While an unconstitutional tax may confer no right, impose no
duty and support no obligation, the trespass resulting from
proceedings to collect such void tax cannot be restrained by
injunction where irreparable injury or other ground for equitable
interposition is not shown to exist.
Thomas C. Platt filed his bill (subsequently amended) against J.
W. Allen Comptroller of the State of Tennessee, and A. Shelton,
Sheriff, and S. D. Cate, Deputy Sheriff, of Hamilton County,
Tennessee, in the Circuit Court of the United States for the
Eastern District of Tennessee, as president of the United States
Express Company, a joint-stock company of the State of New York,
and as one of the members thereof, on behalf of himself and his
associates, who were too numerous to be joined as parties, to
restrain the collection of a license tax from the said company for
the years 1887, 1888, and 1889, under certain acts of the State of
Tennessee of 1887 and 1889, in that behalf, alleged by him to be
unconstitutional. Complainant averred that the comptroller had
issued a distress warrant to the Sheriff of Hamilton County, who
had placed it in the hands of his deputy to execute, for the
collection of the license taxes of 1887 and 1888, which warrant the
said sheriff "has levied on or is about to levy on the property of
the United States Express Company," and that the comptroller
threatened to issue another distress warrant to collect the license
tax for the year 1889. And the bill then proceeded:
"Your orator further shows that the property of the said United
States Express Company in Tennessee is employed in interstate
commerce in the said express business and necessary to the conduct
of it; that if seized by the said sheriff, it will greatly
embarrass the company in the conduct of such business and subject
it to heavy loss and
Page 139 U. S. 592
damage, and the public served by it to great loss and
inconvenience. Your orator further says that your orator and the
United States Express Company are without adequate remedy at law in
the premises."
The prayer was for an injunction against the collection of the
taxes imposed by the acts of Tennessee referred to, or either of
them, and from interfering or attempting to interfere in the
operation of the company's business by reason of the nonpayment of
said taxes, or either of them, and for general relief, process, and
answer. Defendants filed a plea in abatement, setting up an act of
the Legislature of Tennessee entitled "An act to facilitate the
collection of revenues," approved March 21, 1873, and insisting
that, in accordance with its terms,
"complainant's only remedy is to pay under protest the taxes
complained of, and then sue within thirty days thereafter for a
recovery of the amount so paid, and no injunction or other
restraining order or writ to prevent the collection of said tax
will lie."
And also a motion to quash the writ and dismiss the bill, as
amended, for the reasons, among others, that the suit was brought
in a district other than that of which the defendant Allen was an
inhabitant and other than that in which he was found at the time
the writ was served on him; that under the public laws of the State
of Tennessee -- namely, the act above mentioned -- complainant's
only remedy is to pay under protest the taxes complained of and
then sue to recover the same, and no restraining order will lie
against the collecting officer, and that no irreparable injury or
other ground of equitable jurisdiction is shown in the bill.
The motion to dismiss was sustained as to the defendant Allen
and judgment entered in his favor, but the motion was overruled as
to the other defendants, they excepting; the plea was heard and
stricken from the files, and exceptions taken, and defendants were
granted leave to rely upon the matter of the plea and the several
grounds of the motion in their answer. Defendants Shelton and Cate
thereupon answered, restating the grounds of the plea and
motion.
Replication was filed, and the cause came on to be heard
Page 139 U. S. 593
upon bill, answer, and replication, and a decree was rendered
perpetually enjoining defendants as prayed, and for costs, from
which decree the defendants Shelton and Cate prayed an appeal to
this Court. The opinion of the circuit court will be found reported
in 39 F. 712.
Sections 1 and 2 of the Act of the Legislature of Tennessee of
1873, entitled "An act to facilitate the collection of revenues,"
Laws Tenn. 1873, c. 44, p. 71, are as follows:
"SECTION 1. That in all cases in which an officer charged by law
with the collection of revenue due the state shall institute any
proceeding, or take any steps for the collection of the same,
alleged or claimed to be due by said officer, from any citizens,
the party against whom the proceeding or step is taken shall, if he
conceives the same to be unjust or illegal, or against any statute
or clause of the constitution of the state, pay the same under
protest, and upon his making such payment the officer or collector
shall pay such revenue into the state Treasury, giving notice at
the time of payment to the comptroller that the same was paid under
protest, and the party paying said revenue may at any time within
thirty days after making said payment, and not longer thereafter,
sue the said officer having collected said sum for the recovery
thereof, and the same may be tried in any court having jurisdiction
of the amount and parties, and if it be determined that the same
was wrongfully collected as not being due from the said party to
the state for any reason going to the merits of the same, then the
court trying the case may certify of record that the same was
wrongfully paid, and ought to be refunded, and thereupon the
comptroller shall issue his warrant for the same, which shall be
paid in preference to other claims on the Treasury."
