White Packing Co. v. Robertson

Citation17 F. Supp. 120
Decision Date10 November 1936
Docket NumberNo. 58.,58.
CourtU.S. District Court — Middle District of North Carolina
PartiesWHITE PACKING CO. v. ROBERTSON.

Walter H. Woodson, of Salisbury, N. C. (Ivins, Phillips, Graves & Barker, of Washington, D. C., of counsel), for plaintiff.

Carlisle W. Higgins, U. S. Atty., of Winston-Salem, N. C. (Robert H. Jackson, Asst. Atty. Gen., and Andrew D. Sharpe and Frederic G. Rita, Sp. Assts. to Atty. Gen., of counsel), for respondent.

HAYES, District Judge.

This is a suit in equity to restrain the collector from requiring the complainant to file an income tax return and from assessing and collecting a tax imposed by title 3 of the Revenue Act of 1936 (sections 501-506 26 U.S.C.A. §§ 345-345e), designated by the statute as "Tax on Unjust Enrichment," and for judgment declaring the statute unconstitutional under the Federal Declaratory Judgment Act, as amended (28 U.S.C.A. § 400).

An order to show cause was issued why an injunction should not issue and restrain the defendant from requiring the filing of the tax returns by the complainant. The defendant answered the order to show cause and filed a motion to dismiss the bill of complaint on the grounds that this court is deprived of jurisdiction by section 3224 of the Revised Statutes (26 U.S.C.A. § 1543); that the bill of complaint failed to allege facts sufficient to entitle it to equitable relief; that it appears that the plaintiff has a plain and adequate and complete remedy at law; and that this court has no jurisdiction of a suit for a declaratory judgment. This suit involves a novel proposition. It is to be observed that at the filing of the bill the complainant did not file a tax return and the period for filing the return had not expired. It does not sufficiently appear whether the taxpayer will be liable for any tax if and when the return is filed. This court is therefore confronted with the question of passing on the constitutionality of the act in behalf of a taxpayer who may not be liable to a tax at all and would give this taxpayer the benefit of an opportunity to challenge the constitutionality of a law when he may not have any interest involved. The complainant, anticipating his inability to get along in such circumstances, alleges that he will be compelled to elect between one of two methods available for the ascertainment of the amount of tax for which he might be liable. And that this election on his part might be detrimental if he should make an unwise election and therefore he asks a court of equity to appoint auditors and examine the complainant's books and records and determine as a matter of law which method of bookkeeping should be recognized for the purpose of supporting the tax return to be filed.

The complainant is engaged in operating a packing house and during the period while the triple A was in force incurred certain processing taxes, some of which were paid into a depository designated by this court. From April 1, 1935, until the termination of the Agricultural Adjustment Act (7 U.S.C.A. § 601 et seq.) by the decision of the Supreme Court in United States v. Butler et al., 297 U.S. 1, 56 S.Ct. 312, 80 L.Ed. 477, 102 A.L.R. 914, the complainant paid into the depository of the court $32,523.78.

The plaintiff wants this court now to hold the act of 1936 unconstitutional, and if it is unconstitutional to restrain the defendant from requiring the filing of the returns, for assessing or collecting the so-called windfall tax. And if the court does not hold the act unconstitutional, the complainant wants the court to appoint auditors to determine what sort of a tax return should be filed and what method of bookkeeping should be employed for the purpose of filing the returns.

Revised Statutes, § 3224 (6 U.S. C.A. § 1543), expressly provides that no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court. This statute has been construed in so many cases and so recently that it would seem unnecessary to cite any authority. It has been applied in Graham v. DuPont, 262 U.S. 234, 43 S.Ct. 567, 67 L.Ed. 965; Bailey v. George, 259 U.S. 16, 42 S.Ct. 419, 66 L.Ed. 816; Dodge v. Osborn, 240 U.S. 118, 36 S.Ct. 275, 60 L.Ed. 557; State Railroad Tax Cases, 92 U.S. 575, 23 L. Ed. 663, and recently in Red Star Yeast & Products Company v. La Budde, 83 F.(2d) 394 (C.C.A.7th Circuit), and Huston v. Iowa Soap Co. (C.C.A.8th Circuit) 85 F.(2d) 649, decided Sept. 8, 1936.

It is perfectly manifest from the allegations in the bill and the statutes involved the complainant has plain, adequate, and complete remedies at law to litigate without payment the validity of the statute and all questions of liability under it. In Bailey v. George, supra, the court pointed out that a system of corrective justice had been worked out and ample machinery established for the purpose of enabling a taxpayer to recover taxes illegally assessed or collected and that a court of equity should not interfere by means of an injunction with the collection of the tax which would hamper the government in the performance of its duties, but that the taxpayer should pursue his remedy at law. This principle so clearly stated in that case and followed so consistently by the courts since that date is not disturbed by the decision of the Supreme Court in Rickert Rice Mills, Inc., v. Fontenot, 297 U.S. 110, 56 S.Ct. 374, 80 L.Ed. 513. The court in that case expressly stated that it had no occasion to discuss or decide the question of the adequacy of the remedy at law. The taxes had not been paid and in view of the decision which is rendered the taxpayer was not required to pay the tax thereafter. And it was further stated that if the collector endeavored to do so, he would be a trespasser. Since two Circuits have had occasion to determine the applicability of section 3224 since the Rickert Mills Case and have decided that the section is still applicable, I see no reason why this court should not follow those decisions.

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8 cases
  • White Packing Co. v. Robertson
    • United States
    • United States Courts of Appeals. United States Court of Appeals (4th Circuit)
    • April 6, 1937
  • Washington Beauty College, Inc. v. Huse
    • United States
    • United States State Supreme Court of Washington
    • June 7, 1938
    ...... decree. . . In. Schoenwald v. Diamond K. Packing Co., Wash., 73 P.2d. 748, appellant prayed for a declaratory judgment which was. ...201; International Harvest Hat Co. v. Caradine Hat Co., D.C., 17 F.Supp. 79; White. Packing Co. v. Robertson, D.C., 17 F.Supp. 120, affirmed. 4 Cir., 89 F.2d 775; Agnew & ......
  • Bernhardt Furniture Co. v. Robertson
    • United States
    • U.S. District Court — Middle District of North Carolina
    • February 8, 1937
    ...maintained in any court." This court followed this statute in an opinion filed in White Packing Co. v. Robertson (D.C.) decided November 10, 1936, 17 F.Supp. 120, in the "windfall" tax statute; and in Reynolds Tobacco Co. v. Robertson (D.C.) 14 F. Supp. 463, involving a tax on exports. Exce......
  • Cottman Co. v. Dailey
    • United States
    • United States Courts of Appeals. United States Court of Appeals (4th Circuit)
    • January 4, 1938
    ...See Dodge v. Osborn, 240 U.S. 118, 36 S.Ct. 275, 60 L.Ed. 557; White Packing Co. v. Robertson, 4 Cir., 89 F.2d 775, 777; Id. D.C., 17 F.Supp. 120, and cases there cited. Section 3224 of the Revised Statutes, 26 U.S.C.A. § 1543, forbids the maintenance of any suit for restraining the assessm......
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