# Transcript of Record — Rickert Rice Mills, Inc. v. Fontenot > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386009_0294%3A07 ## Record - **Collection:** Supreme Court brief - **Document type:** Transcript of Record - **Published:** January 1, 1936 - **Citation:** 297 U.S. 110 ## Text Le RR RE th a Tats Sidzisteb nae CERR’S COPr Y’T.- ; ; . r fs TRANSCRIPT OF RECORD Supreme Court of the United States OCTOBER TERM, 1935 | _ No. 586 FARMERS RICE MILLING CO., INC., PETITIONER, : ws. RUFUS W. FONTENOT, INDIVIDUALLY AND AS ACTING UNITED STATES COLLECTOR OF IN- TERNAL REVENUE FOR THE DISTRICT OF . LOUISIANA ON WRIT OF CERTIORARI’ TO THE UNITED STATES CIRCUIT COURT OF APPEALS FOR THE FIFTH CIRCUIT PETITION FOR CERTIORARI FILED NOVEMBER 14, 1935. CERTIORARI GRANTED NOVEMBER 25, 1935 % a ok = 5 ? Na PRIS RINE RE hyp ee eS 2 & reese bete avec goer; Repress _ SUPREME COURT OF THE UNITED STATES OCTOBER TERM, 1935 | No. 586 FARMERS RICE MILLING CO., INC., PETITIONER, VS. RUFUS. W. FONTENOT, INDIVIDUALLY AND AS ACTING UNITED STATES COLLECTOR OF IN- TERNAL REVENUE FOR THE DISTRICT OF LOUISIANA ON WRIT OF CERTIORARI TO THE UNITED STATES CIRCUIT COURT OF APPEALS FOR THE FIFTH CIRCUIT INDEX Page Record from D. C. U. S., Eastern Louisiana...................45. 1 EE TTT PTT Ter ree eT TTT eT ETE TT ETP TTT 1 EE ee a ee 2 Exhibit “A”—Administrative Rulings Relating to the 1935 Southern Rice Production Adjustment Program.......... 27 | PIED. MPP MOEN OOE oe acc ccc vcrseseveesecees Peer pe aee 38 ‘ Pee ieervacedesve 48 CE ee Peer iC REEL ERT EEE RETO 54 Motion t6 dismiss ............... estevess a orerr Teri rrt rr Tt ee 56° » Order consolidating all cases for purpose of trial............... 58 i i a: io ee eke 66-54 00-044 044000608 8 eee Cece es 60 BMGaeis OF Woman Th, TEC oo occ ccc ccccccccccccccceces ante 64 Joint affidavit of L. J. Bartel, R. F. Gould and J. J. Mayer...... Ee Oe he CaM OW shed ot ue ed 600650000 0.4 40 04848 R KOO 88 78 Motion of plaintiff for injunction pending appeal and order de- . . ££ _ Serrrerrrreery tener eee eee ee ee ewe eeeeeeeeees 79 Jupp & DETWEILER (Inc.), Painters, WASHINGTON, D. C., DECEMBER 6, 1935. —7204-C Print ii INDEX P P Original Record from D. C. U: S., Eastern Louisiana—Continued. ” Petition for appeal and order allowing same ................6.. - Assignment of errors ......... MET UAGAERLOLONOLVA SNe TCEN CESS BEE HE bv e ctw ede doce vecebeedecdnrecedeescstéecesseaesds POD cc ccccetesscececccoeceveeeceréeccesesnecoeyesseseecse Ce ES icc decineereuasesueeeenesntectuauas vebeks ; Original ‘Proceedings in U. S. C. C. A., Fifth Circuit................ 86 Motion for preliminary injunction pending appeal.......... - we Order denying m.tion for preliminary injunction pending ap- | eT Te ee eT Teer Te eee eee eeee Neer s CeeKnee ee 97 SD ME. lec. ot cess seemenddeneteneees 98 Clerk’s certificate ..............005. (omitted in printing).. 100 Order allowing certiorari ...... $400000 000 Nase Setpenees ee 101 * a ee, SERS me PREY sate pe oneh ont orey eee a BERLIN RyeOsOn UNITED STATES OF AMERICA. DISTRICT COURT OF THE UNITED STATES, EASTERN DISTRICT OF LOUISIANA, NEW ORLEANS DIVISION. No. 327 (In Equity). * FARMERS RICE MILLING CO., INC., versus RUFUS W. FONTENOT, INDIVIDUALLY AND AS ACTING UNITED STATES COLLECTOR OF INTERNAL REVENUE: FOR THE DIS- TRICT OF LOUISIANA. Appearances: | Messrs. McCoy, King & Jones, Attorneys for _Farmers Rice oe Co., Inc., ‘Plaintiff-Ap- pellant. 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, . Defendant-Appellee. APPEAL from the District Court of the United States 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 the City of New Orleans, Louisiana. TRANSCRIPT OF RECORD. 2 BILL OF COMPLAINT & EXHIBITS ’ ~ ANNEXED. Filed .Oct. 28, 1935. In the District Court of the- United States, Eastern District of -Louisiana, New Orleans Division. Farmers Rice Milling Co., Inc., vs. No. 327 (In Equity). Rufus W. Fontenot, ode and as Acting United States Collector 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 Farmers Rice Milling Co., Inc., herein- after referred to. as plaintiff and in the neuter singular, complaining of Rufus ‘W. Fontenot, invidually arid as @cting United States Collector of Internal Revenue for the District of Louisiana, hereinafter called de- fendant, and for cause of action shows to the Court as follows: 1, Plaintiff is a corporation organized under the laws of the State of Louisiana, with its principal office and domicile at Lake Charles, in Calcasieu Parish, Louisi- .ana. The defendant is a citizen of the State of Louisi- ana, 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. Se ih sda lie Nha aa eR eda a 3 ee 2. The grounds of jurisdiction of this Court in this case are that this is a suit arising under the Corstitu- tion