Transcript of Record — Rickert Rice Mills, Inc. v. Fontenot

Supreme Court brief1936

Ask Donna

What actually matters in this document.

Text

+\ Bene ware

air,

oat;

TRANSCRIPT OF RECORD

Supreme Court of the United States

OCTOBER TERM, 1935.

: No. 581

T. SIMON, PETITIONER

)

vs.

RUFUS W. FONTENOT, INDIVIDUALLY AND AS

ACTING UNITED: STATES COLLECTOR OF IN-.

TERNAL REVENUE FOR THE DISTRICT OF

LOUISIANA i? Aare

ON WRIT OF CERTIORARI TO THE UNITED STATES CIRCUIT COURT

OF APPEALS FOR THE FIFTH (IRCUIT

PETITION FOR CERTIORARI FILED NOVEMBER 11, 1988,

CERTIORARI GRANTED NOVEMBER: 25, 1985,

Re RR ee Sa EN TES ade nama cnennmtnenemnens ewe an: *

a. . F “

—

) 7

SUPREME, COURT OF THE UNITED STATES

-OOTOBER TERM, 1935" ©

No. 58]

'T. SIMON, PETITIONER,

vo. " o.,

-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 UNI ITED STATES CIRCUIT COURT .

OF APPEALS FOR THE FIFTH. CIRCUIT

. 4

‘ . INDEX.

3 % ns : . Page

Record from D. C. U. 8. Eastern IN 5s cdc cdesvceveg menses ‘ol 4.

COMOM ccccccccccsiccccccvopscccccecccecccccsccecceeesecees 1

Bill of complaint ........+..seseeeeeee eee eeeeeeeeeees eveeeens 2

Exhibit “A”—Administrative Rulings Relating to

the 1935 Southern Rice Production een ots

Program .......... Pelee eeadeecceacveseverGcencweceodes 27:

Wilt “B"—Oomtract occccccccccsccccccccepecccesccess ‘ 38

Exhibit “C”—Section 21 ......... seaknneeawss iesienaedees 48

Answer ....-- Rescues peregedetosecssetecervoesneves ‘seu eveues 54

Motion to dismiss .......2...+..eeeeeees ees aBeasces seuneres 56

Order consolidating all cases for purpose of trial...........+... 58

Affidavit of W. M. Reid ..... eee see e we eeeeeeeeens 60

Affidavit of Homer L. Bruce..... ied ihaeisewaeeeudneees iecsiaa 64

‘Joint affidavit of L. 5. Bartel, R. F. Gould & J. J. Mayer wexresue 75

Decree OTT TTITITITITT TITLE 78

3 Motion of plaintiff for injunction pending aaa and order de-

nying same ........2ss0e0e0: Feeewews te eeeeees se eeeeeeeees : 79

‘Jupp & DETWEILER (INc.), — WasHInoron, D. C., DeceMBER 6, 1935.

—_ 7203-0 ona

ii .

Record from D. ©. U. 8., Eastern ‘Louisiana —Continued.

* Petition for appeal and order allowing same..............60+++

Assignment of CFrOrs 2.66.66 e cece cece ewes rire CooMecceces .

Appeal bond 2... .4 6 ccc ccc ccccweees Sevocccedcoucecescoesee ood

Preecipe eeereeeeeee eee eree ewe ee eee e eee a> “eee eee eer eee eeeeenenee

Clerk’s certificate .......66cee0. TTT TT LITT TT fooedeve oov'ee

Hh Original

Proceedings in U. 8. C. C. A., Fifth Circuit ....... jeeeees oan 86

Motion for preliminary injunction pending appeal.......... 6

Order denying motion for preliminary injunction pedémg ap-

peal PTTTITITITITTTT TTT TTT TO eee eee eeneeeeeeeneneee 97

Opinion by the Court ...... 66. ce cece eee eweeeeeeeee pees 98

Clerk's certificate ........+++++++++. (omitted in printing).. 100

Order allowing certiorariy, .......666:cceceebeeeeeeeneeues 101

é .

v \ |

. ,

~~ .

. a >

‘

“@

UNITED STATES OF ‘AMERICA.

DISTRICT COURF’ OF THE UNITED STATES,

EASTERN DISTRICT OF LOUISIANA, NEW .

ORLEANS DIVISION. -

Noy 325 (In, Radley).

bad

«”

T. SIMON

versus

RUFUS W. FONTENOT, INDIVIDUALLY AND

AS ACTING UNITED STATES COLLECTOR

OF. INTERNAL .REVENUE FOR THE DIS-

TRICT OF LOUISIANA’

Appearances: . Bf .

Messrs. Baker, Botts, Andrews & Wharton; John

. Bullington, Attorneys for T. Simon, Plain-

‘ tiff-Appellant.

Rene A. Viosca, Esq., United States Attorney -and

Robert Weinstein, Asst. U. S. Attorney, appear-

' ing on behalf of Rufus W. Fontenot, Individual-

ly and as ,Acting United States Collector of

Internal Revenue for the District of Louisiana,

ites eee nana

APPEAL enn the District Court of the United Skates

for the Eastern District of Louisiana, to the

United States Circuit Court of Appeals for the

Fifth Circuit, returnable. within thirty €30) days -

from the 29th day of October, 1935, at t the City

of New Orleans, Lotisiana. | ‘

| TRANSCRIPT OF RECORD.

47, -

BILL OF COMPLAINT & EXHIBITS

ANNEXED. : a

Filed Oct. 28, rons | .

In the District. Court of the United States, Eastern

District of Louisiana, New Orleans Division.

T. Simon

vs. No. 325 (In Fiquity).

— W. ities Individually and as Acting United

States Colkecter of Internal Revenue for. the Dis-

trict of Louisiana.

¥ .

To the Honorable Wayne G.: Borah, Judge of the.

United States District Court, for the Eastern Dis-

trict of Louisiana:

(

Comes now T. Simon, hereinafter referred to as

‘plaintiff and in the neuter singular, complainigg of

Rufus W. Fontenot, individually and as Acting United

States Collector of Internal Revenue for the District

of Louisiana, hereinafter called defendant, and for ‘s

cause of action shows ‘to the Court as follows:

Plaintiff isa resident of Crowley, Acadia Parish

Louisiana, and is a citizen of the State of Louisiana.

The defendant is a citizen of the State of Louisiana

residing at New Orleans, Louisiana, and is the duly

appointed, commissioned, qualified and Acting United

States Collector of Internal Revenue for the State of

Louisiana.

The grounds of jurisdiction of this Court in this

case are that this is a suit arisimfg under the Constitu-...

tion of the United States and the laws of the United*”

States, in off the United States and the laws of the °

United States; in which the matters in controversy

‘exceed Three Thousand Dollars ($3,000.00), and this

/suit is also one in which an injunction is sought against

an official of the United States to prevent him from

unlawfully collecting processing taxes levied by the

United States pursuant to certain ‘acts of Congress,

more fully set out hereinafter, and to have declared 1 in-

valid and unconstitutional said acts of Congress in so

far as they: attempt to provide for the levy, assessment

and collection of said processing tax.

in oe ‘ j Se

_ Plaintiff is engaged in the business of milling

rice and owns and operates a rice mill at Crowley,

Louisiana. The milling of said rice, which constitutes

‘processing of said rice under the terms of the Agri-

cultural Adjustment Act, hereinafter referred to, is

done ,wholly within said State and is a matter of

intrastate commerce exclusively, being performed in its

entirety within the limits of said State wherein plain-

tiff’s rice mill is established and operated.

‘Stee ee

GS ws aS! , *

' There was” adopted by the 73rd Congress and ap-

proved on May 12. 1933, an Act, P. L. No. 10, popular-.

ly known as the “Agricultural Adjustment Act,” but

officially entitled: .

“An Act to relieve the existing national Economic

an ies by inereasing agricultural purchasing power,

‘ e

s 4

to raise revenue for extraordinary expenses incurred.by

“. reason of the emergency, to provide emergency relief

with respect to agricultural indebtedness, to provide for

the orderly liquidation of joint: stock land banks, and

for other purposes.’

and “aa Act with its amendments, for convenience

hereinafter,. will be referred to by its popular title,

namely; the Agricultural Adjustment Act.

Said Agricultural Adjustment Act has been amended

several times and particularly by an amendmient ap-

proved August 24, 1935, which amendment is herein-

after referred to as the Amendment of August 24, 1935.

The policy to be effectuated by the enactment of

said, Act, prior togghe Amendment of August 24, 1935,

was declared by Congress in Section 2 to be as follows :

“Tt is hereby declated to be the policy of Congress—

(1) “To establish and maintain such ‘balance be-

tween the production and consumption of argicultural

commodities, and such marketing Conditions therefor,

as will reestablish prices to farmers at a level that.

will give agricultural commodities a purchasing power

with respect to articles that farmers buy, equivalent to

the purchasing power of agricultural commodities in

the base period. The base period in. the,case of all

agricultural commodities except tobacco shall be the

« prewar period, August 1909-July 1914: In the case

of tobacco, the base period shall be the postwar period,

August 1919-July 1929.

(2) To approach such equality of purchasing power

by gradual correction of the present . inequalities there-

in at as rapid a rate as is deemed feasible in view of

the current consumptive demand in domestic and

foreign markets.

(3) To protect the consumers’ interest by readjust-.

ing farm production at such level as will not increase.

the percentage of the consumers’ retail expenditures

for agricultur: | commodities, or products derived there-

from, which-1$ returned to the ‘farmer, above the per-

centage which was returned to the farmer i in the pre-

war period, August 1909-July 1914.”

