1. Substitution of the official successor to a collector of
internal revenue who resigned and died pending a suit to restrain
collection of a tax assessment held
proper under § 11, Act
of February 13, 1925. P. 304 U. S.
2. R.S. § 3224, providing that "no suit for the purpose of
restraining the collection or assessment of any tax shall be
maintained in any court," is inapplicable in exceptional cases
where there is no plain, adequate, and complete remedy at law. P.
304 U. S.
3. A corporation, created by a State as an instrumentality of
the State and having control and management of state educational
institutions, sought to restrain collection by distraint of sums
assessed by the Commissioner of Internal Revenue in consequence of
neglect to collect and pay over the federal tax, Revenue Act of
192, § 500(a)(1), as amended, on admissions to intercollegiate
football games played at those institutions. The corporation
Page 304 U. S. 440
that the exaction would unconstitutionally burden a governmental
activity of the State. The tickets of admission to the games in
question bore printed notices to the effect that the corporation
was not liable for any admission tax, but that an amount equivalent
thereto was being collected as part of the price of admission, and
would be retained as such unless it should later be determined that
the corporation was liable for the tax. Held,
the suit was
within the equity jurisdiction of the federal court. Pp.
304 U. S. 445
304 U. S.
The State was entitled to a determination of the question
whether the statute, as construed and applied, imposed an
unconstitutional burden, and the issue could not adequately be
raised by any other proceeding.
4. A corporation created by the State as an instrumentality of
the State and having control and management of state educational
institutions at which athletic exhibitions are held and the public
are charged for admission, may constitutionally be required to
collect, make return of, and pay to the United States the
admissions tax imposed by Revenue Act of 1926, § 500(a)(1), as
amended by Revenue Act of 1932, § 711. P. 304 U. S.
5. The tax immunity implied from the dual sovereignty recognized
by the Constitution does not extend to business enterprises
conducted by the States for gain. P. 304 U. S.
93 F.2d 887, reversed.
Certiorari, 303 U.S. 634, to review the affirmance of a decree
enjoining a United States collector of internal revenue from
distraining bank deposits representing moneys claims by the Regents
of the University System of Georgia, a state instrumentality,
respondent in this case. See also
10 F. Supp. 901; 18
62; 81 F.2d 577.
Page 304 U. S. 441
MR. JUSTICE ROBERTS delivered the opinion of the Court.
The question on the merits is whether the exaction of the
federal admissions tax, in respect of athletic contests in which
teams representing colleges conducted by the respondent
participate, unconstitutionally burdens a governmental function of
the State of Georgia. The petition also challenges the respondent's
ability to maintain a suit to enjoin the collection of the tax and
to substitute as defendant the successor in office of the Collector
originally impleaded. The court below decided all the questions
Page 304 U. S. 442
involved against the petitioner. [Footnote 1
] Because of their importance, we granted
Section 500(a)(1) of the Revenue Act of 1926, [Footnote 2
] as amended by § 711 of the
Revenue Act of 1932, [Footnote
"a tax of 1 cent for each 10 cents or fraction thereof of the
amount paid for admission to any place, . . . to be paid by the
person paying for such admission. . . . [Footnote 4
Subsection (d) commands that the price (exclusive of the tax to
be paid by the person paying for admission) at which every
admission ticket is sold shall be conspicuously printed, stamped,
or written on the face or back of that portion of the ticket which
is to be taken up by the management, and imposes a penalty for
failure to comply with its terms. Section 502 requires the person
receiving payments for admissions to collect the tax and make
return in such form as the Commissioner of Internal Revenue may
prescribe by regulation. Section 1102(a) [Footnote 5
] imposes the duty on persons who collect the
tax to keep records and render statements, under oath, and to make
returns as required by the Secretary of the Treasury. Section
1114(b) and (d) [Footnote 6
fixes penalties for failure to collect or pay over and subsection
(e) provides for the personal liability of one collecting the
Page 304 U. S. 443
and for distraint by the Collector of Internal Revenue for taxes
and penalties. Section 607 of the Revenue Act of 1934 [Footnote 7
] requires the person charged
with the collection of the tax to hold the amount collected as a
special fund in trust for the United States, confers the right to
assess him with the amount so collected and withheld, including
penalties, and, in connection with R.S. § 3187, [Footnote 8
] authorizes the Collector of
Internal Revenue to distrain therefor.
