Petition for Writ of Certiorari — Mouton v. Sinclair Oil & Gas Co.
Supreme Court brief1970
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No. 3 8 3 WN 24 1669
WON F. DAVIS, CLERK
In the :
Supreme Court of the United States
OCTOBER TERM, 1969
AsHTON J. MOUTON, COLLECTOR OF REVENUE,
STATE OF LOUISIANA,
Petitioner,
Vv.
SINCLAIR OIL AND GAS COMPANY,
Respondent.
PETITION FOR WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS FOR
THE FIFTH CIRCUIT
OF COUNSEL:
EMMETT E. BATSON,
COUNSEL OF RECORD.
JOHN B. LEVY,
CYRUS A. GRECO,
JAMES W. MURRAY
Department of Revenue,
State of Louisiana,
Post Office Box 201,
Baton Rouge, Louisiana 70821.
Phone 389-5941.
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INDEX
Page
Table of Authorities ............-----------s-eeesecsseeeeeeeeeeee ii
Petition
Opinion ....-.------------nsecsscoseensessesnnennensennstnnscenttens 1
Jurisdiction ............----------cecececesseseeeneseteneseseeeees 2
Questions Presented for I iiensvninennersivnsvne 2
Statutes Involved. ........-.-.--------ceseseeseeeseeeeteeetees 3
Statement of Facts ........------------s-e-esereseeseseeseeees 3
Argument on Questions Presented
Argument on Question on Number One.... 6
Argument on Question on Number Two.... 20
Appendix
Conclusion and Prayer ..........------------------ 29
Certificate of Service ........-...----.---------+-++ 30
Judgment of United States Court of Appeals
for the Fifth Circuit ...................-0----0-----0- 31
Opinion of United States Court of Appeals
for the Fifth Circuit ...................------------- 32
United States Statutes prior to codification .... 35
Codification and House Comments thereon .... 37
Louisiana Statutes providing a Plain, Speedy
and Efficient remedy for the collection
of taxes paid under protest ...............------- 44
ii
TABLE OF AUTHORITIES
CASES
Page
City of Houston v. Standard Triumph Motor Com-
pany, Sth C.A., 1965, 347 F. 2d 194, Cert. den.
382 U.S. 974, 15 L.Ed. 2d 466, 86 S.Ct. 539. .... 24
George F. Alger and Company v. Peck, Ohio, S.
Dakota, 1954 119 F. Supp. 812. ........000000... 25
Georgia Railroad and Banking Company v. Red-
wine, 342 U.S. 299, 96 L.Ed. 335, 72 S.Ct. 321
INEGI Dey mertanccrsemtc aoe 25
Great Lakes Dredge and Dock Company v. Huff-
man, 319 U.S. 298, 297, 87 L.Ed. 1407, 63
S.Ct. 1070, (1943). 20
Harrison v. N.A.A.C.P., 360 U.S. 167, 3 L.Ed. 2d
1152, 79 S.Ct. 1025 (1959). ...... " 26
Helmsley v. City of Detroit, 6 C.A., 1963, 320 F.
ER to nme re eee eee: 25
Kaiser Steel Corporation v. Ranch Company, 391
U.S. 593, 20 L. Ed. 2d 835, 88 S.Ct. 1753
PUES Gilciichcachetasetonsds ivcionesnvaendacwiehiaaiionntariasercinicieren 25
Leiter Minerals v. United States, 352 U.S. 220, 1
L.Ed. 2d 267, 77 S.Ct. 287 (1956). ................ 21
Leiter Minerals v. California Company, 241 La.
i Fe Fe. | | Meccnnennnrn 23
Leiter Minerals v. United States, 5th C.A., 1964,
ee ehtintpresetnnelnterapicnggll 23
Louisiana Power and Light Company v. City of
Thibodeaux, 360 U.S. 25, 3 L.Ed. 2d 1058 79
a BP Ca scccceccnncesessssnicnrvcinninninnie 23
Pf ce
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iii
Page
Matthews v. Rodgers, 284 U.S. 521, 76 L.Ed. 447,
52 S.Ct. 217 (19381). .....-..----- ‘ 21
Mississippi River Fuel Corporation v. Cocreham,
La. E.D., 1965, 247 F. Supp. 819, reversed 5
C.A. 1967, 382 F. 2d 929. ........--------------ee0e0+ 18
Mississippi River Fuel Corporation v. Fontenot,
5th C.A., 1956, 234 F. 2d 898, Cert. denied 352
U.S. 916, 1 L.Ed. 2d 122, 77 S.Ct. 213. .......... 17
Murphy Corporation, et al v. Fontenot, 255 La. 379,
73 So. 2d 180 (1954), Cert. denied, 348 U.S.
831, 99 L.Ed. 655, 75 S.Ct. 54. -.....---------------+ 17
Natural Oil and Gas Corporation v. Waggonner,
151 So. 2d 575 (1963), reversed by 376 U.S.
369, 11 L.Ed. 2d 782, 84 S.Ct. 857 (1964). .... 18
Township of Somerset County, New Jersey v. Crom-
well, 326 U.S. 620, 90 L.Ed. 358, 66 S.Ct. 445
(1946). ....--.ossesccceseesssscseseseceescsensnennensesnseesenenses 25
Wyandotte Chemicals Corporation v. City of Wyan-
dotte, 6 C.A., 1963, 321 F. 2d 927. ...........-----.-- 25
UNITED STATES STATUTES
Title 28, United States Code, Section 1254(1) ...... 2
Title 28, United States Code, Section 1331 ............ 3
Title 28, United States Code, Section 1332 ............ 3
Title 28, United States Code, Section 1341 ............ 3
Title 28, United State Code, Section 1651(a) ...... 2
Section 24 of the Judiciary Code of 1911, Para-
graph 1, March 8, 1911, c. 231, 36 Stat. 1091,
as amended by May 14, 1934, c. 283, 48 Stat.
775, August 2, 1937, c. 726, 50 Stat. 148. ........ 7
iv
LOUISIANA STATUTES
Page
Title 47, Louisiana Revised Statutes of 1950 Sec-
OE icons dsaade lal ahaeaanoneniaineinaeetieginesiniing 4
Title 47, Louisiana Revised Statutes of 1950,
I ati aieeeaenatienenbeanvtineie 44
OTHER AUTHORITIES
Congressional Record, Volume 78, Part 2, 73rd
Congress, 2nd Session, pages beginning at
DOUG, TUE Ba Fa veers ennenteceieceneovccsveenscerees 11, 35
Committee on the Judiciary, Report No. 1035, 75th
Congress, Ist Session. ............-------cesseeeesereneenes
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No.
| In the
Supreme Court of the United States
OCTOBER TERM, 1969
AsHTON J. MouTON, COLLECTOR OF REVENUE,
STATE OF LOUISIANA,
Petitioner,
Vv.
SINCLAIR OIL AND GaS COMPANY,
Respondent.
PETITION FOR WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS FOR
THE FIFTH CIRCUIT
ASHTON J. MOUTON, Collector of Revenue for
the State of Louisiana does hereby petition this Honor-
able Court for a Writ of Certiorari to the United
States Court of Appeals for the Fifth Circuit, in Num-
ber 25,751 of that Court, Ashton J. Mouton, Collector
of Revenue, State of Louisiana versus Sinclair Oil and
Gas Company.
OPINIONS BELOW
The petition for a rehearing was denied without
written opinion by the United States Court of Appeals
for the Fifth Circuit. The written opinion on the cas:
by the Court of Appeals for the Fifth Circuit has not
yet been reported. Both the written opinion a:: the
2
application for rehearing are attached hereto as Ap.
pendix A.
The United States District Court for the Eastern
District of Louisiana, Baton Rouge Division, refused
to remand this case to the Louisiana District Court
from whence it had been removed. It then granted
summary judgment to Sinclair Oil and Gas Company
simply by an order to that effect entered in the record.
JURISDICTION
The decree of the United States Court of Appeals
for the Fifth Circuit was entered and signed on April
22, 1969. A petition for a rehearing was denied on May
19, 1969. An order staying the mandate of the court to
and including July 25, 1969, was signed by the Deputy
Clerk on May 23, 1969.
The jurisdiction of this Court is invoked under
Title 28 U.S.C., Section 1254(1) and Title 23 U.S.C.,
Sec. 1651(a).
A writ of certiorari is applied for on the ground
that the courts below lacked jurisdiction as a matter
of federal law and that a suit filed in a state court
cannot be removed to a federal court when the federal
court would have no jurisdiction if filed in that court.
