1. Objection to the equity jurisdiction of the District Court
held to have been properly raised by motion to dismiss the
bill, and preserved by assignments of error in this Court. P.
284 U. S.
524.
2. The rule, emphasized by Jud.Code § 267, that suits in equity
shall not be maintained in the federal courts in any case where a
plain, adequate, and complete remedy may be had at law is of
peculiar force in cases in which it is sought to enjoin the
collection of state taxes. P.
284 U. S.
525.
3. That refusal to pay an allegedly unconstitutional state tax
will result in civil and criminal penalties and irreparable damage
to the plaintiff's business is not basis for a suit in the federal
court to enjoin collection if the legal remedy of paying under
protest and suing the collector to recover is afforded by the state
law. P.
284 U. S.
526.
4. Such a legal remedy exists under the statutes and decisions
of Mississippi. P.
284 U. S.
527.
5. Such legal remedy, although against the collecting officer,
rather than the state or municipality, is to be deemed adequate,
where the bill does not allege special circumstances showing
inability of the plaintiff to pay the tax, or of the collecting
officer to respond to judgment. P.
284 U. S.
528.
Page 284 U. S. 522
6. The equity jurisdiction of the inferior federal courts is
that of the English Court of Chancery at the time of the separation
of the two countries; it cannot be enlarged by state legislation
creating new equitable remedies in the state courts. P.
284 U. S.
529.
7 Therefore, the fact that a state has provided a remedy against
illegal state taxes by injunction does not authorize the federal
courts to enjoin where the legal remedy is adequate.
Id.
8. In general, the jurisdiction of equity to avoid multiplicity
of actions at law is restricted to cases where there would
otherwise b some necessity for the maintenance of numerous suits
between the same parties, involving the same issues of law or fact.
It does not extend to cases where there are numerous parties
plaintiff and the issues between them and the adverse party are not
necessarily identical.
Id.
9. Where the alleged unconstitutionality of a state tax depend
in the case of each of many taxpayers upon its effect upon his
particular business in interstate commerce, a suit by or on behalf
of all to enjoin the collector cannot be supported as one to avoid
a multiplicity of actions. P.
284 U. S. 530.
Reversed.
Appeal from a decree of the District Court of three judges,
which enjoined the county sheriff and
ex officio tax
collector and three members of the state Board of Tax Commissioners
from collecting certain "privilege" taxes. The bill was filed by
numerous plaintiffs on behalf of themselves and of all others
similarly situated.
MR. JUSTICE STONE delivered the opinion of the Court.
This is an appeal, §§ 238, 266 of the Judicial Code, from a
decree of a District Court of three judges, for the Northern
District of Mississippi, enjoining the collection from the several
appellees of a state tax, as an unconstitutional burden on
interstate commerce. After argument here on
Page 284 U. S. 523
the merits, the cause was restored to the docket
"for reargument, limited to the question of the jurisdiction of
the District Court both with respect to the amount involved in the
suit and the jurisdiction of the court as a court of equity;"
reargument has been had accordingly.
The bill of complaint assails the constitutionality of § 56, c.
88, 1930 Laws of Mississippi, as applied to appellees. The section
imposes an annual license or "privilege" tax of $100, payable in
advance by "every individual . . . engaged in the business of
buying or selling cotton for himself." It also requires employers
engaged in the business of buying or selling cotton to pay a
similar "tax of twenty-five dollars ($25.00) for every employee
engaged in their business as buyer or seller." Penalties are
imposed in double the amount of the tax for its nonpayment. Section
225. Failure to make application for the license, or engaging in
the business without having procured the license or paid the tax,
are misdemeanors, punishable by fine not exceeding $500 or
imprisonment not exceeding six months, or both. Section 242.
The bill, which is in the form of a class bill, filed by the
numerous appellees for the benefit of themselves and others
similarly situated, alleges that they are engaged in interstate and
foreign commerce, in the course of which they purchase cotton
within the state and sell and ship it in interstate or foreign
commerce to purchasers outside the state; that the business of each
of the several appellees and the right to conduct it is of a value
of more than $3,000, the jurisdictional amount for suits brought in
a District Court of the United States; that the tax imposed by the
state statute is, as to them, an unconstitutional burden on
interstate commerce, and that appellants, state officers, charged
with the duty of collecting the tax, threaten to enforce its
collection by criminal proceedings and the imposition of penalties.