The respondent is a public corporation, created by Georgia as an
instrumentality of the State, having control and management of the
University of Georgia and the Georgia School of Technology.
Athletics at these institutions are conducted under the
respondent's authority by two corporations, the University of
Georgia Athletic Association and the Georgia Tech. Athletic
Association. The expense of physical education and athletic
programs at each school is defrayed almost entirely from the
admission charges to athletic contests and students' athletic fees
collected for the purpose. During September and October, 1934,
football games were played at the institutions for which admissions
were charged and collected by the associations. Each ticket showed
on its face the admission price, the amount of the tax, and the
total of the two, and also carried the following printed
"The University of Georgia [or Georgia School of Technology],
being an instrumentality of the government of the Georgia, contends
that it is not liable for any admission tax. The amount stated as a
tax is so stated because the University is required to do so by
Treasury regulations pending a decision as to its liability in this
respect. This amount is collected by the University as a part of
the admission, and will be retained as such unless it is finally
determined that the University is itself liable for the tax. "
Page 304 U. S. 444
Each association deposited the total collected as the disputed
tax in a separate bank account, apart from its other funds, but
made no return thereof. The Collector prepared returns for the
amounts. In consequence of the associations' neglect to pay the
amounts so returned, the Commissioner assessed each association in
the amount shown by return made for it and certified the
assessments to the Collector, who made demands for payment. These
were ignored, and the Collector filed liens, issued warrants, and
levied upon the deposit accounts. The respondent then brought suit
in which it prayed a decree that, as an agency of the State
performing an essential governmental function in the conduct of the
games, it was immune from the tax, and sought injunctions,
temporary and permanent, to restrain the Collector from proceeding
further to collect the sums demanded. From a decree awarding a
final injunction, the Collector appealed, but, pending appeal,
resigned and, before the hearing, died. Over objection, the Circuit
Court of Appeals ordered the petitioner substituted as appellant,
and affirmed the decree. We are of opinion that the court below
rightly decided the procedural questions, but erred as to the
If the suit was maintainable against his
predecessor in office, the substitution of petitioner was lawful.
We are not unmindful of the principle that suits against officers
to restrain action in excess of their authority or in violation of
statutory or constitutional provisions are, in their nature,
personal, and that a successor in office is not privy to his
predecessor in respect of the alleged wrongful conduct. [Footnote 9
] As a result of the
inconvenience resulting from the lack of power to substitute one
who succeeded to the office of an alleged offending official,
Page 304 U. S. 445
which this Court has called attention, [Footnote 10
] Congress adopted the Act of
February 13, 1925, [Footnote
] which provides:
". . . Where, during the pendency of an action, suit, or other
proceeding brought by or against an officer of the United States, .
. . and relating to the present or future discharge of his official
duties, such officer dies, resigns, or otherwise ceases to hold
such office, it shall be competent for the court wherein the
action, suit, or proceeding is pending, whether the court be one of
first instance or an appellate tribunal, to permit the cause to be
continued and maintained by or against the successor in office of
such officer. . . ."
The motion to substitute the petitioner asserted that, unless
restrained, he would continue in the course pursued by his
predecessor. The answer did not deny this allegation, but relied
upon the claim that the present Collector is not privy to the acts
of the former one. In Ex parte La Prade, 289 U.
, this Court reserved the question whether, in
such a situation, the successor might be substituted. As the
present case is within the letter of the act and within the
inconvenience intended to be obviated by its adoption, the
substitution was properly permitted.
If the tax, the collection of which was
threatened, constituted an inadmissible burden upon a governmental
activity of the State, the circumstances disclosed render the cause
one of equitable cognizance, and take it out of the prohibition of
R.S. § 3224. [Footnote 12
The respondent has long been of opinion that exaction of the tax in
respect of games played under the auspices of the University of
Georgia and the Georgia School of Technology constitutes an
unconstitutional burden upon an essential governmental activity of
Georgia. At first,
Page 304 U. S. 446
the respondent collected the tax as required by the act, paid it
over to the Treasury, and made claim for refund. The claim was
rejected on the ground that the tax was paid by the patron of the
game, and that the athletic associations and the respondent were
mere collecting agents having no interest in the fund which would
justify repayment to them if it had been illegally collected.