QUESTIONS PRESENTED FOR REVIEW
1.
Under federal law does a federal district court
have jurisdiction of a suit to determine the legality of
state taxes when the State involved provides the tax-
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3
payer a plain, speedy and efficient remedy in its own
courts for the contest of the taxes asserted by the State?
2.
In the alternative, only in the event this Court
determines question number one adverse to the Collec-
tor, is the federal district court required to stay its
hand until the question of the legality of a State tax
is determined in the state court when the question is
there pending?
STATUTES INVOLVED
Title 28, United States Code, Section 1331, rela-
tive to a federal question.
Title 28, United States Code, Section 1332, rela-
tive to diversity of citizenship.
Title 28, United States Code, Section 1341, rela-
tive to taxes by states.
Title 47, Louisiana Revised Statutes of 1950, Sec-
tion 1576, relative to the remedy provided by Lou-
isiana law for the recovery of taxes paid under
protest.
- The full text of the above sections are set out in
Appendix A.
STATEMENT OF TIIE CASE
This case was originally filed in the Nineteenth
Judicial District Court, Parish of East Baton Rouge,
State of Louisiana. The object of the suit was to collect
certain state severance taxes which the Collector of
Revenue, State of Louisiana, hereinafter referred to
as “Collector”, claimed were due by the defendant,
ES a Pee ee
4
Sinclair Oil and Gas Company, hereinafter referred
to as, “Sinclair”.
The taxes which the Collector claimed as due are
imposed by state law. LSA—R.S. 47:631:
§631 Imposition of tax
Taxes as authorized by Section 21 of Article
X of the Constitution of Louisiana, are hereby
levied upon all natural resources severed from the
soil or water, including all forms of timber, in-
cluding pulp woods, and turpentine and other
forest products; minerals such as oil, gas, natural
gasoline, distillate, condensate, casinghead gaso-
line, sulphur, salt, coal, lignite and ores; also
marble, stone, gravel, sand, shells and other nat-
ural deposits; and the salt content in brine.
At no time did the Collector assert the taxes claimed
were due under any federal law and at no time did
the Collector assert any federal law as a basis of his
claim. Sinclair was not threatened by any irreparable
injury nor has it ever claimed that it would be. Sin-
clair was not required to pay any of the taxes asserted
until it had had its day in the Louisiana Courts and in
the United States Supreme Court if it chose to apply
for a writ of certiorari and that writ had been granted.
That is because Louisiana provided a plain, speedy and
efficient remedy in its own courts for the contest of
taxes.
Sinclair answered the suit and asserted as a de-
fense allegations to the effect that the oil and gas
against which the Collector was asserting his claims
for severance taxes were produced in Barksdale Air
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5
Force Base. Sinclair further answered to the effect
that the Collector could not apply the tax to oil and gas
produced in Barksdale because the base was an area
of exclusive federal jurisdiction.
After the filing of the answer and the excep-
tions the Collector agreed to a stipulation proposed by
Sinclair which showed that the oil and gas against
which the tax was asserted by the Collector were pro-
duced within the confines of Barksdale Air Force Base.
Sinclair later removed this case to this Court on
the grounds:
1. That the Collector was acting unconstitution-
ally and therefore individually, not in his offi-
cial capacity as the Tax Collector of the State.
2. That the Collector’s petition when considered
with the stipulation agreed to by him raised
a federal question that should be ruled on by
the federal court.
The Collector moved to remand the case to the
State Court on the grounds that:
1. The Collector was acting in his official capac-
ity for the State and the taxes he was assert-
ing against Sinclair do not inure to his benefit
but to the exclusive benefit of the state. There-
fore, since one of the parties was the State and
since a State of the United States is not a
citizen there was no diversity jurisdiction.
2. That the Collector presented no federal ques-
tion to the State Court; that the federal ques-
tion, if any, was presented by Sinclair as a
defense and this did not make the state suit
removable.
ee.
6
The lower court refused to remand this case; in.
stead, it held that it had jurisdiction and then rendered
summary judgment for Sinclair.
ARGUMENT ON QUESTIONS PRESENTED
1.
Argument on Question No. One.
It is respectfully submitted that a suit in a State
Court cannot be removed to a federal district court in
which jurisdiction does not exist under federal law.
In the instant case jurisdiction in the federal district
court to which the case was removed from State Court
did not exist not only because of the two reasons stated
by the Collector as grounds for a remand but also be-
cause the State of Louisiana provides a plain, speedy
and efficient remedy in its own courts for the contest
of taxes and when such a remedy is provided by a state
court Congress has limited the jurisdiction of the fed-
eral district courts. This additional reason was also
argued in the Court below. That Louisiana does pro-
vide a plain, speedy and efficient remedy in its own
courts for the contest of taxes has been noted with ap-
proval by no less an authority than the United States
Supreme Court. Great Lakes Dredge and Dock Co. v.
Huffman, 319 U.S. 293, 296, 87 L.Ed. 1407, 1410, 63
S.Ct. at page 1072 (1943).
Both the District Court and the Circuit Court
found that:
1, The suit in federal court was a suit against
the Louisiana Collector of Revenue acting
illegally in his individual capacity, and,
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7
2. The suit presented a federal question.
Based on the above two findings both lower courts
concluded that they had jurisdiction. However, it is
submitted that these two findings were not correct and
neither were they sufficient to confer jurisdiction on
the two lower courts because of the express statutory
law limiting such jurisdiction in questions involving
state taxes even when there is both diversity and a
federal question where a state provides a plain, effi-
cient and adequate remedy in the state court for the
contest of such taxes from whence the cases can be
taken to the United States Supreme Court.
Congress first expressed its will concerning this
limitation by an act passed August 2, 1937, c. 726, Sec.
1, 50 Stat. 148, wherein it added the last sentence to
the first paragraph of Section 24 of the Judicial Code
as it then read. March 3, 1911, c. 231, Sec. 24, Par. 1,
36 Stat. 1091. Sec. 24 of the Judiciary Code had been
previously amended on May 14, 1934, c. 283, Sec. 1,
48 Stat. 775, so that with the 1934 amendment and the
1937 amendment Sec. 24 of the Judiciary Code read as
follows:
The district courts shall have original juris-
diction as follows:
Of all suits of a civil nature, at common law
or in equity, brought by the United States, or by
any officer thereof authorized by law to sue, or
between citizens of the same State claiming lands
under grants from different States; or, where the
matter in controversy exceeds, exclusive of inter-
est and costs, the sum or value of three thousand
8
dollars, and (a) arises under the Constitution or
laws of the United States, or treaties made, or
which shall be made, under their authority, or (b)
is between citizens of different States, or (c) is
between citizens of a State and foreign States,
citizens, or subjects. No district court shall have
cognizance of any suit (except upon foreign bills
of exchange) to recover upon any promissory note
or other chose in action in favor of any assignee,
or of any subsequent holder if such instrument be
payable to bearer and be not made by any corpora-
tion, unless such suit might have been prosecuted
in such court to recover upon said note or other
chose in action if no assignment had been made:
Provided, however, that the foregoing provision
as to the sum or value of the matter in controversy
shall not be construed to apply to any of the cases
mentioned in the succeeding paragraphs of this
section. (italics supplied)
(The following was added by the 1934
amendment). Notwithstanding the foregoing pro-
visions of this paragraph no district court shall
have jurisdiction of any suit to enjoin, suspend,
or restrain the enforcement, operation, or execu-
tion of any order of an administrative board or
commission of a State, or any rate-making body of
any political subdivision thereof, or to enjoin, sus-
pend, or restrain any action in compliance with
any such order, where jurisdiction is based solely
upon the ground of diversity of citizenship, or the
repugnance of such order to the Constitution of
the United States, where such order (1) affects
rates chargeable by a pubiic utility, (2) does not
interfere with interstate commerce, and (3) has
been made after reasonable notice and hearing,
,
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9
and where a plain, speedy, and efficient remedy
may be had at law or in equity in the courts of
such State.
(The following was added by the 1937
amendment). Notwithstanding the foregoing pro-
visions of this paragraph, 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.” (italics supplied)
The Judiciary Act of 1911 was codified in 1948.
