H. W. Denton and International Union of Electrical, Radio and MacHine Workers, CIO v. City of Carrollton, Georgia

JOHN R. BROWN, Circuit Judge.

International Union of Electrical, Radio and Machine Workers, CIO, and Den-ton, a Georgia citizen, one of its employed labor organizers, sought declaratory and injunctive relief against the enforcement of an Ordinance 1 of the City of Carrollton, Georgia, requiring that any person, firm, or corporation engaging in the profession, business enterprise or occupation of labor union agent, promoter, or organizer apply for and obtain a license for which the license fee was $1,-000.00 plus $100.00 for each day the activity was carried on. Conviction for failure to comply with the Ordinance subjected a violator to a fine not exceeding $100.00 or imprisonment not exceeding sixty days or both.

The plaintiffs claimed, and the Court found, that at least some of the em *483 ployees of two manufacturing concerns in Carrollton engaged in interstate commerce had sought assistance in organizing the employees of these plants as members of the IUE who would then act as Collective Bargaining Agent for them. To do this effectively required that an organizer (Denton) “talk to, contact, assemble and meet with” these employees within the city limits of Carroll-ton and which would be, “activities covered by the Ordinance.” Accepting, apparently, the plaintiffs’ further proof that on inquiry by Denton whether this Ordinance would be enforced if he undertook to do this organizational work, the city officials stated that all Ordinances would be enforced, the Court held further that there would be, “a probable institution of criminal proceedings against * * * Denton, if * * * [he] should * * * proceed with organizational efforts without obtaining a license *

In addition to the attack that the Ordinance was an unconstitutional deprivation of the right of free speech, public assembly, and dissemination of lawful information, Thomas v. Collins, 323 U.S. 516 , 65 S.Ct. 315 , 89 L.Ed. 430 ; cf. Grosjean v. American Press Co., 297 U.S. 233 , 56 S.Ct. 444 , 80 L.Ed. 660 ; Hague v. CIO, 307 U.S. 496 , 59 S.Ct. 954 , 83 L. Ed. 1423 ; Lovell v. City of Griffin, 303 U.S. 444 , 58 S.Ct. 666 , 82 L.Ed. 949 ; Largent v. State of Texas, 318 U.S. 418 , 63 S.Ct. 667 , 87 L.Ed. 873 ; Martin v. City of Struthers, Ohio, 319 U.S. 141 , 63 S.Ct. 862 , 87 L.Ed. 1313 ; and an unwarranted discrimination against labor unions as a class and field of local regulation in violation of the due process and equal protection provisions of the Constitution, e.g., Truax v. Raich, 239 U.S. 33 , 36 S.Ct. 7 , 60 L.Ed. 131 ; cf. Hale v. Bimco Trading Co., 306 U.S. 375 , 59 S.Ct. 526 , 83 L.Ed. 771 ; the Ordinance was primarily assailed as an unconstitutional interference with the operation of the Labor Management Relations Act, 29 U.S.C.A. § 141 et seq. carrying forward the policy of the predecessor National Labor Relations Act; see Amalgamated Utility Workers v. Consolidated Edison Co., 309 U.S. 261, 267 , 60 S.Ct. 561 , 84 L.Ed. 738 ; Amalgamated Ass’n, etc. v. Wisconsin Employment Relations Board, 340 U.S. 383, 398 , 71 S.Ct. 359 , 95 L.Ed. 364 ; Garner v. Teamsters, etc., 346 U.S. 485, 490 , 74 S.Ct. 161 , 98 L.Ed. 228 .