Believing the basis of the Commissioner's refusal to refund was
sound, [Footnote 13
respondent then resorted to the expedient of collecting the amount
of the tax under the reservation printed upon the tickets.
The bill, after reciting the facts as above summarized, alleges
that the statute imposes a tax upon the individuals who purchase
tickets, but, properly construed, is inapplicable to those
purchasing tickets to the football games in question. If further
asserts that, in respect of those games, neither the respondent nor
the athletic associations collected any tax from purchasers of
admissions; that, if the statute be construed to justify the
Collector in seeking to force respondent to pay sums representing
alleged taxes due from numerous individuals, it is unconstitutional
as an attempt to interfere with and control and to burden the
State's educational activities and unlawfully to impose on the
State government the duty of collecting taxes for the federal
government; that the action of the petitioner in issuing warrants
of distraint is either an attempt to collect from respondent taxes
alleged to be due from various individuals or to impose upon the
respondent penalties, criminal and punitive in nature.
The petitioner insists the bill shows the tax was in fact
collected from the patrons of the games, and the allegation
Page 304 U. S. 447
that no tax was collected is a mere conclusion of law which the
court should ignore; that the trial court was without jurisdiction
to determine in this suit for injunction whether or not taxes had
been collected by respondent; that the Revenue Act imposes no
liability for the tax upon the vendor of the tickets who fails to
collect, although it does impose a penalty for willful failure to
collect the tax and other penalties; that, as the respondent
collected the tax, it has no standing in its capacity as a
collecting agent to deny the validity of the exaction, and, as a
collecting agent, could not create a right to resist collection by
the government by forcing a stipulation upon purchasers of tickets
that the amount collected should belong to the agent if it were
able to defeat the government; that, as such agent, respondent has
no interest adverse to the United States; that the stipulation in
question did not amount to an assignment of a ticket purchaser's
claim for refund or, if it did, the purchaser has thereby lost his
right to recover the tax by reason of the prohibition of assignment
of claims against the United States embodied in R.S. § 3477;
respondent or the athletic associations would have had an adequate
remedy at law for recovery of the amounts assessed against them had
they paid the assessments, and finally that R.S. § 3224 [Footnote 15
] prohibits the issue of
an injunction against collection.
To these contentions, respondent replies that, while it placed
the required information on the ticket and segregated the
equivalent of the tax from the proceeds of tickets sold to avoid
the imposition of penalties on its personnel, the notation on the
tickets shows that it did not undertake to collect, and did not in
fact collect the tax;
Page 304 U. S. 448
that, by refusal to collect, it took itself out of the category
of an agent who voluntarily acted on behalf of the government;
that, while the statute places no liability upon respondent for the
tax as such, it imposes upon the respondent civil and criminal
penalties for refusal to collect it; that respondent is not an
assignee of the claims of its patrons, but, if the tax is invalid,
is owner in its own right of the entire amount paid by each
purchaser; that respondent has no remedy at law, because, if it had
paid the tax out of its own funds, it could not have claimed refund
of payment thus voluntarily made for its patrons' accounts; that
State officials may not be required to collect an illegal tax as a
condition precedent to contesting its validity; that § 3224 has no
application to this suit.
The dispute as to the propriety of a suit in equity must be
resolved in the light of the nature of the controversy. The
respondent in good faith believes that an unconstitutional burden
is laid directly upon its transactions in the sale of licenses to
witness athletic exhibitions conducted under authority of the State
and for an essential governmental purpose. The State is entitled to
have a determination of the question whether such burden is imposed
by the statute as construed and applied. It is not bound to subject
its public officers and their subordinates to pains and penalties,
criminal and civil, in order to have this question settled, if no
part of the sum collected was a tax, and if the assessment was in
truth the imposition of a penalty for failure to exact a tax on
behalf of the United States. And if the respondent is right that
the statute is invalid as applied to its exhibitions, it ought not
to have to incur the expense and burden of collection, return, and
prosecution of claim for refund of a tax upon others which the
State may not lawfully be required to collect. These extraordinary
circumstances, we think, justify resort to equity.