In that codification what was formerly the first para-
graph of Section 24 became Title 28, United States
Code, Sections 1331, 1332, 1341, 1342, 1345, 1354 and
1359. The House Committee report on the codification
and any revisions made relative to the former first
paragraph of Section 24 of the 1911 Judiciary Act are
contained in “Revision of Title 28, United States Cede,
House Report 308, 80th Congress, 1st Session.” Perti-
nent parts of the report as well as the Section 24 of the
Judiciary Act of 1911 together with the 1934 and 1937
amendments are reproduced in the Appendix for the
convenience of the court. The House Report clearly
shows that no significant changes were made in the
law as it was prior to codification with reference to
the limitation of jurisdiction of federal district courts
relative to the collection of state taxes except that in
view of the then new Rules of Civil Procedure, the
words, “all civil actions” were substituted for “all
suits of a civil nature, at common law or in equity.”
10
(See House Report on Sections 1331, 1332, 1341 of
Title 28 of United States Code, which are reproduced
in the Appendix)
If we now rewrite the first paragraph of Sec, 24
of the Judiciary Act of 1911 as it appeared in 1937
when Congress first limited the district courts’ juris-
diction in state tax matters, leaving out all portions
thereof which do not pertair. to the case at bar, it
would read as follows:
“The district courts shall have original jurisdic.
tion as follows:
Of all suits of a civil nature, at common law
or in equity brought by the United States, . . . or,
where the matter in controversy exceeds, exclu-
sive of interest and costs, the sum or value of
three thousand dollars, and (a) arises under the
Constitution or laws of the United States ... or
(b) is between citizens of different states .. .
Notwithstanding the foregoing provisions of this
paragraph, no district court shall have jurisdic-
tion 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.” (Ital-
ics supplied )”
When read as above the Collector submits that
Congress in its first legislation limiting the jurisdic-
tion of the district courts to entertain suit relating to
the collection of state taxes clearly and unequivocally
stated that the restraint was applicable to all such
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ww
11
suits whether they were designated as suits at common
law or in-equity, provided, of course, a plain, speedy
and efficient remedy existed in the courts of the state.
Since the 1948 codification did not change that limita-
tion in any way it follows that statutory federal law
as it now stands does not give the district courts the
authority to entertain and pass upon civil actions to
recover state taxes where the state provides a plain,
speedy and adequate procedure for such recovery in its
own courts
The intention of Congress to limit the lower fed-
eral courts jurisdiction in all tax cases is made doubly
clear when one considers the great debate which took
place in the Senate when the 1934 amendment to the
Judiciary Code was adopted. Congressional Record,
Volume 78, Part 2, 73rd Congress, 2nd Session, pages
beginning at 1915, 2014 and 2238. On Senate Bill No.
752. The 1934 amendment did not concern taxes but as
it clearly appears from the debate on that amendment,
it concerned the restriction of the federal courts’ power
relative to suits by public utilities. The case for the
limitation of the lower federal courts’ jurisdiction
was clearly stated by Senator Johnson as reported in
the Congressional Record above referred to, beginning
at page 1915, second column.
“The design of the measure is to correct what
has become an intolerable evil. Those who are
familiar at all with the various commissions which
the States have set up for the regulation of public
utilities and the determination of their rates will
realize from their experience that the process is
-
I pe Oy en eee ame POSE ES
12
interminable where not only the State courts may
be resorted to by the public utility which questions
the decision of the State regulatory commission,
but the United States courts may be resorted to
as well.
The bill takes no substantive right away from
the public utility corporations. It enables, of
course, the public utility corporation to pursue its
remedy through all the courts of the States and
ultimately through the United States Supreme
Court itself, but it seeks to put the public utility
as a litigant in the same category that citizens of
the States would be put under like circumstances,
It would seem, from looking at the record of
the various cases that have gone to the court of last
resort, as if our public utility corporations main-
tain a circumlocution office the design of which
is to rival, in the matter of finality of fixing of
rates by the various States, the celebrated case of
Jarndyce against Jarndyce.
The bill comes here not from one State, but
it comes from many States of the Union. It has the
approval practically of every public utility com-
mission of every State that possesses such a com-
mission. It has the approval, too, of those who
have had great trouble and great labor and great
expense in endeavoring justly to fix the rates of
public utility corporations in the different States
of the Union.
I have with me letters from different States,
all approving the measure, all begging for the re-
lief. I have one from California from its railroad
commission and from the California Farm Bu-
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—
13
reau Federation, one from the Public Utilities
Commission of the State of Colorado, from the
Public Service Commission of Indiana at Indian-
apolis, from the Board of Railroad Commissioners
of the State of Montana, from the National Asso-
ciation of Railroad and Utility Commissioners,
which maintains an office in this city, from the
Public Service Commission of the State of Nevada
at Carson, from the Department of Public Service
of the State of New York, from the Public Com-
mission of Oregon, from the Public Service Com-
mission of Wisconsin, and various others, all unit-
ing in the plea for the passage of this bill and
praying that regulation, which has been attempted
by the States, may if just and fair, be ultimately
put in force without the intolerable and intermin-
able delays which have existed in the past.
Not only this, but the President himself dealt
with the subject when he was Governor of New
York, and he dealt with it in no uncertain tones.
In January 1930 President Roosevelt, then
Governor of the State of New York, sent a special
message to the New York Legislature, then in ses-
sion, from which I quote:
The recent decision of the Federal court in
the southern district of New York permitting the
New York Telephone Co. drastically to raise its
telephone rates brings to the fore in a striking
way the whole question of interference by the
United States courts with the regulatory powers
of our public-service commission. * * *
It means that hearings and trials which
rightfully should be held before our public-service
commission or before State courts are, by a
14
scratch of the pen, transferred to a special master
appointed by the Federal court. The State regula-
tory body * * * is laughed at by the utility seek-
ing refuge with a special master, who is un-
equipped by experience and training, as well as by
staff and assistants, to pursue that searching in-
quiry into the claims of the company which the
consuming public is entitled to demand. The spe-
cial master becomes the rate maker; the public-
service commission becomes a mere legal fantasy.
This power of the Federal court must be
abrogated.
This is the language of the President:
‘Only the Congress can give the remedy. Legis-
lation has been introduced in the Congress to carry
out this purpose. * * * I recommend to your honor-
able bodies that you memorialize the Congress to
pass this legislation.’
There have been classic examples during the
last few years of the methods that public utilities
pursue in order to delay and to hamper just regu-
lation and to prevent the putting into effect of
rates which are fixed by the public-utility commis-
sions of the various States. I cannot better show
the wrongs that have been permitted by the exist-
ing law, and the necessity for the measure which
is today presented, than by reading to you from
the Public Service Commission of the State of
Montana its peculiar experience in relation to its
endeavor to control and regulate Montana’s public
utilities. It is high time that the public utility was
taught by the Congress of the United States that
its rights are exactly the same as those of any
citizen of any State, but that it has no greater
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15
rights and no higher privileges than any citizen
of the State; and it is endeavored by this measure
to put in the same category, so far as litigation is
concerned, the public utility with the citizen of
the State.
There is no reason in law, in equity, in jus-
tice, in governmental policy, indeed, in saying
that two bites at the cherry, as it were—two
sources of litigation—shall be open at the sweet
will of the public utility, where but one is given
to the ordinary citizen, and that a public utility
may go on with its litigation in a State court until
it thinks it may be defeated, and then go into a
United States court, obtain its injunction there,
refer the case to a master of its selection, who will
go over the same ground that the public-utility
commission has gone over and upon that evidence,
that has once been taken, again take as it sees fit,
through those who have little knowledge of the
subject, the same evidence, and then substitute its
will in the Federal court for the will of the State
court and the will of the people, who are repre-
sented by their public-utility commission.
It is that we seek to prevent here. The Judi-
ciary Committee, by a very large majority, re-
ported the bill favorably. My two distinguished
brethren—one from Vermont, the other from
Rhode Island—are in opposition, and have pre-
sented a minority report; but I challenge them to
present the view of a single State in opposition to
the legislation that is proposed, or in opposition to
curtailing the extraordinary and outrageous priv-
ilege, from the standpoint of litigation, that here-
tofore has been accorded to these public-utility
corporations.”
16
Opponents of the bill raised the question of con-
stitutionality and also whether it was wise to so limit
the jurisdiction of the federal courts in any event. The
proponents won since that great debate there has been
no question that it is the will of Congress that where a
plain, speedy and efficient remedy for the contest of
the public utility rates may be had in the state courts
the use of the federai courts are denied to public
utilities.
In 1937 Senator Johnson directed his attention to
a similar situation which then existed relative to the
federal courts’ interference with the collection of state
taxes. Senate Bill 1551 was introduced to limit the
lower courts’ jurisdiction and it was adopted in the
form shown on page 9 of this brief. In the 1948
revision of the Judiciary Code the amendment was
written as it appears in Title 48, U.S.C., Sec. 1341.