By said Amendment of August 24, 1935, Subsection

(1) of said Section 2 was amended by inserting at

the beginning thereof the words

“Through the exercise of the powers conferred upon

_the Secretary of Agriculture under this title.”

and Subsections (2) and (3) were stricken out and

the following inserted in lieu thereof:

“(2) To protect the interest of the consumer by

(a) approaching the level of prices which it is de-

clared to be the’ policy of Congress to establish in

subsection (1) of this section by gradual correction

of the curfent level at as rapid a rate as the Secretary

of Agriculture deems to be in the public interest and

feasible in view of the current consumptive demand

in domestic and foreign markets, and (b). authorizing

no action under this title which has for its purpose

the maintenance of prices to farmers above the. level .

which it is declared to be the policy of Congress to

establish in subsection (1) of this section.” A

Plaintiff pn that under no provision .of the

Constitution of the United States is the Congress of

the United States authorized to provide for said pro-

cessing taxes for the purpose of accomplishing any of

~ 6

said policies above set forth,’and the levy, assessment

and collection of said taxes have been provided for in

said Act, not for, the purpose of raising revenue, but

for the purpose of accomplishing the things set out

‘in said declaration of policy of Congress and for said

reasons the levy, assessment and collection of said

taxes are wholly illegal,’ unlawful and unwarranted

under the Constitution of the United States. 2

e . @ - 6 an ——

Section 8 of said Agricultural Adjustment Act pro-

Vides in substance that, in order to effectuate the de-

clared policy of the Act, the Secretary of Agriculture

shall have power to provide for a reduction and ad-

justment in the acreage ‘and production for market, or

bcth, of any basic agricultural. commodity, including

rice, through agreements with producers or by other

voiuntary methods, and to provide for rental or bene-

fit payments in connection therewith, in such. amounts

as the Secretary finds best calculated to effectuate the

declared policy of the Act, to be pew out t of the moneys

hereinafter referred to. igs

‘

Section 9(a) of said ee Adjustment, Act

levies the processing taxes thereinafter provided. It

then provides that when the Secretary of Agriculture

determines that any one or more payments (including

said rental or benefit payments) authorized to be made

under Section 8 of said Act or to be made with

respect to.any basic agricultural commodity, he

shall proclaim such determination ‘and a’ pro-

cessing tax shall be in effect with respect to such

commodity from the beginning of the marketing

year therefor next following the date of such proclama-

tion. Said Act, however. provided that with _respect

to rice the processing tax for the period from April 1,

1935, to July 31, 1936, should be at the rate of Ic

FM SE LP RAINES WRENNER eR ge enn IR Ree Bi rt ty: _—

‘

DOP oar 7 epee eRED Rag Ore oe YF ———

per pound of rough rice. Under a similar provision of

said Act before being amended by the Amendment of

August 24, 1935, the Secretary was directed to pro-

claim, and did proclaim, before April 1, 1935, that

‘rental or benefit payments would. be made with re- .

spect to rice and the processing tax of 1c per pound

of rough rice would be in. effect-on and after April

1, 1935. )

Section 9(b) of said Agricultural Adjustment Act

' provides that the processing tax shall be at such rate

as equals the difference between the current average

farm price’ for the commodity and the fair exchange ‘

value of the commodity, as those terms*are defined in

the Act, plus such percentage of such difference, not

to exceed 20 per centum, as ‘the Secretary may deter-

mine will result in the collection in any marketing

year of an amount of tax equal to (A) the amount

of credits or refunds which he estimates will be allowed

- during: such period with respect .to the commodity

and (B) the amount of the tax which he estimates

would have been collected during such period upon all

processings of such commodity exempt from tax be-

cause such processings are done by or for a State or

a political subdivision or an institution thereof, except

that the processing tax on rice for the period above

_ Mentioned should be at the rate of 1c per pound of:

rough. rice.

Section 12(a) of said Act, prior to the Amendment

of August 24, 1935, appropriated the sum of $100,-

000,000.00 to be available to the Secretary of Agri-

culture for administrative expenses under Title 1 of

said Act and for rental and benefit payments made

with respect to reduction in acreage or reduction in

production for market under Part 2 of said Title 1:

Section 12(a) of said Act, after said amendment, ap-

propriated the said sum of $100,000,000.00 to the

Secretary for administrative expenses under Title 1

ae yy ee hee ae Ok ME a Po Peele ae ae ee

8 ,

and for payments authorized. to be made under Section

_ 8, including said rental and benefit payments made

with respect to adjustment and reduction in acreage

* or production for market of basic agricultural com- —

a: _"modities, including rice. |

—

Section 12(b) of said Act, prior to said Amend-

ment of August 24, 1935, provided that, in addi-

:tion to said $100, 000, 000. ‘00, the proceeds derived

from all processing taxes imposed: under said Title

1 were appropriated to be available to .the Secre-

tary of eAgriculture for expansion of markets. and re-—

moval of surplus agricultural products’ and adminis-

trative expenses, rental and benefit payments, and

refunds on’ taxes. -Seéction 12 (b) of said Act as

amended by said Amendment of August 24, 1935, pro-

vided that, in addition to said $100,000,000. 00 a further

sum was appropriated to be available to the Secretary

‘of Agriculture for payments authorized to be made

under said Section 8,*including said rental and benefit

payments, said sum so appropriated to be equal to the

proceeds derived. from all processing taxes imposed

under said Act.

Acting pursuant tc’the purported authority given

to him under said Agricultural Adjustment Act, the

Secretary of Agriculture under date of April 18, 1935,

through R. G. Tugwell; the then acting Secretary of

Agriculture, promulgated certain rulings telating to the

1935 Southern Rice Production Adjustment Program,

a copy of which rulings is attached hereto as Exhibit A

and made a part. hereof as if fully copied herein at

this point. Under said rulings the Secretary of Agri-

culture allotted acreage to be planted in rice and bar-

rels of rice to be produced, (a barrel being defined as

being one hundred sixty-two pounds of rough sice)

RARITY gripe rr en Mee! a athrS WRG ——— — CO

in the States of eRARENS, Louisiana and Texas as

follows:

siege ‘Acres. Barrels.

Arkansas ..... 135,000 1,834,722

Louisiana .... 364,500 3,898,333

i ee .. 142,500 2,010,833

-* Said rulings provided for a State Committee appointed

by the Secretary of Agriculture for each State and. .

for various forms and applications ‘to be filled out by

those desiring to produce rice and to be filed with the

said State Committee: Said rulings’provided that the -

base period for Texas should be the years 1931 to 1933,

inclusive, and for Arkansas and.Louisiana should: be

dhe years 1929 to 1933, inclusive. Said rulings further’

provided that the said Staté Committee should make

an allotment to a producer applying to the Secretary

of Agriculture through said State Committee for

permission to grow rice during the year 1935, by taking

the average acreage planted by such producer during

the base period applicable to him. and by reducing

this result, by 20% in Arkansas and in Louisiana

and by 22% in Texas; and should give an_allot-

ment or permission to ‘said producer to plant said .

80% (in the case of Arkansas and _ Louisiana)

or 478% (in the case of Texas) of the aver-

age acreage planted by him during said base period. °

_Said rulings further provided for said State Com-

mittee to allot to each such producer a quota of barrels

of rice that he might produce during the year 1935 by

allotting to him 80% (if in Arkansas or Louisiana)

or 78% (if in Texas) of the average number of bar-.

rels of rice raised by him during said base period.

If a iainies had produced rice during any of the

years constituting his base period, he was eligible to ©

obtain an allotment and a quota from said State Com-

mittee, and if he should obtain such allotment ‘and

SMe em a per eee OF —. .) .s ” h oe

quota, he was then eligible to execute a contract with

_the Secretary of Agriculture in the form shown by

Exhibit B attached hereto and made a part hereof for

all purposes as if copied in full at this point. If said

producer executed said contract and it was accepted

by the Secretary, he was then_eligible for the benefit

payments to be made by the Secretary as provided for

in*said agreement. However, if a groducer had not

produced rice during any of the years constituting his

base period, he was not eligible to execute said contract

with the Secretary and was not eligible #r the benefit

payments provided ‘for therein. » Likewise, if a producer

did not execute such contract, or if he executed such

contract and it was not accepted by thé Secretary, he

was not eligible for the benefit payments as provided

for therein. — raters os

Plaintiff alleges that said processing taxes were not

levied under the taxing power of the United States

and for the purpose of raising revenue, but were levied

for the purpose of raising money with which the Secre-

tary of Agriculture could make rental or benefit pay-

ments to producers of agricultural products, including

rice, and for.the purpose of controlling, regulat-

ing, and reducing the amount of acreage that

would be planted to rice and the amount of rice

that would be grown, and to accomplish the pur-

poses set out in Section 2 of said Act, and that the

Congress of the United States had no authority under

the Constitution of the, United States to levy said pro-

cessing taxes for said purpose and for said objects.

Section 8 further provides that, in order ‘to

effectuate the declared policy of the Act, the Sec-

retary is empowered to provide for a reduction:

in’ acreage or a reduction in production of any

= —

ee ee 11

basic agricultural commodity through agreements ‘with

producers, and to provide for rental or benefit pay-

ments in connection therewith. in such amounts as_

the Secretary deems fair and reasonable, but there’ is

no standard or measure established or provided i in said

Act by which the said Secretary shall be guided in

providing for said reduction in acreage or production

or in the amount of the rental or benefit payments,

and said provisions are wholly invalid and violative

_ of Article 1 of the Constitution of the United States

which vests all of the legislative power in the Congress |

pf the United States and is an invalid and uncon- *

stitutional delegation of legislative power ~ Congress

to the Secretary of Agriculture.

Plaintiff oe alleges that the Secretary has made

no. findings whatsoever, and if he has made any such

: findings, ‘they are wholly insufficient to. support his.

action in providing said method--of reduction ‘of acre-

age and production of rice as above set forth, and his

said regulations and provisions concerning said reduc-

tion of acreage and reduction of production and

amounts of benefit payments are wholly arbitrary and-

unsupported by any findings, or at least any sufficient

findings, by the Secretary of Agriculture and are not

‘authorized by said Act or the Constitution of the

United States. .

2."

Section 9(b) of said Act provides that if the Secre-

tary of Agriculture has reason: to believe that the pro-

“cessing tax levied on any commodity will cause such

reduction. in thé quantity of such production domestic-

ally consumed as to result in the accumulation of sur-

plus stock thereof or in the depreciation of the farm.

price of the commodity, then he shall cause an in-

vestigation to be made on due notice and opportunity

for hearing to interested parties, and if thereupon the

OTOL IG SSO gO ee hn MEPs RPA OF Ry SINT Oo 7) et oF) eae

a ie . a 12

Secretary finds that such. result will occur, then ‘the-—.

processing tax on such commodity shall be at such

rate as wall prevent:such accumulation of surplus stock

and: depr@ciation of said farm price. Said provision

applies to the processing tax levied upon rice. Said ~

provision sets no proper standard by which the Secre-

tary shall be guided in determining the rate of the.

processing tax on rice or how long said tax of one

cent (Ic) per pound shall remain on rice, and. the

continuation of said processing tax being dependent

upon said action by the Secretary, said provision is an.

unconstitutional : delegation of legislative power to the.

Secretary. of Agriculture in violation. of Article 1 of

said Constitution vesting the legislative power in the

Congress, and for said reasons the said Act -in. levying

said processing tax is void and illegal. °

10.