Page 304 U. S. 449
What we have said indicates that R.S. § 3224, supra,
does not oust the jurisdiction. The statute is inapplicable in
exceptional cases where there is no plain, adequate, and complete
remedy at law. [Footnote 16
This is such a case, for here, the assessment is not of a tax
payable by respondent, but of a penalty for failure to collect it
from another. The argument that no remedy need be afforded the
respondent is bottomed on the assumption that it is a mere
collecting agent which cannot be hurt by collecting and paying over
the tax; but this argument assumes, first, that respondent did in
truth collect a tax, and second that the imposition of the tax on
the purchase of admissions cannot burden a state activity. This is
arguing in a circle, for these are the substantial matters in
controversy. We hold that the bill states a case in equity as, upon
the showing made, the respondent was unable by any other proceeding
adequately to raise the issue of the unconstitutionality of the
Government's effort to enforce payment.
We come then to the merits. For present
purposes, we assume the truth of the following propositions put
forward by the respondent: that it is a public instrumentality of
the State government carrying out a part of the State's program of
public education; that public education is a governmental function;
that the holding of athletic contests is an integral part of the
program of public education conducted by Georgia; that the means by
which the State carries out that program are for determination by
the State authorities, and their determination is not subject to
review by any branch of the federal Government; that a state
activity does not cease to be governmental because it produces some
income; that the tax is imposed directly on the State activity,
Page 304 U. S. 450
directly burdens that activity; that the burden of collecting
the tax is placed immediately on a State agency. The petitioner
stoutly combats many of these propositions. We have no occasion to
pass upon their validity, since, even if all are accepted, we think
the tax was lawfully imposed and the respondent was obligated to
collect, return, and pay it to the United States.
The record discloses these undisputed facts: the stadium of the
University of Georgia has a seating capacity of 30,000, cost
$180,000, and was paid for by borrowed money which is being repaid
by the Athletic Association, whose chief source of revenue is
admissions to the contests in the stadium. $158,000 of the amount
borrowed has been repaid since the stadium was completed in 1929.
The student enrollment is about 2,400. Each student pays an annual
athletic fee of $10, which confers the privilege of free admission
to all the school's athletic events. All admissions collected, and
the tax paid on them, are paid by the general public, none by the
students. [Footnote 17
total receipts of the Athletic Association from all sources for the
year ending August 31, 1935, were $91,620.25, of which $71,323.27
came from admissions to football games.
The stadium of the Georgia School of Technology has a seating
capacity of 29,000. It cost $275,000, and was paid for by a gift of
$50,000 and from admissions charged and student fees. The
enrollment is about 2,000 students, each of whom pays an annual
athletic fee of $7.50 which gives the privilege of free admission
to all games. All admissions collected, and the tax paid on them,
are paid by the general public, none by the students. The total
receipts of the Athletic Association for the six months ended
December 31, 1934, were $119,436.75, of which $74,168.51 came from
admissions to football games.
Page 304 U. S. 451
It is evident that these exhibition enterprises are
comparatively large, and are the means of procuring substantial aid
for the schools' programs of athletics and physical education. In
final analysis, the question we must decide is whether, by electing
to support a governmental activity through the conduct of a
business comparable in all essentials to those usually conducted by
private owners, a state may withdraw the business from the field of
When a state embarks in a business which would normally be
taxable, the fact that, in so doing, it is exercising a
governmental power does not render the activity immune from federal
taxation. In South Carolina v. United States, 199 U.
, it appeared that South Carolina had established
dispensaries for the sale of liquor and prohibited sale by other
than official dispensers. It was held that the United States could
require the dispensers to take licenses and to pay license taxes
under the internal revenue laws applicable to dealers in
intoxicating liquors, and this notwithstanding the State had
established the dispensary system in the valid exercise of her
police power. In Ohio v. Helvering, 292 U.
