# Transcript of Record — Rickert Rice Mills, Inc. v. Fontenot > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386009_0294%3A02 ## Record - **Collection:** Supreme Court brief - **Document type:** Transcript of Record - **Published:** January 1, 1936 - **Citation:** 297 U.S. 110 ## Text ietilcteis te ddiana pte %, dap ales Se a ee fs CLERK'S Copy. TRANSCRIPT OF RECORD Supreme Court of the United States Ed | OCTOBER TERM, 1935 “ . No. 578 A.B. DORE, PETITIONER, | US. | RUFUS -W. FONTENOT, INDIVIDUALLY AND AS ACTING UNITED STATES COLLECTOR OF IN- TERNAL REVENUE FOR THE DISTRICT’ OF LOUISIANA ; ON WRIT OF CERTIORARI TO TITE UNITED STATES CIRCUIT COURT OF APPEALS FOR THE FIFTH CIRCUIT PETITION FOR CERTIORARI FILED NOVEMBER 11, 1935. CERTIORARI GRANTED ‘NOVEMBER 25, 1935. «at eas SUPREME COURT OF THE UNITED STATES _ OCTOBER TERM, 1935 No. 578 A. B. DORE, PETITIONER, vs. : RUFUS W. FONTENOT, INDIVIDUALLY AND AS ACTING UNITED STATES COLLECTOR OF IN- TERNAL REVENUE FOR THE DISTRICT OF LOUISIANA ON WRIT OF CERTIORARI TO THE UNITED STATES CIRCUIT: COURT OF APPEALS FOR THE FIFTH CIRCUIT INDEX Page Record from D. C. U. 8., Eastern Louisiana eo ecco sececeserecccccee s,. 1 Captiom ....ccccccereeceeeeeunn mannan nna ee ' J Bill of complaint .....ccccscssccucususeebeeweeuwaeteeneseeses 2 Exhibit “A”—Administrative Rulings Relating to the 1935 Southern Rice Production Adjustment Program.......... 27 Exhibit. “B”"—Gamteeet the first processing ‘of the’ rough rice and mustbe paid by the end of the calendar month following the month in which,the processing occurred. On the other hand, when a lot of rough rice has been processed in ahy month, some of the grades may be sold immediatel whereas some of the other grades produced from sai rice may be kept for several months before being sold, \ and it is thus impossible to tell how much has been \_~ \ NN ee received for the clean rice and its products that are produced from any ‘month’s processing, afnd it is .im- possible to tell how much, if any, of safd processing tax has been passed on to the ‘purchaser of said clean rice. | | Indeed, it is eee even to pen whether, _ for any,given month, the mill.operations have resulted = in a gain or loss and it is only at the end of the _ season that a gain or loss for the season can be de- termined. 4 In addition, in the’ cost of rough rice:~processed during any month, there is an additional item of the cost of the milling of such rice. The, cost of milling rice depends upon many factors so that it is impossible to determine what has actually . been the cost of milling any particular lot’ of rice.. “There are many varieties of rice, some of which have longer grains than others. Different processes of milling must be used for each different kind and variety of rice, and where the plaintiff. and other millers: have on hand varied and sundry varieties and kinds of rice it is necessary in the operation of the -mill to change quickly: from one kind of rice to an- other as the milling of one lot of rice is completed and the milling of another ‘kind begun. In addition, lots of rice of the same variety’ will vary the.one from the other due to the varying amounts of moisture in the rice, varying conditions under which the rice was harvested, and many other factors, which m@kes it necessary to vary the operation of the rice mill in ‘many respects, as between lots of:rice. In addition, the out- put of a mill ine barrels per day varies because of all these factors very considerably. Under all the cir- cumstances, it is impossible for a mill to determine the cost to it of the milling of any particular lot of rice, which cost .must necessarily enter into a deter- - . 20 mination of whether in selling the clean rice it has - included any part, or what part, of the processing tax in the price for which it sells its clean rice and rice products. In addition, owing to the —s nature of the rice business and the customary manner of selling rice that prevails in the rice industry, it is impossible for - the plaintiff and other rice millers to determine the cost of any particular rice that has gone into the clean rice that is covered by any particular sale. The - clean ‘rice that is obtained from any particular lot of rough rice is not sold in the trade by itself alone. At the beginning of the season plaintiff and other rice mills know approximately the different kinds of 4ice that they will have during the season. In the early part of the season and as the season progresses, plaintiff and other millers make ‘up samples of rice of the kind that they have determined they will be able to -supply dugjng the season. Owing to the varied character of clean rice out-turn from roygh rice, these samples are made up of mixtures of differ- ent kinds of-rice. It has been found impossible to make up such samples entirely of one kind of rice from one lot of rough rice as it'is impossible to match in any appreciable quantity a sample of one lot of clean rice with another lot of clean rice. Clean rice is sold on these samples and when an-order is obfained for a given amount of clean rice of a certain sample, the plaintiff and other rice millers then find what different lots of clean rice they have on hand which by mixing will produce the sam- _ ples upon which the sale has been made. As a result, when a sale of clean rice is made, the order is filled - by.a mixture of clean rice which is made up from many different lots of clean rice. These different lots of clean rice have been milled from different lots of rough rice for which different prices have been paid. As a result the rice that goes into a clean 21 rice sale has come from many differentsources and has been milled under many different conditions and it is impossible to tell exactly the cost of such clean rice under the circumstances. In addition, part of the clean rice obtained from a lot of rough. rice may be carried for many months and mixed on different sales with innumeftble combinations of other lots of clean rice so that it is)impossible to trace through the history of rice processed during any month to determine what price was obtained for it, whether it was sold at a profit or a loss, and what part, if any, of the process- ing tax has been passed on to the purchaser. Furthermore, there is no way in which the cost of a lot of rough rice can be allocated between the various grades of rice and the various rice products produced from such lot except by speculation for the use of arbitraries. . In short, it is impossible to determine, statistically or otherwise, where the ultimate burden of the pro- cessing tax falls—how much of it is paid by the con- sumer, how much by the producer, or how much by the processor. In -view of the above facts, the purported remedy: given by Section 21(d) of said Agricultural Adjust- ment Act is wholly inadequate and is in fact.a statu- tory denial of any legal remedy at all. 13. In addition, the conditions imposed upon the right of the plaintiff to recover taxes paid by it must, under Section 21(d) be established to the satisfaction of the Commissioner: of Internal Revenue, and no provision is made for judicial review. The transcript of the hearing before the Commissioner of Internal 22° Revenue is the sole record of the case on appeal to the Courts. The effect of such section is therefore to limit the function of the judicial review to the deter- . mination of whether there was any evidence submitted to the Commissioner of Internal Revenue tending to support the findings of the Commission. Said Section 21(d) therefore deprives the plaintiff of its property without due process of law in violation of the Fifth Amendment to the Constitution. $u ‘oa + ° 14. Under said Section 21(d) of said Agricultural “Adjustment Act, if. the _processing tax has been either passed on or passed back by the plaintiff, then the plaintiff cannot maintain any action to recover the tax, if it is ultimately determined to be invalid, either for its own account or for the account of the persons to whom the processing tax: has been thus passed on | or passed back by the plaintiff; nor can the persons to whom the processing tax has been thus. passed on or passed back maintain such an action on their own account, but all right of action by anyone to recover the tax, if it has been passed on or passed back, has been wholly taken away by. said amendments to said ‘Agricultural Adjustment Act. Moreover, Section 21(a) of said Act and: Section 405 of the Revenue -Act of 1935 deprive the Courts of power té render declaratory’ judgmhents with respect to such Nalleged taxes. By reason of the impossibilities of proof here- inabove referred to, the practical effect of said Act will be to deny taxpayers and the plaintiff all means of securing a judicial decision as to the constitutional- ity of the processing taxes, unless the Court grants the relief herein sought. 15. Plaintiff further shows that by Section 30 of said Amendment of August 24, 1935, Section 21(a) was. ee added to said Act, which in substance provides that no suit to enjoin the collection of any tax imposed by said Act shall be maintained. . ‘Plaintiff alleges that said section is not intended to apply,. and does not apply, to the injunction prayed for by this plaintiff inasmuch as plaintiff has no adequate remedy at law. Plaintiff alleges, however, that if said section should be interpreted as providing that no injunction should be granted to the plaintiff as prayed for in this cause, then the said section, together with the other provi- / \ sions of said Act, is invalid and in violation of the Fifth Amendment to the Constitution of the United States, that no person shall be deprived of his property without due process of law, in that said illegal and un- constitutional taxes will be collected from the plain- tiff and the plaintiff will have no remedy to prevent the collection of said ‘unlawful taxes, and will be for- ever deprived of the right in any manner to test the > constitutionality of such taxes. 16. Said Section 21(d) further denies to the plaintiff a complete and adequate remedy at law, because a. multiplicity of claims* and suits would be required to enforce’ such rights as are granted thereunder and because said .subsection requires that the facts re- quired to be proved thereunder be established: to’ the satisfaction of the Commissioner of Internal Revenue’ and makes no provision for .a judicial review of his decision. 