The bill states that resort to equity to prevent collection of the
tax is either
Page 284 U. S. 524
necessary or authorized for the following, among other,
reasons:
(1) That the enforcement of the unconstitutional statute would
irreparably injure or destroy the business of each of the
appellees.
(2) That the taxes, if paid, cannot be recovered by any action
or proceeding at law.
(3) That § 304 of Hemingway's Annotated Mississippi Code of 1927
has conferred on the appellees the right to proceed in equity in
the state courts to enjoin the collection of an unconstitutional
tax, and that that remedy is available in the federal District
Court.
(4) That resort to equity is necessary in order to avoid a
multiplicity of separate suits by the appellees and others
similarly situated, three hundred in all, to enjoin collection of
the tax, or otherwise necessary in order to recover it if paid or
to prevent successive prosecutions for the violation of the act, in
all of which suits or proceedings the issue of the
constitutionality of the tax would be substantially the same.
The right of appellees, if any, to maintain the present suit, is
conferred by § 24(1) of the Judicial Code, 28 U.S.C. § 41(1),
which, regardless of the citizenship of the parties to the suit,
vests in district courts of the United States jurisdiction over
suits at law or in equity "arising under the Constitution or laws
of the United States" where the matter in controversy exceeds
$3,000. Although the present suit arises under the Constitution of
the United States,
see Davis v. Wallace, 257 U.
S. 478, and it be assumed, without deciding, that the
jurisdictional amount is involved, it cannot be maintained if not
within the equity jurisdiction of the district court. The want of
equity jurisdiction, if obvious, may and should be objected to by
the court of its own motion. In other cases, this jurisdictional
requirement, unlike the others mentioned,
Page 284 U. S. 525
may be treated as waived if the objection is not presented by
the defendant
in limine. Duignan v. United
States, 274 U. S. 195,
274 U. S. 199;
Singer Sewing Machine Co. v. Benedict, 229 U.
S. 481,
229 U. S. 484;
Thompson v. Railroad
Companies, 6 Wall. 134;
compare Matson
Navigation Co. v. United States, ante, p.
284 U. S. 352;
Hilton v. Dickinson, 108 U. S. 165,
108 U. S. 168;
Grace v. American Central Ins. Co., 109 U.
S. 278,
109 U. S.
283-284;
Boers v. Preston, 111 U.
S. 252,
111 U. S. 255.
Here, the objection to the equity jurisdiction of the district
court was properly raised by appellants' motion to dismiss the
bill, and is preserved by their assignments of error in this
Court.
Section 16 of the Judiciary Act of 1789, 1 Stat. 82, perpetuated
without material change as R.S. § 723, Jud.Code § 267 (28 U.S.C. §
384), declares that suits in equity shall not be sustained in the
courts of the United States "in any case where a plain, adequate,
and complete remedy may be had at law." The effect of this section,
which was but declaratory of the rule in equity, established long
before its adoption, is to emphasize the rule and to forbid in
terms recourse to the extraordinary remedies of equity where the
right asserted may be fully protected at law.
See Deweese v.
Reinhard, 165 U. S. 386,
165 U. S. 389;
New York Guaranty Co. v. Memphis Water Co., 107 U.
S. 205,
107 U. S.
214.
The reason for this guiding principle is of peculiar force in
cases where the suit, like the present one, is brought to enjoin
the collection of a state tax in courts of a different, though
paramount, sovereignty. The scrupulous regard for the rightful
independence of state governments which should at all times actuate
the federal courts, and a proper reluctance to interfere by
injunction with their fiscal operations, require that such relief
should be denied in every case where the asserted federal right may
be preserved without it. Whenever the question has been presented,
this Court has uniformly held that the mere illegality or
Page 284 U. S. 526
unconstitutionality of a state or municipal tax is not, in
itself, a ground for equitable relief in the courts of the United
States. If the remedy at law is plain, adequate, and complete, the
aggrieved party is left to that remedy in the state courts, from
which the cause may be brought to this Court for review if any
federal question be involved, Jud.Code § 237, or to his suit at law
in the federal courts if the essential elements of federal
jurisdiction are present.
See Boise Artesian Hot & Cold
Water Co. v. Boise City, 213 U. S. 276;
Shelton v. Platt, 139 U. S. 591;
Dows v.