In elaboration of this point, they asserted that the operation of the Ordinance brought it within each of the three classes of forbidden local regulations delineated in Weber v. Anheuser-Busch, Inc., 348 U.S. 468 , 75 S.Ct. 480, 485 , 99 L.Ed. 546 : First, it prohibits the exercise of the right of “ ‘full freedom’ of workers in the selection of bargaining representatives of their own choice,” Hill v. State of Florida, 325 U.S. 538 , 65 S.Ct. 1373, 1374 , 89 L.Ed. 1782 ; International Union of United Automobile, Aircraft and Agricultural Implement Workers of America v. O’Brien, 339 U. S. 454 , 70 S.Ct. 781 , 94 L.Ed. 978 ; Amalgamated Ass’n, etc. v. Wisconsin Employment Relations Board, supra; Garner v. Teamsters, etc., supra, since employees, while presumably free to choose representatives under Section 7 of the Act must confine their choices to agents approved and licensed by the local City Government; Second, it tends to regulate, by establishing its own standards, conduct which has been prohibited as an “unfair labor practice” under the Act, Plankinton Packing Co. v. Wisconsin Employment Relations Board, 338 U. S. 953 , 70 S.Ct. 491 , 94 L.Ed. 588 ; Building Trades Council v. Kinard Construction Co., 346 U.S. 933 , 74 S.Ct. 373 , 98 L.Ed. 423 ; Garner v. Teamsters, etc., supra; Capital Service v. N. L. R. B., 347 U.S. 501 , 74 S.Ct. 699 , 98 L.Ed. 887 ; e.g., the duty to bargain in good faith with employees’ representative would, or might, depend on whether the “person * * * who engaged in * * * the profession, business enterprise or occupation * * * of a * * * union agent” was properly licensed; cf. 29 U.S. C.A. §§ 158(b), 159(f — h), 160(c) and United Mine Workers of America v. Arkansas Oak Flooring Co., 351 U.S. 62 , 76 S.Ct. 559 ; Third, it infringes upon the machinery for dealing with certifica *484 tion which carries “implications of exclusiveness”, LaCrosse Telephone Corp. v. Wisconsin Employment Relations Board, 336 U.S. 18 , 69 S.Ct. 379 , 93 L. Ed. 463 ; Bethlehem Steel v. New York State Labor Relations Board, 330 U.S. 767 , 67 S.Ct. 1026 , 91 L.Ed. 1234 , since the payment of an exorbitant fee is a prerequisite to soliciting or procuring a suf.ficient “showing of interest” of at least 30% of the employees in the unit claimed, 29 U.S.C.A. § 159 (c), NLRB Statement of Procedure, Sections 101.16-101.17.

But the District Court never got that far. To be sure, he found jurisdiction, 28 U.S.C.A. § 1343 , and rightly so since, on the merits, although he did not find it necessary to decide this ground, there was a serious and substantial question, 28 U.S.C.A. § 1337 , 2 whether the Ordinance collided with pre-emptive Congressional legislation such as the National Labor Relations Act, 29 U. S.C.A. § 141 et seq., A.P.L. v. Watson, 327 U.S. 582 , 66 S.Ct. 761 , 90 L.Ed. 873 . 3 He declined to exercise the jurisdiction he possessed for a twofold reason. First, because to do so would be to stay proceedings in a state court contrary to the Statute. 4 Second, and this was the principal basis for his action, the case was wanting in equity for lack of a showing of danger of irreparable injury, both great and immediate, under the general principles restated 5 in Douglas v. City of Jeannette, 319 U.S. 157, 163, 164 , 63 S.Ct. 877, 881 , 87 L.Ed. 1324 .

*485 But this wholesome rule envisages itself the necessity, under circumstances of genuine and irretrievable damage, for affording equitable relief even though the result is to forbid criminal prosecution or other legal proceedings. We start here with an exaction euphemistically called a “license tax,” but which in its cumulative effect is exorbitant and punitive. Its effect, and therefore its purpose, seems not to regulate, but to prohibit. The payment of a license tax of $1,000.00 while large, would not alone, even if legality were doubtful, present a case for equitable relief. But to this must be added the further sum of $100.00 for each day a person acts not only as a “labor union organizer,” but as “union agent” as well, which could presumably cover activities long after the organization drive and while the union, victorious in the membership campaign, undertakes what may be a protracted process of bargaining. For one person for one year of v/orking days, the total would approach $32,300.00. 'i