In addition to the foregoing reasons, the said Agri-

cultural Adjustment Act and its provisions for the

leyying, assessment and collection of said processing

taxes upon rice processed by this plaintiff are void,

illegal and in violation of the Constitution of the

United States for the following reasons:

1 They ; are an attempt oa ain by the tfaieed

States to regulate, control and reduce the production of

certain. agricultural commodities specified i in said Act,

including rice. The so-called processing taxés im-

posed by said Act are an integral part of the scheme,

attempt and effort of regulating, controlling and reduc-

ing the production of such commodities, which attempt,

effort and scheme is not within the scope of any of the

powers vested in the Congress by the Constitution, and

if said power exists as a governmental function, it is

therefore within the powers reserved to the States as_

expressly provided by the Tenth Amendment to the

Constitution.

2. The so-called processing taxes were not imposed

‘under or in conformity with the power vested inthe’

Congress by. Section 8 of Article 1 of the Constitution

to. levy*and collect taxes, duties, imposts and excises,

in that they are not imposed to pay the debts or to

provide for the common defense. or the general welfare

of the Unitéd States, but were imposed for the benefit

of a particular class of individuals,: namely, the pro-

ducers of.the various agricultural commodities speci-

fied in said Act who cofiform to the conditions laid:

down in said Act.

: ; = ’

3. The said Act and provisions for the levy, assess-

ment and collection of said‘ processing taxes violates

the provisions of the Fifth Amendment to the Con-

stitution since the so-called processing taxes constitute -

the deprivation of the property of one class of: citi-

zens, inclwding the plaintiff, namely, processors of

-said, specified commodities, including rice, without

due process of law, in that such processing taxes

constitute the taking of the property of this class of

citizens, including the plaintiff, not for ublic pur-

pose but for a private purpose, to-wit, the payment of

gratuities or. bounties or benefit payments to another

class of persons, namely, the producers of the desig-

-nated agricultural commodities, ‘including rice, and

particularly ‘since this taking is without just’ com-

pensation to the plaintiff and said processors.

4. Said so-called processing taxes levied by the

w\ct are taxes in name only and not ir fact. They

constitute merely an exactment and imposition by

the Government: for the purpose, not of raising

Jevenue for the support of ‘the government, bu

of raising the price for farm products and ad-

justing farm income god for carrying ‘out. the

policy of said Act as hereinabove set forth and for the

purpose of enabling the government to’ carry out and

effectuate the’ said attémpt, effort’ and scheme &f the

United States -as hereinabove set out.’ ‘

¢ — se

a roy . wt _ . Vr Serre eeg-aheous

siete Hniieenait a

SR SD LD LAT NO WT L

5. Under the terms of Article 1, Section 1, of the

Constitution of the United States, the legislative

powers granted to the Federal Government are vested

in the Congress ; whereas, the said Act purports to vest

powers in the Secretary ‘of Agriculture, who alone is

to determine, at his‘ own discretion and without any

definite: standard fixed by Congress, the method of

bringing about a reduction or adjustment in acreage

and production of agricultural commodities, including

rice; to provide for rental or benefit payments in con-

nection therewith in such amounts as the Secretary

may deem fair and reasonable; to determine how long.

the said tax of lc per pound upen the processing of

rice shall remain in effect, and if the Secretary changes

said rate, what rate shall Be fixed. In said respects

the -said Act involves an invalid delegation to the

Secretary of Agriculture by Congress of powers vested

exclusively in, it. by. the Constitution and because of

_said things the said Act delegates said legislative

powers to the Secretary of Agriculture and said powers .

are conferred exclusively on Congress by said Article

1, Section 1; Article 1, Section 8, clause 18; Article

Section 1; Article J, Section 7, clause 1; and

‘Article 1, Section 9, clause 7 of the Constitution.

6. The said taxes if construed as direct, violate

Article 1, Section 9, clause 4, and Article 1, Section 2,

clause 3 of the Constitution, because: not apportioned

ee to population.

7. The said taxes are not excise taxes, and are not

uniform throughout the United States as required by

Article 1, Section 8, clause :.

8. The said alleged taxes cannot be levied under

Article 1, Section 8, clause 3, regulating commerce,

because neither the production nor processing of com-

modities, including the processing of rice done by,plain-

tiff, is in interstate commerce and cannot be regulated

by Congress and in so far as this plaintiff is concerned,

its processing of said rice is not interstate commerce

and cannot be regulated by Congress.

11.

_» Under the terms of. said Act and orders of the

Secretary of Agriculture and the Secretary of the

Treasury, the plaintiff is required to file returns with

‘the defendant on or before the 30th. day of October,

1935, showing the amount of rice processed by the

plaintiff during*the month of Septentber, 1935, and

the amount of said so-called processing tax on ac-

count of said rice procéssed by the plaintiff during

said month, and plaintiff is required ‘to pay said

amount to the defendant on or before October 30,

1935. The amount of said processing taxes om account |

of the rice processed by the plaintiff during ‘said yponth

of September is $53,531.86. Thé defendant as said

Collector of Internal Revenue is charged with the duty

of collecting said tax, and if the plaintiff does not make

said payment on or-before October 30, 1935, the said

defendant will assess said tax against the plaintiff and

will serve upon the plaintiff notice and demand for

the payment of said tax, and the plaintiff will be al-*

lowed ten days from the receipt of such ‘notice and

demand within which to pay said tax. In the event

of failure to pay said tax within said time, the defend-

ant will assess against the\plaintiff a penalty equal

to 5 per centum of the amount of the tax and interest

on the tax at the rate of 1 per centum from the due date

of the tax until it is paid; if plaintiff fails to pay said

tax within the ten days after receipt of said notice and

demand, the.defendant- will proceed to collect the tax,

pénalty and interest by filing a notice of lien upon

all of plaintiff's property, and by distraining upon and

selling such of plaintiff’s property as may be necessary

in order to realize the amount of said tax, penalties and

interest. Additional processing taxes for the mor ths sub-

Shinada

ae Se oto ee nt SY ee

ie f * - - - ~

San Relea geno eed: RENEE NTA EAR, Do hk a PT RADAR Nat seh ova Sasvvie bs eat

Sine aE

Prides, lg aba tritiediimis

sequent to September,~1935, will accrue and will be

assessed against and collected from plaintiff, just as

the processing tax for the month of September will be, .

in the manner described, unless the defendant is. te

strained and enjoined from assessing and collecting said

taxes. Plaintiff has its rice mill at the place stated in

paragraph 3 hereof with a large inventory of rough

rice and clean rice, bank accounts and cash on hand.

Repeated levies upon and distraint of its property from

month to month will cause plaintiff.irreparable injury

and damage, in that such levies and distraints will

impair the valuable good-wiil of its business; will seri-

ously interfere with, if not prevent, the actual opera-

tions of its plant and the sales of its product; and

will result in a permanent injury “to its business and

good-will. Furthermore the tax, if once paid by

lainttt will be irretrievably lost. to plaintiff, to its

great. and irreparable injury. , :

x | 2.

Plaintiff further shows that by the Amendment of

August 24, 1935, Section 30, of said amendment added

a new section to the Agricultural Adjustment Act

designated as Section 21, a copy of which Section 21

is attached hereto and marked Exhibit C. Plaintiff

does not have an adequate and complete remedy at

law. as to taxes levied and assessed under said Act

because of the provisions of Section 21(d) of said

Agrtcultural Adjustment Act. Under Section 21(d) a

recovery will not be allowed to the plaintiff for any

amount of the tax paid by plaintiff unless it shall be

established that the plaintiff has not directly or in-

directly included such amount in the pricé of the rice

with respect to which it was imposed or passed on any

part of any such amount to the vendee, or included any

part of such amount in the charge or fee for processing,

and that the price paid by the plaintiff for rough rice

was not reduced by any part of such amount.

Plaintiff states that it.is an impossibility to prove

or attempt to prove what portion, if any, of the pro-

cessing taxes paid by it has been either deducted from

the purchase price of rough rice or added to the sell-

ing price of clean rice for. the following reasons:

Rice millers buy‘ rough rice at the market price,

a price that is established by the competitive bidding

of the many rice millers. Rough rice is bought in large

quantities and kept on an average of several months

before the clean rice made from it is sold, and because

of said facts the miller has no way of definitely know- |

ing at the time of the purchase of rough rice whether

he will make a profit or loss on the milling and selling

of rice. A major factor in determining the market

price of rough rice is the market price of clean rice

at the time the rough rice is bought but there is no '

- assurance, however, that the market price for clean rice

will be the same at the time the miller actually sells

the clean rice milled from the rough rice.

The miller who buys rough rice must pay the

market price as established under these conditions,

and has no power to fix or make the market price

himself. Having no power to make’ prices, he cannot

arbitrarily depress the market price of rice in order

to pass the processing tax back to the producer.

Likewise, the miller sells the clean rice in com-

petition with many other rice millers, and also in com-

petition with many other food products, such as wheat,

potatoes, beans and other food products, that can be

substituted for rice. Under such circumstances, if the

price of clean rice is pushed too high, consumers

will shift to other products with. the result that

the’ demand for rice will decline until the price

of rice falls to where people will buy it instead

of other competitive commodities. Under these

circumstances the rice miller carnot fix or make

PORNO a be oe we ED naa INET Ee ONES ET rare ae

SE RN LTE EONS ok Ss ee RnR ee epee

" : ms

q .

;

”

Anes

istonde

RIS

ee ee ee. ee ee

’

Role As

the price for clean rice, and cannot arbitrarily increase

the price of clean rice in order to pass the processing

tax on to the-purchaser of clean rice.

In addition, rough rice when milled produces many

grades of rice and products thereof. It produces extra

fancy head rice, fancy head rice, head rice, second

head rice, screenings, brewers, polish, bran, and hulls,

all of which commodities have varying values, extra

fancy rice being the most valuable and the other ‘prades

being of less value in the order above set forth. [xtra

fancy, fancy, head and second head. rice are generally

sold for human consumption as rice. Screenings are

sold to some extent for direct consumption by human

‘beings. Brewers and screenings are a very low priced

commodity and are used in general by breweries.

Polish, bran and hulls are sold ‘generally for stock

feed.’ Some of such products, particularly brewers,

polish, bran and hulls-are sold practically always for

a less price per pound than is paid for the rough rice

per pound. There is no definite proportion by which

the price paid- for rough rice can be allocated in any

way to thesé different grades of rice, so that it is im-

possible to tell with any degree of accuracy how

much the rice.and rice products that have been pro---

‘duced from any particular lot of rough rice have cost,

making it impossible to tell what amount of the pro-

cessing tax, if any, has been passed on to a pur-

chaser of these articles.

