Standard Nut Margarine Co. v. Mellon, 6183.

• Decision Date: 25 June 1934
• Docket Number: No. 6183.,6183.
• Citation: 63 App. DC 339,72 F.2d 557
• Parties: STANDARD NUT MARGARINE CO. OF FLORIDA v. MELLON et al.
• Court: U.S. Court of Appeals — District of Columbia Circuit

63 App. DC 339, 72 F.2d 557 (1934)

STANDARD NUT MARGARINE CO. OF FLORIDA v. MELLON et al.

No. 6183.

United States Court of Appeals for the District of Columbia.

Argued May 8, 1934.

Decided June 25, 1934.

Geo. N. Murdock, of Chicago, Ill., and Lloyd Anderson, of Washington, D. C., for appellant.

Frank J. Hogan, D. D. Shepard, W. J. Donovan, and Ralstone R. Irvine, all of Washington, D. C., for appellees.

Before MARTIN, Chief Justice, and ROBB, VAN ORSDEL, and GRONER, Associate Justices.

MARTIN, Chief Justice.

An appeal from an order sustaining demurrers to the declaration and judgment accordingly.

The appellant, plaintiff below, is a corporation which from April, 1928, to July 10, 1931, owned and operated a business at Jacksonville, Fla. The defendant Andrew W. Mellon during the same period was Secretary of the Treasury of the United States. At the same time the defendant Ogden L. Mills was Assistant Secretary or Acting Secretary of the Treasury.

The plaintiff in its declaration alleges, in substance:

That throughout the aforesaid period it manufactured and sold a certain food product known as "Southern Nut Product," which was composed wholly of vegetable oils, salt, water, and coloring matter, and contained no animal oils or fat or any element named as an ingredient of oleomargarine as defined by Act of Congress of August 2, 1886 (24 Stat. 209 26 USCA §§ 194, 207, 541 et seq.), and that plaintiff's product accordingly was not taxable as oleomargarine under that act.

That in April, 1928, when plaintiff began the manufacture and sale of its product the Commissioner of Internal Revenue, with the knowledge and under the direction of defendants, assured plaintiff that its product was not taxable as oleomargarine nor subject to the provisions of the oleomargarine law, and that such products had been held by the courts not taxable as oleomargarine.

That neither defendants nor their subordinates have ever by analysis found or decided that plaintiff's product was lawfully taxable as oleomargarine, but nevertheless the defendants afterwards arbitrarily, illegally, capriciously, contemptuously, oppressively, and without color of law demanded of plaintiff the tax for the manufacture of its product as oleomargarine and demanded of plaintiff's dealers in the product that they procure licenses as oleomargarine dealers and pay the special tax required to be paid by such dealers under the Act of August 2, 1886, supra.

That defendants and their deputies, agents, and employees with their knowledge and consent and under their direction assessed plaintiff's product with taxes under the classification of oleomargarine and demanded payment of the same and thereby interfered with and destroyed the plaintiff's business throughout the country, although defendants then well knew that there was no law making plaintiff's product taxable as oleomargarine prior to July 10, 1931, when products such as the plaintiff's first became legally taxable as oleomargarine under the act of Congress effective on that date. 46 Stat. 1022 (26 USCA § 541 and note).

That in January, 1930, plaintiff sought and secured from the District Court of the United States for the Southern District of Florida an injunction against the collector of internal revenue for the district of Florida enjoining him from in any way attempting to tax plaintiff's product as oleomargarine, or to demand that plaintiff's dealers in such product should procure a license as dealers in oleomargarine and otherwise comply with the provisions of the oleomargarine laws. That defendants caused an appeal to be taken from this decree, and in February, 1931, the decision was affirmed by the Circuit Court of Appeals for the Fifth Circuit. Miller v. Standard Nut Margarine Co., 49 F.(2d) 79. That defendants thereupon appealed from this decision to the United States Supreme Court which in February, 1932, affirmed the decree of the Circuit Court of Appeals. Id., 284 U. S. 498, 52 S. Ct. 260, 76 L. Ed. 422.

That notwithstanding the granting of the injunction by the District Court in Florida, defendants, their deputies and agents, continued to arbitrarily, and oppressively interfere with the business of plaintiff in other states, namely, Georgia, South Carolina, North Carolina, Alabama, Mississippi, Tennessee, and Louisiana by demanding that plaintiff's dealers procure licenses as dealers in oleomargarine and comply with the oleomargarine laws or discontinue the sale of plaintiff's product.

That, as a result of these arbitrary, wanton, capricious, illegal, malicious, oppressive, and contemptuous acts of defendants, plaintiff's business in its product was greatly injured and interfered with in the state of Florida and in the other states and it was deprived of and lost large profits which were accruing to it and would have accrued to it had it been permitted to continue its business unmolested by defendants until July 10, 1931, and plaintiff, because of the injuries it has sustained, demands judgment in damages against defendants in the sum of $200,000 and additional punitive damages in the sum of $50,000 for the wrongs above complained of.

The defendant demurred to the declaration for want of substance. The lower court sustained the demurrers. Whereupon the present appeal was taken.

By the act of August 2, 1886, supra, a tax is imposed upon the manufacture and sale of oleomargarine as defined by section 2 of the act (26 USCA § 541), which reads as follows:

"Sec. 2. For the purposes of this chapter certain manufactured substances, certain extracts, and certain mixtures and compounds, including such mixtures and compounds with butter, shall be known and designated as `oleomargarine,' namely: All substances known heretofore as oleomargarine, oleo, oleomargarine oil, butterine, lardine, suine, and neutral; all mixtures and compounds of oleomargarine, oleo, oleomargarine oil, butterine, lardine, suine, and neutral; all lard extracts and tallow extracts; and all mixtures and compounds of tallow, beef fat, suet, lard, lard oil, vegetable-oil annotto, and other coloring matter, intestinal fat, and offal fat made in imitation or semblance of butter, or when so made, calculated or intended to be sold as butter or for butter."

It may be observed that the definition of oleomargarine contained in the statute specifies only such products as are derived from animal oils or fats, and does not include any product composed exclusively of vegetable oils, unless by force of the term "vegetable-oil annotto" which is contained therein. Annotto is a vegetable coloring...