# 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%3A04 ## Record - **Collection:** Supreme Court brief - **Document type:** Transcript of Record - **Published:** January 1, 1936 - **Citation:** 297 U.S. 110 ## Text TRANSCRIPT OF RECORD i ae Supreme Court of the United States , OCTOBER TERM, 1935 No. 580 BATON ROUGE RICE MILL, INC., 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 PETITION FOR CERTIORARI FILED NOVEMBER 11, 1935. CERTIORARI GRANTED NOVEMBER 25, 1935. fewer: Sagres SUPREME COURT OF THE UN ITED STATES ‘OCTOBER TERM, 1935 _ No.580 # }»#& «, 7 BATON ROUGE RICE MILL, INC., PETITIONER, ‘ ; (r) “Piodiece’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 rice- 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 su~h 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. 31 (u) “Official figures” means the records of acreage and production prepared by the United States Depart- ment of Agriculture. (v) A “barrel” means 162 pounds of rough rice. (w) A “bushel” means 45 pounds of rough rice. If. Determination of Allotments and Quotas.—1. The allotment of a producer shall be determined by each State Committee 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 to 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 the total thus secured by thrée (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 allotments 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 and in Arkansas, and the total thus secured by three (3) in Texas; (c) Reduce the result obtained by 20 percent in Louisiana and in Arkansas and the result obtained by 22 percent in Texas. ats . | 32 The total quotas assigned to producers 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 , 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. e (a) If a producer has died or has ®een declared legally incompetent by a Court uf competent juris- diction and has not executed, prior tdthe 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 hag 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 berore an applica- tion for an allotment and quota has been executed by or on behalf of the partnership, its records of rice . production forthe 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. t 34 . III. Transfer of Allotment and Quota.—The pro- ' ducer’s Allotment and Quota shall now 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. (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. ° (b) If a producer voluntarily withdraws, either wholly, or in part, from the production of rice after’ executingeyan Application but before exe- cuting a Contract,he may transfer all or part of his Allotment .and Qu a to such persons as are continu- ing his farming optration, 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, hé may transfer all or part of his Allotment and Quota to such 35 person as is continuing his farming operations upon proof of such disability, retirement, and succession. (d) Upon dissolution of a partnership, after an Applicatiou has been executed by or on behalf of the partnership, but before a Contract 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. cs 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 on a crop share basis, such well or canal operator shall not change his status so 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 Application, Declaration, Contracts, ‘and Other Documents by a Person in a Representative Capacity.— (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 Coxporation, who shall state his title, and affix the corporate seal to the Contract, (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., wy Pe ; ° . ‘ =~ attached to the contract, which ‘authorization shali:be considdfed a part of the. contract documents. — (2) In the event a document is to be signed by an executar, administrator, guardian-of an incompe- tent person, recetv.~, or other person appointed by a Court in a fiducia y capacity, there shall be furnished either the original. or a certified copy ‘of the Court order of appointment or a certificate ona prescribed form showing that such person was duly appointed as such fiduciagy and that the appointment 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. , | . a a (4) If the producer is a Governmental body or agency, there shall bé attached-to~ the document a certified copy of a resolution f the Board or other authority ,githorized by statute to lease and contract in regard to fhe land and personal ‘propefty covered: by the ‘contract, authorizing the execution of such document by the person executing the document on an 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 fér a partnership. « Shall.be éxecuted in the-name of the partnership and of each partner as an. individual, by each member of EERE FE St ty, Spee ror See + ae « 37 the partnership, or on behalf of each partnér who does not. personally sign, by an agent duly author- ized to.sq sign by a Power of Attorney, on a prescribed form. a 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, © | as us, 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 ‘litiiiting the exclusiveness of the ' above definition, the.expression shall’ mot include cash . rent or debts incurred in connection with the produc- tion of past crops. | : was ; ; ; P ; » 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 curren production credit. i.) Dated ‘April 18, 1935. R. G. TUGWEEL, Acting Secretary of Agriculture. 4 G=, * 38 - : a: EXHIBIT “B”. Filed Oct. 25; 1935. Férm Rice 36, U.S. Department of Agriculture, _, es _ ,Agricultural Adjustment Administration, a Rice Section. ' - ng Form approved by Comptroller General, U. S., May 1, 1935. “ar 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 a Act.) ; 7 é 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-subjectto 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. dieie na ? 