Furthermore, the processing tax is levied upon the

first processing of the rough rice and must be paid

by the end of the calendar month following the month

in which the processing oecurred: On the other hand,

when a lot of rough rice has been processed in any

month, some of the grades may be sold immediately,

whereas some of the other grades produced from said

rice mav be kept for several months before being sold,

and it is thus impossible to tell how much has been

received for the clean rice and its products that are

produced from any month’s processing, and it is im-

possible to tell how much, if any, of said processing.

tax has been passed on to’the ‘purchaser of said clean

rice.

Indeed, it is impossible even to determine 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. ;

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. Dyjfferent 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 makes 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 in 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-

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 tt sells its clean rice and rice

products. :

In addition, owing to the peculiar 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

rice 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 during the season. Owing to the

varied chdracter of clean rice out-turn from rough

- rice, these samples are made up of mixtures of differ-

ent kinds of ‘rice. It has been found imipossible 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 appreciabie 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 obtained

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

wae

rice sale has come from many different sources 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 innumerable 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

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 tthe plaintiff of its. property.

without due process of law in violation of the Fifth

Amendment to the Constitution.

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 itis 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 to render.

declaratory judgments with respect to such alleged

— By reason of the impossibilities of proof here-

bove referred to, the practical effect of said Act

vail 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

23.

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 taxés, 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. ,

7, .

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

not appropriated funds for the payment of ial refunds

and plaintiff. believes, that in view of the aggregate

amount involved, there is a reasonable doubt whether

such appropriation would ever be made. .

— ; oa

Plaintiff is ready, able and willing and hereby offers

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 shali direct the said sums

claimed to be due)from plaintiff for processing taxes on —

account of the rice processed by plaintiff auring the

month of Séptember, 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 undér 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 being 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 bill,

but not under oath, and answer under oath being here-

by expressly waived; .

2. That pending the hearing of the application ~

a’ preliminary injunction hereinafter prayed for,

temporary restraining order issue immediately por

ing and restraining the defendant until the hearing

of its application for a preliminary injunction or until

° \ ,

' the further order -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 ta%es under

and pursuant te 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 said 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 jeopasdy 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 asséss 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

_ |

Se prter itv as

interest or penalty on account of plainuff’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;

5. That at the final héaring it be adjudicated that

the provisions of said Agricultural Adjustment Act

providing for the levying, assessing and collecting of

said processing taxes against and from the plaintiff

are invalid, unlawful and unconstitutional on each and

every one of the grounds upon which they are herein-

above alleged to be unlawful, invatid and unconstitu-

tional; and that the deferdant 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 may be

justly entitled.

(Signed) T. SIMON, ar

(Signed) BAKER, BOTTS, ANDREWS .

| & WHARTON, 7 |

By JOHN P. BULLINGTON,

Attorneys for Plaintiff.

State of Louisiana,

Parish of Acadia.

Before me, the undersigned authority on this day

personally: appeared T. Simon, who, having been

by me first duly sworn, stated on "oath that he has been

duly authorized by said corporation to make this

affidavit for and in its behalf; that he has read the

foregoing and above bill and knows the contents

thereof and that the facts therein set out are true, ex-

.cept as to such facts as are therein stated. on informa-

Agios.

FEE ST

tion and belief, and that as to those facts so Pe

to be on inleornation and belief, he believes them to

be true.

(Signed) - T. SIMON.

Subscribed and Sworn to before me, this 27th i“

of October, 1935.

(Signed) : a MULLER,

Notary Public in and_ for.

(Seal) Acadia Parish, La.

EXHIBIT “A.” -

Filed October 25, 1935.

Issued April 18, 1935.

United States Department of Agriculture,

Agricultural Adjustment Administration.

Administrative Rulings Rélating to the 1935 Southern

Rice ‘Production Adjustment Program.

Explanation.

These Administrative Rulings apply to and are part

of the Southern Ricé Production espana Contract

and documents pertaining thereto.

i 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-

>»

od .

cata: aagh ie c a

OO TN EOD VE TORR Leste Le lS sre wae merry

out knowing exactly What he must do in order to

‘receive the benefits of the program.

I. Definitions—As used in the Southern Rice Pro-

duction Adjustment Application, Declaration, Con-

tract, Schedule, and these Administrative Rulings:

(a) “Person,” “tenant,” “landlord,” “producer,” —

and “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. \

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” méans

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) “Application” means any Application for Rice

Acreage Allotment (forms Rice 1 and 2) heretofore

or hereafter executed by any producer. “Application

ee a en essen

;

‘

serial number” means the serial number of any such

Application.

(g). “Declaration” 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 number 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.

(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. . 7

e |

‘

; B

. NEARER PRET a ele Re at eon RR Wis SRE EN RIA eI PE Eee ee

(j) “1935” means the period from January 1,

1935, to December 31, 1935.

(k) £1934” means the period from January 1,

1934 to December 31, 1934. . .

(1) The term “State base 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 period” in Arkansas and

Oulsiana means the period of the calendar years

aa .

APNE ES

Ties ka tren ip trinaea Sa ge aet

Pin REAM IS

USS kPa A ch SSA Nab aa nt oad SS

1929 to 1933, inclusive, waa in Texas the years. 1931

to 1933, inclusive.

(o) 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

procedure set forth in Administrative Ruling II 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 rice 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

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 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.

ie Pee Saree ©

(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. ’

II. 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 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 allotments assigned to producers in each

state shall not in any event exceed the state allotment

for that state. se

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.

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 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 historv 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- :

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. , :.

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.

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.

(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 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.

retired from the production of rice after executing an

Application but before executing a Contract, he may

transfer all or part of his Allotment and Quota to such

q5°

person 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 thé

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 partnérs: 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 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 3s 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. — wo |

(1) In the event any document is to be executed “

on behalf of a Corporation, it shall bé signed on behalf :

of the Corporation by an officer of the Corporation,

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., or

. 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 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. ‘.

_(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

‘ocument. 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

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 escribed

form."

VI. Pledge of Adjustment Payments.—Adju tment

payments may not be assigned under any con

This is forbidden by the Contract, as well as prohibited

by law.

However, the producer’s right to adjustment: pay-

ments under the Conttact may be pledged in

order to obtain funds (or creait) 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 k

of land, planting, cultivating, watering, harvesting, and a

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 connection 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.

ss tei mal Wa Sal Bi SET a se ls

EXHIBIT “B”.

Filed Oct. 25, 1935.

Form Rice 36,

U.S. Department of Agriculture,

Agricultural Adjustment Administration,

Rice Section.

Form approved by ‘Comptroller ‘General, uy, &.

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 ery

‘2. -The producer.

(ar

(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 not allocated a portion of his

_ allotment;

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 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 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.

pianted to rice in 1935 on all the farms covered by

this contract shall not exceed his allotment;

(e) Agrees that the acreage permitted under this

contract to be planted to rice in 1935 shail 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;

(zg) 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

pe Red A: LST Atay " ahlas sean vase

bin ate!

SEAM est

eect y tes Me RN RN hi kL GAN a be

a eT a tre

production and/or sale of rice on or from any and all

of such farms, and expressly 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 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 farm(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-

diction 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 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 mdde pursuant to the

terms of this numbered paragraph, such payee shall

‘receive such payments in trust to pay the whole amount

meee

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,

(i) Represents that the statéments 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 ~ Secretary:

3. Amount v Payments —The Secretary shall, as

a consideration for thé 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

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 Secretarye

‘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.

5. (a) All adjustment payments hereunder are for-

the benefit of the producer and shall be made only to

the producer unless the producer shall, by naming an-

other person in this numbered paragraph, direct that

_ such payments be made to the person so named, in

which event the payments shall be made by check drawn

payable to the person so named who shall receive them

subject to the provisions of this contract, ‘and particu-~

larly subject to the provisions of subparagraph ¢h) of ° .

paragraph 2 hereof.. If the person so named shall have

died or shall refuse to accept such payment, or shall

for any reason be unable to receive and distribute such

payment subject to the provisions of this contract then .

such payment shall be made to the producer, who like-

_wise shall receive such payments: subject to the pro- —

visions of this contract and particularly subject to the ©

provisions’ of subparagraph (h) of paragraph 2 hereof.

(Stamp State and County cade above.)

| EPPO a Pa one oe See oe

County §

Community.......... Contract )

er an

5. (b) Designated payee ......... Rents ye

er EEE Te eT Cer ere | }

(Address of payee)

III. Signature(s) of Producer(s).

6. In Witriess Whereof,.each of the undersigned has ©

hereunto set his hand on the date indicated opposite

his signature. ; ;

Re es OE ne Pree reeeret. , 1935.

(Signature of Producer) (Application No.)

F 44 . ,

a Address of Producer (Rural Route No.) .... (Box

‘No.) .... (Post Office) ..... pens Ew. 6:0 6 05 09-1

ee te ine vass Me aeons caw vite ; 1935.

(Witness) (Date of Producer’s signature)

‘(Signature of Producer) | (Application.No.)-

Address of Producer (Rural Route No.) .... (Box

INO.) .... (Post Ofice)-...... ee | eer

- IV. Certification of Committees. |

We Hereby Certify that we have €Xamined the fore-

going offer and that, to the best of. our information

and belief, the total acreage allocated by the producer

to all the farm(s) covered by this contract does not

exceed the producer’s allotment, and hereby recom-

mend that the foregoing offer. be — by the Sec-

retary.

Sw eeaweweee@eceneesr @ 4060906470049

CCPH eC CCC CECT H OCH EHH © HES Ee ©

6 6 28 © CCE OCC CCH SEG ECO OOOH EH 6 ¢

Date....., 1935. Date....., 1935. Date....., 1935.

V. . Acceptance by Secretary.

In consideration of and in reliance upon the agree-

ments of the producer herein set forth and the repre-

sentations made by the producer in and in connection

with this contract, this offer is hereby accepted, this

‘aaa i POR Se ee,

. e ’

Representative of Secretary

of Agriculture.