To require the payment of any such sum as a condition to testing the validity of the exaction, if it does not of itself make the tax illegal for that reason, at least presents such a heavy burden that to decline equitable relief would be to deny judicial review altogether, Ex parte Young, 209 U.S. 123, 144 , 28 S.Ct. 441 , 52 L.Ed. 714, 722 ; Missouri Pacific Ry. Co. v. Tucker, 230 U.S. 340 , 33 S.Ct. 961 , 57 L.Ed. 1507 ; Terrace v. Thompson, 263 U.S. 197 , 44 S.Ct. 15 , 68 L.Ed. 255 ; Beal v. Missouri Pacific R. Co., 312 U.S. 45 , 61 S.Ct. 418 , 85 L.Ed. 577 . Indeed, in such a setting, where the so-called tax has clearly punitive qualities, it may, if invalid, be enjoined, Regal Drug Co. v. Wardell, 260 U.S. 386 , 43 S.Ct. 152 , 67 L.Ed. 318 ; United States v. LaFranca, 282 U.S. 568 , 51 S.Ct. 278 , 75 L.Ed. 551 ; Raymond v. Chicago Union Traction Co., 207 U.S. 20 , 28 S.Ct. 7 , 52 L.Ed. 78 ; Union Pacific R. Co. v. Board of Commissioners of Weld County, 247 U.S. 282 , 38 S.Ct. 510 , 62 L.Ed. 1110 ; Lee v. Bickell, 292 U.S. 415 , 54 S.Ct. 727 , 78 L.Ed. 1337 ; and see Allen v. Regents of University of Georgia, 304 U.S. 439 , 58 S.Ct. 980 , 82 L.Ed. 1448 ; Miller v. Standard Nut Margarine Co., 284 U.S. 498 , 52 S.Ct. 260 , 76 L.Ed. 422 ; Georgia Railroad & Banking Co. v. Redwine, 342 U.S. 299 , 72 S.Ct. 321 , 96 L.Ed. 335 ; Toomer v. Witsell, 334 U.S. 385 , 68 S.Ct. 1156 , 92 L.Ed. 1460 .

The large amount of money required to pre-pay for a test becomes an aggravated factor if actual doubt exists concerning the recoverability of such sums in the event the basic law is ultimately declared invalid. That doubt both eliminates the statutory 6 prohibition against enjoining state tax collections and is a basis for apprehension of genuine and irretrievable loss. Union Pacific R. Co. v. Board of Com’rs of Weld County, supra; Raymond v. Chicago Union Traction Co., supra; Georgia Railroad & Banking Co. v. Redwine, supra; Fox v. Standard Oil Co., 294 U.S. 87 , 55 S. Ct. 333 , 79 L.Ed. 780 ; Graves v. Texas Co., 298 U.S. 393 , 56 S.Ct. 818 , 80 L.Ed. 1236 ; Dawson v. Kentucky Distilleries & Warehouse Co., 255 U.S. 288 , 41 S.Ct. 272 , 65 L.Ed. 638 ; Atlantic Coast Line R. Co. v. Doughton, 262 U.S. 413 , 43 S.Ct. 620 , 67 L.Ed. 1051 . This is of critical importance here for, considering that any such suits for recovery would likely be in Georgia State Courts over whom we would have no corrective powers, the most that a Federal Court *486 could say is that the right of recovery under Georgia law is doubtful, 7 at least. That is all that is required, Dawson v. Kentucky Distilleries & Warehouse Co., 255 U.S. 288, 296 , 41 S.Ct. 272, 275 , 65 L.Ed. 638, 646 , “The decisions of the highest court of the state left it at least doubtful whether money so paid could have been recovered at law by the taxpayer, among other reasons, because the money would not have been paid under compulsion of distraint or of a right of distraint or under a mistake of law or of fact * * *. It is well settled that ‘if the remedy at law be doubtful, a court of equity will not decline cognizance of the suit.’ Davis v. Wakelee, 156 U.S. 680, 688 , 15 S.Ct. 555, 558 ( 39 L.Ed. 578 , [584]). * * *”

Of course, since we hold that the successive license tax was itself so large and the uncertainties about its recovery so great that plaintiffs were not required to pay them as the means of testing the substantial questions over this Ordinance, it is equally true that, under such circumstances, they did not have to run the further serious risk of substantial fines and extended imprisonment for new and successive offenses were they to carry on the activities without license or payment of tax. This combination of circumstances made the threat of real and lasting damage genuine and present. *487 There was, therefore, a substantial basis for equitable relief, A. F. L. v. Watson, supra; Hynes v. Grimes Packing Co., 337 U.S. 86 , 69 S.Ct. 968 , 93 L.Ed. 1231 ; Shields v. Utah Idaho Central Railroad Co., 305 U.S. 177 , 59 S.Ct. 160 , 83 L.Ed. 111 ; Traux v. Raich, supra; Toomer v. Witsell, supra.

The District Court should have exercised its jurisdiction and considered and determined the merits of the case and the validity or unconstitutionality of the Ordinance. The case is therefore reversed and remanded 8 for further and not inconsistent proceedings.