Chicago, 11 Wall. 108,
78 U. S.
110-112.
It may be assumed that, if appellees do not pay the challenged
tax, and in consequence of that omission they are subjected, as it
is alleged they will be, to the civil and criminal penalties for
nonpayment, the resulting injury to their business will be
irreparable, and can be avoided only by resort to equity to prevent
the threatened wrong. But appellants insist that the appellees are
under no such constraint, either to expose themselves to the
penalties for failure to pay the tax or to seek equitable relief
against its collection, since each of them may pay the tax to the
collecting officer under protest, and, under the laws of
Mississippi, may maintain a suit at law for its recovery on the
ground that it was exacted in violation of the Constitution of the
United States. That such a procedure saves to the taxpayer his
federal right, and, if available, will defeat the jurisdiction of
federal courts to enjoin the collection of the tax, has long been
the settled rule in this Court.
Henrietta Mills v. Rutherford
County, 281 U. S. 121;
Arkansas Building & Loan Assn. v. Madden, 175 U.
S. 269;
Atchison, Topeka & Santa Fe Ry. v.
O'Connor, 223 U. S. 280;
Shelton v. Platt, supra; Singer Sewing Machine Co. v. Benedict,
supra; Allen v. Pullman's Palace Car Co., 139 U.
S. 658;
Indiana Mfg. Co. v. Koehne,
188 U. S. 681.
From an examination of the decisions of the highest court of the
state, we conclude, as the Attorney General
Page 284 U. S. 527
of the state insists, that that procedure is open to the
appellees in Mississippi, if the tax is paid under protest, to
avoid penalties or criminal proceedings. In
Coulson v.
Harris, 43 Miss. 728, the Supreme Court of Mississippi denied
the jurisdiction of equity to enjoin the collection of an illegally
assessed tax on the sole ground that the taxpayer might pay the tax
to the collecting officer and sue at law for its recovery. In
Tuttle v. Everett, 51 Miss. 27, recovery was allowed of a
tax thus paid in a suit at law brought against the collector before
he had paid over the tax to the proper treasury. In
Vicksburg
v. Butler, 56 Miss. 72, and
Pearl River County v. Lacey
Lumber Co., 124 Miss. 85, 86 So. 755, suits at law for
recovery of a tax were maintained against the city, in the first
case, and the county, in the second, to which the collector had
paid the taxes. But, in the former, the court was at pains to point
out at pp. 75-76:
"Some of the cases refer to a notice to the collector that suit
will be brought to recover the money back. That notice is necessary
if the payer intends to sue the collector. After its receipt, if he
pays it over to the proper treasury, he does so at his risk, and
does not relieve himself from responsibility. If, however, he pays
over the money without such notice, suit can only be brought
against his principal, in this case, the City of Vicksburg."
In
Pearl River County v. Lacey Lumber Co., supra, the
court said, p. 109:
"We do not think that the county can shield itself from
repayment of money collected under an unconstitutional law, paid
under protest on the ground that the county had disbursed the money
so collected into various taxing districts, or has expended the
money which it wrongfully collected. The fact that the county might
not be able to recover from the taxing districts the amount of
money paid to such districts would not exempt it from liability to
the taxpayer from whom it wrongfully collected it. "
Page 284 U. S. 528
Such a suit, although against the collecting officer, rather
than the state or municipality, affords an adequate legal remedy,
in the absence of allegations in the bill, which are wanting here,
of special circumstances showing inability of the taxpayer to pay
the tax or of the collecting officer to respond to the judgment.
See Arkansas Building & Loan Assn. v. Madden, supra,
p.
175 U. S. 274;
Atchison, Topeka & Santa Fe Ry. v. O'Connor, supra, p.
223 U. S. 285;
Singer Sewing Machine Co. v. Benedict, supra, p.
229 U. S. 487,
and is the rule in Mississippi:
Coulson v. Harris, supra,
p. 752;
Richardson v. Scott, 47 Miss. 236.
Collection of the money by the collector in the name of the
state, if wrongful, would not protect him.
Atchison, Topeka
& Santa Fe Ry. v. O'Connor, supra. The statutes, §§ 3289,
3290, Mississippi Code of 1930, which require payment over by the
collector of taxes to the appropriate treasury, allow the penalties
for nonpayment to be remitted on certificated of the Governor or
Attorney General, if "they are satisfied that the delay has not
been willful or avoidable by the collector," and § 3278 makes
provision for the repayment to any sheriff or tax collector of
taxes, "by mistake or oversight, erroneously paid" to the state
treasurer.
