A suit in the federal court to enjoin enforcement of a state
tax, alleged to be unconstitutional, will not lie where the
enforcement is by suit pending in a state court and where the state
courts .afford a plain, speedy, and efficient remedy. Judicial Code
§§ 265 and 24, par. 1, as amended by Act of August 21, 1937. P.
306 U. S.
534.
Affirmed.
Appeal from a judgment of the District Court, of three judges,
which denied applications for temporary and permanent injunctions
and dismissed the bill, in a suit to restrain enforcement of a
state liquor tax.
MR. CHIEF JUSTICE HUGHES delivered the opinion of the Court.
The Commonwealth of Kentucky, acting through its Commissioner of
Revenue, brought suit in the Franklin Circuit Court of that State
to recover the amount of a tax claimed to be due from the Central
Distributing Company, a Kentucky corporation. A writ of attachment
was issued and levied upon certain whiskey which appellants claimed
was subject to their lien under a chattel mortgage executed by the
company. The mortgagor was in default, and appellants had taken
possession of the property.
Page 306 U. S. 532
Contending that the statutes under which the tax was assessed
and sought to be enforced (Alcohol Control Act, effective March 17,
1934, c. 149 Alcohol Beverage Tax Act, effective May 1, 1936, and
Alcohol Beverage Control Law, effective March 7, 1938) were invalid
under the state constitution and also under the commerce clause,
the contract clause, and the due process clause of the Fourteenth
Amendment, of the Federal Constitution, appellants brought this
suit in the federal court against the Commonwealth, on relation of
the Commissioner of Revenue, and the Sheriff, to restrain the
proceedings to collect the tax and to prevent the defendants from
disposing of the property which had been attached.
Defendants moved to dismiss the petition upon the ground that
the plaintiffs had an adequate legal remedy and that the court was
without jurisdiction to grant the relief sought.
On hearing of the application for a temporary and permanent
injunction, the District Court, composed of three judges, dismissed
the petition. The court stated that it was its opinion that § 12 of
the Alcohol Control Act of 1934, c. 149, "furnishes petitioners an
adequate remedy . . . to contest the validity of said Act and to
recover any taxes collected from them by the Commonwealth of
Kentucky" thereunder. The case comes here on appeal. Jud.Code, §
266, 28 U.S.C. § 380.
Appellants contest the ruling of the District Court, asserting
that, under § 12 of the Act of 1934 -- the text of which is set
forth in the margin [
Footnote
1] -- the remedy is given
Page 306 U. S. 533
only to the taxpayer, and it not available to appellants, the
taxpayer's mortgagees. The Commonwealth urges the contrary, but
points to no decision of the state court which is decisive of that
point.
Apart from that question, the Commonwealth insists that
appellants had a plain and adequate remedy by appearing in the
attachment suit in the Franklin Circuit Court where all issues as
to the validity of the tax and the propriety of the proceedings for
enforcement could be litigated and determined, with the ultimate
right of review in this Court of any federal question raised and
decided. The Commonwealth points to the provision of the Civil Code
of Practice of Kentucky, § 29, [
Footnote 2] under which any person claiming an interest in
property which has been attached may file his petition stating his
claim
Page 306 U. S. 534
and controverting that of the plaintiff in the attachment
whereupon he may be made a defendant, his petition being treated as
an answer.
See also Carroll's Kentucky Statutes, Baldwin's
1936 Revision, § 950-1.
Appellants assert that the Franklin Circuit Court was without
jurisdiction of the attachment suit, but that question,
appropriately one for the decision of the state court, could
manifestly be presented and determined in that action.
Appellants also state that, in the present suit, they asked the
federal court to exercise its equity powers in their aid in the
foreclosure of their mortgage, but it is apparent that this relief
is merely incidental, and that the main object of the suit is to
restrain the proceedings in the Franklin Circuit Court which had
been brought to enforce the collection of the tax.
This endeavor, aside from the application of the general
principle governing the equity jurisdiction, encounters two
positive statutory prohibitions: (1) that of § 265 of the Judicial
Code (28 U.S.C. § 379) providing that an injunction shall not be
granted to stay proceedings in a state court (
Essanay Film Co.
v. Kane, 258 U. S. 358,
258 U. S. 361;
Monamotor Oil Co. v. Johnson, 292 U. S.
86,
292 U. S. 97;
Hill v. Martin, 296 U. S. 393,
296 U. S.
403), and (2) the provision of the Act of August 21,
1937 (c. 726, 50 Stat. 738), amending the first paragraph of § 24
of the Judicial Code to the effect that
"no district court shall have jurisdiction of any suit to
enjoin, suspend, or restrain the assessment, levy, or collection of
any tax imposed by or pursuant to the laws of any State where a
plain, speedy, and efficient remedy may be had at law or in equity
in the courts of such State."
The judgment is
Affirmed.
[
Footnote 1]
Section 12 of the Act of 1934 (Carroll's Kentucky Statutes,
Baldwin's 1936 Revision, § 4214a-23) is as follows:
"No suit shall be maintained in any court to restrain or delay
the collection or payment of the tax levied by this Act. The
aggrieved taxpayer shall pay with or without protest the tax as and
when required, and may at any time within two years from the date
of such payment sue the Commonwealth through its agent, the Auditor
of Public Accounts, in an action at law in any court, state or
federal, otherwise having jurisdiction of the parties and subject
matter, for the recovery of the tax paid with legal interest
thereon from the date of payment. If it is finally determined that
said tax or any part thereof was wrongfully collected for any
reason, it shall be the duty of the Auditor of Public Accounts to
issue his warrant on the Treasurer of the Kentucky for the amount
of such tax so adjudged to have been wrongfully collected, together
with legal interest thereon. The Treasurer shall pay the same at
once out of the general expenditure fund of the State in preference
to other warrants or claims against the Commonwealth. A separate
suit need not be filed for each individual payment made by any
taxpayer, but a recovery may be had in one suit for as many
payments as may have been made."
[
Footnote 2]
The text of § 29 of the Civil Code of Practice is as
follows:
"In an action or proceeding for the recovery of real or personal
property, or for the subjection thereof to a demand of the
plaintiff under an attachment or her lien, any person claiming a
right to, or interest in, the property or its proceeds, may, before
payment of the proceeds to the plaintiff, file, in the action, his
verified petition, stating his claim and controverting that of the
plaintiff; whereupon the court may order him to be made a
defendant, and upon that being done, his petition shall be treated
as his answer. But if he be a nonresident, he must give security
for costs."