2. The producer, 9 re _~ pliance and making payments under this contract “the : 39 ae pen (a) Représents that he has allocated to each farm upon which the will participate in any manner in the production of rice in 1935 some = of his allotment and that the total acreage alloc ed bythe producer * to all sirch4arms does not exceed his allotment; . . >» . FF * . =4 2 (b) Agrees that he will not share Or participate in any mariner in the prgdluction of rice in 1935 on any - farm to which che hag\not allocated a fortion of his allotment ; et ; = ; oe ad (c) Agrees that for the purposes of checking com- producer’s share of the acréage planted to rice in 1935” on ‘each farm covered by this contract 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 i935 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; planted ‘to ‘rice in 1935 on all the farms covered by this contract shall not exceed“his allotment: Sa (e) Agrees that the acreage permitted under this contract to be planted:to rice in 1935 shall be farmed in a workmanlike manner ‘throughout 1935; - (d) Agrees that his total share of the acreage. (f) - Applies for membership in the Rice Production Control ‘Association Organized pursuant to-F orm 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 ~ s . . * z oc, Pa RRR Ohi, Re ENT See as haha. Piha desea ivanell: Sars ins” — Pied aL lig SORTS Y aE RE Pay Ge GE” ee PEPE Pe Sg FT we pene ~ a petal - . 40 ‘production and/or sale of rice on or from any and all ‘of such farms, and expyessly. waives any right to have: such records kept confidential. ; : , (h) Agrees not to sell, pledge, transfer, or assign, in whole or in part, this contract or his right to or ‘claim for paymtents ‘under this contract, .and npt 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 farm(s) covered by this contract (hereinafter referred taas “current production eredit”) and such pledge or hypothecation shall operate to establish an interest or right on the part of the pledgee in and to said\, the pledge or hypothecation thereof ghall not alter the provisions of paragraph 5 that: alt-adjustment pay- ment checks drawn in compliance withthis contract shall be made payable 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 i$ designated in paragraph-§ es 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. a payee other than the producer is named in para- graph 5 hereof, and if such payee shall not have been notified of any pledge 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 adjustment paye « ments as against any other person jor persons, but - « ve - thereof to the producer, it being expressly’ understood _-tand agreed that the- Secretary shall have no duty or obligation to see that distribution if made in accord- ance with the foregoing provisions, but shall have the right to enforce the performance of said trust by the Payee; is . ad , -‘(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 s¢ontract, 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 ahy 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. ‘“Aynount 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 ae i od “ae Qo ‘ nf 7 (1) A first adjustment payment at a rate of 81 cents. per barrel of rice, and > .’ a A Sc ae elt iil a LOUK mast ritemttin ate 1 > . . oa 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 patagraph, whichever shall apply: | ; | fis : ) (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 bartels 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. , “er (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 Decembeg 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 TEMPORARY INJUNCTION SHOULD NOT ISSUE. : coe Filed Oct 28th, 1935. (Title Omitted.) To the Honorable the Judge of the District. Court of the United States in and for the Eastern District of Louisiana: — Now into Court comes Rufus W. Fontenot, Acting Collector of Internal Revenue, Defendant in the above entitled and numbered cause; through Rene A. Vioica, United States Attorney in and for the Eastern District of Louisiana, and Robert Weinstein, Assistant United States Attorney for said District, his attorneys, and by virtue of the rules and practice of this Court re- quiring the defendant in rule to file all defenses to the rule on the date set fot the hearing on the application for a temporary injunction, and with full reservation of all of his rights under the pleadings in this cause, 55 answers the rule by stating that for lack a sufficient | information to justify a belief he ‘denies all of the allegations of. paragraph two, three, four, five, six, seven, eight, nine, ten, eleven, twelve, thirteen, ‘four-. teen, ‘fifteen, ' sixteen, seventeen and eighteen of the Bill of Complaint, and also denies the allegations of. paragraph one with the exception of the statement . relative to the defendant, which statement is admitted. : Your Respondent further avers that the proceedmgs slfould be dismissed for the reasons that this Honor- , able Court has no jurisdiction and that the Agricul- tural Adjustment Act is constitutional, valid and enforceable. - | Wherefore, . your Respondent prays this. Honorable Court to. dismiss the Bill of Complaint at Complain- , ant’s costs and to refuse granting any injunction in these proceedings, and for all . general and equitable relief. | (Signed) _RENE A. VIOSCA, | \United States Attorney. (Signed) ROBERT WEINSTEIN, | Asst), United States Attorney. (Verification. ) | State of Louisiana, Parish of Orleans. ) Before me, the undersigned authority, personally . came Rene A. Viosca, who is the United States At- torney for the Eastern District of Louisiana, who in his oath says: That in his aforesaid official capacity he is of counsel for defendant in the above case; that he has drawn the return to the rule to show cause and . that all the allegations of fact. therein are true and correct to the best of ‘his knowledge, information and belief. (Signed). RENE A. VIOSCA. 