White Packing Co. v. Robertson

Decision Date06 April 1937
Docket NumberNo. 4130.,4130.
Citation89 F.2d 775
PartiesWHITE PACKING CO. v. ROBERTSON.
CourtU.S. Court of Appeals — Fourth Circuit

Richard B. Barker, of Washington, D. C. (Walter H. Woodson and Stahle Linn, both of Salisbury, N. C., and Ivins, Phillips, Graves & Barker, of Washington, D. C., on the brief), for appellant.

F. E. Youngman, Sp. Asst. to Atty. Gen. (Robert H. Jackson, Asst. Atty. Gen., and Sewall Key, Sp. Asst. to Atty. Gen., on the brief), for appellee.

Before PARKER, NORTHCOTT, and SOPER, Circuit Judges.

PARKER, Circuit Judge.

This is an appeal from an order dismissing a suit instituted to enjoin the collector of internal revenue for the North Carolina district from proceeding under title III of the Revenue Act of 1936 (26 U.S.C.A. §§ 345-345e) to collect from plaintiff the so-called "windfall" tax imposed by that title, from filing a return for plaintiff with respect to such tax, from imposing penalties on plaintiff, or from taking other action against plaintiff thereunder. Relief was asked in the bill on the ground that the statute imposing the tax was invalid because both the tax itself and the method provided for its computation were violative of provisions of the Federal Constitution. A second cause of action asked the aid of the court in determining the amount of the tax, if it should be held valid, on the ground that alternative methods of return provided in the act left the plaintiff in doubt as to which method to adopt and that this doubt could not be resolved in the absence of an audit which would require a greater length of time than allowed by the act for a return.

The plaintiff in the court below was the White Packing Company of Salisbury, N. C., a small meat packing concern, which as a processor of hogs was subject to the processing tax imposed by the Agricultural Adjustment Act of May 12, 1933, 48 Stat. 31, see 7 U.S.C.A. § 601 et seq. The bill alleged that between July 11, 1935, and January 16, 1936, plaintiff paid into the registry of the court in a suit in which the collection of the processing tax had been enjoined a total of $34,190.49, which was paid back to it when that tax was declared unconstitutional by the Supreme Court. United States v. Butler, 297 U.S. 1, 56 S.Ct. 312, 80 L.Ed. 477, 102 A.L.R. 914. In this court it is stated by plaintiff that there was an additional amount of processing taxes, not paid into the registry of the court, for which it would have been liable for the year 1935 under the terms of Agricultural Adjustment Act, amounting to $11,286.66.

The motion to dismiss in the court below was based upon three grounds: (1) That the suit was forbidden by Rev.St. 3224 (26 U.S.C.A. § 1543); (2) that the bill failed to allege facts sufficient to entitle plaintiff to equitable relief; and (3) that plaintiff had an adequate remedy at law. The District Judge sustained the motion on the first and third grounds and stated, in addition, that the bill failed to show that complainant was liable for any tax and for that reason was deficient in failing to show threat of injury. See (D. C.) 17 F.Supp. 120. In view of his holdings with respect to these matters, he properly declined to consider or pass upon the constitutionality of the taxing statute. Huston v. Iowa Soap Co. (C.C.A.8th) 85 F.(2d) 649, 652. We think that his holdings were unquestionably correct on the record before him and that nothing need be added to the discussion of the questions there involved which is contained in his opinion. A like conclusion was reached by the Circuit Court of Appeals of the Tenth Circuit in Sheridan Flouring Mills v. Cassidy, 87 F.(2d) 20, and of the Fifth Circuit in Steinhagen Rice Milling Co. v. Scofield et al. (C.C.A.5th) 87 F.(2d) 804, by Judge Chesnut in Star Milling Co. v. Magruder,1 by Judge Hamilton in Louisville Provision Co. v. Glenn (D.C.) 18 F. Supp. 423, 432, and by Judge Yankwich in Union Packing Co. v. Rogan (D.C.) 17 F.Supp. 934.