Reversed and remanded.

. “An Ordinance providing for a business license tax and per -diem license for any person conducting tbe business or occupation of labor union, union agent or labor union promotor or labor union organizer * * *.

“ * * * that * * * any person, firm or corporation who engaged in, or who may exercise for any length of time within the City of Carrollton the profession, business enterprise or occupation in the capacity of a labor union agent, labor union promotor, labor union organizer, shall prior to engaging to any extent in any said activities file written application with the Mayor and City Council of the City of Carrollton, giving the name of such individual, firm or corporation seeking said license, the age, place of origin, the employer, if any, of said person, the criminal record, if any, of said person and if none so stating upon oath, and such other matters as the Mayor and Council shall require, and no such license shall be approved except by act of the Mayor and Council.

“Upon approval of the Mayor and Council of any such application the applicant shall pay a license tax in the amount of $1,000.00 and shall thereafter deposit at the beginning of each twenty four hour period of each day for each person engaged in any said activity the sum of $100.00 with the City Clerk for the continuance of said license during said twenty four hour period. There shall be no proration of the initial license of $1,000.00.

“ * * * that any individual firm or corporation failing to obtain the aforesaid license or to thereafter pay the per diem continuation tax herein provided and set out, shall upon conviction be punished as prescribed in Section 263 of the Code of the City of Carrollton, Georgia.”

. 28 U.S.C.A. § 1337 : “Tlie district courts shall have original jurisdiction of any civil action or proceeding arising under any Act of Congress regulating commerce or protecting trade and commerce against restraints and monopolies.”

. Jurisdiction was also asserted under 28 U.S.C.A. § 1331 : “The district court shall have original jurisdiction of all civil actions wherein the matter in controversy exceeds the sum or value of $3,000, exclusive of interest and costs, and arises under the Constitution, laws, or treaties of the United States.” The Court stated that jurisdiction was not predicated upon such, allegations although, on this uncon-tradicted record, since the validity of the license fees was also brought directly in question, the payment of the initial fee and the probable liability for the daily fee for 21 days would, without more, satisfy this requirement.

. 28 U.S.C.A. § 2283 : “A court of the United States may not grant an injunction to stay proceedings in a State court except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments.” The District Court relied strongly on Amalgamated Clothing Workers of America v. Richman Brothers, 348 U.S. 511 , 75 S.Ct. 452 , 99 L.Ed. 600 .

. “Congress, by its legislation, has adopted the policy, with certain well defined statutory exceptions, of leaving generally to the state courts the trial of criminal cases arising under state laws, subject to review by this Court of any federal questions involved. Hence, courts of equity in the exercise of their discretionary powers should conform to this policy by refusing to interfere with or embarrass threatened proceeding in state courts save in those exceptional cases which call for the interposition of a court of equity to prevent irreparable injury which is clear and imminent; and equitable remedies infringing this independence of the states — though they might otherwise be given — should be withheld if sought on slight or inconsequential grounds. * * *

“It is a familiar rule that courts of equity do not ordinarily restrain criminal prosecutions. No person is immune from prosecution in good faith for his alleged criminal acts. Its imminence, even though alleged to be in violation of constitutional guaranties, is not a ground for equity relief since the lawfulness or constitutionality of the statute or ordinance on which the prosecution is based may be determined as readily in the criminal case as in a suit for an injunction. Davis & F. Mfg. Co. v. City of Los Angeles, 189 U.S. 207 , 23 S.Ct. 498 , 47 L.Ed. 778 ; Fenner v. Boykin, 271 U.S. 240 , 46 S.Ct. 492 , 70 L.Ed. 927 . Where the threatened prosecution is by state officers for alleged violations of a state law, the state courts are the final arbiters of its meaning and application, subject only to review by this Court on federal grounds appropriately asserted. Hence the arrest by the federal courts of the processes of the criminal law within the states, and the determination of questions of criminal liability under state law by a federal court, of equity, are to be'supported only on .a, showing of 'danger of irreparable injury *485 ‘both great and immediate’. Spielman Motor Sales Co. v. Dodge, 295 U.S. 89, 95 , 55 S.Ct. 678, 680 , 79 L.Ed. 1322, 1325 , and cases cited; Beal v. Missouri P. R. Corp., 312 U.S. 45, 49 , 61 S.Ct. 418, 420 , 85 L.Ed. 577 ; 579, and cases cited; Watson v. Buck, 313 U.S. 387 , 61 S.Ct. 962 , 85 L.Ed. 1416 [ 136 A.L.R. 1426 ]; Williams v. Miller, 317 U.S. 599 , 63 S.Ct. 258 , 87 L.Ed. 489 .”

