Jaffry, Edward S.

English

University of Miami School of Law

University of Miami Law SchoolInstitutional RepositoryUniversity of Miami Law Review5-1-1957Federal Courts -- Jurisdiction -- State Revenue ActsEdward S. JaffryFollow this and additional works at: http://repository.law.miami.edu/umlrThis Case Noted is brought to you for free and open access by Institutional Repository. It has been accepted for inclusion in University of Miami LawReview by an authorized administrator of Institutional Repository. For more information, please contact library@law.miami.edu.Recommended CitationEdward S. Jaffry, Federal Courts -- Jurisdiction -- State Revenue Acts, 11 U. Miami L. Rev. 432 (1957)Available at: http://repository.law.miami.edu/umlr/vol11/iss3/10MIAMI LAW QUARTERLYparison on any broad general market will relieve them of any liability underthe Act. The dissenting opinion appears more logical in applying reasoningwhich excludes a comparison of cellophane with the whole flexible pack-aging market. 21 A manufacturer who utilizes cellophane for his productuses it because of the particular qualities which it, and no other material,possesses. The adoption of this expanded rule amounts to a judicial nulli-fication of the Sherman Act in this type of proceeding. The Sherman Actwas originally adopted to prevent anyone from using his size to unfairadvantage, and this decision does not seem consistent with that spirit.EDGAR LEwIsFEDERAL COURTS-JURISDICTION-STATE REVENUE ACTSPetitioner, a labor organizer, instituted an action in a federal districtcourt to enjoin the enforcement of a municipal ordinance imposing analleged exorbitant tax' on petitioner's activities. Held, the fcdcral prohi-bition against interference with the tax-collecting procedure of a state2 isremoved when it is shown that there is no speedy and efficient remedy inthe courts of that state, and there exists a threat of genuine and irretrieveablcloss. Denton v. City of Carrollton, 234 F.2d 581 (5th Cir. 1956).The federal courts' recognition of the sovereign status of the severlstates has at all times been the motivation behind their reluctancy to inter-fere with the fiscal procedures of a state 321. Id. at 423.The majority opinion purports to reject the theory of "interindustry competi-tion." Brick, steel, wood, cement and stone, it says, are "too different" to beplaced in the same market. But cellophane, glassine, wax papers, sulphite papers,greaseproof and vegetable parchment papers, aluminum foil, cellulose acetate,pliofilm and other films are not "too different", the opinion concludes. Themajority approach would apparently enable a monopolist of motion pictureexhibition to avoid Sherman Act consequences by showing that motion picturescompete in substantial measure with legitimate theater, television, radio, sportingevents and other forms of entertainment. Here, too, "shifts of business" un-doubtedly accompany fluctuations in price and "there are market alternativesthat buyers may readily use for their purposes.1. Municipal Ordinance, City of Carrollton, Georgia:An ordinance providing for a business license tax and per diem license for anyperson conducting the business or occupation of labor union, union agent orlbor union promoter or labor union organizer ...j . [T]he applicant shall pay a license tax in the amount of $1,000.00 and shallthereafter deposit at the beginning of each twenty four hour period of each dayfor each person engaged in any said activity the sum of $100.00 with the CityClerk for the continuance of said license during said twenty four hour period.There will be no proration of the initial license of $1,000.00.2. 28 U.S.C. § 1341 (1952). "The district court shall not enjoin, suspend or restrainthe assessment, levy or collection of any tax under state law where a plain, speedy andefficient remedy may be had in the courts of such State."3. Matthews v. Rogers, 284 U.S. 521 (1932).CASENOTESFor reasons of public policy,4 federal courts have been slow to interferewith the collection of public revenues.5 Except in a case that fell into oneof the recognized headings of equity jurisdiction,6 the federal courts did notenjoin the enforcement of state revenue statutes. Whenever the questionwas presented, the Supreme Court uniformly held, that the mere assertionof illegality or unconstitutionality of a state or municipal tax is not ofitself grounds for equitable relief.7 If the remedy at law was plain, adequateand complete, the aggrieved party was left to that remedy in the statecourts.8 However, if the legal remedy, even though provided by statute,9was inadequate, the district court took jurisdiction for the purpose of grant-ing injunctive relief.' That rule as adopted by The Judiciary Act of 1789,"1was but a declaration of the established principle in equity, forbidding re-course to the extraordinary remedies of equity where the right asserted4. Dows v. Chicago, 78 U.S. (1 I Wall.) 108, 110 (1871):. . . It is upon taxation that the several states chiefly rely to obtain themeans to carry on their respective governments, and it is of the utmost importanceto all of them that the modes adopted to enforce the taxes levied should beinterfered with as little as possible. Any delay . . . may delay the operations ofgovernment, and thereby cause serious detriment to the public.5. Boise Artesiam Hot & Cold Water Co. v. Boise City, 213 U.S. 276, 282 (1909):a proper reluctance [on the part of the federal courts] to interfere byprevention with the operation of the state governments has caused it to refrainfrom so doing in all eases where the Federal rights . . . could otherwise be pre-served unimpaired.6. Inadequate remedy at law: Stratton v. St. Louis Southwestern Ry., 284 U.S.530 (1932); Matthews v. Rogers. 