"SEC. 2. That there shall be no other remedy in any case of the
collection of revenue, or attempt to collect revenue illegally, or
attempt to collect revenue in funds only receivable by said officer
under the law, the same being other or different funds than such as
the tax payer may tender or claim the right to pay than that above
provided, and no writ for the prevention of the collection of any
revenue claimed,
Page 139 U. S. 594
or to hinder and delay the collection of the same shall in any
wise issue either injunction, supersedeas, prohibition, or any
other writ or process whatever, but in all cases in which for any
reason any person shall claim that the tax so collected was
wrongfully, or illegally collected, the remedy for said party shall
be as above provided, and in no other manner."
MR. CHIEF JUSTICE FULLER, after stating the facts as above,
delivered the opinion of the Court.
The question whether, even if the act under which the tax in
question was imposed were unconstitutional and the tax void,
complainant, on behalf of the express company, was entitled to the
relief accorded meets us on the threshold.
It was ruled in
Dows v.
Chicago, 11 Wall. 108,
78 U. S. 112,
that a suit in equity will not lie to restrain the collection of a
tax on the sole ground that the tax is illegal, but that there must
exist in addition special circumstances bringing the case under
some recognized head of equity jurisdiction, such as that the
enforcement of the tax would lead to a multiplicity of suits, or
produce irreparable injury, or, where the property is real estate,
throw a cloud upon the title of the complainant. And MR. JUSTICE
FIELD, speaking for the Court, said:
"The equitable powers of the court can only be invoked by the
presentation of a case of equitable cognizance. There can be no
such case, at least in the federal courts, where there is a plain
and adequate remedy at law. And except where the circumstances
which we have mentioned exist, the party of whom an illegal tax is
collected has ordinarily ample remedy either by action against the
officer making the collection or the body to whom the tax is paid.
Here such remedy existed. If the tax was illegal, the plaintiff
protesting against its enforcement might have had his action, after
it was paid,
Page 139 U. S. 595
against the officer or the city to recover back the money, or he
might have prosecuted either or his damages. No irreparable injury
would have followed to him from its collection. Nor would he have
been compelled to resort to a multiplicity of suits to determine
his rights. His entire claim might have been embraced in a single
action. We see no ground for the interposition of a court of equity
which would not equally justify such interference in any case of
threatened invasion of real or personal property."
In
Union Pacific Railway Co. v. Cheyenne, 113 U.
S. 516,
113 U. S. 525,
MR. JUSTICE BRADLEY declared that it was
"well settled that there ought to be some equitable ground for
relief besides the mere illegality of the tax, for it must be
presumed that the law furnishes a remedy for illegal taxation."
And he quoted with approval the language of Judge Cooley on this
subject:
"To entitle a party to relief in equity against an illegal tax,
he must by his bill bring his case under some acknowledged head of
equity jurisdiction. The illegality of the tax alone, or the threat
to sell property for its satisfaction, cannot of themselves furnish
any ground for equitable interposition. In ordinary cases, a party
must find his remedy in the courts of law, and it is not to be
supposed he would fail to find one adequate to his proper relief.
Cases of fraud, accident, or mistake, cases of cloud upon the title
to one's property, and cases where one is threatened with
irremediable mischief may demand other remedies than those the
common law can give, and these, in proper cases, may be afforded in
the courts of equity."
Cooley on Taxation, p. 536. The same learned author says, (page
538):
"When a tax is assessed as a personal charge against the party
taxed, or against his personal property, it is difficult to suggest
any ground of equitable jurisdiction. Presumptively the remedy at
law is adequate. If the tax is illegal and the party makes payment,
he is entitled to recover back the amount. The case does not differ
in this regard from any other case in which a party is compelled to
pay an illegal demand; the illegality alone affords no ground for
equitable interference, and the proceedings to enforce the tax by
distress and sale can give none, as these only constitute
Page 139 U. S. 596
an ordinary trespass. To this point the decisions are numerous.
The exceptions to this rule, if any, must be of cases which are to
be classed under the head of irreparable injury."