56 — ee Sworn to and subscribed before me this 28th day of October, VS; ; ' Signed) CLAUDE D. SHAW, Deputy Clerk, U. S. District Court, Eastern District o Louisiana. MOTION TO DISMISS. _. Filed Oct. 28, 1935. + (Title Omitted.) To the Honorable, the Judge of District Court of the United States in and for the-Eastern District. of Louisiana: ” r : Comes now Rufus W.. Fontenot, Acting Collector . of Internal Revenue, defendant in the above entitled and numbered cause, by Rene A. Viosca, United States .« ‘Attorney in and for the Eastern District of Louisiana, and Robert Weinstein, Assistant United States At- torney. for said District, his attorneys, with full re- servation of his rights to further plead in this cause, . and moves the Court to dismiss the Bill of Complaint filed herein, with costs to be paid by the Complainant upon the following grounds and for the following reasons: = ) I, That this Court is without jurisdiction to restrain or enjoin the collection of taxes herein involved, or to hear! and/or determine the issues presented by said bill of complaint because: 1.. Section 3224 of the Revised Statutes of the United States prohibits the maintaining in any Court ’ of a suit for the purpose of restraining the assessment and/or collection of Federal Tax. 57 2. Section. 21-A of the Agricultural Adjustment Act, as ‘amended, prohibits the maintaining in any ‘Court of a suit for the purpose of restraining the assessment and/or collection of any processing tax under the said Agricultural Adjustment Act. 3. The bill of complaint ‘sets forth no facts which, if true, would entitle complainant to the -relief prayed for in a Court of Equity. er : 4. Complainant has a plain, adequate and. complete remedy, in, the ordinary course of law. IT. That the United States of America is the real party in interest, which may not be sued without its con- sent. 3S ITT. That there is no actual controversy between com- ‘plainant and defendant or betweenzany parties over _which this Court has jurisdiction within the purview of the Declaratory Judgment Act. ” IV. That the Declaratory Judgment Act was not intended by the Congress to be used for the litigation of ques- tions arising under the Revenue Laws, and particu- larly was not intended as a means for obtaining in- jufictive relief. Vv. This proceeding is prohibited by the provisions” of the Declaratory Judgment Act, as amended, and can- not be maintained. (Revenue Act of 1935, approved — August 31, 1935, Section 405). sitesi Steichen De NENG NS ncRNA ee «458 Dated: this 28th day of October, 1935. (Sgd.) RENE A. VIOSCA, ‘ United States Attorney. (Sgd:) ROBERT WEINSTEIN, — Assistant United States Attorney. ee ORDER OF COURT. CONSOLIDATING ALL | CASES FOR TRIAL, ETC. Filed Oct. 28, P9355. . United States District Court, Eastern District of ine. . Louisiana, New Orleans Division. Docket No. 321—In Equity: Rickert Rice Mills, Inc., versus ‘Rufus W. Fontenot, Individually and as Acting | Collector of Internal Revenue. : a Docket No. 322—In Eqbiy: _/ A. B. Dore, doing business under the name of The . Dore Rice Mill, : _ versus | Rufus W. Fontenot, Individually and as Actin Collector of Internal Revenue. ‘ ~ Docket No. 323—In Equity: | . United Rice Milling Products Co.; Inc., | versus ky : ‘Rufus W. Fontenot, Individually and as Acting Collector of Internal Revenue. 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 “y" versus ° Rufus W. Fontenot, Individually and as Acting | Collector of Internal Revenue. Docket No. 326—In Equity. Levy Rice Milling Company, Inc., versus - | & Rufus W: Fontenot, Individually and -as Acting Collector of Internal Revenue. . Docket No. 327—In Equity: Farmers Rice Milling Company, Inc., versus i Rufus W. Fontenot, Individually and as ‘Acting Collector of Internal Revenue. Docket No. 328—In Equity: Noble-Trotter Rice Milling -Co., Inc., versus | Rufus W. 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 \ on 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 terms 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 Milters’ 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 read all of the allegations contained in Sec- tion 12 of Plaintiff’s bill of complaint and Equity 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 - VPs AAR pence ns crn eer ee e ; : . CUED IRR EEA: bp ee eke re en ee — | 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 procéssing tax, as well as other taxes. Having made these estimates, he determiries 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 sever‘a months after the purchase of the rough rice. r 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 7 the part pf 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 s ~ . \ Da arrepeeeerersect 0 OL ee BR ERS SE eZ, 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 I 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. 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.’ | it I am familiar with accounting and_ statistical methods, and I know of no possible method of keep- ing books and records in the rice business which would accurately reflect the gain or loss from the purchase, milling and sale of any given lot ‘of: rice as dis- tinguished from the gaift 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 arbitraries. 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 and December, and decreasing to the end of the season. 