, it was shown that Ohio, in the exercise of the
same power, had created a monopoly of the distribution and sale of
intoxicating liquors through stores owned, managed, and controlled
exclusively by the State. It was sought to enjoin the Commissioner
of Internal Revenue and his subordinates from enforcing against the
State, her officers, agents, and employees, penalties for the
nonpayment of federal excises on the sale of liquor. Relief was
denied, and the views expressed in the South Carolina
were reaffirmed. In Helvering v. Powers, 293 U.
, the court found that Massachusetts, in the
exercise of the police power, had appointed a board of trustees to
operate a street railway company's properties for a limited time.
It was held that, though the
Page 304 U. S. 452
trustees were State officers, their salaries were subject to
federal income tax because the State could not withdraw sources of
revenue from the federal taxing power by engaging in a business
which went beyond usual governmental functions and to which, by
reason of its nature, the federal taxing power would normally
The legislation considered in South Carolina v. United
provided for a division of the profits of the
dispensary system between the State treasury and cities and
counties. Thus, the enterprise contributed directly to the
sustenance of every governmental activity of the State. In the
present instance, instead of covering the proceeds or profits of
the exhibitions into the State treasury, the plan, in actual
operation, appropriates these monies in ease of what the State
deems its governmental obligation to support a system of public
education. The difference in method is not significant. The
important fact is that the State, in order to raise funds for
public purposes, has embarked in a business having the incidents of
similar enterprises usually prosecuted for private gain. If it be
conceded that the education of its prospective citizens is an
essential governmental function of Georgia, as necessary to the
preservation of the State as is the maintenance of its executive,
legislative, and judicial branches, it does not follow that, if the
State elects to provide the funds for any of these purposes by
conducting a business, the application of the avails in aid of
necessary governmental functions withdraws the business from the
field of federal taxation.
Under the test laid down in Helvering v. Gerhardt,
p. 304 U. S. 405
however essential a system of public education to the existence of
the State, the conduct of exhibitions for admissions paid by the
public is not such a function of state government as to be free
from the burden of a nondiscriminatory tax laid on all admissions
to public exhibitions for which an admission fee is charged.
Page 304 U. S. 453
The opinion in South Carolina v. United States, supra
at 199 U. S.
-457, points out the destruction of the federal power
to tax which might result from a contrary decision. [Footnote 18
Moreover, the immunity implied from the dual sovereignty
recognized by the Constitution does not extend to business
enterprises conducted by the States for gain. As was said in
South Carolina v. United States, supra
at 199 U. S.
"Looking, therefore, at the Constitution in the light of the
conditions surrounding at the time of its adoption, it is obvious
that the framers, in granting full power over license taxes to the
national government, meant that that power should be complete, and
never thought that the states, by extending their functions, could
practically destroy it."
Compare Helvering v. Therrell, 303 U.
The decree is
MR. JUSTICE CARDOZO took no part in the consideration or
decision of this case.
MR. JUSTICE BLACK concurs in the result.
The defendant in the District Court was W. E. Page, the
petitioner's predecessor in office. That court dismissed the bill.
10 F. Supp. 901. The Circuit Court of Appeals reversed. 81 F.2d
577. After answer and a hearing on the merits, the District Court
awarded an injunction. 18 F. Supp. 62. The Circuit Court of Appeals
permitted the substitution of the petitioner for Page and affirmed
the decree by a divided court. 93 F.2d 887.
C. 27, 44 Stat. 9, 91; U.S.C. Tit. 26, §§ 940-944.
C. 209, 47 Stat. 169, 271; U.S.C. Tit. 26, § 940(a)(2).
Exemptions touching admissions of certain persons and all
admissions to specified types of entertainment or exhibitions are
not involved. Subsection (e), 47 Stat. 271.
44 Stat. 112, U.S.C. Tit. 26, § 960.
44 Stat. 116, U.S.C. Tit. 26, §§ 494, 856, 921.
C.277, 48 Stat. 680, 768, U.S.C. Tit. 26, § 1551.
U.S.C. Tit. 26, § 1580.
Pennoyer v. McConnaughy, 140 U. S.
, 140 U. S. 10
United States ex rel. Bernardin v. Butterworth,
169 U. S. 600
169 U. S.
-604; Philadelphia Company v. Stimson,
223 U. S. 605
223 U. S.
-621; Irwin v. Wright, 258 U.