Irreparable injury is the sole ground upon which jurisdiction in
equity can be regarded as invoked in this case. The jurisdictional
averments are:
"That the property of said United States Express Company in
Tennessee is employed in interstate commerce in the said express
business, and necessary to the conduct of it; that if seized by the
said sheriff, it will greatly embarrass the company in the conduct
of such business, and subject it to heavy loss and damage, and the
public served by it to great loss and inconvenience,"
and "that your orator and the United States Express Company are
without adequate remedy at law in the premises."
The latter allegation is a mere matter of inference, and it is
necessary that by facts averred or proven the conclusion should be
made out. The answer denied, in the language of the previous
motion, that any irreparable injury or other ground of equitable
jurisdiction was shown in the bill, and asserted that the plaintiff
had full, adequate, and complete remedy at law under the act of
1873. As the case was tried on bill, answer, and replication, it is
taking the most favorable course for complainant to determine
whether the decree must stand of fall by the averments of the bill
alone. But, testing it in that way, we do not see how it can be
sustained. The trespass involved in the levy of the distress
warrants was not shown to be continuous, destructive, inflictive of
injury, incapable of being measured in money, or committed by
irresponsible persons. So far as appeared, complete compensation
for the resulting injury could have been had by recovery of damages
in an action at law. There was no allegation of inability on the
part of the express company to pay the amount of the taxes claimed,
nor any averments showing that the seizure and sale of the
particular property which might be levied on would subject it to
loss, damage, and inconvenience which would be in their nature
irremediable. The bill showed the company to be doing a vast
business, and it was an unreasonable inference that it must submit
to the sale of its wagons
Page 139 U. S. 597
and horses, or that such sale would work that kind of mischief
which justifies the interference of equity in the application of a
preventive remedy. Nor did the mere fact that its property might be
used in the conduct of interstate commerce give jurisdiction. But
in addition to all this, since 1873 there has been a statute in
existence in Tennessee providing a remedy at law which has been
pronounced by this Court simple and effective.
Tennessee v.
Sneed, 96 U. S. 69. Under
that act, where an officer charged by law with the collection of
revenue due the state takes any steps for the collection of the
same, a party conceiving the tax to be unjust or illegal may pay it
under protest and sue the officer to recover the money back, and if
the court determines that it was wrongfully collected, then, upon
its certificate to that effect, the comptroller "shall issue his
warrant for the same, which shall be paid in preference to other
claims on the Treasury." And the act further provides that there
shall be no other remedy in any case of the collection of revenue,
and no writ for the prevention of such collection or to hinder and
delay it shall in any wise issue, either injunction, supersedeas,
prohibition, or any other writ or process whatever.
This act has been sanctioned and applied by the courts of
Tennessee.
City of Nashville v. Smith, 86 Tenn. 213;
Railroad v. State, 8 Heiskell 663, 804. It is, as counsel
observe, similar to the act of Congress forbidding suit for the
purpose of restraining the assessment or collection of taxes under
the internal revenue laws, in respect to which this Court held that
the remedy by suit to recover back the tax after payment, provided
for by the statute, was exclusive.
Snyder v. Marks,
109 U. S. 189; 14
Stat. 152, 475. Legislation of this character has been called for
by the embarrassments resulting from the improvident employment of
the writ of injunction in arresting the collection of the public
revenue, and even in its absence, the strong arm of the court of
chancery ought not to be interposed in that direction except where
resort to that court is grounded upon the settled principles which
govern its jurisdiction.
It is asserted by counsel that a court of equity has
jurisdiction
Page 139 U. S. 598
to restrain the collection of a tax when the tax is wholly
illegal and void, and that such jurisdiction has been uniformly
exercised in the federal courts.
Allen v. Balt. & Ohio
Railroad, 114 U. S. 311;
Osborn v. Bank of the United
States, 9 Wheat. 738;
Cummings v. National
Bank, 101 U. S. 153, and
Dodge v.
Woolsey, 18 How. 331, are cited, but the
jurisdiction will be found to have rested on other grounds than
merely the unconstitutionality of the taxes involved.