17. A refund of processing taxes paid by the plaintiff could not actually be obtained even if it.were possible for the plaintiff to prove the negative facts required by subsection (d) of Article 21, because Congress has ea . i : not appropriated funds for the payment of such refunds _and plaintiff believes, that in view of the aggregate amount involved, there i is a reasonable doubt whether such appropriation would ever be made. 18. Plaintiff i is ready, able and willing and hereby atless and agrees that in the event the injunctive relief herein prayed for is granted, it will deposit at such time and in -such manner as this Court shall direct the said sums claimed to be due from plaintiff for processing taxes on | account of the rice processed by plaintiff during the | month of September, 1935, and the plaintiff further offers and: agrees that at the end of each month here- after it will file processing tax returns: with the defend- ant as required by existing laws and regulations and that as and when processing taxes under said returns become — due and payable according to existing laws and regula- tions or any extension lawfully granted to the plain- tiff, it will deposit the amount of such taxes in such manner as the Court may direct; all such deposits to “abide the final decree in this cause. Wherefore, plaintiff — without an adequate remedy at law prays: 1. That process issue and be served upon the de- fendant requiring him to appear and answer this hill, but not under oath, and answer. under oath being here- by expressly’ waived: 2. That pending the hearing of the application for a preliminary | injunction hereinafter prayed for, a temporary restraining order issue immediately enjoin- ing and restraining the defendant until the hearing of its application for a preliminary injunction or until a the further ordef of this, Court, from assessing or collecting or attempting ‘to assess or collect from ' the plaintiff in any~ manner whatsoever, whether - by lien or jeopardy or by distraint | proceedings, in Court or otherwise, any processing taxes under -.and pursuant to said Agricultural Adjustment Act and any interest or penalty on account of. plaintiff’s failure to pay said processing tax, and from im- posing or giving notice of intention to. impose any . lien for said taxes upon the property, real or personal, of the plaintiff; ; 3. That notice issue to the defendant advising him that plaintiff is hereby applying for a preliminary injunction and that plaintiff’s sard\application ‘will be heard at a time to be fixed by the Court in said notice, and that upon said hearing a preliminary injunction pending the final disposition of this case’be issued enjoining and restraining the defendant from assess- | ing or collecting or attempting to -assess ‘or collect from the plaintiff in any manner whatsoever, whether by lien or jeopardy or by distraint - proceedings, in Court or otherwise, any processing taxes under and pursuant to said Agricultural Adjustment Act and ;any interest or penalty on account of plaintiff’s failure to pay said processing tax, and from imposing or giving notice of intention to impose any lien for said taxes upon the ‘property, real or personal, of the plaintiff; 4. That at the final hearing of this cause said preliminary injunction shall not have been granted, then that a permanent injunction be granted per- manently restraining and enjoining the defendant from assessing or collecting or attempting to assess or collect from the plaintiff in any manner whatsoever, whether by lien or jeopardy or by distraint proceedings, in Court or otherwise, any processing taxes under and _ pursuant to said Agricultural Adjustment Act and any Ti 6 ee it anid ade el eee ae 26 interest or penalty on account of plaintiff's failure to . pay said processing tax, and from imposing or giving notice of intention to impose any lien for said taxes upon .the property, real or oe of the plaintiff; 5. That at the final hearing it be adjudicated that © the provisions of said Agricultural Adjustment Act: “ «providing for the levying, assessing and collecting of said processing taxes against an@ fromthe plaintiff are invalid, unlawful and unconstitutional on each and every one of the grounds upon whichgthey are herein- above alleged tp be unlawful, invalid and unconstitu- tional; and that the defendant has no lawful right to attempt in any manner to collect said processing _taxes from the plaintiff or any of the penalties or in- “terest thereon purported to be. provided for in’ said ‘Agricultural Adjustment Act’; 6. And plaintiff prays. for such other and: further relief, both general and special, to which it. aad be justly entitled. (Signed). A. B. DORF, Plaintiff, (Signed) JOHN P. BULLINGTON, HOMER L. BRUCE, (Signed) - BAKER, BOTTS, ANDREWS, oot & WHARTON, © By JOHN P. BULLINGT ON, Attorneys for Plaintiff State of Louisiana, Parish of Orleans. Before me, the undersigned authority, on this day personally appeared A. B. Dore, proprietor of The Dore Rice Mill, who, having been by me first. duly ‘sworn; stated on oath that he has read the foregoing and above bill and knows the contents thereof ‘and ¢ 27 oe that the facts therein set out are true, except as to~ such facts as are therein stated on information and belief, and that as to those facts so stated to be on - information and a he believes’ them to be true. (Signed) ~ A.B, DORE. Subscribed and Sworn to before me, tits 25th day of October, 1935. (Signed) SUMPTER D. MARKS, oe (Seal) ~ Notary Public in and for Or- ! leans Parish, Louisiana. EXHIBIT “A.” Filed October 25, 1935. ~ Issued April 18, 1935. United States Department of Agriculture, Agricultural Adjustment Administration. Administrative Rulings Relating to the 1935 Southern Rice Production Adjustment Program. Explanation. These Administrative Rulings apply to and are part of the Southern Rice Production Adjustment Contract and documents pertaining thereto. If any of the provisions are not understood, the ‘Community or County Committee should be consulted. No producer should make out’ and submit to his Community or County Committee an Application or a Contract or other documents pertaining thereto with- | . . . o | m ose se . out knowing exactly what he must do in order to receive the benefits of .the program. ~~ ~ |. efinitions—As used in the Southern Rice Pro- duction . Adjustment Application, Declaration, Con- tract, Schedule, and these Administrative Rulings: (a) “Person,” “tenant,”. “landlord,” “producer,” aiid “well or canal operator,” include individuals, co- partnerships, and corporations; and where it is* re-: quired by the context, the singular shall include the plural. (b) “Farm” -means one contiguous tract of land operated as one unit substantially separate from any other such tract of land. (c) “Producer” includes persons owning and oper- ‘ating their own farms; tenants operating farms rented for cash; tenants operating farms under a crop-share lease, contract, or agreement; landlords leasing to share tenants; corporations, copartnerships, or individuals * furnishing water for production of-rice on a. share basis;° and such other persons or classes of persons as the Secretary may determine to be eligible to sign Southern Rice Production Adjustment Contracts. (d) \ “Participation in the production of rice” means. sharing as a producer in any manner in the produc- tion-of rice on a farm. (e) “Farming Operation” means the production of rice or the participation in the production of rice by a producer. (f) “Applicatioh”_means any Application for Rice Acreage Allotment (forms Rice 1 and 2) heretofore . or hereafter executed by: any producer. “Application: a> 29 | serial number” means the serial number of any such © Application. , (g) ‘SDectaration” means any 1935 Southern. Rice ° Declaration of Farm Acreage (form Rice 30) hereto- fore or hereafter executed by any producer. The “farm | serial number” means the serial — of any such Declaration. ~ (h) “Schedule” means any Producer’s Schedule of Rice Acreage (Form Rice-37) heretofore or hereafter . executed by any producer.- Each such Schedule shall bear the same serial number as the Contract executed ’ by the producer who executes the Schedule. ee 7 (i) -“Contract” means any: 1935 Southern Rice Production Adjustment Contract (Form Rice-36) here- tofore or hereafter executed by any producer. The “Contract serial number” means the serial. number of any such Contract. (j) “1935”' means the period from January — :. 1935, io December 31, 1935. (k) “1934” means the peviod from January 1, 1934 to Eeceeiper 31, 1934. | (1) The term “State Sai period” means the period _ of calendar years 1929 to 1933, inclusive. {m) The “State Allotment” shall be 135,000 acres for Arkansas, 364,500 acres for Louisiana, and 142,500 acres for Texas.- The “State Quota” shall be 1,834,- 722 barrels for Arkansas, 3,898,333 barrels for Louis- iana, and 2,010,833 barrels for Texas. (n) The .term “base sinlel in Arkansas’ and Louisiana means the period of the calendar years 30 1929 to 1933, ‘maton and in Texas the years 1931 to 1933, inclusive. (0) The “production history” of a producer means, as the context may require, the producer’s rice acreage or rice production, or both, for the base| period as ad- justed to the official figures and accepted by the State Committee. : (p) The “producer’s Allotment” and the. “pro- ducer’s Quota” means respectively the rice acreage _and_the rice production assigned by the State Com- mittee, acting for and on behalf of the Secretary, to the producer for 1935 and determined according to the ees set forth in Administrative Ruling Il hereof. (q) _ The “acreage allocated” by the producer means that ‘part of a producer’s allotment which, in a De- claration, ° he allocates: to a given farm as a basis for determining his share of the total ricé acreage planted on that farm in 1935. (r) “Producer’s share of the rice acreage planted” and the “Producer’s share of the acreage planted to rice in 1935” each means with respect -to any farm, that acreage which bears the same ratio to the total ricé acreage planted on that farm in 1935 (as de- termined upon checking compliance with the Contract in the manner prescribed by the Secretary) that the acreage allocated by the producer to that farm in a Declaration bears to the total rice acreage allocated to that farm in such Declaration. \ (s) The “Secretary”. means the Secretary of Agriculture of the United States: ; (t) ‘Rice Section” means the Rice Section of the Agricultural] Adjustment Administration. (u) “Official figures” means the records of acreage , and production prepared by the United States Depart- ment of Agriculture. 31 _~ (v) A “barrel” means 162 pounds of rough rice. (w) A “bushel” means 45 pounds of rough rice. II. Determination of Allotments and Quotas.—1. The allotment of a producer shall be, determined by. each State Cormmittee as follows: (a) Add the acreage of rice planted annually by each producer for his own account during the base period, after ad- justment of acreage of all producers fo the official figures for each. state for each of the years. of.the base period; (b) Divide the total thus secured by five (5) in Louisiana and in Arkansas, and theetotal thus secured by three (3) in Texas; (c ) Reduce the result obtained by 20 per cent in Louisiana and in Arkansas and the result obtained’ by 22 percent in Texas. The total divest assigned to producers in each state shall not in any event exceed the state allotment . for that state. | 2 The quota of a producer shall be determined by each State Committee as follows: (a) Add the number of barrels of rough rice produced annually by each _ producer for his own account during the base period, after adjustment of the production of all producers to official figures for each state for each of the years of the base period ; (b) Divide the total thus secured by five (5) in Louisiana ee in Arkansas, and the total thus secured by three /(3) in Texas; (c) Reduce the result obtained by 20 Ae in Louisiana and in rkansas and the result/ ob*gined by 22 percent in Y a i : ! | 32 ( The total quotas or to sicdecers j in each state shall not in any event exceed the state quota for that State. 3. If the total of allotments and quotas deter- mined according to the provisions of sections 1 and 2 of this numbered ruling, in any state, is less than the State Allotment and State Quota such excess may be allocated to producers by the State Committee, sub- ject to approval by the Secretary or his authorized agent, 4. The Allotment and Quota are based upon the personal production history of the producer, - regardless of where the rice was produced and are the measure of such history. ‘The producer’s produc- tion history shall not be transferred except as the State Committee shall, in writing, approve transfers made pursuant to the provisions. of subsections a, b, and c of this numbered paragraph 4 of Administra— tive Ruling II. All requests for transfer of produc- . tion history shall be in writing, signed by, or on behalf of the producer by his duly authorized agent, and ap- proval thereof shall be in writing signed by at least two members of the State Committee. In no event shall. the State Committee approve the transfer, of production history by reason of foreclosure, execution or any forced sale. : (a) If a producer has died or has been declared legally incompetent by a Court of competent juris- diction and has not ‘executed, prior to the date of such death or incompetency, an Application for an allotment and quota, his records of production may be used by such heirs or devisees, or such member of the family of such deceased producer or by such members of the family of such incompetent producer as are continuing the farming operation of the deceased or incompetent producer, upon their furnishing proof of such relation- 33 ship and succession to the producer’s farming opera-_ tion. (b) If a well or canal operator voluntarily sells -his well or canal system and has not executed an application, his production history shall be trans- ferred to such successor, provided that the former well or canal operator was not engaged in farming opera- . tions -in 1934. + (c) If a partnership is dissolved before an applica- tion for an allotment and quota has been executed by or on behalf of the partnership, its records of rice production for the base period shall be divided among. the partners in such proportions as is agreed upon by the partners or their authorized representatives in writing submitted to the State Committee. _ 5. In all figures representing final determination of individual allotments and quotas, fractions amount- ing to one-half a unit or less shall be dropped and fractions amounting to more than one-half a unit shall be considered a whole unit. | 6. If a producer during the base period had oper- ated in more than one state, he shall°apply for an’ allotment and quota to the State Committee of each state in which he had farmed during the base period. Only the history earned by the producer in that state shall be- presented. to the State Committee in his Application. No producer shall be assigned Allot- ments and Quotas in two or more. states, larger in the aggregate, than the Allotments and Quotas assign- able to him in one state, had all of his farming opera- tions been confined to that one state. 