of the United States and the laws of the United States, in of the United States ‘and the laws of the United States, in which the matters in controversy exceed. Three Thousand Dollars ($3,000.00), and this suit is also one in which an injunction is sought against an official of the United States to prevent him from unlawfully collecting processing taxes levied by the United States pursuant to certain acts of Congress, more fully set out hereinafter, and to have declared in- valid and unconstitutional said acts of Congress ‘in so far as they attempt to provide for the levy, assessment and collection of said processing tax. “ J. Plaintiff is engaged in the business of milling rice and owns and operates a rice mill at Manchester, in Calcasieu Parish, La. .The milling of said rice, which constitutes’ processing of said rice under the terms of the Agricultural Adjustment Act, hereinafter referred. to, is done wholly within said State and is a matter of intrastate commerce exclusively, being performed in its entirety within the lirzits of said State wherein plain- tiff’s rice mill is established and operated. 4. There was adopted by the 73rd Congress and ap- proved on May 12. 1933, an Act, P. L. No. 10, popular- ly known as the “Agricultural Adjustment Act,” but | officially entitled: “An Act to relieve the existing national Economic emergency by increasing agricultural purchasing power, + to raise revenue for extraordinary expenses incurred by — reason of the emergency, to provide: emergency relief _with respect to agricultural indebtedness, to provide for ‘the orderly liquidation of joint stock land banks, and . for other purposes.’ and oni Act wit) its amendments, for convenience _ hereinafter, will be referred to by its popular title, namely, the Agricultural a aaa Act. Said Agricultural Adjustment Pa has been amended several times,and particularly by an amendment, ap- proved August. 24, 1935, which amendment is herein- after referred to as the Athen ment of August 24, 1935. 5. The policy to be elociamed by the enactment of said Act, prior to the Amendment of August 24, 1935, » Was declared by Congress in Section 2 to be as foliows: re i$ hereby declared to be the wiines 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- “ es . : a ; 5 in at as rapid.a rate as is deemed feasible in view of ine 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 agricultural commodities, or products derived there-_ from, which is 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 - 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 head following inserted i 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 current 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.” Plaintiff alleges 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 | EERO LEG OEE II, IS III, OL ELE SOME Va lar aN Al i alec i be OO NE ss > . . ~ aa ” ————— ; a 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 redsons the levy, assessment’ and collection of said? :taxes are wholly illegal, unlawful and unwarranted under the Constitution of the United States. 6. 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 productidn for market, or both, of any basic agricultural commodity, including | ‘ rice, through agreements with producers or by other - voluntary 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 paid out. of the moneys hereinafter referred t to. Section 9(a) of said Agricultural 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 datt 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 1c » 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 tag rice and the processing t@&& of Ic per pound of rough rice would be. in effect on and after April 1, 1935. *. a Section’ 9(b) of said (Agriciftural Adjustment Act provides that the procgSying tax shall be at such rate as equals the differestgé between the current average farm price for the é ity 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 yéar 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- _ 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 lc per pound of _ rough ricé- ———S Section 12(a) of said Act, prior to the Amendment of quest, 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 a t a2) " ee Ary Lptes Me rOrs PRR ES EMO Fah SONS ELEM PIER Sey ds eee Done zy ag eta TSE wen Rayer PEO ne are ms 33 EERE DS | Sal eer a cf « ba 3 . 8 and for payments authorized to ‘be miade under Sectign 7 8, including said rental and benefit payments made “° with respect, to adjustment .and reduction in acreage or production for market of basic agricultural com- modities, including rice. . tei bd . 