, 258 U. S.
See Ex parte La Prade, 289 U.
, 289 U. S.
C. 229, 43 Stat. 936, 941, U.S.C. Tit. 28, § 780.
U.S.C. Tit. 26, § 1543.
Compare Shannopin Country Club v.
Heiner, 2 F.2d 393
Lafayette Worsted Co. v. Page, 6 F.2d 399
Union Pac. Ry. Co. v. Bowers,
33 F.2d 102; Wourdack v.
55 F.2d 840; but see Builders' Club of Chicago v.
14 F. Supp. 1020.
U.S.C. Tit. 31, § 203.
"No suit for the purpose of restraining the assessment or
collection of any tax shall be maintained in any court." U.S.C.
Tit. 26, § 1543.
Miller v. Standard Nut Margarine Co., 284 U.
, 284 U. S.
Student athletic fees are not treated as admissions subject to
the tax. See
Cumulative Bulletin XI-2 (July December 1932)
"Mingling the thought of profit with the necessity of regulation
may induce the state to take possession, in like manner, of
tobacco, oleomargarine, and all other objects of internal revenue
tax. If one state finds it thus profitable, other states may
follow, and the whole body of internal revenue tax be thus stricken
(P. 199 U. S.
"The same argument which would exempt the sale by a state of
liquor, tobacco, etc., from a license tax would exempt the
importation of merchandise by a state from import duty."
(P. 199 U. S.
.) Compare Board of Trustees of University of
Illinois v. United States, 289 U. S. 48
289 U. S.
"Obviously, if the power of the state is carried to the extent
suggested, and with it is relief from all Federal taxation, the
national government would be largely crippled in its revenues.
Indeed, if all the states should concur in exercising their powers
to the full extent, it would be almost impossible for the nation to
collect any revenues. In other words, in this indirect way, it
would be within the competency of the states to practically destroy
the efficiency of the national government."
(P. 199 U. S.
MR. JUSTICE STONE, concurring in the result.
Congress, by R.S. § 3224, has declared that "No suit for the
purpose of restraining the assessment or collection of any tax
shall be maintained in any court." While
Page 304 U. S. 454
I agree with the decision of the Court on the merits, I am not
persuaded that this statute does not mean what it says, or that the
suit is not one to restrain collection of the tax. I can only
conclude, as I did in Miller v. Standard Nut Margarine
Co., 284 U. S. 498
284 U. S. 511
that the statute deprived the District Court of jurisdiction to
entertain respondent's suit, and that the judgment should be
reversed with direction that the cause be dismissed.
MR. JUSTICE REED, concurring in the result.
Except for the holding that injunction is a proper remedy to
test the position of the Regents, I agree with the opinion of the
Court. As even a small breach in the general scheme of taxation
gives an opening for the disorganization of the whole plan, it
seems desirable to express dissent from the conclusion that the
Regents may utilize the summary remedy of injunction, over the
objection of the Government, as a means of testing the
applicability of a tax law to them.
The facts set out in the opinion of the circumstances and
agreement under which the money threatened to be distrained was
collected make it quite clear, it seems to me, that the Regents
collected tax moneys from the spectators. Any allegation in the
petition to the contrary is an erroneous conclusion of law. The
Collector sought to cover this money into the Treasury. Section
502(a) of the Revenue Act of 1926; [Footnote 2/1
] § 607 of the Revenue
Page 304 U. S. 455
Act of 1934 [Footnote 2/2
] and §
3224 of the Revised Statutes [Footnote
] make it clear that no injunction will lie to restrain such
action. [Footnote 2/4
Section 3224 was enacted in 1867, and, until recent years, was
followed by the courts without deviation. Exceptions were made to
protect taxpayers against collection of penalties. [Footnote 2/5
] In an exceptional case of "special
and extraordinary" circumstances [Footnote 2/6
] where a "valid . . . tax could by no legal
possibility have been assessed against respondent . . . ," this
Court permitted an injunction. "Special and extraordinary"
circumstances have multiplied. Here, the lower court found them
"demonstrated by the fact that the Regents had actually paid the
tax in former years, and filed a claim for refund which was denied
on the ground that they had not
Page 304 U. S. 456
borne the burden of any part thereof."