7. The sum of all Allotments and of all Quotas . within a State shall not in any event exceed the State Allotment and Quota, respectively. 34 III. Transfer-of Allotment and Quota.—The pro- ducer’s Allotment and Quota shall not be transferred -except as the State Committee shall in writing approve transfers made pursuant to the provisions of sub- sections a, b, c, and d of this Ruling III. In no event shall the State Committee approve the transfer of an Allotment or Quota by reason of foreclosure, execution, or any forced sale. All requests for transfer shall be made in writing signed by or. on behalf of the pro- ducer by his duly authorized agent, and approval there- of shall be in writing signed by at least two members of the State Committee. r (a) If.a producer dies or has been declared in- competent by a Court of competent jurisdiction after executing an Application but before executing a Con- tract, his allotment and quota. may be transferred to ‘such heirs, devisees, or such members of the family of such deceased. producer or such members of the family of such incompetent producer as are continuing the farming operations of the deceased or incompetent producer, upon their furnishing proof of such relation- ship and succession to the producer’s farming opera- tion. a (b) If a producer voluntarily withdraws, either wholly or.in part, from the production of rice after executing an Application but before exe- cuting a Contract, he may transfer all or part of his Allotment and Quota to such persons as are continu- ing his, farming operation, upon proof of such with- drawal and succession. (c) If a producer. has become disabled and has retired from the production of rice after executing an Application but before executing a Contract, he may transfer all or poet of his Allotment and Quota to such pérson as is continuing his farming operations upon proof of such disability, retirement, and succession. (d) Upon dissolution of a partnership, after an Application has been: executed by or on behalf of the . partnership, but before a Contraet-has been executed © by. or-on behalf of the - ‘partnership, the Allotment and Quota shall be divided among the partners in such proportions as is agreed upon by the partners or their - duly authorized representatives in writing submitted to the State Committee. IV. Use of Allotment and Quotas by Well or Canal Operators.—If a well or canal operator has an allot- ment and quota assigned to him by the State Commit- tee on the basis of his personal history as’a furnisher of water qn a crop share basis, such well or canal operator shall not change his statusaso as to use such allotment and quota in a capacity other than as a fur- nisher of water on:a share crop basis. V. Signing of hainalian, Declaration, Contracts, and Other Documents by a Person in a Representative Capacity.— os (1) In the event any document is to be executed on behalf of a Corporation, it shall be signed on behalf of the Corporation by an officer of the Corporation, who shall state his title, and affix the corporate seal to the Contraet, (If: the Corporation has no cor- porate seal, the following | statement in writing shall appear’ over the signature, “No corporate seal re- quired or adopted,”) or by a representative of the ‘corporation other than an officer, who has been au- thorized by the corporation to execute the contract: by power of attorney, under seal, duly executed on behalf of the corporation on a prescribed form and filed with the Comptroller of the Agricultural Ad- justment Administration at Washington, D. C., 36 attached to the contract, which authorization shall be considered a part of the contract documents. (2) In the event a document is to be signed by an executor, administrator, guardian of an incompe- tent person, receiver, or other person appointed by a Court in a fiduciary capacity, there shall be furnished either the original or a certified copy of the Court order of appointment or a certificate on a prescribed form showing that such person was duly appointed as such fiduciary and that the opment is’ still in * full force and effect. (3) Where a document is signed by a manager or an agent for a producer, the original or a certified copy of a Power of Attorney, on a prescribed form, author- izing the manager or agent so to sign shall be fur- nished. (4) If the producer is a Governmental body or agency, there shall be attached to the document a certified copy of a resolution of the Board or other authority authorized by statute to lease and contract in regard to the land and personal property covered by the contract,. authorizing the execution of such document by the person executing the document on its behalf. (5) ‘When one producer has several documents to ‘be signed by the same agent or attorney, a properly executed power of. attorney may be filed with the Comptroller of the Agricultural Adjustment Adminis- tration to cover all such cases, and shall be considered as a part of each document so signed. -- (6) A document to be signed for a partnership ‘Shall be executed in the name of the partnership and of each partner as an individual, by each member of 37 the. partnership, or on behalf of each partner who does not personally sign, by an agent duly author- ized to so sign by a Power of Attorney, on a prescribed form. VI. Pledge of Adjustment Payments. —Adjustment payments may not be assigned under any condition. This is forbidden by the Contract, as well as prohibited -by law. ) : However, the producer’s right to adjustment pay- ments under the Contract may be pledged in - order to obtain funds (or credit) for carrying on the current operation of the farm. The expression “funds” (or credit) for carrying on. the current operation of the farm and “current production credit” means funds or credit to meet any necessary expense of preparing of land, planting, cultivating, watering, harvesting, and marketing of the rice crop grown in the ‘year 1935. Without in any way limiting the exclusiveness of the above definition, the expression shall not include cash rent or debts incurred in conhection with the produc- tion of past crops. No pledge of any producer’s right to adjustment payments under his contract for any purpose other than to procure current production credit as defined above shall give rise to any obligation under the Con- tract upon any payee designated therein by the pro- ducer to distribute such payment, when and if accepted by such payee, to the person claiming to hold such a pledge not given for current production credit. Dated April 18, 1935. R. G. TUGWELL, |. Acting Secretary of Agriculture. 38 EXHIBIT “B”. | Filed Oct. 25, 1935. Form Rice 36, U. S, Department of Agriculture, Agricultural Adjustment Administration, Rice Séction. Form approved by Comptroller General, U. S., May 1, 1935. 1935 Southern Rice Production Adjustment Contract. (Pursuant to and to effectuate the purposes of the Agricultural Adjustment Act, approved May 12,. 1933, as amended, hereinafter referred to as -the . Act. ) I. Performance by Producer: 1. The undersigned producer (and each and all of them if more than one signs. this instrument) .here- by offer(s) to enter into a contract with the Secretary - of Agriculture (hereinafter referred to-as the “Secre- tary”) upon the terms and conditions hereinafter set forth and subject to such regulations or administra- tive rulings (which shall be part of the terms and conditions of this contract) as have been heretofore or '" may hereafter be prescribed by the Secretary relating - to 1935 Southern Rice Production Adjustment Con- tracts. This contract.shall apply to every farm upon which the producer participates:in’ any manner in the production of rice in 1935 (hereinafter referred to as “the farm(s) covered by this contract”). This. offer shall become a binding contract upon its accept- ance by the Secretary. 2. The producer, 39 (a) Represents that he has allocated to each farm - upon which he will participate in any manner in the production of rice.in 1935 some part of his allotment . ‘and that the total acreage allocated by the producer to all such farms does-not exceed his allotment; (b) Agrees that he will:not share or participate in any manner in the production of rice in 1935 on any farm to which he has 1 not allocated a portion of his allotment; (c) Agrees that for the purposes of checking com- pliance and making payments under this contract “the producer’s share of the acreage planted to rice in 1935” on each farm covered by: this contraci shall be that acreage actually planted to rice on such farm in 1935 which’bears the same‘ratio to the total acre- age planted to rice on such farm in 1935 that the acreage allocated by the producer to such farm bears to the total acreage allocated thereto by all persons participating in the production of rice. thereon; (d) Agrees that his total share of the acreage planted to rice in 1935 on all the farms covered i this contract shall not exceed his allotment; (e) Agrees that the pane permitted under this contract to be planted to rice in 1935 shall be farmed in a workmanlike. manner throughout 1935; (f) Applies for membership in the Rice Production - Control Association organized pursuant to Form Rice 35 in each County or Parish in which a farm covered by this contract is located; (g) Agrees to permit: access by any authorized agent of the Secretary to the farm(s) covered: by this _ contract, and to all fiscal books, records, and docu- . ments, regardless of where located, pertaining to the \ \ 40 production and/or sale of rice on or frova any and all . of ‘such farms, and expressly waives any right to have such records kept confidential ; 3 (h) Agrees not to sell, pledge, transfer, dr assign, in whole or in part, this contract or his right ‘to or claim for payments under this contract, and not to execute any power of attorney to collect such payments, and any sale; pledge or assignment, order or power of attorney shall be null and void, except that the producer may pledge or hypothecate his right to any adjustment payments under this contract, for the purpose of obtaining funds (or credit) for carry- ing on the current operation of the faria‘s) covered by this contract (hereinafter referred to as “current production credit”) and such pledge or hypothecation shall operate to establish an interest or right on the part of the pledgee in and to said adjustment pay- ments as against any other person or persons, but the pledge or hypothecation thereof shall not alter the provisions of paragraph 5 that all adjustment pay- ment checks drawn in compliance with this contract shall be made pavable to the payee therein stipulated. If the adjustment payments herein provided for shall have been pledged by the producer for current pro- duction credit, the producer, or'if a payee is designated in paragraph 5 hereof and accepts such payment, then such payee if notified in writing of the