VI. State Committee’s Certificate of Compliance.

The undersigned State committeemen certify that

the producer’s total share of the acreage planted to rice

in 1935 on all farm(s) covered by this Contract does

not exceed the producer’s allotment, and further ‘certify

that the producer’s allotment and quota and the pro-_

ducer’s total share of the acreage planted to rice in’

1935 on all farms upon which the producer is partici- ’

pating in the production of rice in 1935 are correctly

stated in items 1, 2, and 3, respectively, of part VIII

below, and further certify that to the best of their in-—

formation and belief the producer has’ fully complied

with all terms of this Contract and all regulations and

administrative rulings issued by the Secretary applic- -

able up to and including the date of this certificate.

ee FP CF 8 68 2 2 eee 6 ae Oe eee Se OS

(For State Committee)

Y S228. 2 P22 SS. OS. SSeS Se Bee a a a

(For State Committee)

VII. Producer’s Certificate of Compliance.

The producer ‘certifies that his total share of the

acreage planted to rice in 1935 on all farms upon which

he is participating in any manner in the production of

46 ~~

rice does not exceed his allotment, that his allotment

and quota, and his total share of the acreage planted to

rice in 1935 on all farms on which he is participating

in any manner in the production of rice in 1935 are

correctly stated in itéms 1, 2, and 3, respectively, in

. part VIII of this contract, and further certifies that

he is not sharing in the production of rice on any

farms covered by this Contract are being farmed in

a workmanlike manner, and that he has fully complied

with all other terms of this Contract, and with all

regulations and administrative rulings issued by the

Secretary, applicable up to and + nee the date of

this certification.

(Producer. )

VIII. Certified Basis for Determining Payments.

1. Producer’s allotment .......... eer re

(e.g mre th RE ee

3. Producer’s share of — . gicseaes

4. Quota percentage (item 3 = item 1).... .....%*

5. Number of barrels for payment (item 4

Tg RS a ae

*If the above percentage is not more than 100 nor less

than 85 per cent, then 85 pgr cent shall be used.

Do not write in this blank; a, use by Comptroller’ S

Computation of payments:

1935 first sian payment Item 5 times

81¢ per bbl... ..... .. eee eee eee eee ss ai

1935 second adjustment payment, Item 5

eee ff Oe Duras can

Do Not Write in Space’ Below.

Certificate of Comptroller.

Audited and approved for 1935 first adjustment

payment in the amount of .............. _aegaipirnee

JOHN B. PAYNE,

Comptroller,

Ml seven tases Chua

Auditor.

: Schedule No. ..:.....

are Aer yn ae

5 PCE ree by check on Treasurer of the

United States in favor of payee. or payees named

thereon. ;

Check No...........-. Ste Deree

Certificate of Comptroller.

Audited and approved for 1935 second adjustment

payment im the amount of ... 65. scenes SRA es

_ JOHN B. PAYNE,

Comptroller,

\ By: ee ee ee ee ee ee

: Auditor.

| Schedule Ne rte

SS as anes

_ , RNS CER een by check on Treasurer of the

United States in favor of payee or payees named

thereon.

Chock Mo..........:;. | Ty ae nt

(Any intentional misrepresentation of fact made in

this contract for the purpose of defrauding the United

States will be subject to the criminal provisions of the

United States Code.) ‘S

‘

EXHIBIT “C”,

Filed October os 1935,

Sec. 21. (a) No suit, action, or proceeding (includ-

ing probate, administration, receivership, and bank-

ruptcy proceedings) shall be brought or maintained in

any Court if such suit, action, or proceeding is

for the purpose or has ‘the effect ‘(1) of prevent-

ing or restraining the assessment or collection of -

any tax imposed or the amount of any penalty or ir-.

terest accrued under this title on or after the date of

the adoption of this amendment, or (2) of obtaining-a

declaratory judgment under the Federal Declaratory

Judgments Act in connection with any such tax or

such amount of any such interest or penalty. In pro-

bate, administration, receivership, bankruptcy, or: other

similar proceedings, the claim of the United States

for any such tax or such amount of any such interest

or penalty, in the amount assessed by the Commis-

sioner ‘of Internal Revenue, shall be allowed and

ordered to be paid, but the right to claim the refund

or credit thereof and to maintain such claim pursuant

to the applicable provisions of law, including sub-

section of this section, may be reserved in the

Court’s order. :

(b) The’ taxes imposed under this title, as de-

termined, prescribed, proclaimed and made effective by

the proclamati s and certificates of the Secretary of

Agriculture my the President and by the regulations

of the Secretary with the approval of the President

prior’ to the date of the adoption of this amendment,

are hereby legalized and ratified, and the assessment,

levy, coJlection, and ‘accrual of all such taxes (to-

gether with penalties and interest with respect there-

to) prior to:said date are hereby legalized and ratified

and confirmed’ as fully to all intents and purposes as

if each such tax had been made effective and the rate

thereof fixed specifically by prior Act of Congress. All

such taxes which have accrued and remain unpaid on

the date of the adoption of this amendment shall be

assessed and collected pursuant to section 19, and to

the provisions of law made applicable thereby. Noth-

ing in this section shall be construed to import illegal-

ity to any act, determination, proclamation, certificate,

or regulation, of the Secretary of Agriculture or of the

President done or made prior to the date of the adop-

tion of this amendment.

under this title, prior to the date of the adoption of

this amendment, as determined, prescribed, proclaimed

and made effective by the proclamations of the Secre-

tary of Agriculture or of the President or by regula-

tions of the Secretary, and the initiation, if formally

approved by the Secretary of Agriculture prior to such

date of adjustment programs under section 8 (1) of

this title, and the making of agreements with producers

prior to sych date, and the adoption of other voluntary’

methods prior to such date, by the Secretary of Agri-

culture under this title, and rental and benefit pay-

ments made pursuant thereto, are hereby legalized and

ratified, and the making of all such agreements and

payments, the initiation of such programs, and the

adoption of all such methods prior to such date are

hereby legalized, ratified, and confirmed as fully to all

‘intents and purposes as.if each such agreement, pro-

gram, method, and payment had‘been specifically au-

thorized and made effective and the rate and amount

thereof fixed specifically by prior Act of Congress.

_ article wi

+ 50

(d) (1) .No covery, recoupment, set Soff; refund,

or éredit. shall made or- allowed of, nor. shall any

counter claim: be allowed for, any amount of any tax,

_ penalty, or interest which accrued before, on, or after

the date of the adopfion of this amendment under this

title (including any overpayment of such tax), unless,

after a claim has been dulv ‘led,-it shall -be established,

in addition to all other fac. ; required to beeestablisbed,

‘to the satisfyétion of the Commissioner of Internal

Revenue, and\the Commissioner shall find and declare.

of record, afterdue noticé by the Commissioner to such

‘claimant and opportunity fos hearing, that neither the

claimant nor any person: directly or indirectly under

his contrgl or having control over him, has, directly or

indirectly, included. such’ amount in the price of the

respect to wheeh it was imposed or of any_

article pr essed from the commodity with respect to

which it was eS or Sead on any part of such

charge or fee for processing, and that the price paid by

the claimant or such person was not reduced by any

part of such amou oe any judicial proceeding re-

lating to such claim, | a transcript of the hearing befgre

the Commissioner shall be duly certified and filed as

the record in the case ana shall be so considered’ by

the Court. The provisions of this subsection shall rot

apply to any refund or credit authorized by subsection

_ (a) or (c) of section 15, section 16, or section 17 of this

title, or to any refund or credit to the processor of any

tax paid by him with respect to the provisions of sec-

tion 317 of the Tariff a of 1930.

(2) ° le the evens that any tax oe by this title

is finally held inv d by reason of any provision of

‘the Constitution, or ‘is finally held invalid by reason

of the Secretary ‘of Agriculture’s exercise or failure to

exercise any power conferred on him under. this title,

there shall be refunded or credited to any person (not

is)

* -

a processor or other person who paid the tax) who

would have.been entitled to a refund or credit pur-

suant to thé provisions of subsections (a) and (b) of, .

section 16, had the tax terminated ky ‘proclamation

pursuant to the provisions of section 13, and in lieu

thereof, a sum in an amount equivalent to the amount ”

to which such person woult\have been entitled had.

the Act been valid and had the*tax ‘with’ respect to the

particular commodity terminated immediately prior

to the effective date of such holding of invalidity, sub-

ject, however, to the following condition: Such -claim-

ant shall establish to thé ‘satisfaction of the.Commis- —

sioner, and. the Commissioner shall find and declate

of record, after due notice by the Commissioner to the

claimant and opportunity for hearing, that the amount

of the tax paid upon the processing of the commodity

used in the floor stocks with respéct to which

‘the claim is made was included by the pro-

cessor or other person: who paid the. tax in

-the -price of such stocks (or of the material from

which such stocks were made). In any judicial pro-

ceeding relating.to such claim, a transcript of the

hearing before the Commissioner shall be duly certi-.

fied and filed as the record in the case and shall be so

considered by, the Court. Notwithstanding’ any other.

provision: of law: (1) no suit or proceeding for the re- °

covery, recoupment, set-off, refund or credit. of any -

_tax imposed by this title, or of any penalty or intérest,

which is based upon the invalidity .of such tax by

reason of any provision of the Constitution or by —

reason of the Secretary of Agriculture’s exercise or

failure to exercise any power conferred on him under

this title, shall be niaintained in any Court, unless

prior to the expiration of six months after the date on

which such tax imposed by his title has been finally

held invalid a claim therefor (conforming to such regu-

lations as the Commissioner of Internal Revenue with |

the approval of the Secretary pf the Treasury, may

prescribe) is filed by the person entitled thereto; (2)

no such suit or proceeding shall be begun before the

expiration of one year from the date of filing such

claim unless the. Commissioner renders a decision

thereon within that time, nor after the expiration of

—five years from the date of the payment of such tax,’ *

penalty, or sum, unless, suit or proceeding is begun

within, two years after, the disallowance of the part ©.

of such claim to which such suit or proceeding re-

lates. The Commissioner shall within $0 days after

such disallowance notify the taxpayer thereof by mail.

(3) The District Courts of the United States -shall

. have. jurisdiction of cases to which this subsection

applies, regardless of the amount in ‘controversy, if

such Courts would have had jurisdiction of. such cases

but forslimitations under the Judicial Code, as

amended, gn jurisdiction of such Courts based upon

the amouft in controversy.

(e) In connection with the establishment, .by_ any

claimant, of the facts required to be established in

subsection (d) of this section, the Commissioner of

Internal Revenue is hereby authorized, by any officer

or employee of the Bureau of Internal Revenue,’ in-

cluding the field service, ‘designated by him for ‘that

purpose, to ‘examine any books,. papers, records, or

memoranda, relative to any matter affecting the find-

ings to be made by the Commissioner pursuant to sub-

section (d) of this section, to require the attendarice

of the claimant or of. any officer or employee of the

claimant, or the attendance.of any other person having

knowledge i in the premises, and to take, or cause to be

taken, his testimony with reference to any such matter,

with power to administer oaths -to such person or

‘persons. It shall be lawful for the Commissioner, or

any collector designated by him, to summon’ witnesses _

on behalf of the United States or of any, claimant to

appear before the Commissioner, or before any person

designated by him, at a time. and place named in the

EELS TOO mr Mey ROLES ABN TA Sa Fo TET op PARROT en ee tac tena se

summons, and to produce such books, papers, cor-

respondence, memoranda, or . other ang ‘as

‘the Commissioner ‘may deem relegant - ma-_

terial, and®.to, give testimony or ne in-

terrogatories, pnder oath, relating to any'matter affect-

‘ing the findings to be made by the Commissioner, pur-

suant to subsection (d) of thjs section.. The provisions

of Revised Statutes 3174 an@j of Revised Statytes 3175

shall te applicable “wit spect. to any * summons

issued pursuant to the sions of this subsection.