284 U.S. 521 (1932); Henrietta Mills v. RutherfordCounty, 281 U.S. 121 (1930); Avoidance of multiplicity of suits: Raymond v. ChicagoUnion Traction Co., 207 U.S. 20 (1907); accord, United States v. Osage County, 251U.S. 128 (1919); danger of irreparable injury: Shelton v. Platt, 139 U.S. 591 (1891);accord; Beal v. Missouri Pac. Ry., 312 U.S. 45 (1941) (although not involving a taxstatute or ordinance, the same general principle of equity was applied, denying an in-junction where there was no clear showing that an injunction was necessary in orderto prevent irreparable injury); American Federation of Labor v. Watson, 327 U.S. 582(1946); Gibbs v. Buck, 307 U.S. 66 (1939).7. Mathews v. Rogers, 284 U.S. 521 (1932); Boise Artesian Hot & Cold WaterCo. v. Boise City, 213 U.S. 276 (1909); Shelton v. Platt, 139 U.S. 591 (1891); Dowsv. Chicago, 78 U.S. (11 Wall.) 108 (1871). Accord: State Corp. Comm. v. WichitaGas Co.. 290 U.S. 561 (1933); Champlin Refining Co. v. Corporation Comm'r; 286U.S. 210 (1932) (although not involving a tax regulation, these cases concluded thatthe mere unconstitutionality or invalidity of a state or municipal regulation was not asufficient ground to invoke the aid of a federal court of equity).8. Great Lakes Dredge & Dock Co. v. Hoffman, 319 U.S. 293, 297 (1943):Federal courts in the exercise of the sound discretion which guides them ingranting or withholding extraordinary relief in equity will not ordinarily restrainstate officers from collecting state taxes, where state law affords an adequateremedy to the taxpayer.See also, Garr Scott & Co. v. Shannon, 223 U.S. 468 (1912); Atchison, T. & S. F. Ry. v.O'Connor. 223 U.S. 280 (1912).9. City Bank Farmers Trust Co., v. Schnader, 291 U.S. 24 (1934); Stewart DryGoods Co. v. Lewis, 287 U.S. 9 (1932); Chicago B. & G. Ry. v. Osborne, 265 U.S. 14(1924); Atlantic Coast Line Ry. v. Daughton, 262 U.S. 413 (1923).10. Fox v. Standard Oil Co., 294 U.S. 87 (1935); Lee v. Bickell, 292 U.S. 415(1934).11. 1 Stat. 82 § 16 (1789), 28 U.S.C. § 384 (1946), provided:... That suits in equity shall not be sustained in the Federal courts in any casewhere a plain, adequate and complete remedy may be had at law.MIAMI LAW QUARTERLYcould be protected at law." -' Congress gave further recognition and sanc-tion to the practice of the federal equity courts by the Act of August 21,1937.' aIt is against this background that the federal courts applied Section1341 of the present Judiciary Code.' 4 Thus, it has been held, that wherea state provides by statute for the recovery of a tax paid under protest,no injunction will issue.' However, the remedy at law has been heldinadequate where there has been no provision made for payment of intereston the tax so refunded."' Mere inconvenience or expense to the taxpayerwill not constitute sufficient grounds for the granting of an injunction. 7Nevertheless, in order for the remedy in the state court to deprive thefederal court of jurisdiction, there must not be any reasonable doubt asto the existence of form or such remedy.'In this field the collision between two doctrines is apparent. On onehand, the desire of the Federal Government is to leave to the States theright to exercise their fiscal policies without interference. On the otherhand, there is the necessity of securing to an individual protection of hisconstitutional rights in the face of arbitrary action on the part of a stateor its political subdivisions. In the instant case, the court recognized therestraint imposed upon their jurisdiction."' However, they reasoned, be-cause of the largcess of the tax imposed coupled with the doubt existing12. Deweese v. Reinhard, 165 U.S. 386, 389 (1897); New York Guaranty Co. v.Memphis Water Co., 107 U.S. 205, 214 (1883).13. 50 Stat. 738 (1937), 28 U.S.C. 41(1) (1946);... [N]o district court shall have iurisdiction of any suit to enjoin, suspend orrestrain the assessment, levy, or collection of any tax imposed by or pursuant tothe laws of any state where a plain, speedy and efficient remedy may be had atlaw or equity in the courts of such state.14. 