pledge, shall receive the adjustment payment in trust to pay there- from to the pledgee the amount of the obligation owing for current production credit secured by such pledge and to pay the balance of said payment to the producer. | If a payee other than'the producer is mamed in para- graph 5 hereof, and if such payee shall not have been notified of any pledgé of the adjustment payments for current production credit made pursuant: to the terms of this numbered paragraph, such payee shall receive such payments.in trust to pay the whole, amount thereof to the producer, it being expressly understood and agreed that the Secretary shall have no duty or obligation to see that distribution is made in accord- ance with the foregoing provisions, but shall have the right to enforce the performance of said trust by the payee; f (i) Represents that the statements contained here- in are true to the best of his information and belief. Without limitation of any other right or remedy of the Secretary conferred by law or this contract, a material misstatement herein or in any information furnished by the producer in connection with this contract or any noncompliance. by the. producer with any of the terms hereof,-or with any applicable regula- tion or administrative ruling which has. been or may hereafter be prescribed by: the Secretary with reference to 1935 Southern Rice Production Adjustment Con- tracts shall be grounds for termination of-this contract by the Secretary. The determination of the Secretary that any such misstatement or noncompliance has occurred shall be final and conclusive. In the event of termination of this contract by the Secretary, the producer shall return to the Secretary all payments theretofore made under this contract, together with all costs incident to the collection thereof. II. Performance by Secretary: 3. Amount of Payments.—The Secretary shall, as a consideration for the performance by the producer of all the terms and conditions of this contract, and in the manner and at the times specified in paragraph 4 hereof, make (1) A first adjustment payment at a rate of 81 cents per barrel. of rice, and ~“ 7, 42 (2) A second adjustment payment at a rate per barrel of rice, uniformly applicable to all such con- tracts, to be determined by the Secretary, upon an amount of rice determined in the manner specified in sub-paragraph (a) or (b) of this num-- bered paragraph, whichever shall apply: (a) If the producer’s‘total share of the acreage planted to rice in 1935 on all the farm(s) covered by this contract is not more than 100 per cent nor less than 85 per cent of the producer’s allotment, such pay- ments shall be made upon that number of barrels of rice which equals 85 per cent of the producer’s quota. (b) If the producer’s total share of the acreage planted to rice in 1935 on all the farm(s) covered by this contract is less than 85 per cent of the producer’s allotment, such payments shall be made. upon . that -number of barrels of rice which bears the. same ratio -to the producer’s quota that the producer’s total share of the acreage planted to rice in 1935 on all such farms bears to the producer’s allotment. 4. [Time of Payments. (a) . The first adjustment payment shall be made as soon as practicable after August 1, 1935, provided that proof satisfactory to the Secretary, of compliance with the terms and conditions of this contract, has been submitted to the Secretary or his authorized agent. (b) The second adjustment. payment shall be made as soon as practicable after December 1, 1935, provided that proof satisfactory to the Secretary, of compliance with the terms and conditions of this con- tract, has been submitted to the Secretary or his | authorized agent. a a a 43 5. (a) All adjustment payments ; hereunder are for the benefit of the producer and shall be made only t the producer unless the producer shall, by naming an- other person in this numbered paragraph, direct ‘ (Sgd.) ROBERT WEINSTEIN, Assistant . United States Attorney. ORDER OF COURT CONSOLIDATING ALL CASES FOR TRIAL, ETC. Filed, Oct. 28, 1935. United States District Court, Bastern District of Louisiana, New Orleans Division. — No. 321—In Equity: Rickert Rice Mills, Inc., versus Rufus W. Fonwave, Individually and as Acting Collector of Internal Revenue. Docket No. 322—In Equity: A. B. Dore, ding business under the name of The Dore Rice Mill, versus Rufus W. Fontenot, Individually and as Acting ” Collector of Internal Revenue. Docket No. 323—In Keulty: United Rice Milling Procucts Co., Inc., versus ‘Rufus W. Fontenot, Individually and as Acting Collector of Internal Revenue. fs | 59 Docket No. 324—In Equity: Baton Rouge Rice Mill, Inc., . versus” | Rufus W. Fontenot, Individually: and as Acting Collector of Internal Revenue. Docket No. 325—In Equity: T. Simon | | versus. , Rufus W. Fontenot, Individually and as a Action. Collector of Internal Revenue. Docket No. 326—In Equity. Levy Rice Milling Company, Inc., versus — W. Fontenot, Individually and as «Acting Collector of Internal Revenue. — Docket No. 327—In Equity: Farmers Rice Milling Company, Inc., versus Rufus W. Fontenot, Individually and as Acting Collector of Internal Revenue. | or No. 328—In Posies: Noble-Trotter Rice Milling Co., Inc., . versus Rufus Ww. ‘Fontenot, Individually and as Acting Collector of Internal Revenue. Considering the stipulation. and agreement of coun- sel’ for all parties made. this day in open Court; It is Ordered that the above numbered and entitled cases be and they are hereby consolidated for the 60 \ | purpose of trial and that the affidavits and evidence offered in one case be- considered to apply to all. (Signed) JOHN McDUFFIE, Judge. _ New Orleans, Louisiana, October 28, 1935. State of Louisiana, ” Parish of Orleans. Before me, the undersigned authority, on this day personally appeared W. M. Reid, known .to me, who being by me first duly sworn in“térms of law deposed and said.on his oath as follows: My name is W. M. Reid. I reside in New Orleans, Louisiana,‘ and am Executive Secretary of the Rice Millers’ Association. My principal duties are the preparation and interpretation of statistical and econ- omic: data with regard to the rice milling industry. I have been engaged in the rice milling business since 1909, and from 1916 to, 1928, I personally operated a rice mill. I am thoroughly familiar with the rice milling industry in all of its phases. ~ I have réad all of the allegations contained in Sec- tion 12 of Plaintiff’s btll of complaint and Fquity 321, Rickert Rice Milling Company vs. Rufus W. Fontenot, -Equity 322, A. B. Dore vs. Rufus W. Fontenot, Equity 323, United Rice Milling Products Company, Inc., ° Vs. Rufus W. Fontenot and companion cases, and all of such. allegations are true and correct in every re- - spect. It is true that rice millers, when they purchase rough rice, consider the fact that they will have to pav a processing tax on the milling of such rough rice. How- ever, this is simply one of the many factors entering ‘into the miller’s determination of what he ought. to - 61 pay for rough rice. As a practical matter, when the rice. miller negotiates for the purchase of a given lot of rice, he first estimates what he believes he could get for such rice after milling on the existing market for clean rice and rice products. He then estimates what he thinks it will cost him to process the rough rice into its various grades and products, and in this esti- * mate is included the amount of the processing tax, as well as: other taxes. Having made these estimates, he determines what he ought to pay for the rough rice. However this is not necessarily what he does pay, be- cause each individual miller. is buying in competition with other millers. Thus, if other millers are paying more than he thinks he ought to pay, he has to meet the price the others. are paying, if he is to get any rice. No individual miller makes the rough rice market. It is a market made of the composite pur- | chasing of all millers in the particular terri- tory. While. the estimates above referred to are made with .regard to the market ‘for clean . rice and rice products at the time of the purchase of the rough rice, that market, however, does not neces- sarily control since rough rice is not ordinarily milled, and the clean rice ‘and products sold until several months after-the purchase of the rough rice. | Since the market for.clean rice and rice products fluctuates from day to day and month to month, the prospects of the future market has a bearing on what the miller may have to pay for rough rice. Optimism ' with reference to the future market for clean rice on the part of a sufficient number of rice millers will force up the market for rough rice, and all millers will have to meet the increased price of rough rice (if they are to have any rice at all), even though some of them may be pessimistic as to the future market. For example, the present market price of rough rice is quite high with reference: to the present market price for clean rice and rice products. In _ other words, using the estimates above referred to, the cost 62 , of rough rice on today’s market plus estimated cost of milling (including the processing tax) is more than the miller could reasonably expect to procure for the rice and rice products made from such rough rice on the existing market for clean rice and rice products. This present day market for rough rice is not made by any individual miller, but is made by the com- posite of purchases by all millers in the territory. Thus, -as. | have previously said, while the processing tax is considered by the miller in determining what he ought to pay for rough rice, it is simply one of many factors entering into such determination, and is by no means controlling. 7” Furthermore, it is impossible to tell on any given purchase of rough rice how much, if at all, that price has been affected by the existence of the processing tax. , I am familiar with accounting and_ statistical methods, and I know of no possible method of keep- ing books and records im the rice business which would accurately réflect the gain or loss from the purchase, milling and sale of any given lot of rice as dis- tinguished from the gain or loss from the aggregate of all transactions during a season. A profit or loss, however, may be estimated at any’ given time by the’ use of averages, predictions and arbitrarigs. The rice milling business is seasonal; _ the season beginning on August Ist and_ ending ‘on July. 31st, the operations gradually... in- creasing until the peak is reached during the months of October, November @nd December, and decreasing to the end of the seasoM. For this reason as well as others, the cost of_milling varies greatly from time to time during the season. The estimated cost of milling which millers use. in budgeting and determining what they want to pay for rough rice is arrived at by aver- aging the cost of the entire season so that this factor, when used to estimate a profit or loss on a given transaction, could never be exact, and might be very 63 much too high or very much too low when applied to that particular transaction. Under these circumstances, when a miller purchases a particular lot of rice, "he may F-elieve that all, or a. part of the processing tax to be assessed on such rice will be absorbed by the farmer. On the other hand, he may believe that all, dr a part of such tax will be absorbed by himself. However, he can never even _know, much less prove, even after all the clean, rice and rice products made from the particular lot of rough rice has been sold whether he, or the farmer, or the purchaser, or al! of them together has borne the ultimate economi¢ burden of the tax. This is because any belief he may have had as to whether the burden of the tax would fall, must of necessity, have been based in part on estimates, which are in turn, based on, averages, which are never accurate with respect to any given lot of rice.’ In addition, such belief must ‘also be based inspart on assumptions as to market conditions on clean rice and rice products, which may or may not be correct. The rough rice may go through the mill on a day when large amounts are being milled,.and the cost per unit is lower than the average; or, it might go through on a day when little rice was being: milled resulting in a unit cost higher than the average; ‘or, it might go through partly on one kind of a day, and ‘partly on another. Furthermore, © the rice may not mill out what he expected, even if ‘the market on cleanxrice and rice products remains the same. And, in, addition, the price at which he eventually sells the clean -rice and rice products may — be substantially less or substantially more than the. sale price on which he based his presumptions. ‘Phere is no necessary relation between the market for clean rice. and for rice products, since they are ’ sold for different purposes, and this is an added reason — why the miller cannot possibly allocate the cost of a given lot of rough rice among the clean rice and rice products produced from it. pene aN sat ot 64 For example, it is entirely possible for the market on bran or hulls to be relatively high, while the market on the various grades. of head rice is relatively low. The rough rice: market is affected by the clean rice and rice products market. and vice versa, but it is as impossible to determine their relative affect on each other as it is to determine whether the hen or the egg came first. I know of no way‘of determining what either the rough rice or clean rice*marked would be if there were no processing tax. I do know, however, that the individtal miller cannot force down the price .paid to the farmer for rough rice because of the tax, and thus force the farmer to pay all, or a part of the burden of the tax. The individual miller simply pays the market price for rough rice which has been fixed by the composite action of all millers, and it would be impossible to prove whether a lowering of the rough vice market was the result of the assessment of the tax, or whether it was caused by other factors, such as a drop in time clean rice and rice products market, a composite-pessimism on the part of rice millers as to the future market or other factors. The same thing is true with regard to the market for clean rice and rice products, and no individual miller can arbitrarily force that market upwards in order to pass. on the tax. ; (Sed.) W. M. REID. Sworn and subscribed to before me, the undersigned authority, this 28 day of October, 1935. (Sed.) HARRY R. CABRAL. ° (Seal) : Notary Public. State of Texas, County of Harris. ) Before, me, the undersigned authority, on this day personally appeared Homer L. Bruce, who, having been by me duly sworn, stated on oath as follows: He lives in Houston, Harris County, Texas, and is duly licensed and practicing attorney at law. He is 65 familiar with the bills of complaint that are being pre- sented to the United States District Court at New Orleans; Louisiana, on ‘behalf of certain rice millers of Louisiana seeking an injunction against the collec- tion of processing taxes on rice, having worked with his partner Mr. John P, Bullington in the preparation of said bills of complaint, and is familiar with the general practice of the rice industry of.selling rice on samples and the filling of orders for clean rice by mixing rice from different lots of clean rice in the manner set out in the bills of complaint. This affidavit is made in connection with the allega- tions in said bills that it is impossible for the plaintiff rice millers to comply with the requirements of Section 21 (d) ofthe Agricultural Adjustment Act that they shall establish that no part of the processing tax has - been passed on to the consumer or taken out of the price paid the producer before they are allowed to re- cover any processing taxes paid. Section 8 (3) of the Agricultural Adjustment Act gave the Secretary of Agriculture authority to issue licenses to processors, including processors of - rice, and provided that the Secretary should have the right to revoke any license for violations of its terms. Sec- tion 8 (2) of the same Act ‘authorized the Secretary to enter into marketing agreements with processors. In, the fall of 1933, the Secretary entered into a marketing agreement with members of the southern rice milling industry, and at the same time. issued a license applicable to all mills. This marketing agree- ment and the license were in substantially the same form. Later various amendments were made to both the marketing agreement and the license. In the marketing agreement and in the license, the Secretary of Agriculture fixed the price to.be paid ‘to-farmers for rough rice, these prices being set out in Article III of the marketing agreernent and license ereinafter referred to, namely, the one effective on July 2i, 1934. Article IV, Section 1 of the license % P ri - 66 3 ‘ - & av) iy 3 ary effective July |2 1934, set out the minimuin price that millers mi ight sell clean rice for in the domestic market and that section 1S as follows: “Section 1. To bestia’ the purposes of this Amended license and to aid in the carrying out. and enforcement of the provisions hereof, no gmiller shall :offer for sale, se or deliver for domestic consumpflon ; any quantity of clean rice for an amount per pocket less than the sum of : ©: . 2 ‘ ia the siduininun ee; determined pursuant. to article III and Schedule 1, for the grade, variety and quantity of the rough rice from. which such clean rice _ was milled, =. harge for such quantity of rough rice and prevailing at the time of such offer, sale or delivery, and . as ae, a ‘(c) the published c - lot rail rate for transporting such rough rice from the customary point of delivery ‘to the ‘miller’s mill, and , | (d) “the administrative assessment for such quan- tity of rough rice and prevailing when such Tice was - milled; Provided, however, that any miller may offer clean rice. for sale for export to foreign countries, on the foregoing basis’ less a maximum discount of 20 cents per barrel of such! ough rice and may, if the rice is - actually exported, ‘sell or deliver clean:-rice for” export to foreign countries on said basis’ less said maximum discount. The determination of the Millers Commit- tee as to whether or not clean rice is actually exported ‘shall be final and conclusive, subject to appeal -to the - Secretary. Said minimum amounts, below which this ‘section provides that clean rice shall ‘not be offered’ for sale, sold, or delivered, by a miller, apply f. o. b. the. miller’s mill. o . Sec. 2. The conversion ‘charge per barrel of rough rice shall, ‘until and except as changed by the Secre- tary, be an amount equal to the sum of (a) seventy (70) cents per barrel of rough rice, (b) nine (9) cents per barrel of rough rice if standard one-hundred pound- single packages are used for the 'clean rice, and (c), if cotton or paper inner linings or regular.burlap outer slips are used for the clean rice, an additional five. (5) cents per barrel-of rough rice, or (d) if any other type of container is used for the clean rice,-the actual in- voice price for: the container used. The Secretary may at any time and from time to time during the effective period, increase or decrease the. amount of, and/or change the basis. of computation of, the conversion . Charge”. vy, One of the main purposes, if not actually the main purpose,.of the Agricultural- Adjustment Act and this ‘license was to increase the price of rough ‘rice paid the farmer, and in order to kgep the rough rice price at a higher level, the Secretary attempted by this Section 1 to fix the price that clean rice might be sold at as roughly. 79¢ per barrel above the cogt of the rough rice. It was. extremely important to ‘keep the clean rice ‘up to. this level in order to ma‘ itain the - rotgh rice price. In the fall of 1934, the Secretary of Agrieulture brought proceedings, according to the in- formation and belief. of the affiant, against a number of different rice mills in Louisiana and to affiant’s. knowledge against Bay City Rice Mills of Bay City, . Texas, a partnership composed of W.’M. Loving and three other partners. The case against, the Bay City Mills was case No. 11-1-7, entitled In the Matter of. W. NS SAE OE ERLE CELE IIRL CREDLE LAL EGS PEN ELE TS NIN SILOM OES EFI 68 M. Loving, R. Q. Pegram, S. M..Clements and_L. D. ‘Clements, Individually and as Co-partners trading under the name Bay City Rice Mills. One of.the orig- inal chargés against ‘the Bay City ‘Rice Mills. was Charge No. 11, which charged in general terms that the Mill had sold clean rice for domestic consumption _for an amount less than the price fixed far the sale of the clean rice pursuant to this license. This Charge 11 . was later made more specific as follows: - ™ e wh, That de said Linessse since ie effective date of said License has violated Section 1 of Article V of | said License as in effect until July 21, 1934, 12:01 A.° M. Eastern Standard Time, and Section 1 of ‘Article IV of said License as in effect from July 21, 1934, 12:01 A. M. Kastern Standard Time on, in that said’ Licensee has offered for sale, sold and delivered, fox domestic - consumption, quantities of clean rice, to-wit: Clean tice lot numbered 36 on the books of the, respondent derived from rough rice lot numbered 33 on the books -of the respondent and purchased from C. FE. Everitt ;.“ clean rice lot numbered 43. on the: books of the re- . -spondent derived from-rough rice’lot nuwnber 33 on | the boaks of the respondent and purchased\from C. FE. - Everitt; clean rice lot -numbered 123 on/ the books of the réspondent derived from rough rice lot, numbered 153 on the books of the respondent. _ and purchased from “A. P. Powers clean rice > lot numbered 124 on the books of: the respond- ent -derived from rough rice .lot. numbered 154 _on the books’ of the respondent and. purchased from. _J..R. Reed; for an amount per pgcket less than the price fixed for the sale of such clean rice pursuant to said Section 1 of Article V. of said License as in effect up until July 21, 1934, 12:01 A. M. Eastern Stand- ard Time, and pursuant to said Section 1 of Article IV of said License as in- effect from July 21, 1934, — 12:01 A. M. Eastern Standard Time 6n.” ~ ' ture’s representatives, that it utterly impossible, owing to the manner in which ice industry 1 is con- ducted, through the sale of cleam’free on samples made. - The affiant, jullie with Mr: ‘W..E. Davant of Bay City, Texas, represented. the Bay City Rice Mills in this hearing before the representatives of the Secretary of Agriculture og these charges, which he@ring ‘was held in Houston, Fexes, and again on December 27, 1934, and ran through January, 2, 1935. | The Bay City Rice Mills in that proceeding took” the position, and so advised the Secretaty: of Agricul- up of mixés of different lots of clean rice, as’ more . fully set_put in the bills of complaint presented to the United States District Court at New @rleans tn the processing tax suits,’to determine in the case of any lot of fice,’whether the clean rice had heen sald for 79¢ more* than the rough rice had. cost, or for the amount above™the cost of the clean: tice that the- Secretary required’ under Section 1 of Article IV. The Secretary of Agriculture’s representatives had access to all the books, vouchers and records of the Bay City Rice Mills, both in’ connection with ‘its rough rice purchases and its clean rice sales and had several auditors continuously working on those re- cords. The amount paid for the rough-rice purchased -from Evoritt, Powers and Reed, as set forth in said ~ Charge II was established. The clean rice derived - usual in the rice, business, an almost infinite variation» _ in the combinations of these mixes of cleafi rice lots, » from the rough*rice purchased from these three pro- ducers was tracedyat the hearing into the sales of clean rice into whith they entered ‘and the price of clean rice sales ‘was established. However, owing to. the fact that each quantity of clean rice ‘that went into a sale was-made up of a mixture from: variqus. © lots of clean rice, which were in turn produced from various lots of rough rice bought from different pro-: ducers,. and owing to the fact that theré was, as is and owing to the fact that rough rice when -milled ERS LETTE EEE LAL ES NIE ELE LOBES SEG OE ILS LOPE SI + eel EEE RF RE PS Pn eee ere Kom REN ME Ka ae : essa ot : . . : ' 