State v. Great Atlantic & Pacific Tea Co.

• Citation: 183 So. 219,190 La. 925
• Decision Date: 30 May 1938
• Docket Number: 34785
• Parties: STATE v. GREAT ATLANTIC & PACIFIC TEA CO. [*]
• Court: Louisiana Supreme Court

183 So. 219

190 La. 925

STATE v. GREAT ATLANTIC & PACIFIC TEA CO. ^[*]

No. 34785

Supreme Court of Louisiana

May 30, 1938

Rehearing Denied June 27, 1938

Appeal from Civil District Court, Parish of Orleans; Harold A Moise, Judge.

Suit by the State of Louisiana against the Great Atlantic & Pacific Tea Company to recover license taxes due the State for the years 1935, 1936, and 1937. From a judgment for plaintiff defendant appeals.

Affirmed.

Hugh M. Wilkinson, of New Orleans, for appellant.

Justin C. Daspit, F. A. Blanche and E. L. Richardson, all of Baton Rouge, for appellee.

FOURNET, Justice. O'NIELL, C. J., does not take part. LAND, J., absent. ODOM, J., dissents from the refusal to grant a rehearing.

OPINION

FOURNET, Justice.

This is an action by the State of Louisiana to recover from the Great Atlantic & Pacific Tea Company the amount of license taxes due it for the calendar years 1935, 1936 and 1937, under the provisions of Act No. 19 of 1932, as amended by Act No. 51 of 1934, generally known as the Louisiana Chain Store License Tax Act, together with interest and attorney's fees.

Defendant, before filing any pleadings in the matter, deposited in the registry of the court the amount of the taxes involved, less interest and attorney's fees; it then resisted the rule by excepting to the jurisdiction of the court ratione materiae on the ground that the matter of interest and attorney's fees was pending in the District Court of the United States for the Eastern District of Louisiana, and, with reservation of its rights thereunder, filed an answer denying liability to the State for any interest or attorney's fees, setting forth as its reasons therefor substantially: (1) That it instituted injunction proceedings and contested the constitutionality of the Act in the United States District Court for the Eastern District of Louisiana, in good faith, prior to the time the taxes became delinquent under the provisions of the Act, which had the effect of suspending the accrual of interest and attorney's fees during the pendency of the action, otherwise it would be deprived of its property without due process of law and of its right to the equal protection of the laws in violation of the Constitution of the United States, Amendment 14, § 1, U.S.C.A.Const. Amend. 14, § 1, and the Constitution of the State of Louisiana, Article 1; (2) that the State, through its proper representative, on the hearing in the District Court of the United States for the issuance of the interlocutory injunction, "agreed without prejudice to the ultimate rights of any parties to this suit * * * that it was proper for the matters involved to be held in statu quo until a hearing might be had on the merits," which had the effect of suspending the running of interest and attorney's fees, and the state is accordingly estopped from demanding the same on account of the delay during such action; and (3) in the alternative, that the defendant should be relieved of the claim for interest and attorney's fees to the extent of the amount tendered the State under Act No. 19 of 1932.

On these issues the case was tried and submitted, and the trial judge, for written reasons, gave judgment in favor of the plaintiff for the amount of interest and attorney's fees as prayed for. The defendant has appealed.

The Legislature of the State, under the authority of Section 8, Article 10 of the Constitution of Louisiana for the year 1921, by Act No. 51 of 1934, amended and reenacted Act No. 19 of 1932. The statute, as amended, became effective January 1, 1935, and the license taxes due thereunder were delinquent on March 1, 1935. It is also provided in the Act that in the event the taxes were delinquent, "such taxes shall bear interest at the rate of two per cent per month, plus ten per cent additional on both principal and interest as attorney's fees * * *," Section 5, as amended by section 4 of the act of 1934.