See Taylor v. Guy, 119 Miss. 357, 80 So. 786.
These provisions would seem to contemplate suits against the
collector for the recovery of the tax and to afford him some
protection in the event of a judgment against him.
Atchison,
Topeka & Santa Fe Ry. v. O'Connor, supra, p.
223 U. S. 287.
But, as no facts are presented to show that the suit against the
collector in the present case will not be adequate, it is
unnecessary to consider their precise scope and effect.
The suit in equity to enjoin an illegal tax, authorized by § 304
of Hemingway's Code for 1927 (§ 420, Mississippi Code of 1930),
appears not to be available when there is any other adequate
remedy.
See Anderson v. Ingersoll, 62 Miss. 73;
Noxubee County Board of Supervisors v. Ames,
Page 284 U. S. 529
3 So. 37. In any case, the section cannot affect the
jurisdiction of federal courts of equity. The equity jurisdiction
conferred on inferior courts of the United States by § 11 of the
Judiciary Act of 1789, 1 Stat. 78, and continued by § 24 of the
Judicial Code is that of the English court of chancery at the time
of the separation of the two countries.
Payne v.
Hook, 7 Wall. 425,
74 U. S. 430;
In re Sawyer, 124 U. S. 200,
124 U. S.
209-210. While local statutes may create new rights, for
the protection of which recourse may be had to the remedies
afforded by federal courts of equity, if the remedy at law is
inadequate and the other jurisdictional requirements are present,
state legislation cannot enlarge their jurisdiction by the creation
of new equitable remedies, nor can it avoid or dispense with the
prohibition against the maintenance of any suit in equity in the
federal courts, where the legal remedy is adequate.
Henrietta
Mills v. Rutherford County, supra, pp.
281 U. S.
127-128;
Pusey & Jones Co. v. Hanessen,
261 U. S. 491,
261 U. S.
500.
Appellees' bill of complaint does not state a case within the
jurisdiction of equity to avoid multiplicity of suits. As to each
appellee, a single suit at law brought to recover the tax will
determine its constitutionality, and no facts are alleged showing
that more than one suit will be necessary for that purpose.
See
Boise Artesian Hot & Cold Water Co. v. Boise City,
213 U. S. 276,
213 U. S.
285-286;
Dalton Adding Machine Co. v. State
Corporation Comm'n, 236 U. S. 698,
236 U. S.
700-701.
But it is said that, since each appellee must pay the tax to
avoid penalties and criminal prosecution, all must maintain suits
for the recovery of the tax unconstitutionally exacted, in order to
protect their federal rights, and that, to avoid the necessity of
the many suits, equity may draw to itself the determination of the
issue necessarily involved in all the suits at law.
In general, the jurisdiction of equity to avoid multiplicity of
suits at law is restricted to cases where there would otherwise be
some necessity for the maintenance of
Page 284 U. S. 530
numerous suits between the same parties, involving the same
issues of law or fact. It does not extend to cases where there are
numerous parties plaintiff or defendant, and the issues between
them and the adverse party are not necessarily identical.
St.
Louis, Iron Mountain & Southern Ry. Co. v. McKnight,
244 U. S. 368,
244 U. S. 375;
Kelley v. Gill, 245 U. S. 116,
245 U. S. 120;
Francis v. Flinn, 118 U. S. 385;
Scott v. Donald, 165 U. S. 107,
165 U. S. 115;
Hale v. Allinson, 188 U. S. 56,
188 U. S. 77
et seq., and see Pomeroy, Equity Jurisprudence (4th
ed.1918), §§ 251, 251 1/2, 255, 259, 268.
While the present bill sets up that the single issue of
constitutionality of the taxing statute is involved, the alleged
unconstitutionality depends upon the application of the statute to
each of the appellees, and its effect upon his business, which is
alleged to be interstate commerce. The bill thus tenders separate
issues of law and fact as to each appellee, the nature of his
business, and the manner and extent to which the tax imposes a
burden on interstate commerce. The determination of these issues as
to any one taxpayer would not determine them as to any other. There
was thus a failure of such identity of parties and issues as would
support the jurisdiction in equity.
Reversed.