4 F 70 Pe) ‘ produces difterent gr des of clean rice, as set forth in the above mentioned bills of complaint, ‘the Secretary of Agriculture was never able to shofv in that case whether or not ‘the Bay City.Rice Mills had obtained for the clean rice derived from the Evoritt, Powers, and Reed rough rice. the amount (roughly 79c) above the cost of the rough rice that Article*IV, Section 1, attempted to require the mill to get. . Although that was one of the charges most vitally affecting -the entire, ricé ‘program in affiant’s belief, and although the Secretary of Agriculture through his two attorneys who prose- cuted the case and through his several auditors who were continuously working onthe records of the Bay City Mills made every effort to prove the charge, the Secretary of Agriculture in his findings did not find that the charge had been proven 2nd did not find that the Bay City Rice Mills had violated the license in the manner set forth in Charge 11. Affiant believes, and on that belief states, that the . reason the Secretary of Agriculture did not find that. Charge 11 had been supported by any..evidence was because it was utterly. impossible practically to. show ' whether clean rice had been sold for the amount above the Tough rice cost that the license required. The charge referred specifically to the sale of clean rice lots 36, 43, 123 and 124. Evidence as to the history of those clean’ rice we is as ‘set out below. selling of rice by samples and mixing rice was usual and vastomary. ae” : ne : \ | f For example, Mr. F. A. Farda, who testified as a witness for the Secretary of Agricultuge, and who is the Manager of Standard Rice Company, one of the largest rice milling companies in the United States, testified as follows: . ‘ ~ > ane > “Mr. F ides , a ‘ + ‘Well, it, is. not common practice, in fact, it is not a practice to make a mixture just in order to put it in a warehouse and keep it. You make the mixture , when you sell yqur rice, get ready to sell it, you sell it on'a sample and then you make your composite mix- iure and your lots match your sample. That tS .@: * common:-practice. ; “Mr.:Davant: » ... ./ i ; ’ Is it. not a practice to make up these samples prac- tically in the beginning of the season and to send them out as types? ADE ie “Mr. Farda: . ‘The practice is to make hand mixes, and to send them samples, and when you sell on the samples. you make . your actual mixture, make it up.” (R. 420-421. ) * - . a . a Mr. Farda: eee The usual practice is, you don’t make your mix until you have the rice sold.” (R. 429-430.) ; i | + tt ‘e@,-@ . “Mr. Finda: . You never make a mix until’ you have a sale ~.° made, because jit would not be of material ad- ae ee eer Ne ee ee. ee ee ee eee ee Se EE ee ee ee Pes oe Oe Hat Only, + OA fod Bodin. Bi Bistans e* 14 ‘ vantage to do’ so because you may not find another market for that particular blend that you make. You therefore keep your rice in the original lots to be in a position to make a blend of whatever the trade or market requires at that time.” (R. 430.) . In connection with the ‘above lots of clean rice, the Secretary’s attorneys tried to maké sdme allocation of the cost of rough rice to the different grades of clean rice produced as between. fancy rice and head rice, but this was realized by aff to be purely arbitrary allocation’ of cost without any real or sound basis’ for the same. The ‘aie proceeding’ against ‘Bay City Rice Mills was a proceeding before the Secretary of Agriculture to forfeit the license of Bay City Rice Mills for alleged violation of.the license, The. hearing was: held before a | Pepresentative of the Secretary ‘of Agriculture. In the levennind affidavit the figure of 79c above rough rice cost has been referred to. That, ‘as stated, was used only roughly. Under the. license, the price for clean rice was to be the price fixed for rougli rice plus the conversion charge ‘plus the carload rail rate for transporting rough rice to the miller’s mill plus the administrative assessment of Sc per barrel. ‘The coriversion CNarge was 70c per barrel plus 9¢ per barrel if standard one hundréd pound single packages were, * used for clean rice plus 5c pgr VArrel if cotton or paper interlinings were‘used.: This, would make the spread | ‘between the rough rit€ price and clean rice price ap- proximately 89c exclusive of the freight item. (Sgd.) = - HOMER L. BRUCE. Subscribed and Sworn to before mé, the undersigned authority, by Homer L. Bruce, this 27th day of Octo- : * ber, 1935. - (Sgd.) RAYMOND REILSON, (Seal) Notary Public in and for Hairis County, Texas. ~ ‘ \ ’ ~ 75 0 AFFIDAVIT, State of ‘Louisiana, . ' Parish of Orleans. | We, L. Je Bartel, R. F. Gould, and J. J. Mayer, each fifst being duly sworn, deposes and says: * v . Mies That we are Deputy Collectors of the Treasury De- ‘partment, Internal Revenue Service,. Louisiana Dis- . ~ trict, working in connection with the rice processing tax division, and that the experience of each in. the rice industry, prior'to becoming Deputy Collectors, is as follows: L. J. Bartel has had: actual experience of ° approximately twenty years in buying. ugh rice; operation of ‘rice milling plants, and the distribution . of milled rice and by-products. R: F. Gould has shad actual experience as follows: Fifteen years with’ the largest rice millers of the’industry as Office Manager, and Chief Accountant; one year as Sectetary, and auditor of a rough rice buying agency for New Or- leans rice mills, and one and éme-half years as traveling auditor: for the Millers Committee, an agency operat- ing under a Marketing .Agteement for the. Southern Rice Industry. J. J..Mayer has had approximately seven years actual experience in buying, selling ‘and grading rough rice and distributing milled rice, and by-products. _ Our broad. experience, as above out- lined, reveals the following facts as existing in the rice milling industry: - There is no established market price on rough rice, and the method of buying the rough rice by the millers. els a competitive bidding method.’ Each miller has outlined to him: by the management of the mill. he basis is as follows: Rice millers determine the price to make their. bid to a producer for his rough rice based on the prevailing market price for milled . rice. a his bayer, who makes the competitive bid on the basis _ : 76 computing the values to the different grades and by- products obtained from the processing of the rough rice being bid. ‘upon. For example: A lot (parcel) of rough rice,-estimated to produce . (per barrel of 162 pounds) the following articles, grades, classes, etc., when processed, with estimated values as set out for each of the respective grades, classes,. etc.: Fancy Head Rice—100 cua at 4 a $4.50 Second Héad Rice—4 pounds at 3c ...... a Screenings Rice—6 pounds at 2%4c ...... fee, ae Brewers Rice—2 pounds at 2c ............ 04 ~ Total yield per barrel—112 pounds. gc RAE Santee iota beeen es $4.81 plus Approximate revenue from by-products 3 (25c per barrel of 162 pounds) ........ 25 Total revenue ...... ee ae ae eae $5.06 Competitive bidding’ -basis prior to the processing - tax law requiring payment of a processing tax in cash: The above $5,06 is the’ gross. value of. milled rice. articles and by-products resulting from a 162. pound barrel of rough rice. The mill would deduct from this gross figure the conversion charge, this conversion figure including the mills ex- pense for processing the rough rice, and the estimated profit. Assuming that this. conversion would be 60c per barrel, the mill would then bid the producer $5.06, less the 60c conversion, or $4.46 per barrel for the rough rice. The affiants solemnly swear that they have used and seen records of various rice mills estab- lishing the basis-as, outlined above. Competitive Bidding Basis after the Processing Tax Law requiring Payment of a Processing Tax in Cash: Since the beginning of the 1933 crop movement, which a become available for market during the month of July, — and on which the processing tax applies, the rice millers use the same basis to p olin values; however, in, addition to deducting the conversion. charge, the. rice millers deduct also .the 1c per pound processing tax on the rough rice, or $1.42 per barrel, and submits his “ bid to the producer, less this deduction, as. follows: From the value of the same lot of ‘rough rice as above . illustrated, estimated:to produce milled rice and by- . products with gross values of. $5.06 per barrel, the rice miller deducts the following: Conversion 60c and pro- . cessing tax $1.62, or a total-of\$2.22 per barrel, and makes bid‘ to the producer of $2.84 per-barrél for that particular lot of rough rice. as, ‘The affiants further solemnly swear that in their practical experience they have prepared, and have seen prepared profit and loss statements for certain given periods .other than the entire season; further that these profit and loss statements are prepared on particular lots of rice, which is essential and hecessary in their accounting™procedure. Should the Agricultural. Ad- justment Act be held unconstitutional, th*affiants state that the rice processors should enjoy the reniedy _and benefits given by Section 21 (d) of the said Agri- cultural Adjustment Act, as amended August 27th, 1935, beo@use the recerds of uying processing and selling kept by the rice mills are @ quate enough to properly allocate the cost‘of varidus grades of milled rice and its by-products, resulting from the processing of the rough rice; also to properly allocate in this cost, the processing tax, proportionately to the various grades of each lot of milled rice sold by itself ‘alone or mixed. The greater portion of the milled rice sales are straight mill run lots without blending. . + ~ fe 78° The affiants ‘arti’ solemnly swear that they have ‘kept or have seen rice millers’ records which reflect correct cost of production, profits from sales,. etc., properly: allocated to milled rice of various ,varieties, and grades, and by-products, and similarly allocated as to profits in selling prices; and should the Agricul- tural Adjustment Act be proven unconstitutional, each rice processor has sufficient records to enable him to recover in accordance with Section 21 (d) of the Agri- cultural Adjustment Act, as amended. Summed pp, the introduction of the rice processing tax has in no wise alteréd the customary manner or .procedure followed by the rice milling industry in conducting their business.. (Sed.) . > L. J. BARTEL, (Sed.) R. F. GOULD, (Sgd.) JAMES J. MAYER. Subscribed and sworn to before me this 28th day of October, 1935. ~ (Sgd.) HOMER R. ROBINSON, « an Deputy Collector. DECREE. *° Filed October 28, 1935. (Title Omitted.) This cause came on today to be heard upon ‘the | application of the plaintiff for a preliminary injunc- tion, as well as upon the motion filed on behalf of the | defendant to dismiss the bill of complaint, and was argued by counsel for the respective parties ; Whereupon, and upon oMideration thereof, and for the reasons — assigned: . It is Ordered, Adjudged and Decreed that the ap- plication for the Preliminary Injunction be and the same is hereby denied; It is Further Ordered, Adjudged and Decreed that the plaintiff’s petition and bill of complaint in all re- spects be dismissed. , (Signed) JOHN McDUFFIE, Judge. _ New Orleans, Louisiana, October 28, 1935. MOTION FOR INJUNCTION PENDING APPEAL. Filed Oct. 29, 1935. (Title Omitted. . Comes now the plaintiff in the above entitled and numbered cause and moves the Court to grant plain- tiff an injunction pending appeal for the reason that, — unless such injunction pending appeal is granted plain- tiff, plaintiff will be. compelled to. pay the taxes re- ferred to in plaintiff’s petition before plaintiff’s appeal . can be determined by the Circuit Court of Appeals, thus causing it great and irreparable injuries. Plain- tiff offers to furnish good and sufficient bond by a solvent surety company in an amount to be fixed by a = Weg 80 > the Court, ‘if the Court should grant its prayer ine injunction pending .appeal, BAKER, BOTTS, ANDREWS & WHARTON, | By JOHN P. BULLINGTON. Motion denied. * [ (Signed): JOHN McDUFFIE, em MOTION OF PLAINTIF r FOR APPEAL AND. . ORDER