No great debate took place with reference to the
1937 amendment. In the report of the Committee on
the Judiciary, Report No. 1035, 75th Congress, Ist
Session, the Committee simply stated:
“Tt should be emphasized that the bill does not
take away any equitable right of the taxpayer or
deprive him of his day in court. Specific provision
is made that the suit will not be withdrawn from
the jurisdiction of the Federal district court ex-
cept where there is a plain, speedy, and efficient
remedy at law or in equity in the courts of the
State. A full hearing and judicial determination
of the controversy is assured. An appeal to the
Supreme Court of the United States is available
as in other cases.
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17
The propriety of this kind of legislation was
fully discussed by the Senate Judiciary Committee
when the so-called Johnson Act of May 14, 1934,
S. 752, Public, No. 222, was favorably reported
and subsequently passed by the Congress.
The report on the Johnson bill pointed out
that the continuance of the unjust discrimination
between citizens of the State and foreign corpora-
tions doing business in such State has been the
cause of much controversy. The controversies aris-
ing out of the use of the injunctive process in State
tax cases would be eliminated by the passage of
this bill.”
Let us now look at the history of this litigation in-
volving the same area, the same tax and, in most cases,
the same parties. The legality of the Louisiana sever-
ance tax imposed on oil and gas produced from Barks-
dale Air Force Base was first litigated by the oil com-
panies in the Louisiana Courts in 1955 in the case of
Murphy Corporation, et al v. Fontenot, 255 La, 379,
73 So. 2d 180 (1954). The legality of the tax was up-
held by the Louisiana Supreme Court and the United
States Supreme Court denied certiorari. 348 U.S. 831,
99 L.Ed. 655, 75 S.Ct. 54. The oil companies then went
into federal court to test the question. In the case of
Mississippi River Fuel Corporation v. Fontenot the
United States Court of Appeals for the Fifth Circuit
upheld the legality of the tax. Mississippi River Fuel
Corporation v. Fontenot, 5th C.A., 1956, 234 F, 2d
898. The United States Supreme Court denied writs.
Cert. den. 352 U.S. 916, 1 L.Ed. 2d 122, 77 S.Ct. 213.
After the loss in the Louisiana Supreme Court and
18
the loss in the federal Fifth Circuit the oil companies
had no choice except to wait for an excuse to present
the question to the courts again. This excuse arose in
the case of National Gas and Oil Corporation v. Wag-
gonner, 151 So. 2d 575 (1963), Cert. den. by the Lou-
isiana Supreme Court, 244 La. 463, 152 So. 2d 561.
This later case involved the imposition of an ad valorem
tax on certain equipment the oil companies possessed
in the area in question. This time the United States
Supreme Court granted writs and held that the ad
valorem tax could not be imposed because the equip-
ment was located in an area of exclusive federal juris-
diction. Humble Pipeline Company v. Waggonner, 376
U.S. 369, 11 L.Ed. 2d 782, 84 S.Ct. 857 (1964). Using
the Waggonner case as a spring board the oil companies
then again tested the legality of the severance tax in
the federal court. The federal court ruled against the
oil companies. Mississippi River Fuel Corporation v.
Cocreham, La. E.D., 1965, 247 F. Supp. 819, but on
appeal the Fifth Circuit over the strenuous objection of
the Collector as to its jurisdiction, declared the sever-
ance tax illegal on the basis of the Waggonner case
although the Waggonner case was an ad valorem tax
case. Mississippi River Fuel Corporation v. Cocreham,
5th C.A. 1967, 382 F. 2d 929. On application for a
rehearing the Fifth Circuit, sitting as a three judge
panel, refused to grant a rehearing by a two to one
decision. So, in 1968 the question of the legality of
the severance tax as applied to the oil companies
operating in the area in question stood as follows:
eoe.,rcec&n THE CNICN POOR COPY
19
1. The legality of the tax upheld by the Louisiana
Supreme Court in 1954. Certiorari denied by
the United States Supreme Court.
2. The legality of the tax upheld by the United
States Court of Appeals for the Fifth Cir-
cuit in 1956. Certiorari denied by the United
States Supreme Court.
3. The legality of the tax overturned by the
United States Court of Appeals for the Fifth
Circuit in 1968. Rehearing denied by a two
to one decision. Certiorari denied by the
United States Supreme Court.
With the above history in mind the Collector filed
this suit in the Louisiana courts with the idea that the
Louisiana courts should have the opportunity to in-
terpret the state laws which had been interpreted by
the Fifth Circuit in the 1968 Mississippi River Fuel
case. But the Collector has been hamstrung in this
effort by the removal of this case to the federal courts.
In so hamstringing the Collector it is respectfully sub-
mitted that the lower district court as well as the
United States Court of Appeals for the Fifth Circuit
has not only clearly disregarded the will of Congress
in limiting the lower federal courts’ jurisdiction as
shown by the great debate which took place when the
1934 amendment to the Judiciary Code was considered
but the Fifth Circuit has also placed the litigation of
state taxes back in the jungle of state and federal
concurrent jurisdiction and endless litigation as the
history of the litigation of this particular state tax for
the past 15 years so clearly shows.
_ - ve eee ee
20
PART II.
In the alternative, it is respectfully submitted
that when the question of the legality of a state tax
is pending in a state court and the state provides a
plain, speedy and efficient remedy for the contest
of the tax in the state court that even though a federal
court may have jurisdiction still the federal court
has no discretion but to stay its hand until the question
is resolved in the state court.
The Collector will now show this court that even
where there is unquestioned federal jurisdiction to hear
a case, as in a suit between citizens of different states
or the determination of a federal question if the tax-
payer has a plain, adequate and efficient remedy at
law in the state courts, the federal courts must not
exercise that jurisdiction until the highest courts of
the state whose statute is alleged to be unconstitutional
or otherwise illegal has had an opportunity to pass on
the illegality or unconstitutionality of the statute. This
is the doctrine of abstention.
In Great Lakes Dredge and Dock Co. v. Huffman,
319 U.S. 293, 87 L.Ed. 1407, 63 St. Ct., 1070 (1943),
the taxpayer brought suit in the District Court for
the Eastern District of Louisiana against a Louisiana
state officer charged with the administration of the
Louisiana Unemployment Compensation Law. The
prayer was for a judgment declaring the State law un-
constitutional as applied to the plaintiff and their em-
ployees. The statute in question exacts of employers
payment into the state unemployment insurance fund,
in the nature of an excise tax upon the exercise of the
or cent THO OICN POOR COPY
21
right or privilege of employing individuals and mea-
sured by a percentage of the wages paid. The District
Court held the law constitutional and so did the Fifth
Circuit. The Supreme Court granted certiorari and
specifically asked counsel:
“to discuss in their briefs and on oral argument
the question whether the declaratory judgment
procedure can be appropriately used in this case
where the complaint seeks a judgment against a
state officer to prevent enforcement of a state
statute.”
In its opinion the court considered Act No. 330
of the 1938 Louisiana Legislature and held that the
act, now LSA-R.S. 47:1576, provides an adequate rem-
edy in the Louisiana state courts for the recovery of
taxes paid under protest. Then the Supreme Court,
quoting liberally from Matthews v. Rodgers, 284 U.S.