Any witness summoned under this subsection shall be

paid, by the party on whose behalf such witness was

_ surffmoned, the same fees and mileage as are paid

witnesses in the Courts of the United States. All in-

formation obtained by the Comniissioner pursuant to

this subsection shall be available to the Secretary of

Agriculturé upon written. request therefor. Such in-

formation shall be kept confidential by all officers and

employees of the Department of Agriculture, and any’

such officer or employee who Violates this requirement

shall, upon conviction, be subject to a fine of not more

than $1,000 or to imprisonment for not more than

one year, or both, and shall be removed: from office.

(f) . No refund,-credit, or atdtement shall be made

or allowed of the amount of any tax, under section 15,

or section ‘17, unless, within one year after the right

to such refund, credit, or abatement ‘has accrued, a

claim for such»refund, ‘credit, or abatement (conform-

ing to such regulations as the Commissioner of. In-

ternal Revenue, with the approval of the Secretary of

the Treasury, may prescribe) is filed by the person

entitled to such refund, credit, or abatement, except

that if the right to any "such refund, credit, or abate-

ment accrued prior to the ‘date of the adoption of this

amendment, then such one year period shall be com-

puted from’ ‘the date of this amendment. No interest

shall be allowed or paid, or included in any judgment,

with respect to any such claim for refund or.credit.

4 ae

. —.. : j

(g), The provisions of . section 3226, Revised

Statutes, as amended, are hereby‘ extended to apply to

any suit for the recovery of any amount of any tax,

penalty, or. interest, which. accrued, before, on, or after

the date of the adoption of this amendment under «his

title (whether an overpayment or otherwise), and to

any suit for the recovery of any amount of tax which

results from an error in the computation of the tax or

fromsduplicate payments of any tax, or any refund

or credit authorized: by subsection (a) or (c) of sec-

tion 15, section 16, or section 17 of this title or any

refund or credit to the processor of any tax paid by

him with respect to.articles exported pursuant to the:

.- provisions. of section 317° Ml the Tariff Act of 1930.

RETURN TO RULE TO SHOW CAUSE WHY

TEMPORARY INJUNCT ION iat NOT

_ISSUE. ,

; Filed ‘Oct 28th, 1935.

(Title Omitted. )

To _ 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. Viosca,

_ United States Attorney in and for the Eastern District

of Louisiana, and Robert Weinsteir, 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 for the hearing on the application

for a temporary injunction, and with full reservation

ofeall of his rights under ‘the pleadings in this cause,

ai ais ‘ :

Me ABET EET AVL LENNIE ROLE LYE INST Gh a see EOE

55.

: answers the rule by stating that for lack’ of sufficient .

information to justify a belief he denies, all of thé ©

‘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 proceedings

should be dismissed for the reasons that this Hgnor-

able Court has wo jurisdiction and that the Agricul-

tural Adjustment Act is constitutional, valid and

enforceable. ae

_ Wherefore, your Respondent prays this Honerable

Court to dismiss the Bill of Complaint at Complain-

ant’s costs ‘and to refuse granting any injuriction in

these proceedings, and for all general and equitable

relief.

(Signed) RENE A. VIOSCA,.

ae United States Attorhey.

(Signed) ROBERT WEINSTEIN,

Asst. United States Attorney:

Verification.)

State of Louisiana, | oe v;

Parish of Orleans.

- Before me, the. undersigned authority, personally :

-came Rene Ad 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 me

correct to the best of -his knowledge, information and

belief. . ¢

(Signed) RENE A. VIOSCA.

OPI oy PE PEIN EN POET I PONE REAP TOR A Tick abe eet

" 56

Sworn to and subscribed before me this 28th day of

October, (1935.

(Signed) CLAUDE D. SHAW,

. ee 0 uty Clerk, Us S. District

Court, Eastern District . of

Louisiana.

? .

> ° -

MOTION TO DISMISi&

Filed Oct. 28, 1935.

ie - (Title Omitted. )

To the Honorable, the Judge of the District Court of

the United States in and for the Eastern District

of Louisiana?

Comes now Rufus W. Fontenot, Acting Collector

of Jnternal Revenue, defendant in the above entitled

.and numbered cause, ‘by Rene A. Viosca, United States

- Attorney in and for thé Eastern District of Louisiana, ©

and Robert™Weinstein, As$istant 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 thé Bill. of Complaint

filed herein, with costs to be paid by the Complainant

upon’ the following ‘grounds and for the following

reasons : is

. That this Court’ is without jurisdiction to restrain

or enjoin the collection of taxes heréin involved, or to |

hear and/or determine the issues presented by Saig

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.

S72 ee

~2. Section. 21-A of the Agricultural ‘ Adjustment .

_Act; as amended, ‘prohibits the mainta aining 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

JY ‘for in a Court of Equity. ~ ag ie

\ ; e.,

4. .Complainant has a plain, adequate and complete .

remedy: in the ordinary ‘course of law.

« i.

That the United States of America is the real party’

in interest, which may not be sued without its con-

sent. : :

4 | ar ITT.

That there is no actualScontroversy ‘between com-

plainant and defendant or between any 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- |

junctive relief.

Vv.

This. proceeding is prohibited by the provisions of

the Declaratory Judgment Act, mended, and can- -

- not be -maintained. ( Revenge aetot 193 1935, niki

August 31, 1935, Section 405). °

BN RES SIAR TELS EWE RAD ATEN RR RE we ; Se ‘ -

a ciao ch SE SO OUD TI YE Pee Se OE ee Ne WE eRe See ie nee

58 ©

Dated: this 28th day of October, 1935.

(Sgd.) RENE. A. VIOSCA,

! . United ‘States . ‘Attorney.

| (Sed.) ROBERT WEINSTEIN,

Assistant , United States *

Attorney.

ORDER OF COURT CONSOLIDATING ALL

CASES FOR TRIAL, ETC. \

Filed Oct. 28, 1935.

_ United States District Court, Eastern District of

Louisiana, ‘New Orleans. Division.

Docket No. 321—In Equity:

Rickert Rice Mills, Inc.,

versus

Rufus W. Fontenot, Individually and as Acting

Collector of Internal Revenve. | i

Docket No, '322—In Equity:

A. B. Dore, doing businésseunGer the name of The’

. Dore’ Rice .Mill,

versus .

Rufus W. Fontenot, Individually and | as | Acting

Collector ‘of Internal Revenue. |

Docket No. 323—Tv Equity:

* United Rice Milling Products Co., Iid,, ’

. versus

‘Bae W. Fontenot, Individually- and as Acting

Collector of Internal Revenue.

~*~

) / e

NPN RNRN ERR ers sen Me a a

ay You

594

. Docket No. 324—In Equity:

ad .

. Baton Rouge Rice Mill, _inc.,

versus

Rufus W. Fotftenst, Individually and as Acting

Collector of Internal Revenue.

Docket .No. 325—In Equity:

T. Simon

. » versus

Rifus W. Fontenot, Individually ‘affd as Acting

Collector of Internal Revenue. |

‘Docket No. 326—In Equity.

‘ Levy Rice Milling Company; Inc.,

‘ versus —

+ Rufus W. Fontenot, Individually and ‘as. Acting

ts Collector of Internal Revenue.

Docket No; 327—In Equity: m

Farmers Rice Milling Company, Inc.,

’ . versus |

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. Fontendt, Individually and as Acting . .

, Collector of Internal Revenue. .

Considering the stipulation and agreement of coun-

sel’ for all parties made this day i in open Court )

It is Ordered that the above ween and ‘entitled |

cases be. and they are hereby consolidated for the

- 2

SE RN LR RENEE MET AIL CONTE RT Fey rt at le ade RR nee OPI POPOL ARM SE. eA ENS RHINE RCE ats

. . ro .

\ 60

" purpose of trial and that the affidavits and evidence :

— in one case be considered to apply to all. -

(Signed) JOHN McDUFFIE; Judge.

4 r i . oa

Seika peel OEE PT ES Pee Sle ASR Sy adele bake ora

SFE Cee PIE A Syne hie os Fo tae sh cis

° os ‘ - roe

New Orleans,: Louisiana, October 28, 1935.

State of Louisiana,

Parish of Orleans.

Before me, the undersigned ‘spbiiiiioe: 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 foltows:.

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:

. | 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 fies to pava =-

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

Bashi Li ae eke ete ee Tene

TOK at Sie es PK eg tS Te, SPEEDS RRT AS grt ets 8 oo

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 roughrite. -

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 Zz

t rice the others are paying, if he is to get any

rice. o~tndividual miller makes the rough rice

market. .It is a market made of the composite pur-

chasing of ali 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 severa

.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 réference to the future-market for clean rice on

the part of a sufficient numberof 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 mar

price for clean rice and rice products.

words, using the estimates above referred to| the cost

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.

I am familiar with accounffig and a

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 gain or loss from the aggregate

of all transactions during a season. A profit or loss,

ho..ever, may be estimated at any given time by the

use of averages, predictions and arbitraries.

The rice milling business is seasonal; the

sedson 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

PEE Sach Biss Oo eet 5

Z AO LORE OF eC Gs js . ‘

" i ay i Tela 8 ils Le ul os alin a ae

" 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 FEelieve 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, "4

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 rite 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 o£

average; or, it might go through on a day when little 4

_ Tice 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 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 relatiori 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. |

™~

: ot

- 5

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 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 miillers, and it

would be impossible to prove whether a lowering of

the rough r.ce 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 thé part of rice

_ millers as .to the future market or other factors. The

same thing i 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.

(Sgd.) W. M. REID.

Sworn and subscribed to before me, the a ee

_authority, this 28 day of October, 1935.

We oy :

Pos) a

‘ (Sgd-) HARRY R. CABRAL. .

(Seal) 3 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 hves in Houston, Harris County, Texas, and is .

duly- licensed and practicing attorney at law. He is |

FREES OIE PO pi if he a eer ee ede ST ee ee ene as te ter ee

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 arid 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.