See also Galfas v, City of Atlanta, 5 Cir., 193 E.2d 931; City of Miami v. Sutton, 5 Cir., 181 E.2d -644.

. 28 U.S.C.A. § 1341 : “The district court shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in ¡the courts of such State.”

. Recoverability depends entirely upon compliance with and interpretation of the Georgia Code, State Revenue Commission v. Alexander, 1936, 54 Ga.App. 295 , 187 S.E. 707, 708 , “* * * ‘At oommon law, and for many years under the federal statutes, protest at the time of payment was a condition precedent to the recovery of a tax.’ * * * under our state statutes, however, a stricter rule is imposed, and a mere protest will not suffice to change the status from that of a voluntary payment * * *. There is no general statute in Georgia affording a taxpayer a remedy for the recovery of taxes illegally or erroneously assessed, except as is hereinbefore quoted [referring to Code of Georgia, 1933, § 20-1007].”

Code of Georgia, 1933, § 20-1007 (4317): “Voluntary payments; recovery back. — Payments of taxes or other claims, made through ignorance of the law, or where the facts are all known, and there is no misplaced confidence and no artifice, deception, or fraudulent practice used by the other party, are deemed voluntary, and cannot be recovered back, unless made under an urgent and immediate necessity therefor, or to release person or property from detention, or to prevent an immediate seizure of person or property. Piling a protest at the time of payment does not change the rule.”

Hoke v. City of Atlanta, 1899, 107 Ga. 416 , 33 S.E. 412 , denied recovery for taxes paid under protest and threat of levy of execution. Dennison Mfg. Co. v. Wright, 1923, 156 Ga. 789 , 120 S.E. 120 , apparently indicated a right to recover protest payments made under threat of criminal proceedings; but Strachan Shipping Co. v. City of Savannah, 1929, 168 Ga. 309 , 147 S.E. 555 , creates much doubt since a petition alleging payment of an unlawful tax by reason of the fear of criminal prosecution was held insufficient. Eibel v. Royal Indemnity Co., 1934, 50 Ga.App. 206 , 177 S.E. 350 , denied recovery of tax paid under threat of warrant of arrest from an officer having no authority to issue it; see New York Life Insurance Co. v. Williamson, 1936, 53 Ga.App. 28 , 184 S.e. 755. In Goodwin v. MacNeill, 1939, 188 Ga. 182 , 3 S.E. 2d 675 , the Georgia Supreme Court denied recovery of a fine paid to avoid imprisonment under a sentence of conviction which, on appeal, was reversed.

Georgia Railroad & Banking Co. v. Redwine, 342 U.S. 299 , 72 S.Ct. 321, 323 , 96 L.Ed. 335 , augments the doubt when a municipality is involved for, to the Georgia Attorney General’s claim of a “ ‘plain, speedy and efficient’” remedy by “(3) suing the State for refund after payment of taxes” the Court said, “ * * * The third remedy, suit for refund after payment, is applicable only to taxes payable directly to the State and amounting to less than 15% of the total taxes in controversy * *

Whatever the ultimate Georgia holding, the right is at least uncertain, perhaps affected by the circumstances in which the payment is made from “fear” rather than “threat” of prosecution, and may here expose the payer to risk of financial irresponsibility of the individual City Clerk as tax collector of this small (population 7,753) city, since the liability for repayment is apparently personal and not official, Dennison Mfg. Co. v. Wright, supra, a factor of possible dominant importance since right of recovery requires actual collectibility in money, Stewart Dry Goods Co. v. Lewis, 287 U.S. 9 , 53 S.Ct. 68 , 77 L.Ed. 1135 .

. The ease is reversed as to both Denton and IDE. The Court on remand may have to determine whether the Ordinance applies to the Union as such or would entitle it, as distinguished from an individual employee of these local concerns, to relief. The caption, concepts of principal-agent reflected in the Ordinance and afli-davits of city officials might indicate affirmative answers. But, as on the merits generally, we express no opinion on this.