521, 76 L.Ed. 447, 52 S.Ct. 217 (1931), affirmed:
“ _ . but solely on the ground that, in the appro-
priate exercise of the Court’s discretion, relief by
way of declaratory judgment should have been
denied.” (319 U.S. 299, 301; 87 L.Ed. 1407, 1413)
Leiter Minerals v. United States, 352 U.S. 220, 1
L.Ed. 2d 267, 77 S.Ct. 287 (1956). In 1938 one Leiter
conveyed certain lands to the United States with reser-
vation of his mineral rights. Leiter subsequently trans-
ferred his mineral rights to Leiter Minerals, the claim-
ant. No minerals were ever produced by either Leiter
or his successor by virtue of the mineral reservation. In
1950 the United States granted a mineral lease to the
22
California Company which produced oil, gas and other
minerals worth many millions of dollars. Leiter Min-
erals filed suit in the Louisiana State Courts to recover
the value of all the minerals produced by the California
Company on the ground that Leiter Minerals’ mineral
rights had never prescribed because of a 1940 Lov-
isiana Act which provided that mineral rights in exis-
tence at the time Louisiana land was acquired by the
United States were imprescriptible. The interpreta-
tion of the Louisiana statute was involved in the state
suit. Then the United States brought suit to quiet title
in its favor in the federal district court. The United
States District Court held that since the United States
was not a party to the state court action, title of the
United States with respect to the mineral rights could
be tried only in the suit in the federal court. This view
was upheld by the Fifth Circuit but the United States
Supreme Court modified the judgment of both the Dis-
trict Court and the Fifth Circuit. The Supreme Court
stated at 1 L.Ed. 2d 275, 352 U.S. 228:
“But the fact that the United States is not a party
to the state court litigation does not mean that the
federal court should initiate interpretation of a
state statute. In fact, where questions of constitu-
tionality are involved and the Government con-
tends that an application of the state statute ad-
verse to its interests would be unconstitutional
our rule has been precisely the opposite: ‘as ques-
tions of federal constitutional power have become
more and more interwined with preliminary
doubts about local law we have insisted that fed-
eral courts do not decide questions of constitution-
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23
ality on the basis of preliminary guesses regard-
ing local law.’ ”
(Numerous citations. )
The Supreme Court then ordered the judgment of the
Fifth Circuit and District Court modified so that ju-
risdiction was retained in the lower court but the court
was to stay its hand until an authoritative opinion of
the Louisiana Supreme Court as to the interpretation
of the state statute was obtained.
As to the final disposition of the case the Louisi-
ana Supreme Court did render an authoritative opinion
in a suit for a declaratory judgment which was subse-
quently filed in the Louisiana Courts. Leiter Minerals,
Inc. v. California Co., (La. 1961), 241 La. 915, 132
So 2d 845. The United States Court of Appeals for the
Fifth Circuit rendered judgment for Leiter Minerals
in accordance with the interpretation of the Louisiana
statute by the Louisiana Supreme Court. Leiter Min-
erals, Inc. v. United States, 5th Cir., 1964, 329 F. 2d 85.
In Louisiana Power and Light Co. v. City of Thib-
odaux, 360 U.S. 25, 3 L.Ed. 2d 1058, 79 S.Ct. 1070
(1959), the City of Thibodaux, Louisiana filed a peti-
tion for expropriation in a Louisiana District Court,
asserting a taking of the property of a private power
company. The defendant removed the case to the
United States District Court for the Eastern District
of Louisiana on the basis of diversity of citizenship.
After a pretrial conference the district judge, citing
Leiter Minerals, supra, stayed the proceedings until
the Supreme Court of Louisiana had been afforded
24
an opportunity to interpret the statute on which the
city’s expropriation order was based. 153 F. Supp. 515.
The United States Court of Appeals for the Fifth Cir.
cuit reversed the District Court, 255 F. 2d 774, and
on certiorari the United States Supreme Court re-
versed the Fifth Circuit and reinstated the judgment of
the District Court, stating at 360 U.S. 27, 3 L.Ed. 2d
1061:
“We have increasingly recognized the wisdom of
staying actions in the federal courts pending de-
termination by a state court of decisive issues of
state law.”
After the decisions of the United States Supreme
Court in Huffman, supra, Leiter Minerals, supra, and
Louisiana Power and Light Co., supra, the Fifth Cir-
cuit had occasion to consider City of Houston v. Stan-
dard Triumph Motor Co., 5th Cir., 1965, 347 F. 2d 194.
Cert. denied, 382 U.S. 974, 15 L.Ed. 2d 466, 86 S.Ct.
539. The original question in that case was whether
imported English automobiles were immune from Tex-
as ad valorem taxation under the Import-Export
Clause of the United States Constitution. But the
original issue became secondary when the case reached
this Court because the appeal turned on whether the
District Court should have entertained the declaratory
judgment suit at all. The United States Court of Ap-
peals for the Fifth Circuit, after first discussing the
two United States Supreme Court cases of Matthews
v. Rodgers, supra, and Great Lakes Dredge & Dock
Co. v. Huffman, supra, held: At 347 F. 2d 198:
“ . . Wide as a Court’s power must be in the
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25
exercise of its discretion whether to grant declara-
tory relief, the Supreme Court makes clear that ‘it
is the court’s duty to withhold such relief’ when,
in the words of the Johnson Act, there is “‘a plain,
speedy and efficient remedy . . . in the courts of
the state. 319 U.S. at 300-301, 63 S.Ct. at 1074.
This is the decision that the Sixth Circuit has
twice reached. Helmsley v. City of Detroit, Mich.,
6 Cir., 1963, 320 F. 2d 476; Wyandotte Chemicals
Corp. v. City of Wyandotte, 6 Cir., 1963, 321 F. 2d
927. The critical turning point is the adequacy of
the state court remedies. See Township of Hills-
borough, Somerest County, New Jersey v. Crom-
well, 1946, 326 U.S. 620, 66 S.Ct. 445, 90 L.Ed.
358; Georgia Railroad & Banking Co. v. Redwine,
1952, 342 U.S. 299, 72 S.Ct. 321, 96 L.Ed. 335;
George F. Alger & Co. of Detroit, Michigan v.
Peck, S. D. Ohio, 1954, 119 F. Supp. 812, af-
firmed, 1954, 347 U.S. 984, 74 S.Ct. 853, 98 L.Ed.
1120, 1148; Livingston v. United States, E.D.S.C.,
179 F. Supp. 9, affirmed, 1960, 364 U.S. 281 80
S.Ct. 1611, 4 L.Ed. 2d 1719. Certainly, after em-
phasizing the pre-Johnson Act equitable limita-
tions congressionally approved and strengthened
by the enactment, it is inconceivable that the Su-
preme Court intended to allow any discretion to
grant declaratory relief where adequate state rem-
edies were available.”
Kaiser Steel Corporation v. Ranch Co., 391 U.S.
593, 20 L.Ed. 2d 835, 88 S.Ct. 1753 (1968), was a
diversity action brought in the United States District
Court for the District of New Mexico. Both the District
Court and the Court of Appeals for the Tenth Circuit
(388 F. 2d 257), rejected defendant’s motion to stay
26
the federal action pending decision of the question of
state law by the state court. The United States Su-
preme Court reversed and stated at 20 L.Ed. 2d 837:
“The Court of Appeals erred in refusing to stay
its hand. The state law issue which is crucial in
this case is one of vital concern in the arid State
of New Mexico, where water is one of the most
valuable natural resources. The issues, moreover,
is truly a novel one. The question will eventually
have to be resolved by the New Mexico Courts, and
since a declaratory judgment action is actually
pending there, in all likelihood that resolution will
be forthcoming soon. Sound judicial administra-
tion requires that the parties in this case be given
the benefit of the same rule of law which will ap-
ply to all other businesses and landowners con-
cerned with the use of this vital state resource.”
Harrison v. N.A.A.C.P., 360 U.S. 167, 3 L.Ed.
2d 1152, 79 S.Ct. 1025 (1959). In this case registra-
tion and barratry statutes enacted by the Virginia
Legislature as part of its general plan of massive re-
sistance to the integration of schools of the state were
challenged by the National Association for the Ad-
vancement of Colored People in the United States Dis-
trict Court for the Eastern District of Virginia as
invalid under the Fourteenth Amendment. The Dis-
trict Court, finding the statutes free from ambiguity,
declared them unconstitutional and enjoined their en-
forcement. (159 F. Supp. 503). The United States
Supreme Court held, at 360 U.S. 176, 3 L.Ed. 2d 1158:
“According every consideration to the opinion
of the majority below, we are nevertheless of the
view that the District Court should have abstained
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wa
27
from deciding the merits of the issues tendered
it, so as to afford the Virginia courts a reason-
able opportunity to construe the three statutes in
question. In other words, we think that the Dis-
trict Court in dealing with Chapters 31, 32, and
35 should have followed the same course that it
did with respect to Chapters 33 and 36.
“This now well-established procedure is
aimed at the avoidance of unnecessary interfer-
ence by the federal courts with proper and validly
administered state concerns, a course SO essential
to the balanced working of our federal system. To
minimize the possibility of such interference a
‘scrupulous regard for the rightful independence
of state governments . . . should at all times act-
uate the federal courts,’ Matthews v. Rodgers, 284
U.S. 521, 525, 76 L.Ed. 447, 452, 52 S.Ct. 217, as
their ‘contribution . . . in furthering the harmon-
ious relation between state and federal authority
_. 2 Railroad Company v. Pullman Company 312
U.S. 496, 501, 85 L.Ed. 971, 61 S.Ct. 648. In the
service of this doctrine, which this Court has ap-
plied in many different contexts, no principle has
found more consistent or clear expression than
that the federal courts should not adjudicate the
constitutionality of state enactments fairly open
to interpretation until the state courts have been
afforded a reasonable opportunity to pass upon
them.”