It may be assumed, and petitioner admits, that respondents may
not pay the moneys and then sue to recover them. The fallacy
underlying the opinion of the Court is the assumption that some
remedy is necessary. Respondents, being merely collectors of tax
moneys, are not entitled either to enjoin collection of these
moneys or to pay and sue to recover them.
There is no reason why the State of Georgia should risk or ask
its agents to risk penalties to determine whether this tax is
collectible. Respondents would lose nothing by collecting the tax
and turning it over to the United States. If they desire to stand
upon their own conception of the law and refuse to collect the tax,
they must take the risks of such action. Every other taxpayer or
collector of admission taxes must make the same choice.
The prompt collection of revenue is essential to good
government. Summary proceedings are a matter of right. [Footnote 2/7
] The Government has been
sedulous to maintain a system of corrective justice. [Footnote 2/8
] Any departure from the
principle of "pay first and litigate later" threatens an essential
safeguard to the orderly functioning of government. Here, an
injunction is approved when the petitioner below had little more
legitimate interest in the collection of the tax than a curiosity
to know whether the customers of its athletic spectacles, the real
taxpayers, were constitutionally subject to such an exaction.
I am authorized to say that MR. JUSTICE STONE concurs in this
opinion. MR. JUSTICE BLACK concurs in this opinion except insofar
as it approves the reasoning of the Court on the question of State
immunity from interference by Federal taxation.
Page 304 U. S. 457
"Sec. 502(a). Every person receiving any payments for such
admission, dues, or fees shall collect the amount of the tax
imposed by section 500 or 501 from the person making such payments.
Every club or organization having life members shall collect from
such members the amount of the tax imposed by section 501. Such
persons shall make monthly returns under oath, in duplicate, and
pay the taxes so collected to the collector of the district in
which the principal office or place of business is located."
U.S.C. Title 26, §§ 955, 956, 44 Stat. 93.
"Sec. 607. Enforcement of Liability for Taxes Collected.
Whenever any person is required to collect or withhold any internal
revenue tax from any other person and to pay such tax over to the
United States, the amount of the tax so collected or withheld shall
be held to be a special fund in trust for the United States. The
amount of such fund shall be assessed, collected, and paid in the
same manner and subject to the same provisions and limitations
(including penalties) as are applicable with respect to the taxes
from which such fund arose."
U.S.C. Title 26, § 1551.
"Sec. 3224. No suit for the purpose of restraining the
assessment or collection of any tax shall be maintained in any
U.S.C. Title 26, § 1543.
Gouge v. Hart,
250 F. 802, appeal dismissed,
251 U.S. 542; Ralston v. Heiner,
24 F.2d 416; Calkins
240 F. 138; Seaman v. Guaranty Trust
1 F.2d 391.
Lipke v. Lederer, 259 U. S. 557
Regal Drug Corp. v. Wardell, 260 U.
Miller v. Nut Margarine Co., 284 U.
Cheatham v. United States, 92 U. S.
, 92 U. S.
Compare Anniston Mfg. Co. v. Davis, 301 U.
MR. JUSTICE BUTLER, dissenting.
I am of opinion that the District Court had jurisdiction.
So far as concerns the validity of the tax, the University is
the State. It is an instrumentality carrying on the State's program
of public education. The holding of the athletic contests in
question is an integral part of that program, and does not cease to
be such because it produces income. The tax is imposed directly on
and burdens that activity of the State. The Court assumes the facts
above stated and decided the case on that basis. The tax is laid on
the charge paid for admission, is to be borne by the person paying
for admission, and is to be collected by the State and handed over
to the United States. It is hard to understand how the collection
by the fees for the privilege of attendance brings, even for the
purpose of federal taxation, its work of education to the level of
selling intoxicating liquor (South Carolina v. United
States, 199 U. S. 437
Ohio v. Helvering, 292 U. S. 360
operating a railway (Helvering v. Powers, 293 U.
), or conducting any other commercial activity.
The tax seems plainly within the rule of state immunity from
federal taxation as hitherto understood and applied. I would affirm
the judgment of the Circuit Court of Appeals.
MR. JUSTICE McREYNOLDS concurs in this opinion.