28 U.S.C. § 1341 (1952). "28 U.S.C. §1341 substantially carries forward theAct of 1937 curtailing the jurisdiction of the federal district courts to enjoin the assess-ment, levy or collection of state taxes." iMooire, COMMENTARY ON Til. U.S. JUDICIALConFi 164 (1949).15. McCaw v. Fase, 216 F.2d 698 (9th Cir. 1954 , cert. denied, 348 U.S. 927(1955). For other cases indicating circumstances where a plain speedy and efficient remedywas available in the state courts see; George F. Alger Co. v. Peck, 119 F. Supp. 812(D.C. Ohio 1950), affd, 347 U.S. 984 (1954); Kansas City Southern Ry. v. Moley, 88F. Supp. 300 (1.C. Ark. 1950); accord: Diggs v. Pennsylvania Public Utility Comm'r.180 F.2d 623 (3d Cir. 1950) (action by patrons of transportation system to restrainincrease in fares).16. Mutt v. Ellerbe, 56 F.2d 1058, (D.C. S.C. 1932); Hess v. Mullaney, 189 F.2d417, (9th Cir. 1951) (dictum, cert. denied, 348 U.S. 836 (1954).17. George . Alger Co. v. Peck, 119 F. Stipp. 812 (D.C. Ohio 1950), aff'd, 347U.S. 984 (1954) (Congress by Sec. 1341 left the burden on the taxpayer to follow therequired procedure rather than determine the federal issues primarily in the federal courts.).18. George R.R. & Bkg. Co. v. Redwine, 346 U.S. 299 (1952) (where the remedyprovided applied only to part of the taxes paid, and where the petitioner had previouslybeen denied an injunction in the state court, and where an alternative procedure providedby the state requiring the filing of 300 affidavits in 14 counties, there was no adequateremedy available in the state courts); Spector Motor Serv., Inc. v. O'Conner, 340 U.S.602 (1951); Hillsboro Township v. Cromwell, 326 U.S. 620 (1947); Spector MotorServ., Inc. v. McLaughlin, 323 U.S. 101 (1944).19. See note 2 supra.CASENOTESunder state law20 as to the recoverability of any tax so paid, to require theprepayment of the tax as a requisite to testing any substantial questionsinvolved, or to insist that the petitioner carry on his activities without therequired license and face the risk of penal sanctions, would be to place toogreat a burden upon him. It was concluded that these considerationseliminated the statutory prohibition and established sufficient threat ofirretrievable loss, so as to justify federal intervention. This decision is inconformity with the established rule which provides that even though theremay be a remedy provided in the state, if it is inadequate, the petitionermay seek relief in the federal courts. It was apparent that the respondentattempted to restrict tile growth of labor unions in its city. The petitionerhad a right to engage in this activity. To insist that the peitioner seek theremedy provided would effectively deprive him of this right. By decidingthat they had jurisdiction, the court arrived at the only just conclusion.EDWARD S. JAFFRYREAL PROPERTY-MECHANICS' LIENS-LIABILITYOF LESSOR FOR LESSEE'S IMPROVEMENTSA lessee under a long term lease caused inprovments to be made uponthe leased premises. Subsequently, the lessee was evicted owing to a breachof conditions contained in the lease. Various mechanics' lienors sought to20. "There is no general statute in Georgia affording a taxpayer a remedy for therecovery of taxes illegally or erroneously assessed, except as herein before quoted fre-ferring to GA. CoDE § 20-1007 (4317) (1933)]." State Revenue Comm. v. Alexander,54 Ga. App. 295, 187 S.E. 707, 709 (1936). The petitioner's right to recover dependscompletely on an interpretation and compliance with the Code of Georgia, supra,providing:Voluntary payments; recovery back-Payments of taxes or their claims, madethrough ignorance of the law, or where the facts are all known and there is nomisplaced confidence and no artifice, deception or fraudulent practice used bythe other party, are deemed volintary, and cannot be recovered back, unlessmade under an urgent and immediate lecCssity therefor, or to release a personor property from detention, or to prevent an immediate seizure of person orproperty. Filing a protest at the time of payment does not change this rule.Thus, in Strachnan Shipping Co. v. Savannah, 168 Ga. 309, 147 S.E. 555 (1929),it was held that payment of taxes through fear of criminal prosecution, where no warrantshad been issued and no prosecution commenced and there existed no demands or threatsby persons with the authority to carry them out, are voluntary and not recoverable. Seealso Eibel v. Royal Indemnity Co., 50 Ga. App. 206, 177 S.E. 350 (1934) (where anofficer, not authorized to issue a warrant, notified the taxpayer that if he did not makepayment he would be arrested, and payment was made because of the threats, the pay-ment was considered voluntary and not recoverable); Southern Stevedoring Co. v.Savannah, 36 Ga. 526, 137 S.E. 123 (1927) (wherein it was held that an allegation intaxpayer's petition that unless he paid the required occupation tax the city marshall wouldbe notified and plaintiff prosecuted, alleged only a mere possibility of prosecution, andshowed no immediate duress which would necessitate a payment in order to preventimmediate seizure of person or property); accord, Goodwin v. McNeil, 188 Ga. 182, 3S.E.2d 675 (1939) (a fine paid to avoid imprisonment after a conviction which waslater reversed, was held to be.a voluntary payment and not recoverable).

Federal Courts -- Jurisdiction -- State Revenue Acts

https://repository.law.miami.edu/cgi/viewcontent.cgi?article=3616&amp;context=umlr

Federal Courts -- Jurisdiction -- State Revenue Acts

Abstract

Similar works

Full text

Available Versions

University of Miami School of Law