Summarizing the above cases it can therefore be
said with confidence that when the question of juris-
diction is put at issue in matters relating to state taxes,
as was done in this case there must be an affirmative
showing that the state has not provided a plain, speedy
28
and efficient remedy for the contest of the tax statute
in the State Courts. Matthew v. Rodgers, supra and
Hillsborough Township v. Cromwell, supra. In the in-
stant case the United States Supreme Court has al-
ready held that Louisiana’s present statute does pro-
vide a plain, speedy and efficient remedy in the State’s
Courts for the recovery of taxes paid under protest.
Great Lakes Dredge and Dock Co. v. Huffman, supra.
Therefore this suit should have been remanded by the
District Court.
As to the Great Lakes case, supra, the United
States Supreme Court has ruled that even in cases
where there is jurisdiction in the federal courts the
federal court must stay its hand in ruling on a defense
based on the unconstitutionality of the state tax statute
until the State Courts have had an opportunity to rule
thereon, provided, of course, that the State provides a
plain, speedy and efficient remedy in the State Courts.
This court in City of Houston, supra, held that in such
cases it is mandatory on the District Courts to stay
their hand.
As to the cases of Leiter Minerals, supra, Louisi-
ana Power and Light Company, supra, Kaiser Steel
Corporation, supra, and Harrison v. N.A.A.C.P., su-
pra, the thrust of those United States Supreme Court
opinions is that even in cases where there is unques-
tioned federal jurisdiction, the District Courts must
stay their hands in any case where the unconstitution-
ality of any state law is contested if the state courts
provide a plain, adequate and efficient remedy for the
contest of the statute.
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29
In view of the above it is submitted that the Dis-
trict Court should have remanded this case to the Lou-
isiana District Court, or at least stayed its hand until
the Louisiana Court had ruled thereon.
PRAYER
In view of the foregoing the Petitioner, Ashton J.
Mouton, Collector of Revenue, State of Louisiana, asks
this Court:
1. To declare that the United States District
Court below did not have jurisdiction of this
case as a matter of federal law and to remand
this case with orders that it be remanded to
the Louisiana District Court. ‘
2. In the alternative, and only in the event this ;
Court should decide that the United States Dis- 4
trict Court below did have jurisdiction, that
this case be remanded with orders that the
lower court is to refrain from exercising its ;
jurisdiction until an authoritative interpreta-
tion of the Louisiana constitutional provision
and statutes involved in this case is made by
the Louisiana Supreme Court.
Ste ae
PETROL Se
RgSpectfully subpfitted :
bata
EMMETT E. BATSON,
Counsel of Record,
Louisiana Department of Revenue,
P. O. Box 201,
Baton Rouge, Louisiana 70821,
Area Code 504,
Telephone 389-5941.
ERE RIESE AINE TEE BEE LI ELLE LLY EAI BIO BNE UI IF Gt
30
CERTIFICATE OF SERVICE
I, EMMETT E. BATSON, attorney of record for
petitioner, do hereby certify that I have this day served
a copy of the foregoing petition with appendix on the
Solicitor General of the United States and on each of
the attorneys of record of the respondent as shown be-
low by depositing same in the United States Post Office
with sufficient air mail postage prepaid to those over
500 miles away and first class G to a less
than 500 miles
MMETT E. BATSON,
Counsel of Record.
Mr. Clyde R. Brown,
Attorney at Law,
Ouachita National Bank Building,
Monroe, Louisiana.
Solicitor General of the United States,
Department of Justice,
Washington, D. C. 20530
RI CEN THROLIGH POOR COPY
31
APPENDIX
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
OCTOBER TERM, 1968
No. 26751
D. C. Docket No. Civ. 68-105
AsHTON J. MOUTON, COLLECTOR OF REVENUE,
STATE OF LOUISIANA
Plaintiff-Appellant,
VERSUS
SINCLAIR OIL AND GAS COMPANY,
Defendant-Appellee.
Appeal from the United States District Court for the
Eastern District of Louisiana.
Before AINSWORTH and SIMPSON, Circuit Judges,
and MITCHELL, District Judge.
JUDGMENT
This cause came on to be heard on the transcript
of the record from the United States District Court for
the Eastern District of Louisiana, and was argued by
counsel ;
ON CONSIDERATION WHEREOF, It is now
here ordered and adjudged by this Court that the judg-
ment of the said District Court in this cause be, and
the same is hereby, affirmed ;
It is further ordered that plaintiff-appellant pay
to defendant-appellee, the costs on appeal to be taxed
by the Clerk of this Court.
Issued as Mandate: April 22, 1969
és
3
&
&
i
i
Ny
E
}
LE EOE |
32
IN THE
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 26751
ASHTON J. MOUTON, COLLECTOR OF REVENUE,
STATE OF LOUISIANA,
Plaintiff-Appellant,
VERSUS
SINCLAIR OIL AND GAs COMPANY
Defendant-Appellee.
Appeal from the United States District Court for the
Eastern District of Louisiana
(April 22, 1969)
Before AINSWORTH and SIMPSON, Circuit Judges,
and MITCHELL, District Judge.
PER CURIAM: This suit was originally filed by
the Louisiana Collector of Revenue in a Louisiana state
court to collect certain state severance taxes claimed
to be due by defendant Sinclair Oil and Gas Company.
Sinclair removed the suit to the federal district court
and the Collector’s motion to remand for lack of juris-
diction was denied. Sinclair’s motion for summary
judgment based on our prior holding in Mississippi
River Fuel Corporation v. Cocreham, 5 Cir., 1967, 382
ear,rcecn THReCIIGH POOR COPY
33
F. 2d 929, rehearing denied, 1968, 390 F. 2d 34, cert.
denied, 390 U. S. 1015, 88 S. Ct. 1264 (1968), was
granted and the Collector of Revenue has appealed.
All of the legal contentions raised by the Collector
in this case have heretofore been considered and ruled
on adversely to him by this Court in the Mississippi
River Fuel case. (See our per curiam decision released
this day in the companion cases of Shell v. Mouton,
No. 26493, and Mouton v. Shell, No. 26730.)
Nor is there any merit in the Collector’s contention
that this suit was improperly removed from the Louis-
iana state court to the federal district court since it
is apparent that the federal court has jurisdiction both
under diversity of citizenship, 28 U.S.C. § 1332, in that
the Collector is acting unconstitutionally and therefore
in an individual capacity and not as the official repre-
sentative of the State of Louisiana, and because a fed-
eral question is presented, 28 U.S.C. § 1331, in that
the Collector is attempting to collect severance taxes
on oil and gas produced from a federal military en-
clave, Barksdale Air Force Base, Louisiana, on which
the United States has exclusive jurisdiction as provided
by Article I, Section 8, Clause 17, of the United States
Constitution. See Mississippi River Fuel Corporation,
supra at 934, citing Georgia R. R. & Banking Co. v.
Redwine, 342 U. S. 299, 72 S. Ct. 321 (1952), and Ex-
parte Young, 209 U. S. 123, 28 S. Ct. 441 (1908), in
support thereof. It was proper, under 28 U.S.C. § 1446,
to consider the stipulation of fact, together with the
allegations of the complaint, on the petition of the Col-
lector for removal.
34
Being of the opinion, therefore, that our holding in
Mississippi River Fuel, supra, is conclusive as to al]
the legal issues presented in this case, the judgment
appealed from is
AFFIRMED.
Adm. Office, U.S. Courts—Scofields’ Quality Printers, Inc.,
N. O., La.
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35
March 3, 1911, ¢. 231, Sec. 24, Paragraph 1, 36
Stat. 1091.
Sec. 24. The district courts shall have origi-
nal jurisdiction as follows:
First. Of all suits of a civil nature, at com-
mon law or in equity, brought by the United
States, or by any officer thereof authorized by law
to sue, or between citizens of the same State claim-
ing lands under grants from different States; or,
where the matter in controversy exceeds, exclu-
sive of interest and costs, the sum or value of
three thousand dollars, and (a) arises under the
Constitution or laws of the United States, or
treaties made, or which shall be made, under their
authority, or (b) is between citizens of different
States, or (c) is between citizens of a State and
foreign States, citizens, or subjects. No district
court shall have cognizance of any suit (except
upon foreign bills of exchange) to recover upon
any promissory note or other chose in action in
favor of any assignee, or of any subsequent holder
if such instrument be payable to bearer and be not
made by any corporation, unless such suit might
have been prosecuted in such court to recover upon
said note or other chose in action if no assignment
had been made: Provided, however, That the fore-
going provision as to the sum or value of the mat-
ter in controversy shall not be construed to apply
to any of the cases mentioned in the succeeding
paragraphs of this section.