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 believe 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, or 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 all of them together has borne the ultimate economic 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 in part 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 ‘résulting 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 clean rice 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. There 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. | ¢ 4 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 tq 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 individual 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 rice. 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 ri¢e 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. : | (Sgd.) HARRY R. CABRAL. (Seal) : Notary Public. State of Texas, County of Harris. - ieee 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 ERA ee RSTn nr STS aM a — — : 65 7 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 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) of the 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. _ rae Section 8 (3) of the AgricuJtural 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 markéting 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 agreement and license hereinafter referred to, namely, the one effective on July 21, 1934. Article TV, Section 1 of the license oe . ° , , PENG ARIE TRE ARETE ND LRT CAEL IY — AE eth aN ERNE ROL OE ON EE NE TRS LES NIN TE LIE ETN a Net baNe, eater! ss eulnichache's MAC >eddfcirs a a> : 7 | 66 effective July 21, 1934, set out the minimum price that millers might sell clean rice for in. the domestic market and that section is as follows: “Section. 1.. To effectuate the purposes of this: Amended license and to aid in the Carrying out and: . enforcement of thé provisions hereof, no miller shall offer for sale; sell or deliver for domestic consumption any quantity of clean rice for an amount per pocket less than the sum of ° act , (a) the minimum price, 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, | (b) .the conversion charge for such quantity of rough rice and prevailing at the time of such offer, sale or delivery,-.and a (c) the published car 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 guch quan- - tity of rough rice and prevailing when such rice 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 rough 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 67 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. ; 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 fiye (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 tht 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.” : . 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 keep 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 cost of the rough rice. It was extremely important to keep the clean rice up to, this level in order to maintain the rough rice price. In the fall of. 1934, the Secretary of Agriculture 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. @e ad ‘ : ‘ + *. ; . ° e Pe eT ee a ee . 5. Affidavit of Homer L. Bruce. 6. Joint affidavit of L. J. Bartel, R.F. Gould and J. J. Mayer. ; 7. Decree of the District Court’ 8. . Plaintiff’s motion for injunction pending appeal and order denying same. 9. Motion and order for appeal. 10. Plairitiff’s assignment of error. 11. 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 an Appellant. a Approved: . ‘ (Sgd.) ROBERT WEINSTEIN. Asst. U. S. Attorney, Counsel for defendant. i 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 and all proceedings in' the cause entitled “Baton Rouge Rice Mill, Inc., vs. Rufus W. Fontenot, Individually and as Collector of Internal Revenue for the District of ° Louisiana,” No. 324 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 Orleans, La., this 2nd day of Novem-. ber, A. D. 1935. H. J. CARTER, Clerk, By H. W. NIEHUES, (Seal) ane Deputy Clerk. % 87 [fol. 86] In Unirep States Circuit Court or APPEALS FOE THE FirtH Cigcuit, at New Organs, Louisiana | No. 7947 Baton Rovee Rice Miu, Inc., Appellant, Vv. ~~ Rurus W. Fousenor, Individually and ‘as Stine United ° States Collector of. Internal Revente for the District of _ . Louisiana, Appellee Motion ror PRELIMINARY INJUNCTION PENDING APPEAL — Filed November 4, 1935 _ Comes now the Baton Rouge Rice Mill, Inc., appellant in the above numbered and entitled. cause, and after due notice given to the appellee above named, re- spectfully states to the Court that the said appellant on the 26th day of October, 1935, brought a bill in equity in the United States District Court for the Eastern District of Louisiana, New Orleans Division, entitled Baton Rouge Rice Mill, Inc., plaintiff, v. Rufus W. Fontenot, individually and as Acting United States Collector of Internal Revenue . for the District of Louisiana, defendant, and numbered 324 in equity, in the New Orleans Division-of said United States District Court. In its bill of complaint in said cause appellant prayed for a temporary restraining order to be [fol. 87] issued immediately, and for a preliminary i injunc- tion after notice to the appellee, and for a permanent in- junction on the final hearing of said cause, enjoining the appellee from assessing or’ collecting or attempting to assess or collect from the appellant in any manner whatso- ever, whether by lien or jeopardy or distraint proceedings, in court or otherwise, any processing taxes levied under and pursuant to the "Act of the Congress of the United. States known as the Agricultural Adjustment Act and _amendments thereto, or purported to be levied by said Act, upon the