The defendant refused to pay the license taxes provided for under the provisions of the Act, as amended, but tendered to the State the amount due by it under the provisions of Act No. 19 of 1932, which was refused. On February 27, 1935, one day before the taxes became delinquent, the defendant instituted proceedings in the District Court of the United States for the Eastern District of Louisiana, In Equity, testing the constitutionality of the statute, and obtained a temporary restraining order, and on June 24, 1935, an interlocutory injunction was issued, prohibiting the State from collecting or attempting to collect either the taxes, interest or attorney's fees due under the statute. The case was tried on the merits on July 24th and the court sustained the validity of the Act in question (Great Atlantic & Pacific Tea Co. v. Grosjean, 16 F.Supp. 499), from which an appeal was taken to the Supreme Court of the United States, which, by its decree of May 17, 1937, affirmed the judgment of the lower court sustaining the validity of the statute. 301 U.S. 412, 57 S.Ct. 772, 81 L.Ed. 1193, 112 A.L.R. 293. Defendant then requested an extension of sixty days to apply for a rehearing, which extension was granted, but the rehearing, in due course, was denied on October 11, 1937. 302 U.S. 772, 58 S.Ct. 3, 82 L.Ed. 599.

On the 13th day of October, 1937, two days after the Supreme Court refused a rehearing in the matter, the State proceeded in a summary manner under the authority of Act No. 14 of the Second Extra Session of 1935 against the defendant to recover the amount due it under the statute in license taxes, interest and attorney's fees for the years 1935, 1936 and 1937, which, at the time the suit was filed, aggregated $ 281,536.75. The defendant, before pleading, deposited in the registry of the court the principal amount of taxes sued for, leaving at issue the interest and attorney's fees.

The plea to the jurisdiction is based on the theory of the defendant that the question of its liability for the interest and attorney's fees is pending in the District Court of the United States for the Eastern District of Louisiana which previously assumed and took jurisdiction thereof, and is predicated upon an ex parte order of that court, dated January 4, 1937, in the case of Great Atlantic & Pacific Tea Company v. Grosjean, In Equity. See 16 F.Supp. 499.

A review of that case shows that the Great Atlantic & Pacific Tea Company (defendant here) and others, whose appeal bond had been fixed to include the principal amount of the tax, interest and attorney's fees that would probably accrue during the time the litigation would be in progress, moved to have the amount of the bond reduced on the ground that the act, insofar as the interest and attorney's fees were concerned, was not attacked; the court overruled the motion "but with the express reservation to complainant and intervenors of the right to be heard in this Court as to their liability for penalties and attorney's fees on the taxes accruing under the challenged statute should the validity of such statute be finally upheld." Though the statute in controversy was assailed on several grounds, the constitutionality of the interest and attorney's fees provided for in the Act was never raised or placed in issue; consequently, the matter of interest and attorney's fees is not and can not be pending before the Federal court. But even if that question were pending there, the State court would not thereby be deprived of its jurisdiction for it is now well settled as a general rule that the pendency of a suit in a Federal court is not ground for abatement of a like suit in the state court. See Corpus Juris, under the title "Abatement and Revival, section 122, at page 87. We therefore conclude that the plea to the jurisdiction of the court ratione materiae is without merit and was properly overruled by the lower court.

Counsel for defendant apparently concedes that his contention urged in the lower court, i.e., Section 5 of the Act, as amended, violates the equal protection clause of the Fourteenth Amendment to the Constitution of the United States and Article 1 of the Constitution of Louisiana, is without merit in that he has failed to point out in what respect the defendant's rights have been so affected in his presentation of the case on appeal, and from a review of the Act we do not see in what manner the rights of defendant might be so affected. Furthermore, the Supreme Court of the United States, in the matter of the Great Atlantic & Pacific Tea Company v. Grosjean, supra, found as a fact that "the statute bears equally upon all who fall into the same class, and this satisfies the guaranty of equal protection." (57 S.Ct. page 776.)

The injunction proceedings in the Federal court had the effect of restraining and prohibiting the State from enforcing the provisions of the Act during the pendency of the action, but that did not have the effect of suspending the effectiveness of the Act when the final judgment of the court upheld its validity, and the State by its action in not having opposed the issuance of the interlocutory injunction, but instead, having agreed "without prejudice to the ultimate rights of any parties to this suit * * * that it was proper for the matters involved to be held in statu quo until a hearing might be had on the merits," could only have the effect of facilitating and expediting the pending action testing the validity of the Act in controversy, but could not have suspended the accrual of interest and attorney's fees, nor estopped the State from demanding the same.

"An interlocutory or preliminary injunction is a provisional remedy granted before a hearing on the merits, and its sole object is to preserve the subject in controversy in its then existing condition, and without...