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 agreement and license

hereinafter referred to, namely, the one effective on

July 21, 1934. Article IV, Section 1 of the license

* ‘

i ds .

ee . F “ . : 5 . ” a a“ mrt MP Ab CRAPS

= - --- ° ial >

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 |

(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

(¢) 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 such quan-

tity of rough rice and prevailing when such rice was

milled ; | ia

—_—ay 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

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. | a

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

lips are use@ 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.

9 @ * ’

charge. | ee

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.

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 charges against the Bay City Rice Mills was

Charge’ No. 41, which charged in general terms that

the Mill had ‘sold clean rice for domestic consumption '

for an amount less than the price fixed for the sale of

the clean rice pursuant to this license. This ——_

was later made more specific»as follows:.

“

“11. That the said Licensee since the 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. Eastern Standard Time on, in that said Licensee

has offered for sale, sold and delivered, for domestic

consumption, quantities of clean rice, to-wit: Clean

rice 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. E. Fveritt;

clean rice lot numbered 43 on .the books of the -re-.

spondent derived from rough rice lot number 33 on

the books of the respondent and purchased from C.. F.

Everitt; clean rice lot numbered 123 on the books

of . the respondent: derived from rough rice lot

numbered 153 on’ the. books, of the respondent

-and purchased from A. P. “Powers clean fice

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 pocket 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. Fastern 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 on.”

The affiant, together 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 on these charges, which hearing was

held in Houston,/Texas, and again-on December ai;

1934, and ran through January 2, 1935. oe.

The Bay City Rice Mills in that proceeding took

the position, and so advised the Secretary of Agricul-

ture’s representatives, that it was utterly impossible,

owing to thé manner in which the: rice industry is con- |

ducted, through the sale of clean rice on samples made

up of mixes of different lots of clean rice, as more’

fully set out in the bills of complaint presented to the

United States District Court at New Orleans in the

processing tax:suits, to. determine in the case of any

lot of rice, whether the clean rice had been sold for

79¢ more than the rough rice had cost, or for the

amount above the cost of the clean rice 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

from the rough rice purchased from ‘these three pro-

ducers was traced at the hearing into the sales of

clean rice-into which 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 various

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 there was, as is

usual in the rice business,'an almost infinite variation

in the. combinations of these mixes of clean rice lots,

and owing to the fact that rough rice when milled

‘\

+ 3 -

produces different des of clean rice, as set forth in

tthe above mentioned bills of complaint, ‘the Secretary of

Agriculture was never able to show in that case whether

> or not the Bay City Ricé Mills had obtained for the

>’ clean rice derived from the Evoritt, Powers, and Reed

rough rice the “amount (roughly 79¢) 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 rice

‘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 on the.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 and did not find that

the Bay City Rice Mills had violated the license i in the

manner set forth’ in Charge 11. ‘ |

Affiant behieves, 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 rough 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 lots is as set out below.

The clean rice in each case was included in various

sales, each sale being represented by a separate invoice.

The ‘history of those clean rice, lots was as follows:

(As shown by the record in that case.)

Clean Rice Lot 36:

Fhis. rice came from rough rice lot 33 from C. EF.

Everitt. It was mixed with various other lots of rice

and went in as a part of the rice sold. and represented

lcnsieieneineeasiarbischiesemmmtnnitememenaaiies mee pee Oech Ree snore

P 71 |

by. the following 9 invoices : Invoice Nos. 6615, 6622,.

6634, 6639, 6645, 6767, 6770, 6771 and T-162 (R. .

324-326). :

The rice covered by invoice No. 6615 was made up

of rice from various lots as follows: + /

”

39 pockets from lot 17, fancy

125 pockets from lot 31, fancy

200 pockets from lot 36, fancy

26 pockets from lot 33, heads

26 pockets’ from lot 31, heads -

(R. °472.) | 2

Invoice 6622 consisted of the following:

75 pihiien from . lot -26,. fancy

-250 pockets from.lot 35, fancy |

175 pockets from lot 36, fancy fe

(R. 475.)

Invoice~6634 consisted of the following:

. 148 pockets from lot 34 EP . -

a . 75 pockets from lot 35 EP.

' . 75 pockets from lét 36 EP-

81 pockets from lot 37 EP

68, pockets from lot 38 EP

150 pockets from lot 43 EP

201 pockets from -lot 45 EP

_(R. 478.)

There was no evidence whatsoever as to the different

lets going to make up the rice on amy of the other

invoices heretofore or hereafter, referred to, but each

invoice represented a_mix from various lots.:

Clean Rice Lot 43:

This lot went into invoices 6634, 6639, 6644, T-126, .

T-127, T-128, and-P-1006 (R. 327-329). No evidence

ee ee — Oe TT YT, A OG ren Sere ertRgrt oe Rate’ rr eran

‘ e ~———

rt, a 7 Bl Sig oS 6S awit Se PA Ih oo A tag > eee A Sa are ae Se ~

PIS GEE MARL BES NAA IS ER SEY TASER REALE The SIS PLR aA alas Se is Beda ia

was introduced as to the component part of those in-

voices, ex€ept invoice 6634 above set forth, but they all

consisted of mixes.

Clean Rice Lot 123:

This rice went into the following invoices:

Invoices Nos. 6832, 6833, T-187, T-iss, 6840, T-195,

6839, T-200, 6885, 6886, T-201, T-202, T-187, T-188,

and T-182 (R. 329 et seq.). No evidence was intfo-

duced as to the lots going into these invoices but they

were all mixes. . e

Clean, Rice Let 124:

Affiant does not have the record at this time as to

what invoices this lot went into but it was mixed into

a number of mixed invoices.

To have traced the cost of the various lots of clean

rice that went into each invoice would have been long

involved ‘and in fact practically impossible, arid then.

to trace the cost of all rice going into all invoices into

which any one of these clean rice lots went would

have involved further and innumerable records and

evidence.

This is further illustrated: when it is noticed that

a large number of rough rice lots and clean rice lots

were involved, as, for example, in Charge 11 it re-

ferred to rough rice lot as high as No. 154 and clean

rice lot as high as No. 124.

No charge was made that Bay: City Rice Mills did

not keep .accurate and complete records of its opera- .

tions.

PEC lr eee

Nor. was any issue made as fo the fact that the

selling of rice by samples and mixing rice was usual

and customary.

For example, Mr. F. A. Farda, who testified as a

witness for the Secretary of Agriculture, and who is the |

Manager of Standard Rice Company, one of the largest

rice milling companies in the United States, testified

as follows: din | ,

“Mr. Farda:

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 your rice, get ready to sell it, you sell it

on a sample and then you make your compésite mix-

ture and your lots match your ‘sample. That is a

common practice.

“Mr. Davant:

Is it not a practice to make up these samples prac-

tically in, the mesetang of the season and to send.

them out as types? es

“Mr. Farda: a Oh St

The practice is to make hand mixes, ani send them

samples, and when you sell on the samphss you make

your actual mixture, make it up.” (R. 420-421.)

* * * *

“Mr. Farda:.

_ The usual practice. is, you don’t make your mix

until you have the rice sold.” (R. 429-430.)

* * . *

“Mr. Farda:

You never make a mix until you have a sale

made, bécause it. would not be of material ad-

‘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 make some allocation

of the cost of rotigh rice to the different grades of

clean rice produced as between fancy rice and head

rice, but this was realized by all to be purely arbitrary

allocation of-cost without any real or ‘sound basis for

the same. s

The above 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 representative of the Sécretary of Agriculture.

In the foregoing 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 rough rice

plus the conversion charge plus the carload rail rate

for transporting rough rice to the miller’s mill plus

the administrative assessment of 5c per barrel. The

conversion charge was 70c per barrel plus 9c per barrel

- if.standard one hundred pound -single packages were

used for clean rice plus 5c per barrel if cotton or paper

interlinings were used. This would make the spread

between the rough rice price and clean rice price ap-

proximately 89c exclusive of the freight item.

(Sgd.) HOMER L. BRUCE.

~ Subscribed and Sworn to before me, the Seldasianed

authority, by Homer L. Bruce, this 27th day of Octo-

bery 1935. .

(Sed.) RAYMOND REILSON,

(Seal) Notary Public in and for

Harris County, Texas.

;

8! aie

- cs

AFFIDAVIT.

State of Louisiana,

Parish of Orleans.

We, L. J. Bartel, R. F. Gould, and J. J. Mayer,

- each first being duly sworn, deposes and says:

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 rough rice;

‘operation of rice milling plants, and the distribution

of milled rice and by-products. R. F. Gould has had

actual experience as follows: Fifteen years with the

largest rice millers of the industry as Office Manager,

and Chief Accountant; one year as Secretary, and |

auditor of a rough rice buying agency for New Or-

leans.rice mills, and one and one-half years as traveling

auditor for the Millers Committee, an agency operat-.

ing under a Marketing Agreement 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

is a competitive bidding method. Fach miller has

his buyer, who makes the competitive bid on the basis

outlined to him by the management of the mill. The

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.

“7

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 pounds at 4c .....$4.50

Second Head Rice—4 pounds at 3c ........ RY.

Screenings Rice—6 pounds at.2¥%4c ........ 15

Brewers Rice—2 pounds at 2c ......:..... 04 —

Total yield per barrel—112 pounds.

co er epee eee . . $4.81 plus

Approximate revenue from by-products

“ {25c per barrel of 162 pounds) ....... as

TH WI 8b oss cect cee - $5.06 .

oor

Competitive bidding basis frior 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.

Pe a ee ee ee

Competitive Bidding Basis after the —s ‘Tex

Law requiring Payment of a Processing Tax in Cash:

Since the beginning of the 1933 crop movement, which

become available for market during, the month of July,

and on which the processing tax applies, the rice millers

use the same basis to determine values; however,. in

addition. to deducting the conversion charge, the rice

millers deduct also the .lc per pound processing tax

on the rough rice, or $1.62 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 barrel for that

particular lot of rough rice.

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 necessary in their

accounting procedure. Should. the Agricultural Ad-

justment Act be held unconstitutional, the affiants

state that the rice processors.should enjoy the remedy

and benefits given by Section 21 (d) of the said Agri-

cultural Adjustment Act, as amended August 27th,

1935, because the record; of buying processing and °

selling kept by the rice mills are adequate enough to

properly allocate the cost of various 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.

The affiants: further 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 up, the introduction of the rice processing

tax has in no wise altered the customary manner or -

procedure followed by the rice milling industry in

conducting their business.

(Sgd.) -L. J. BARTEL,

(Sed.) . R.:F. GOULD,

(Sed.) JAMES J. MAYER.

~—

Subscribed and sworn to before me this 28th day of

October, 1935.