May 14, 1934, c. 283, Sec. 1, 48 Stat. 775.
Be it enacted by the Senate and House of
Representatives of the United States of America
in Congress assembled, That the first paragraph
36
of section 24 of the Judicial Code, as amended, ig
amended by adding at the end thereof the follow.
ing: “Notwithstanding the foregoing provisions
of this paragraph, no district court shall have
jurisdiction of any suit to enjoin, suspend, or re.
strain the enforcement, operation, or execution of
any order of an administrative board or commis-
sion of a State, or any rate-making body of any
political subdivision thereof, or to enjoin, suspend,
or restrain any action in compliance with any
such order, where jurisdiction is based solely upon
the ground of diversity of citizenship, or the re-
pugnance of such order to the Constitution of the
United States, where such order (1) affects rates
chargeable by a public utility, (2) does not inter-
fere with interstate commerce, and (3) has been
made after reasonable notice and hearing, and
where a plain, speedy, and efficient remedy may
be had at law or in equity in the courts of such
State.”
August 21, 1937, c. 726, Sec. 1, 50 Stat. 738.
Be it enacted by the Senate and House of
Representatives of the United States of America
in Congress assembled, That the first paragraph
of section 24 of the Judicial Code, as amended, is
amended by adding at the end thereof the follow-
ing: “Notwithstanding the foregoing provisions of _
this paragraph, no district court shall have juris-
diction of any suit to enjoin, suspend, or restrain _
the assessment, levy, or collection of any tax im-
posed 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.”
er. cen THO MICNn POOR COPY
37
28 United States Code, Sec. 1331. (1948 revision)
§ 1331. Federal question; amount in controversy;
costs
(a) The district courts shall have original
jurisdiction of all civil actions wherein the matter
in controversy exceeds the sum or value of $10,-
000, exclusive of interest and costs, and arises
under the Constitution, laws, or treaties of the
United States.
(b) Except when express provision therefor
is otherwise made in a statute of the United
States, where the plaintiff is finally adjudged to
be entitled to recover less than the sum or value of
$10,000, computed without regard to any setoff
or counterclaim to which the defendant may be
adjudged to be entitled, and exclusive of interests
and costs, the district court may deny costs to the
plaintiff and, in addition, may impose costs on the
plaintiff. June 25, 1948, c. 646, 62 Stat. 930; July
25, 1958, Pub.L. 85-554, § 1, 72 Stat. 415.
House Committee Report on the above revision.
Revision of Title 28, United States Code, House Report
308, 80th Congress, 1st Session.
SECTION 1331-SECTION REVISED
Based on title 28, U.S.C., 1940 ed., § 41(1)
(Mar. 3, 1911, ch. 231, § 24, par. 1, 36 Stat. 1091;
May 14, 1934, ch. 283, § 1, 48 Stat. 775; Aug. 21,
1937, ch. 726, § 1, 50 Stat. 738; Apr. 20, 1940, ch.
117, 54 Stat. 143).
Jurisdiction of federal questions arising un-
der other sections of this chapter is not dependent
eR et
ERM PAI NOLL EL LF IT RTT TS
38
upon the amount in controversy. (See annotations
under section 41 of title 28, U. S. C. A., and 35
C. J. S., p. 833 et seq., §§ 30-43. See, also, reviser’s
note under section 1332 of this title.
Words “wherein the matter in controversy
exceeds the sum or value of $3,000, exclusive of
interest and costs,” were added to conform to rul-
ings of the Supreme Court. See construction of
provision relating to jurisdictional amount re-
quirement in cases involving a Federal question
in United States v. Sayward, 16 S.Ct. 371, 160
U.S. 493, 40 L.Ed. 508; Fishback v. Western
Union Tel. Co., 16 S. Ct. 506, 161 U. S. 96, 40
L.Ed. 630; and Halt v. Indiana Manufacturing
Co., 1900, 20 S. Ct. 272, 176 U. S. 68, 44 L. Ed.
374,
Words “all civil actions” were substituted
for “all suits of a civil nature, at common !aw or
in equity” to conform with Rule 2 of the Federal
Rules of Civil Procedure.
Words “or treaties” were substituted for “or
treaties made, or which shall be made under their
authority,” for purposes of brevity.
The remaining provisions of section 41 (1)
of title 28, U. S. C., 1940 ed., are incorporated in
sections 1332, 1341, 1342, 1345, 1354, and 1359
of this title.
Changes were made in arrangement and
phraseology.
28 United States Code, Sec. 1332, (1948 Revi-
sion)
§ 1332. Diversity of citizenship; amount in contro-
versy; costs
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39
(a) The district courts shall have original
jurisdiction of all civil actions where the matter
in controversy exceeds the sum or value of $10,-
000, exclusive of interest and costs, and is be-
tween—
(1) citizens of different States;
(2) citizens of a State, and foreign
states or citizens or subjects thereof; and
(3) citizens of different States and in
which foreign states or citizens or subjects
thereof are additional parties.
(b) Except when express provision there-
for is otherwise made in a statute of the United
States, where the plaintiff who files the case origi-
nally in the Federal courts is finally adjudged to
be entitled to recover less than the sum or value of
$10,000, computed without regard to any setoff or
counterclaim to which the defendant may be ad-
judged to be entitled, and exclusive of interest
and costs, the district court may deny costs to the
plaintiff and, in addition, may impose costs on the
plaintiff.
(c) For the purposes of this section and sec-
tion 1441 of this title, a corporation shall be
deemed a citizen of any State by which it has been
incorporated and of the State where it has its
principal place of business: Provided further,
That in any direct action against the insurer of a
policy or contract of liability insurance, whether
incorporated or unincorporated, to which action
the insured is not joined as a party-defendant,
such insurer shall be deemed a citizen of the State
of which the insured is a citizen, as well as of any
40
State by which the insurer has been incorporated,
and of the State where it has its principal place of
business.
(d) The word “States”, as used in this sec-
tion, includes the Territories, the District of Co-
lumbia, and the Commonwealth of Puerto Rico,
June 25, 1948, c. 646, 62 Stat. 930; July 26, 1956,
ce. 740, 70 Stat. 658; July 25, 1958, Pub.L. 85-
554, § 2, 72 Stat. 415; Aug. 14, 1964, Pub.L. 88-
439, § 1, Stat. 445.
House Committee report on above section. Revi-
sion of Title 28, United States Code, House Report 308,
80th Congress, Ist Session.
SECTION 1332-SECTION REVISED
Based on title 28, U. S. C., 1940-ed., § 41
(1) (Mar. 3, 1911, ch. 231, § 24, par. 1, 36 Stat.
1091; May 14, 1934, ch. 283, § 1, 48 Stat. 775;
Aug. 21, 1937, ch. 726, § 1, 50 Stat. 738; Apr. 20,
1940, ch. 117, 54 Stat. 143).
Other provisions of section 41 (1) of title 28,
U. S. C., 1940 ed., are incorporated in sections
1331, 1341, 13842, 1345, 1354, and 1359 of this
title. (See reviser’s notes under said sections. )
Jurisdiction conferred by other sections of
this chapter, except section 1335, is not dependent
upon diversity of citizenship. (See annotations
under section 41 of title 28, U. S. C. A., and 35
C. J. S., p. 833; et seq., §§ 30-43. See, also, revis-
er’s note under section 1331 of this title.) As to
citizenship of bank where jurisdiction depends
upon diversity of citizenship, see section 1348 of
this title.
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41
Words “all civil actions” were substituted for
“all suits of a civil nature, at common law or in
equity” in order to conform to Rule 2 of the Fed-
eral Rules of Civil Procedure.
Words “or citizens of the District of Colum-
bia, Territory of Hawaii, or Alaska, and any
State or Territory” which were inserted by the
amendatory Act April 20, 1940, are omitted. The
word “States” is defined in this section and enu-
meration of the references is unnecessary.
The revised section conforms with the views
of Philip F. Herrick, United States Attorney,
Puerto Rico, who observed that the Act of April
20, 1940 permitted action between a citizen of
Hawaii and of Puerto Rico, but not between a
citizen of New York and Puerto Rico, in the dis-
trict court.
This changes the law to insure uniformity.