ALLOWING SAME. _ Filed Oct. 29, 1935. (Title Omitted.) On motion of plaintiff in the. above cause, and on suggesting to the Court that plaintiff is. ‘aggrieved : ~by the decree entered by the Court herein on the 29th day of October, 1935, granting defendant’s motion to _- dismiss, sand. that’ plaintiff desires to appeal therefrom with a> ’ supersedeas and a stay of proceedings in the- District Court, pending appeal to the United States ~ Circuit Court of Appeals for the Fifth Circuit, and .On further suggesting to the Court that said decree | is contrary to the law and the evidence for the reasons set forth in the assignment of errors filed in plaintiffs behalf herein ;. and On further suggesting to the Court that this motion being filed in open Court on the entry of such decree and in the presence of counsel for defendant, no cita- tion of appeal is necessary or need issue herein; Bl It is: Ordered by the Court that ie appeal of hide tiff from the decree entered herein to the United States Cireuit Court of Appeals for the Fifth Circuit be and the same is hereby allowed with supersedeas, on appel- lant’s furnishing bond with good and solvent surety, conditioned as required by law and to be approved. by the Court in the sum of $250.00 said bond to act as a supersedeas, as well as a bond for costs and damages; It is Further Ordered by the Court that the appeal of plaintiff from the decree entered herein. be made returnable to the United States Circuit Court of Ap-. peals for the Fifth Circuit at New Orleans, Louisiana, on or before November 27th, 1935, and that a certi- fied copy of the record herein be transmitted to said - Court of Appeals by the Clerk of this Court, and that . no Citation of appeal is necessary or need issue herein. (Signed) JOHN McDUFFIE, Judge. ASSIGNMENT OF ERRORS. Filed, October 29, 1935. (Title Omitted.) Comes now plaintiff and says that, in the record in the proceedings of the said Court in the above entitled cause and in the decree made and entered therein on the 28th day of October, 1935, there is manifest error and for error the said plaintiff assigns the following: . (1) The Court erred in sustaining defendant’s motion to dismiss plaintiff’s Bill of Complaint, because such. action was contrary to the law and the evidence. (2) The Court erred in over-ruling and not sus- taining plaintiff's motion for a preliminary injunction because said ruling was contrary to the law and the. evidence. 82 - - Wherefore, plaintiff prays’ that said Decree be, all things, reversed, with instructions to the said Dis. trict Cgurt to grant plaintiff a preliminary injunction. . | * (Signed) - BAKER, BOTTS, ANDREWS , & WHARTON, . By . JOHN P. BULLINGTON, ~ APPEAL BOND. - Filed October 29, 1935. Know all Men by these Presents, that we, A. B. Dore, as principal and The Aetna Casualty and Surety Company, Hartford, Conn., as surety, are held and firmly bound unto Rufus W. Fontenot, in the full sum of $250.00, to be paid to the Said ‘Rufus’ W. Fontenot, his attorneys, executors, admini8trators’ ar assigns, to which payment well and truly to be made © we bind ourselves, our heirs, executors and adminis- trators, jointly and severally by these presents, sealed with our seals and dated this 29th day of October, 1935. Whereas, lately; in the: District Court of the United States for the Eastern District of Louisiana, judgment was rendered against A. B. Dore, and in favor of Rufus. W. Fontenot, denying plaintiff’s application. for a Preliminary Injunction and dismissing plaintiff’s Bill of Complaint, and the said A. B. Dore, having ob- tained an appeal to reverse said judgment, citing and admonishing the said Rufus W. Fontenot to be and appear at a session of the United States Circuit Court of Appeals for the Fifth Circuit to be holden at the > City of New Orleans, La., in said. Circuit Court on the 27th day of? November, 1935. 83 Bak Now thet condition of the above obligation is.such that if the said A. B. Dore shall prosecute its appeal . to’ effect and answer all damages and costs, if it fail to make its plea good, then the above obligation: to be © void, elsé to remain in full force and effect. (Signed) A.-B. DORE, By JOHN P. BULLINGTON, | ‘Attorney of record, Principal. . THE AETNA CASUALTY. & _A SURETY COMPANY, . : Surety, 7 ~ By CARL F. WEISS, — 4 Seal) _ Attorney-in-Fact. Approved, October 29, 1935. (Signed): RUFUS g.. FOSTER, Judge. . a PRAECIPE. Filed October 31, 1935. (Title Omitted.) To the Honorable H. J. Carter, Clerk of the United States District Court for the ‘Eastern District of Louisiana: You will please include in the record upon appeal in the above entitled cause the following documents and procedures: 1. Plaintiff’s original bill of complaint. 2. Defendant’s motion to dismiss and answer. 4; , . 84 - 3. Order of Court consolidating causes for trial and providing for evidence in cause No. 324 in Equity, Baton Rouge Rice Mill, Inc., vs. Rufus W. Fontenot, ' etc., to be considered as evidence in this cause. 4, _ Affidavit of W. M. Reid, 5. Affidavit of Homer L. Bruce. 6. Joint affidavit of L. J. Bartel, R. F, Gouff and J. J. Mayer. 7. Decree of the District rey . ae 8. Plaintiff’s motion for.injunction pending appeal and erder denying same. | 9. Motion and order for appeal. ~10.. Plaintiff’s assignment of error. u. Appeal bond. 12. This Praecipe. 13. Clerk’s certificate. HOMER L. . BRUCE, ' JOHN P. BULLINGTON, BAKER, BOTTS, ANDREWS & WHARTON, By JOHN P. BULLINGTON, Attorneys for Plaintiff and | Appellant. Approved: ; ( sa a ROBERT WEINSTEIN, Asst. U. S. Attorney, Counsel for defendant. 85" Clerk’s Office: I, HENRY, J. CARTER, Clerk of the District Court of the United States for the Eastern District of Louisiana, do hereby certify that the foregoing 50 pages contain and form a full, true and complete transcript of the record, assignment of errors, anc all proceedings - in the cause entitled “A. B. Dore, doing business under name of The Dore Rice Mill, vs. Rufus W. Fontenot, . Individually and as Collector of Internal Revénue for the District of Louisiana,” No. 322 In Equity of the Docket of this Court, as ‘made: up in accordance with the praecipe for transcript copied herein. Witness my Hand and the seal of the said Court at the City of New Orlearis, Louisiana, this 2nd day of November, A..D. 1935. (Seal) —-«xH. J... CARTER, Clerk. ” H. W. NIEHUES, Deputy Clerk. Son | 1 87 ~~ [fol. 86] In Unrrep States Crrcurr Court or APPEALS FOR THE. irre Circuit, at New Orueans, Louisiana ~ . « ” . . No. 7945. 4 ' A. B. Dore, Doing Business as the Dore Rice Mill, - Appellant, | a v. | . * Rurvs. W. Fowrznor, Individually and as Acting United States Collector of Internal Revenue for the Nistrict of Louisiana, Appellee % F , Morron For PRELIMINgRY INJUNCTION Penne APPEAL— Filed November 4, 1935 Comes A. B. Dore, doing business as The’ Dore Rice Mill, appellant in the above numbered and entitled cause, and after due notice given to the appellee above named, respect- fully states to the Court that the said appellant on the 25th _ day of Ocicber, 1935, brought-a bill in equity in the United States District. Court for the Eastern District of Louisiana, - New Orleans Division, entitled A. B. Dore, doing business as The Dore Rice Mill,-plaintiff, v. Rufus W. Fontenot, ‘individually. and as Acting United States Collector of In- ternal Revenue for the District of Louisiana, defendant, and numbered 322 in equity, in the New Orleans Divisj . of said United States District Court. In-its bill of é0m- plaint in said cause appellant prayed for a temporary re-- [fol. 87] straining order to be issued immediately, and for — a preliminaryginjunction after notice to the appellee, and for a permanent injunction onthe final hearing of said cause, enjoining the appellee from assessing or collecting or attempting to assess or collect from the appellant in any manner whatsoever, whether by lien or jeopardy or dis- traint proceedings, in cuurt or otherwise, any processing - taxes levied under and pursuant to the Act of the Congress _ of the United States known as the Agricultural Adjustnient Act and amendments thereto; or purported to be eyied by said Act, upon the appellant for the processing of rice ‘dur- ing the month of September, 1936, and. for subsequent months, and any interest or penalty on account of appel-’ 1—578 © PLT Ie ee I EL tT eT - FRE EM NER REET OTR Tet a iasiaies lant’s failure to pay said processing tax, and from impos- ing or giving notice of intention to impose any lien for said taxes upon the property, real or personal, of appellant. That said application for a preliminary injunction was set. down for hearing before the Judge of said District Court at New Orleans on Monday, October 28, 1935. The-notice thereof was duly waived by the appellee. Prior to said hearing the said appellee filed his motion to dismiss and answer to said bill of complaint, copies of which motion and also of appellant’s bill of complaint are contained in the record in this cause filed in this Court. After a hearing had on appellant’s motion for a prelim- inary injunction and on .the said moti®n to dismiss, the Honorable John McDufiie, acting judge of said District Court gn October 28, 1935, refused appellant’s motion for a preliminary injunction, granted the motion of the appel- lee to dismiss the said bill of complaint and disniissed the said bill of complaint, to which appellant herein duly ex- [fol. 88] cepted. Thereafter, on the 29th day of October, 1935, the appellant herein in open court and in the presence of counsel for appellee filed its petition for an appeal, which ‘ was duly allowed by the said judge of the said United States District Court who tried said cause, and filed at the same time its assignments of errors, and also a cost bond ~ was duly filed and approved by the said Judge of said Dis- trict Court. At the time appellant presented its said peti- ‘tion for appeal, it also petitioned said judge of the District . Court to grant it an injunction enjoining the appellee in the manner set out in its request for a preliminary injunction in its bill of complaint, pending the appeal of appellant to this Honorable Court, but the said judge of said District Court on October 29, 1935, refused appellant’s said peti- tion and refused to grant appellant said injunction pending - said appeal. Appellant has therefore perfected its appeal to Gs Cir- cuit Court.of Appeals for the Fifth Circuit, making said ‘cause returnable at New Orleans, Louisiana, as provided by law. Appellant has duly caused to be prepared a tran- script of the record in said cause and has filed the same, in accordance with law, and within the time allowed by law, in the Clerk’s office in the Cireuit Court of ae at New - Orleans, Louisiana. ee . = . = Re 34 act PSO pte SSH peri RAE se ate on - : weG mar et A SIE err eRe es es ete Pe ——- — nf prety ‘ * . PNG See ss is 35 tags Onsynigily RO REPENS Sst LN PI / aa 89 In said bill of complaint appellant: alleged that the amount of processing taxes on account of the rice processed by the appellant during the month of September, 1935, was $18,546.65, and that under said Agricultural Adjustment Act appellant ‘was required to pay said amount to appellee ~.on or before October 30, 1935,- and that- ‘appellee was [fol. 89] charged with the duty of collecting said tax, and if said tax were not paid on or before October 30, 1935, appellee would assess said tax against the appellant and serve upon appellant notice ‘and demand for the payment thereof and would allow appellant ten days from receipt of such notice within which to pay the same; that in the event said tax should not be paid within said time, appéllee would assess against appellant a_penalty equal to 5% of the amount of the tax and interest on the tax ‘at the rate of 1% per month from the due date of the /tax until paid; that if the appellant failed to pay the tax/within said ten days, appellee would proceed to collect the tax, penalty and interest by filing a notice of lien on all of appellant’s prop- erty and distraining upon and selling such of appellant’s property as might be necessary to realize the amount of said tax, penalties and interest; and that additional proc- essing taxes for months subsequent to September, 1935, will accrue and be assessed against and collected from the appellant in the same manner as the tax for the month of September. Appellant alleged that the said processing tax was illegal q and unconstitutional, and violated various provisions of the .