In this court complainant has filed a motion, supported by affidavits, asking that the cause be remanded with direction to the District Judge to permit an amendment to its bill to show the facts set forth in the affidavits. From these it appears that the cost of preparing a return under the statute will be between $7,500 and $10,000, owing to the fact that plaintiff has not kept its sales of pork segregated from its other business, and the compilation of the information necessary for the making of a proper return will necessitate the examination and analysis of 600,000 or 650,000 invoices. It is further alleged in these affidavits that plaintiff is a small concern in urgent need of additional capital, and that to withdraw from its funds the amounts necessary to make the payment under protest, as basis of suit for recovery, of the taxes which would be assessed against it on the basis of its liability for processing taxes would result in its financial ruin. It is argued that payment under protest and suit for recovery will not afford an adequate remedy at law, for the reason that there would be no means of recovering the expenditure of $7,500 to $10,000 necessary for the making of a return and that this, together with the hardship involved in what, it is alleged, would be a ruinous withdrawal of capital for the purpose of making the payment, brings the case within the principle of Miller v. Standard Nut Margarine Co., 284 U.S. 498, 52 S.Ct. 260, 76 L.Ed. 422.

A sufficient reason for denying the motion to remand would be that we are not impressed with the contention that any such expenditure as is alleged would be necessary for the making of a return, or that irreparable injury would result from the payment under protest of the tax shown thereby to be due. All that the law requires is that the return be made in good faith with the giving of such information as is reasonably available. As records must have been kept for the payment of the processing tax, it is clear that the taxpayer has readily available records from which with little difficulty or expense a good part of the information necessary for the tax return can be obtained. Officials of taxpayer, from their knowledge of the business, can supply, no doubt, an approximately correct estimate as to the remaining items. And, if the Commissioner is not satisfied with the return so filed, it is the government and not the taxpayer that will have the burden of auditing the invoices. Union Packing Co. v. Rogan, supra; Louisville Provision Co. v. Glenn, supra. As to the withdrawal of capital from business, it appears that the tax cannot exceed 80 per cent. of the processing tax and that approximately that portion of the processing tax had already been paid into court by plaintiff and returned to it shortly before the passage of the statute here involved. If the processing tax was passed on to the customer so that the amount impounded was clear profit to plaintiff when returned to him, it is futile to argue that the business will be ruined by the withdrawal of such amount. If, on the other hand, plaintiff bore the burden of the processing tax and did not pass it on, there should be little difficulty in showing this (United States v. Jefferson Electric Co., 291 U.S. 386, 402, 54 S.Ct. 443, 449, 78 L.Ed. 859) and certainly plaintiff's return would show it and no tax would be payable. In other words, only to the extent of 80 per cent. of the processing tax passed on by the processor is the windfall tax imposed; the return of plaintiff will presumably not show any greater taxable income than in reality existed; and the payment of the tax so shown to be due cannot result in irreparable injury to the business of plaintiff as it must be paid from profits recently received, and not from working capital.

A court of equity, of course, cannot entertain such plea of irreparable injury as plaintiff attempts to base on the need of business expansion.

But a conclusive reason for denying the motion is that we are satisfied that the statute is constitutional, and that no purpose would be served by remanding the cause, in order that the adequacy of the remedy at law might be determined in the light of the additional facts shown by the affidavits, when we are of opinion that in any event the order dismissing the bill should be affirmed. The question as to the constitutionality of the statute and the adequacy of the legal remedy both go to the sufficiency of the bill; and the case should not be remanded for additional findings with respect to one ground of dismissal when the dismissal is clearly correct on another ground. It is well settled that where it appears from the record that the court has done the right thing, its action will not be reversed because based upon the wrong ground. Act Feb. 26, 1919, 28 U.S.C.A. § 391. Indiana Farmer's Guide Pub. Co. v. Prairie Co., 293 U.S. 268, 281, 55 S.Ct. 182, 186, 79 L.Ed. 356; United States v. Holt Bank, 270 U.S. 49, 46 S.Ct. 197, 70 L.Ed. 465; Aberly v. Craven County (C.C.A.4th) 70 F.(2d) 52, 54; Great American Ins. Co. v. Johnson (C.C.A.4th) 25 F.(2d) 847; City of St. Paul v. Certain Lands (C.C.A.8th) 48 F.(2d) 805; Ramsay v. Crevlin (C.C.A.8th) 254 F. 813; Brown v. Lane Cotton Mills Co. (C.C.A.5th) 28 F.(2d) 911. A fortiori, a dismissal should not be reversed and the case remanded for further hearing with respect to the ground assigned, when it appears from the face of the bill that complainant is entitled to no relief whatever. It would be absurd to prolong litigation for the purpose of determining whether or not the legal remedy is adequate, when it is apparent from the face of the bill itself that plaintiff is not threatened with wrong entitling him to a remedy of any sort because the only statute of which complaint is made is constitutional.

The statute which is attacked is title III of the Revenue Act of 1936, 26 U.S.C. A. § 345 et seq., imposing the "windfall" tax of 80 per cent. on income of a taxpayer which has arisen because he has shifted to others the...

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