The 1940 amendment applied only to the provi-
sion as to controversies between “citizens of dif-
ferent States.” The new definition in subsection
(b) extends the 1940 amendment to apply to con-
troversies between citizens of the Territories or
the District of Columbia, and foreign states or
citizens or subjects thereof.
The diversity of citizenship language of sec-
tion 41 (1) of title 28, U. S. C., 1940 ed., as
amended in 1940, was described as ambiguous in
McGarry v. City of Bethlehem, 45 F. Supp. 385,
386. In that case the 1940 amendments was held
unconstitutional insofar as it affected the District
of Columbia. However, two other district courts
upheld the amendment. Winkler v. Daniels, D. C.
42
Va. 1942, 43 F. Supp. 265; Glaeser v. Acacia My-
tual Life Assn., D. C. Cal. 1944, 55 F. Supp. 925,
This section is intended to cover all diversity
of citizenship instances in civil actions in accor.
dance with the judicial construction of the lan-
guage in the original section 41 (1) of title 28,
U.S. C., 1940 ed. Therefore, the revised language
covers civil actions between—
Citizens of a State, and citizens of other
States and foreign states or citizens or subjects
thereof ;
Citizens of a Territory or the District of Col-
lumbia, and foreign states or citizens or subjects
thereof ;
Citizens of different States;
Citizens of different Territories;
Citizens of a State, and citizens of Territor-
ies;
Citizens of a State or Territory, and Citizens
of the District of Columbia;
Citizens of a State, and foreign states or
citizens or subjects thereof.
The revised section removes an uncertainty
referred to in the McGarry case, supra, as to
whether Congress intended to permit citizens of
the Territories or the District of Columbia to sue
a State or Territory itself rather than the citizens
thereof. The court observed that “Congress could
hardly have had such intention.”
The sentence “The foregoing provisions as to
the sum or value of the matter in controversy shall
not be construed to apply to any of the cases men-
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43
tioned in the succeeding paragraphs of this sec-
tion” was omitted as unnecessary. Those para-
graphs are (2)-(28) of said section 41 of title 28,
U. S. C., 1940 ed., which are revised and incor-
porated in this chapter and, except for those relat-
ing to actions against the United States and inter-
pleader, contains no provision as to a sum or value
necessary to confer jurisdiction. Consequently the
omitted sentence is covered by excluding such re-
quirement.
Section 41 (1) of title 28, U. S. C., 1940 ed.,
as originally enacted, purported to include all
jurisdictional provisions relating to the district
courts. Subsequently, many special jurisdictional
provisions were enacted and incorporated in other
titles of the U. S. C., 1940 ed., as follows:
28 United States Code, Sec. 1341 (As it now
reads)
§ 1341. Taxes by States
The district courts 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. June 25, 1948, c. 646, 62 Stat. 932.
House Committee Report on above section. Revi-
sion of Title 28, United States Code, House Report
308, 80th Congress, 1st Session.
SECTION 1341-SECTION REVISED
Based on title 28, U. S. C., 1940 ed., § 41 (1)
(Mar. 3, 1911, ch. 231, § 24, par. 1, 36 Stat. 1091;
May 14, 1934, ch. 283, § 1, 48 Stat. 775; Aug. 21,
RURAL
44
1937, ch. 726, § 1, 50 Stat. 738; Apr. 20, 1940, ch,
117, 54 Stat. 143).
This section restates the last sentence of see.
tion 41 (1) of title 28, U. S. C., 1940 ed.
Other provisions of section 41 (1) of title 28,
U. S. C., 1940 ed., are incorporated in sections
1331, 1332, 1342, 1345, 1354, and 1359 of this
title.
Words “at law or in equity” before “in the
courts of such State” were omitted as unneces-
sary.
Words “civil action” were substituted for
“suit” in view of rule 2 of the Federal Rules of
Civil Procedure.
Words “under State law” were substituted
for “imposed by or: pursuant to the laws of any
State” for the same reason.
Title 47, Section 1576, Louisiana Revised Statutes
of 1950.
§ 1576. Payment of tax under protest; remedy at
law for recovery
A right of action is hereby created to afford
a remedy at law for any person aggrieved by the
prohibition of courts restraining the collection of
tax, penalty, interest or other charges imposed in
this Sub-title. The person resisting the payment
of any amount found due by the collector, or of en-
forcement of any provisions of this Sub-title, shall
pay the amount found due to the collector and at
that time shall give the collector notice of his in-
tention to file suit for the recovery thereof. Upon
receipt of this notice, the amount paid shall be .
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45
segregated and held by the collector or his duly
authorized representatives for a period of thirty
days. If suit is filed within the thirty-day period
for the recovery of such amount, the funds segre-
gated shall be further held pending the outcome
of the suit. If the person prevails, the collector
shall refund the amount to the claimant, with in-
terest at the rate of 2% per annum covering the
period from the date said funds were received by
the collector to the date of refund.
This Section shall afford a legal remedy and
right of action in any state or federal court hav-
ing jurisdiction of the parties and subject matter,
for a full and complete adjudication of any and all
questions arising in the enforcement of this Sub-
title, as to the legality of any tax accrued or ac-
cruing or the method of enforcement thereof. In
such action, service of process upon the collector
shall be sufficient service, and he shall be the sole
necessary and proper party defendant in any such
suit.
This Section shall be construed to provide a
legal remedy in the state or federal courts, by ac-
tion at law, in case such taxes are claimed to be
an unlawful burden upon interstate commerce, or
the collection thereof, in violation of any Act of
Congress or the United States Constitution, or the
Constitution of the State of Louisiana, or in any
case where jurisdiction is vested in any of the
courts of the United States.
Upon request of a person and proper showing
by such person that the principle of law involved
in an additional assessment is already pending
before the courts for judicial determination, such
4
«
Re
2
be
e
vw.
46
person, upon agreement to abide by the decision
of the courts, may pay the additional assessment
under protest, but need not file an additional suit.
In such cases the tax so paid under protest shall
be segregated and held by the collector until the
question of law involved has been determined by
the courts and shall then be disposed of as therein
provided.
B-2029, 7-69
47
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF LOUISIANA
BATON ROUGE DIVISION
ASHTON J. MouTON, COLLECTOR OF REVENUE,
STATE OF LOUISIANA,
Plaintiff,
v.
SINCLAIR OIL AND GAS COMPANY,
Defendant.
CIVIL ACTION No. 68-105
ORDER AND JUDGMENT
This cause came on to be heard on motion of the
Plaintiff to remand the same to the Nineteenth Judi-
cial District Court in and for the Parish of East Baton
Rouge, State of Louisiana, and on motion of Defendant
for summary judgment and on cross-motion of the
Plaintiff for summary judgment, and the Court having
considered the record of the cause in the Nineteenth
Judicial District Court in and for the Parish of East
Baton Rouge, State of Louisiana, attached to Defen-
dant’s petition for removal, including the stipulation of
the parties, and having heard the argument of counsel,
and due deliberation having been had thereon, it is.
(1) Ordered that this Court has jurisdiction of
this cause, and, therefore, Plaintiff’s motion to remand
be, and it is hereby, denied ;
(2) Ordered that Plaintiff's cross-motion for
summary judgment be, and it is hereby, denie?;
48
(3) Ordered, the Court finding that upon the
pleadings and admissions on file that there is no gen-
uine issue as to any fact herein, that, as a matter of
law, Defendant is entitled to the relief prayed for in
its motion for a summary judgment for the reasons
and conclusions set out by the Fifth Circuit Court of
Appeals in Mississippi River Fuel Corporation v. Coc-
reham, 382 F. 2d 929 (5th Cir. 1967), writs refused
88 S. Ct. 1264 (1968), that, accordingly, Defendant's
said motion for summary judgment be, and the same
is hereby, granted, and that the Plaintiff have and re-
cover nothing by his suit.
DATED July 31, 1968
E. GORDON WEST
UNITED STATES DISTRICT JUDGE
49
CERTIFICATE OF SERVICE
I, Emmett E. Batson, attorney of record for peti-
tioner, do hereby certify that I have this day served a
copy of the foregoing order and judgment on the Solici-
tor General of the United States and on the attorney of
record for the respondent as shown below by deposit-
ing same in the United States Post Office with suffi-
cient air mail repaid to those over miles
away and first n 500
miles distant.
Mr. Clyde R. Brown
Attorney at Law
Quachita National Bank Building
Monroe, Louisiana
Solicitor General of the United States
Department of Justice
Washington, D. C. 20530
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