In
Allen v. Baltimore & Ohio Railroad, Allen was
Auditor of Public Accounts of Virginia, and Hamilton Treasurer of
Augusta County in that state. The auditor had assessed certain
railroads upon their real estate, not having any rolling stock, as
being in default for nonpayment of taxes assessed by the board of
public works, and had placed copies of the assessment in the hands
of the defendant Hamilton, as Treasurer of Augusta County, for
collection, in pursuance of which he had levied upon certain cars
and locomotives belonging to complainant, and used by it in
operating said railroads as lessee, for part of the taxes, and
threatened to make further levy upon other cars and engines and
sell them for payment of said taxes, and the bill prayed for an
injunction on the several grounds of irreparable damage, avoidance
of multiplicity of suits, removal of closed upon title, etc. It was
admitted in the case that if the property of the complainant levied
on should be sold, great sacrifice and loss must result therefrom,
and that the withdrawal of the rolling stock and machinery proposed
to be sold would cause serious and prolonged embarrassment to
complainant's business; that much delay must accrue before said
rolling stock and machinery, if sold, could be replaced, and that
it would be difficult, if not impracticable, to ascertain and
estimate with even proximate certainty the losses and damages which
would result to complainant from the sale, so that, although the
estate of Hamilton might be sufficient to meet any verdict for
damages if the sale should be adjudged to be illegal, the pecuniary
value of complainant's losses and damages could not be properly and
adequately ascertained and fixed by the verdict of a jury. This
admission made a case of irreparable injury.
Page 139 U. S. 599
In
Osborn v. Bank of the United States, the Court held
that the effect of the law of Ohio in question would be the
expulsion of the bank from the state; that the injury done thereby
would be in its nature irreparable, and further that as by the
amended and supplemental bill it appeared that the money and notes
of the bank were in the possession of one of the defendants, and
kept separate and apart from all other money and notes, the
principle of preventing the transfer of a specific article, which,
if transferred, might be lost to the owner, applied.
In
Cummings v. National Bank, the jurisdiction was
maintained upon the ground of preventing multiplicity of suits, as
well as that the remedy by injunction against an illegal tax was
expressly granted by a statute of the state whose levy of taxes was
drawn in question.
The ground upon which
Dodge v. Woolsey proceeded was
that a stockholder had a remedy in chancery against the directors
of his corporation to restrain them from doing acts which would
amount to a violation of the charter, or to prevent any
misapplication of their capital or profits, which might lessen the
value of the shares, if the acts intended to be done amounted to a
breach of trust or duty, and that the refusal of the directors to
resist the collection of a tax, which they themselves believed to
have been imposed upon them in violation of their charter, was in
legal effect a breach of trust.
The circuit court held the act of 1873 inapplicable to an
unconstitutional tax upon the authority of
Poindexter v.
Greenhow, 114 U. S. 270.
That was an action of detinue brought by Poindexter, a taxpayer,
against Greenhow, Treasurer of Richmond, Virginia, for a desk
belonging to plaintiff, seized and taken by Greenhow for the
purpose of raising the tax claimed to be due from plaintiff after
he had tendered coupons in payment thereof in pursuance of the
Virginia act of 1871, making the coupons receivable for taxes. In
1882, Virginia passed an act providing that in case of proceedings
instituted against a taxpayer for the collection of his tax, not
withstanding his tender of coupons in payment thereof, he should
pay the tax under protest in lawful money, and then
Page 139 U. S. 600
sue the officer for the amount, and if it should be determined
that it was wrongfully collected, the amount should be returned,
and that no writ of injunction, supersedeas, mandamus, prohibition,
or other writ whatever should be issued to hinder or delay the
collection of the tax. At the same time, several other acts were
passed calculated to impede the operation of the act of 1871. This
Court held that the tender was equivalent to payment; that the
taxpayer had the right to stand upon such payment once made, and
that the acts of 1882 were unconstitutional so far as they had the
effect of depriving the taxpayer of his remedy by detinue, or
trespass, or case, or other proper action, for unlawful seizure of
his goods after tendering tax receivable coupons in payment of his
taxes.
McGahey v. Virginia, 135 U.
S. 662,
135 U. S.
675-676. But this was far from deciding that the remedy
for recovery back would not have been sufficient if the validity of
the tax had alone been in issue. The question related to the
previous contract that the coupons should be receivable for taxes,
which contract the subsequent legislation impaired, and its
disposition did not involve the application of the act of 1882,
under the circumstances existing here. And while an
unconstitutional tax may, in the language of the learned judge
holding the circuit court, confer no right, impose no duty, and
support no obligation, it will be perceived that, in our view, the
trespass resulting from proceedings to collect such void tax cannot
be restrained by injunction where irreparable injury or other
ground for equitable interposition is not shown to exist.
We are constrained to hold upon this record that the decree
cannot be sustained, and it is therefore
Reversed, and the cause remanded to the court below, with a
direction to dismiss the bill.
MR. JUSTICE HARLAN dissented.