tax or to seek equitable relief against its collection, since each of them may pay the tax to the collecting officer under protest, and, under the laws of Mississippi, may maintain a suit at law for its recovery on the ground that it was exacted in violation of the Constitution of the United States. That such a procedure saves to the taxpayer his federal right, and, if available, will defeat the jurisdiction of federal courts to enjoin the collection of the tax, has long been the settled rule in this Court. Henrietta Mills v. Rutherford County, North Carolina, 281 U. S. 121, 50 S. Ct. 270, 74 L. Ed. 737; Arkansas Building & Loan Association v. Madden, 175 U. S. 269, 20 S. Ct. 119, 44 L. Ed. 159; Atchison, Topeka & Santa Fe Ry. v. O'Connor, 223 U. S. 280, 32 S. Ct. 216, 56 L. Ed. 436, Ann., Cas. 1913C, 1050; Shelton v. Platt, supra; Singer Sewing Machine Co. v. Benedict, supra; Allen v. Pullman's Palace Car Co., 139 U. S. 658, 11 S. Ct. 682, 35 L. Ed. 303; Indiana Manufacturing Co. v. Koehne, 188 U. S. 681, 23 S. Ct. 452, 47 L. Ed. 651.

From an examination of the decisions of the highest court of the state, we conclude, as the Attorney General of the State insists, that that procedure is open to the appellees in Mississippi, if the tax is paid under protest, to avoid penalties or criminal proceedings. In Coulson v. Harris, 43 Miss. 728, the Supreme Court of Mississippi denied the jurisdiction of equity to enjoin the collection of an illegally assessed tax on the sole ground that the taxpayer might pay the tax to the collecting officer and sue at law for its recovery. In Tuttle v. Everett, 51 Miss. 27, 24 Am. Rep. 622, recovery was allowed of a tax thus paid, in a suit at law brought against the collector before he had paid over the tax to the proper treasury. In City of Vicksburg v. Butler, 56 Miss. 72, and Pearl River County v. Lacey Lumber Co., 124 Miss. 85, 86 So. 755, suits at law for recovery of a tax, were maintained against the city, in...