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 Agriculture for expansion of markets and re- moval of surplus agricultural products and adminis- trative expenses, rental and benefit payments, and refunds on taxes. ‘Section 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 tc be available to the Secretary _ of Agriculture ‘for paym*nts 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. mie 7 : | 7 ae Ss Acting pursuant to 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 relating 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 rice) » 9 in the States’ of Arkansas, Louisiana and Texas as follows: | ? | . Barrels.” Arkansas 1,834,722 Louisiana .... 3,898,333 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 Yhose desiring to produce rice and to be filed with the said State Coinmittee. Said rulings provided that the base period for Texas should bé the years 1931 to 1933, inclusive, and for Arkansas and Louisiana should be the years 1929 to 1933, inclusive. Said rulings further provided that the said State 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 78% (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 ride raised by him during said base period. If a producer had produced rice during any of the, years constituting his base: period, he was eligible t6 obtain an allotment and a quota from said State Com- mittee, and if he should obtain such allotment’ and i“ 10 quota, the was then eligible to execute’ g } contract with the Secretary of Agriculture in the form shown.’ by Exhibit B attached hereto and made a part hereof for all Surposes-as if copied in full at this point. If said ome executed said contract and it: was accepted y’ 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 producer 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 for 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 the Secretary, he. was not eligible for the Sone payments as provided for therein. . . ‘ ‘ a) 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. 8. 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 | basic ‘agricultural commodity through agreements with producers, and to provide for rental or benéfit pay- ments in connectién 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 thé Constitution. of the’ United States which vests. all of the legislative power in. the Congress of the. United Stateg and is an invalid and uncon- stitutional delegation of legislative. power: by Congress to the Secretary of Agriculture. | _ | ‘Plaintiff further 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. ie Section 9(b) of said Act ptovides that if thé Secre- tary of Agriculture has reason to believe that the pro- cessing tax levied on any commodity will cause ‘such reduction in the 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 12 © Secretary finds that such result will occur, then the | Processing - tax on such commodity shall be at such rate as*will prevent sych accumulation of Surplus stock and depreciation 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 (lc) 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 levying; 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 and effort by the United States to regulate, control and reduce the production of certain agricultural commodities specified in said Act, including’ rice., The so-called processing taxes 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 commadities, which attempt, effort and schéme 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 t imposed under or in conformity with the power vested in the 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 thé debts or to provide. for the common defense or the general welfare . of the United 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 conform to the conditions laid down i 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, including 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 a public pur- _pose but for a private purpose, to-wit, the payment of gratuities or bounties or benefit payments to another ' class of nersons, 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 Act are taxes-in name only and not in fact. ‘They constitute merely an exactment and imposition by the Government for the purpose, not of raising revenue for .the support of the government, * but of. raising the price for farm products and ad- justing. farm incame. and for carrying out the policy of said Act as hereinabove set forth and for the . purdkee of enabling the government to carry out and effectuate the said attempt, effort and scheme of the United States as hereinabove set out. MEV CW ERY TT EI NY OOS ERI A? =" ORT OED Day APP 14 5. -Wdnder 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 ¢on- nection therewith in such amounts as the Secretary may deem fair and reasonable; to determine how long the said tax'of lc per pound upon 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 t, Section 8, clause 18; Article. Section. 