appellant for the processing of rice during the month of September, 1935, and for subsequent months, and any interest or penalty on account of appellant’ s failure to pay said processing tax, — from imposing or giving 1—580, abate SE aE ee SRR Pet i ia Rag PEEL IE LOLA OE NONE IB MERU PE gpa . — 7 il RL PS iL it REN ANS 88 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. appel- lant’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 prelimi- nary injunction and on said motion to dismiss, the Honor- able John McDuffie, acting judge of said District Court on October 28, 1935, refused appellant’s motion for a prelimi- nary injunction, granted the motion ofthe appellee to dis- miss the said bill of complaint and dismissed the said bill ’ [fol. 88] of complaint, to which appellant herein duly ex- cepted. Thereafter, on the 29th day of October, 1935, the appellant herein in open court and in the presence of coun- sel 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 District Court. At the time appellant presented its said petition for appeal, it also petitioned said judge of the District Court to grant it an injunction enjoining the appellee in the man- ° - ner 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 petition and refused to grant appellant said injunction pending said appeal. y ’ . Appellant has therefore perfected its appeal to the 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 transcript of the record in said cause and has filed the same, in accord- " ance with law, and within the time allowed by law, in the Clerk’s office in the Circuit Court of Appeals at New Orleans, Louisiana. . at In said bill of complaint appellant alleged that the amount — of processing taxes on account of the rice processed by the : Leases Saas BOR cas EN ae HN a , 89 appellant during the month of September, 1935, was $51,- 259.14, 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 charged with the duty of collecting said tax, and if said tax were | [fol. 89] 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, appellee would asséss 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 property and by dis- training upon and selling such of appellant’s property as might be necessary to realize the amount of said tax, penal- ties and interest; and that additional processing 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 and unconstitutional, and violated various provisions of the Constitution of the United States in many particulars, more fully set forth in appellant’s bill of complaint. The appellant also alleged that under an amendment to said ‘Agricultural Adjustment Act approved on August 24, 1935, a Section -21 (d) was added to said Act, which section pro- vides in substance that appellant should be allowed no re- covery of any of said taxes paid, if the same should be illégal or unauthorized, unless appellant established to the satisfaction of the Commissioner of Internal Revenue, and [fol..90] the Commissioner should so find, that neither ap- pellant nor any person directly or indirectly under appel- lant’s control or having control over appellant, has, directly or indirectly, included such amount in the price of the rice with respect to which it was imposed or of any article pro- cessed 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 procegsing rice, and 2580 — “ — EEE AE LAIR PR OT ESI a : © ENTE OAR OR Oe RRS LTR PN ESF . } - = PEE ERT EY LOMO IER EEE AT BN cyan : ery ’ : 1 iP | Bow ee Ge maar 's oe Bad ~ —- 7. es 90 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 {fol..91] prayed for by appellant, then the said section, to- gether with the other provisions of said Act, was invalid and in violation of the Fifth Amendment to the Constitu- tion, that no person shall be deprived of his‘property with- — - out due process of law, in that.said illegal and unconsti- tutional taxes would be collected from appellant and ap- pellant would have no remedy by which he could recover taxes and would have no remedy to prevent the collection of said unlawful taxes and would @ forever deprived of the right to test the constitutionalityof said taxes. Appellant further alleged that sai if Section 21 (d) denied the appellant a complete and aaequate remedy at law for ' the various other reasons set forth in said bill of complaint. At the hearing before the District Judge appellant in- troduced 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 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 accurately determine ‘whether he had made a profit or a loss on any we . Pa See ns PRIN rae a $OoN Bee, ae ts ALS AE, . en en, PUES ee alle it as ” se ae Rises | SITE ek Pee Ee <1 aie a aaa NRTA PRES, a e ‘ , 91 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 Secre- tary 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 this mill for [fol. 92] failure to sell clean rice and rice producf® pro- cessed from rough rice at a price approximately 79c higher than the price paid for the »sugh rice. The affidavit showed that although the Governzaent 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 the 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 sold 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 forego- ing 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 said bil] 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 un- paid, from appellant, and said taxes for subsequent months, unless restrained by a preliminary injunction granted by this court. The appellant alleges that rot only has it 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 held that it was unconstitutionally assessed, or of refusing to pay (fol. 93] 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- —_—— Ack pean babs gl