(Sed.) HOMER R. ROBINSON,

| 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 consideration thereof, and for

the reasons orally 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

we Court, if the Court should grant its prayer for

injunction pending appeal.

- BAKER, BOTTS, ANDREWS

; & WHARTON, a 4

By JOHN P. BULLINGTON.

Motion denied. |

(Signed)) JOHN McDUFFIE, Judge.

MOTION OF PLAINTIFF 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 agerieved

by the decree entered by the Court herein on the 29th

day of October, 1935, granting defendant’s motion to -

- dismiss, and that plaintiff desires to appeal therefrom

with a supersedeas and.a stay of proceedings in the

District Court, péading appeal to the United States

Circuit — of Appeals for the Fifth Circuit, and

On inthe suggesting to the Court that er decree —

is contrary to the law and the evidence for the reasons

‘set forth in the assignment of errors filed i in plaintiff's

behalf herein ; ang

On further sugg esting 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 ;

Ps °

LLL OS Be Ste ren a ne AP Ree eth Yaw oy aa aati ‘

et , auc ~ a a 45 DERE NAC LRT IORI BERNIE a toe gon sur per geet NOSES

: t rey 4

It is Ordered by the Court that the appeal of plain-

tiff from the decree entered herein to the United States

‘Circuit 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, in

all things, reversed, with instructions to the said Dis-

trict Court to grant phajntiff a preliminary injunction.

(Signed) BAKER. BOTTS, ANDREWS

& WHARTON, .

By JOHN P. BULLINGTON.

Solicitors for Plaint't.

APPEAL BOND.

Filed October 29, 1935.

Know All Men By These Presents, that we, T.

Simon, 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, administrators or

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 T. Simon, and in favor of Rufus . .

W. Fontenot, denying plaintiff’s application for 4a.

Preliminary Injunction and dismissing plaintiff’s Bill

of Comipiaint, and the said T. Simon, 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 Ciréuit 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 N vember, 1935.

Now the condition of the above.obligation is —.,

that if the said T. Simop shalk prosecute its appea

to effect and answer all damages and costs, if it fail

to make its plea good, then the above obligation to be

void, else to remain in full force and effect. -

(Signed) T. SIMON, ty .

BAKER BOTTS, ANDREWS

& WHARTON,

By JOHN P. BULLINGTON,

Principal.

THE AETNA,’CASUALTY &

SURETY COMPANY,

_ Surety,

‘By CARL. F. ‘WEISS.

Attorney in Fact. — (Seal)

Approved October 29th, 1935.

(Signed) RUFUS E. FOSTER, Judge.

PRAECIPE.

Filed October 31, 1935.

(Title Omitted.)

~ To the Honorable H. J. Carter, Clerk of the United

States District Court for the Fastern District

of Louisiana:

You will please include in the. ‘en upon eppesl

in the above entitled cause the following documents

and procedures:

1. Plaintiff's original bill of complaint.

2. Defendant’ $ motion to dismiss and answer.

oi a? es, ARS " ie oe F

Pasa oo ne es abn REIS

\ . 84

3. Order ‘of Court consolidating causes for trial

and providing. for evidence in cause Ne. 324 in Equity,

Baton Rouge Rice Mill, Inc., vs. Rufus W. Fontenot,

etc., to be considered as evidence in this cause.

4, spree of W. M. Reid.

=F rene

- Affidavit of Homer L. Bruce.

6. Joint affidavit of L. J. Bartel, R. F. Gould and

J. J. Mayer.

7. Decree of the District Cie

8. Plaintiff’s motion for injunction pending appeal

and order denying: same.

9. Motion and order _ appeal.

10. Plaintiff's assignment of error.

11. Appeal bond.

. > er

12. This rueeey

13. Clerk's entities.

HOMER L. BRUCE,

JOHN P. BULLINGTON,

BAKER, BOTTS, ANDREWS

& WHARTON,

By JOHN P. BULLINGTON,

Attorneys for Plaintiff and

Appellant.

Approved: |

(Sgd.) . ROBERT WEINSTEIN,

Asst. U. S. Attorney, Counsel

for defendant.

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 “T. Simon vs.

Rufus W. Fontenot, Individually and as Collector of

Internal Revenue for the District of Louisiana,” No.

325 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, Louisiana, this 2nd day |

of November, A. D. 1935.

H. J. CARTER, Clerk, |

By H. W. NIEHUES,

Deputy Clerk.

Bald Ct Ni ad Y PELL PER ENO 4

os : Bie aa PT ea ee,

: a

[fol. 86] Ix Usrrep States Circuit Court or APPEALS FoR

THE FurrH Circuit, at New Organs, Louisiana

No. 7948

T. Srvon, Appellant,

Vv. - -

Rurus W. Fontenot, Individually and as Acting United

State Collector of Internal Revenue for the District of

‘Louisiana, Appellee

Morton FOR PRELIMINARY INJUNCTION PENDING APPEAL—

Filed November 4, 1935

Comes now T. Simon, appellant in the above numbered

and entitled cause, and after due notice given to the ap-

pellee above named, respectfully states to the Court that

the said appellant on the 25th day of October, 1935, brought

a bill in equity in the United States District Court for the

- Eastern District of Louisiana, New Orleans Division, en- .

titled T. Simon, plaintiff, v. Rufus W. Fontenot, individually

and as Acting United States Collector of Internal Revenue

for the District of Louisiana, defendant, and numbered 325

in equity, in the Néw Orleans Division of said United States

District Court. In its bill of complaint in said cause ap-

pellant prayed for a temporary restraining order to be

[fol. 87] issued immediately, and for a preliminary 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 as-

sess 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 amend--

ments 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, and from imposing or giving notice of

intention to impose any lien for said taxes upon the prop-

1—581 .

: (e

; | erty, 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 prelimi-

nary injunction and on the said motion to dismiss, the Hon-

orable John McDuffie, acting judge of said District Court

on October 28,. 1935, refused appellant’s motion for a. pre-

liminary injunction, granted the motion of the appellee to

dismiss the said bill of complaint and dismissed the said

bill of complaint to which appellant herein duly excepted.

[fol. 88] 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 manner set out in its request for a preliminary injunc-

tion 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.

Appellant bas 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 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 Circuit Court of Appeals at New

Orleans, Louisiana.

In said bill of complaint appellant alleged that the

amount of processing taxes on account of the rice pro-

cessed by the appellant during the month of September,

1935, .was $33,531.86, and that under said Agricultural Ad-

TEA ROR on Sh EAE ORY RE TELE IS TE EMSAM mM 808 He pC ETE ESN BEL Eg te RETIRE SS —————

‘

Pe en A SR TE PE WEY SLA sh cy Ae, c)

A PEM EE, cE GIO ASL DORE LBS CPM BL I RES VF? = PIS he

89 .

justment 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

[fol. 89] 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 pay-

ment thereof and would allow appellant ten days from re-

ceipt from such notice within which to pay the same; that

in the event said tax should not be paid within said ‘time,

appellee 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 ap-

pellant’s property and by 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 addi-

tional processing taxes for months subsequent to Septem- .

ber, 1935, will accrue.and be assessed against and coilected |

from the appellant in the same manner as the tax for the

month of September.

Appellant alleged that the said processing tax was il-

, legal and unconstitutional, and violated various provisions

; ) of the Constitution of the United States in many particu-

lars, 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 ~

provides in substance that appellant should be allowed no

recovery 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 Commissidner 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

proeessed from the rice with respect to which it was im-

posed, 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

2—581

rice, and that the price paid by the appellant or such per-

‘son for said rice was not reduced by any part of such

amount. Appellant 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 un-

constitutional and illegal, and that it was impossible, owing

_to the peculiar conditions existing in the rice milling in-

dustry and in the purchase, milling and sale of rice, for

appellant to discharge the burden placed upon it by said

Section 21 (d), all as more fully set out in appellant’s bill

of complaint.

‘ Appellant further — 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

together 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 unconstitu-

tional taxes would be collected from appellant and appel-

lant 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 be forever deprived of the 7

to test the constitutionality.of said taxes. ,

Appellant further alleged that said Section 21 (a) de-

nied the appellant a complete and adequate remedy at law

for the various other reasons set forth-in said bill of com-

plaint.

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

he set out fully and in detail the methods of conducting’ the

rice business and the manner in whith the rough rice mar-

ket and the clean rice market is made, showing that it would

‘

CBP NAGS 4 aie Dah OS SHUN, 0 iy reg DANSK oe Mazen — .

mare shill Sy SILLS LI YM GNIAR WAL AID Pa ae 6 1 aon A ieee

_—

be utterly impossible for any rice miller to accurately deter-

mine 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 attor-

ney at the bar at Houston, Texas, setting out in detail the

proceedings under a complaint brought by the Secretary

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 products proc-

essed from rough rice at a price approximately 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 rige and the price procured for 4

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 79c 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 _—— 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 said 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 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 unconsitutionally assessed, or of 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

—_— A ENG SORES RENNES EAE ETS TTL INE OS VRIEG EM, NA EA OMNES ¢ INT MI AS

" ~ — - . ‘ nbn fates d aes?

ro ee: . Bes dat Pri 12 Bin

REPAY : ‘i

im Bs a

deitininiseDRK AE coeds:

_. 92

not have dismissed said bill of complaint, but should have

overruled 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

“Appeals for the First Circuit declared the Act to be un-

constitutional, and that the Supreme Court, according to

press dispatches, has set said cause for oral argument on

Monday, 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 thereafter;

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 until 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

collected. under said Act are for the purpose of making

these benefit payments*and that since the Secretary of

Agriculture 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

[fol. 94] prayed for herein will not occasion any injury to

. the Government nor will it. unduly interfere with the

achievement of the program set out in said Act if the Act

be held constitutional. On the other hand, as hereinabove

alleged, great and irreparable damage will be done to plain-

tiff in the event the law is held unconstitutional unless the

injunction hereinafter 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

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

- bd ,

SNES BARRE Ol ee aap rere E eye ace zee Some . . S x

7 th : EEE Tar sig, My Lome Set ern ey . o1y ePprrorT se ¥ =o " “s Ser aa a Bes

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

. riee 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 to by John P. Bullington. Jurat

omitted in printing. ,

[fol. 97] In Unirep Srares Circuit CouRT OF aici

No. 7948 ;

T. Simon

versus

Rurus W. Fontenot, Acting Collector of Internal Revenue

Onver Denyinc Morion ror PRELIMINARY INJUNCTION PEND-

inc AppEaL—November 5, 1935

Upon the authority of Rickert Rice Milling Company, ’

Inc., vs. Rufu

This text is long and has been trimmed here. Open the source document for the complete record.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.