§ ff Constitution of the United States in man articulars, more fully set forth in appellant’s bill of complaint. The appel- lant also alleged that under an amendment to said Agricul- tural Adjustment Act approved on August 24, 1935, a Sec-- tion 21 (d) was added to said Act, which section provides . in substance that appellant should be allowed no recovery ()@ _ of any of said taxes paid, if the same should be illegal or ’ unauthorized, unless appellant established to the s isfac- _ tion of the Commissioner of -Internal Revenue, andthe [fol. 90] Commissioner should so find, that neither appel- _ lant nor any person directly or indirectly under appellant’s * control or having ¢ontrol over appellant, has, directly or indirectly,-included such amount in the price of the rice with respect to which it wag imposed or of any article proc- 2—578 ‘ . eran s semen ines ee — wad “ a oa 90 . essed from the rice with respect to which it was imposed, or passed on any part of such amount to the vendee or to- any other person in any manner, or included any part of such’ amount in the charge or fee for processing rice, and that the price paid by the appellant or such person for said - rice was not reduced by any part of such amount. Appel- . lant in said bill of complaint, alleged, as more fully set out in said bill of complaint, that under said Section 21 (d) it. had no adequate remedy at law by which it could recover any part of said taxes if same were unconstitutional and illegal, and that it was impossible, owing to the peculiar conditions existing in the rice milling ‘industry and in the purchase, milling and sale of rice, for appellant to dis- . charge. the burden placed upon it by said Section 21 (d), ‘all as more fully set out in appellant’s bill of complaint. Appellant further alleged that in said amendment of August 24, 1935, a new section known as Section 21 (a) was added to said Agricultural Adjustment. Act, which in substance provided that no suit to enjoin the collection of said processing .taxes should be maintained in any court. Appellant further alleged that said section was not in- tended to apply, and did not apply, to the injunction prayed for ,by appellant, inasmuch as appellant had no adequate remedy at law. Appellant further alleged that if said sec- tion should be interpreted as prohibiting the injunction prayed for by appellant, then the said section, together with (fol. 91] the-other provisions of said Act, was invalid and in violation of the Fifth Amendment to ‘the Constitution, that no person shall be deprived of his property without due process of law, in that said illegal and unconstitutional taxes would be collected from appellant and: appellant would have no remedy by which he could recover taxes and would ‘have no remedy to prevent the collection of said un- lawful taxes and would be forever deprived of the right to test the constitutionality of said taxes. Appellant further alleged that said Section.21 (d) de- nied the appellant a complete and adequate remedy at law for the various other reasons set forth in said bill of com- plaint. — a At the hearing before the District Judge appellant intro- duced in evidence the affidavit of W. M. Reid, Executive Secretary of The Rice Millers Association, a man of twenty- six years experience in the rice business, in which affidavit iain iia Ye cg oy Rs i 2b seme teeesiereep neces 2 ROME Rem a SIRT INNO Ee on mre 91 he set out fully and in detail the methods of conducting the rice business and the manner in which the rough rice mar- ket and the clean rice market is made, showing. that it would be utterly impossible for any rice miller to accu- rately determine whether he had made a profit or a loss on any given transaction, much less prove whether he had ‘passed the tax, or any part thereof, on. Appellant also © introduced in evidence the affidavit of Homer L. Bruce, a practicing attorney at the bar at Houston, Texas, setting out in detail the proceedings under a complaint brought by the Secretary of Agriculture to revoke the license of a rice mill under the Act in effect prior to the present Act. The Secretary of Agriculture sought to revoke the license of [fol. 92] this mill for failure to sell clean rice and rice ° products processed from rough rice at a price ‘approxi- mately 79¢ higher than the price paid for the rough rice. The affidavit showed that although the Government was able to prove the cost of the rough rice and to trace the particular rough rice into various ‘‘mixes’’ of clean’ rice and the price procured for these ‘‘mixes’’ of clean rice it was never able to prove that the price procured for thé clean rice processed from the particular lot of rough rice - was not 79¢ more than the price paid for the rough rice because of the fact that clean rice is customarily gold in ‘‘mixes’’ of various lots of rice and there was no way to allocate the price procured for the mixed rice sold to the various lots of rough rice which went into the mix. In the meantime, appellant alleges that for the foregoing ‘reasons and those set forth in its said bill of complaint. in, said cause, and because the judge of said court in his said order dismissed saié bill of complaint and refused to grant appellant the injunction prayed for pending the appeal in this case, the appellee herein will, to the irreparable dam- age and loss of the appellant herein, proceed to collect the said taxes for September, 1935, which are now due and unpaid, from appellant, and said taxes for subsequent months, unless restrained by a preliminary injunction: granted by this court. The appellant alleges that not only has if no complete remedy at law, but in fact no remedy at law at all, for the reasons hereinabove set forth and set . forth more in detail in said bill of complaint, that it is faced with the alternative of paying the tax with the certainty that no remedy at law exists for its recovery in case it be gia — TERE GUSTER REP RH SSIES ERE NTE PINNED SOME TING RCE HS eT SENET RE OES ve : . eS as : ~~ : F : PIR Se A A . 92 held that it was unconstitutionally assessed, or oi refusing [fol. 93] to pay and running the risk of becoming liable for the heavy civil and criminal penalties provided in the Act, and that the said judge of said District Court should not have dismissed said bill of complaint, but should have over- ruled the same, and upon the hearing should have granted the preliminary injunction as prayed for in said bill of- complaint. Appellant would further show that there is now pending in the Supreme Court of the United States a case involving the constitutionality of the said Agricultural -Adjustment Act, being the. same case in which the Circuit Court of Ap- peals for the First‘ Circuit’ declared the Act to be unconsti- tutional, and that the Supreme Court, according to press dispatches, has set said cause for oral argument on Mon- day, December 9, 1935; that-a decision by the Supreme Court of the United States upon the validity of the said Act may be expected within a reasonable time fhereafter ; that the first benefit payment to farmers provided for in said Act has been made, and that under the standard form of contract between the Secretary of Agriculture and rice farmers no further payment is due yntil such time after December 1, 1935, as the Secretary shall determine and, declare what further amount of benefit payments shall be made and when they shall be made; that the taxes to be col- lected under said Act are for the purpose of making these benefit payments and that since the Secretary of Agricul- ° ture need make no further benefit payments until such time after December 1, 1935, as may be fixed by him, the delay of the Government in collecting these taxes which might be occasioned by the granting of the injunction prayed for [fol. 94] herein will not occasion an injury to the Govern- ment nor will it unduly interfere with the achievement of the program set out in said Act if the Act be held constitu- tional. On the other hand, as hereinabove alleged, great and irreparable damage will be done to plaintiff in the event the law is held unconstitutional unless the injunction here- inafter prayed for is granted. Appellant further shows that unless an injunction pend- ing appeal be granted so as to preserve the status quo, the subject-matter of the suit will be lost and the jurisdiction of this Honorable Court defeated. Such injunction is necessary to preserve the jurisdiction of this Honorable Sw a ll Sa Ee a as EO oe oF 93 ‘ Court, and in order that appellant may enjoy the just fruits of a favorable decision on' this appeal. | The appellant states that it is ready and willing to give any reasonable bond or other.security that may be required by any order of this Court, including the déposit from month to month of the amount of tax due, in a depository to be designated by the court, and therefore prays that this Court make an order granting appellant a preliminary in- junction ‘enjoining and restraining the appellee from as- ‘ sessing or collecting or attempting to assess or collect from appellant in any manner whatsoever, whether by lien or jeopardy or by distraint proceedings,-in court or otherwise, the said processing taxes for the month of September and subsequent months and any other processing taxes under and pursuant to said Agricultural Adjustment Act upon rice processed by appellant, and any interest or penalty on account of appellant’s failure to pay said processing taxes, — and from imposing or giving notice of intention to impose [fol. 95] any lien for said taxes upon the property, real or personal, of the appellant, pending the hearing of: appel- lant’s appeal in this case and upon such conditions and _terms as to this Court may seem just. Homer L. Bruce. John P. Bullington. Baker, Botts, Andrews & Wharton, of Counsel. [fol.96] Duly sworn ie by John *P. Bullington. Jurat- omitted im printing. [fol. 97] In Unrtep States Circuit Court ‘or APPEALS No. 7945 A. B. Dore, Doing Business under the name of Dore Rice Mill,. } versus | Rurvus W. Fontenot, Acting Collector of Internal Revenue Orver Denyine Motion For Previminary INJUNCTION . . PENDING AppEaL—November 0, 1935 Upon the ‘authority of Rickert Rice Milling Company, ‘Inc., vs. Rufus W. Fontenot, etc., the application for in- junction in the above numbered and entitled case is denied. Seth, ery EET MP RES AMEE IRE PEAS ATR TELA EPRI TROL TTT I EY LL 94 [fol. 98]. In Untrep States Circuit Court or APPEALS FOR THE FirtH Crkcuit No. 7937 Rickert Rice Mituine Company, Inc., Appellant, versus Rurvus W. Fontenot, Acting Collector of Internal Revenue, Appellee - Appeal from the District Court of the United States for the Eastern District of Louisiana Motion for Preliminary Injunction Pending Appeal Before Foster and Sibley, Circuit Judges, and Strum, District J ndge | Orrx1ox—November 5, 1935 By the-Court: On consideration of the application for an injunction to stay collection of taxes levied under the provisions of the Agricultural Adjustment Act, as amended by the Act of August 24, 1935, the Court is of the opinion-that the. tax- payer has a remedy at law to recover back any taxes il- [fol. 99] legally exacted and, further, that the provisions of the Act as amended deprive the Court of jurisdiction to grant injunctive relief. It is ordered that the application be denied. [fol.100] Clerk’s certificate to foregoing transcript © omitted in printing. . [fol. 101] Surname Cover or tae Unrrep Srares Orper ALLowine CzrtTiorarI—Filed November 25, 1935 The petition herein for a writ of certiorari to the United States Circuit Court of Appeals for the Fifth Circuit is - 95 granted, and the case is assigned for argument on Monday, December 16, next. And it is further ordered that the duly certified copy of the transcript of the proceedings below which accompanied the petition shall be treated as though filed in response to such writ. . Endorsed on cover: File No. 40,432. U.S. Cireuit Court of Appeals, Fifth Circuit. Term No. 578.