1: ‘Article 1, 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 according to population. ‘ 41. ele the hive of said Act and sin 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 September, 1935, and the amount of said so-called processing tax on ac- count of said rice processed by the ewe _ said month, and plaintiff is required to ~ said amount to the defendant on- or before October 30, 1935. The amount of said processing taxes on account of the rice processed by the plaintiff during said month of September is $11,946.25. The 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 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 collegt the tax, © penalty 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 morths sub- 16 sequent to September, 1935, will accrue and will be assessed agairist and collected from plaintiff, just as the processing tax for the month of September will be, in the manner described, unless the defendarit is re- 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-will 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 plaintiff, will be irretrievably lost to Plaintiff, to its great and irreparable injury. 12. 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 whic 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 | Agricultural 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 price 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. et 17 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: % AS ‘ 4 . 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 dépress 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 cannot fix or make 18 »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. "ie addition, rough rice ‘wie wiliea 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 "orades 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 alfocated in any _ way to these 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 the 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 occurred. 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 may be kept for several months before being sold, and it is thus impossible to tell how much has been oi iss ee ‘ . ; ; : | 19. received for the clean rice and its products that. are produced from any month’s processing, and Jt 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. Thete are many varieties of ricé, some of which have longer grains than others. _ Different processes of “milling must be used for each different kind and variety of rice, and where the plaintiff and other: millers have on hand varied and sundry varieties and kinds of rice it is necessary in the operation of the mill to change quickly from one kind of rice to an- other as the milling of one lot of rice is completed and the milling of another kind begun. -In addition, lots of rice of the same variety will vary the one from the other due to the varying amounts of moisture in the rice, varying conditions under which the rice was harvested, and- many other factors, which 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 ali 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- BERR rer ca cree, eee a) RT TS ORI INT ATS . 3 ee yea hee LPO CRT 2p oO RO epee % . 29 20 mination of eleiitiee in ‘selling the clean rice it has - included any part, or what part, of the processing tax in the price for which it sells its clean rice and rice products. ’ Noo - Tn 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 character 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 impossible to make up such samples entirely of one kind of rice from one lot of rough rice as it is impossible to match in any appreciable quantity a sample of one lot of clean rice- with another lot of clean rice. Clean rice is sold on these samples and when an order is 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 producé’ the sam- ples upon which the sale has been made. As a result, when a sale of clean rice is made, the order is filled by a mixture of clean rice which is made up from many different lots of clean rice. These different lots of clean rice have been milled from different lots of rough rice for which different prices have .been paid. As a result the rice that goes into a clean 21 ‘rice sale has come from many dither 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-tt is impossible to trace through the history of rice pracessed 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 :n 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 musi, under Section 21(d) be tablished to the satisfaction of the Commissioner of Internal Revenue, and no provision is made for judicial review. The transcript of the hearing before the Commissioner of Internal 22 . Revenue is the sole record of the case on appeal to the Courts. The effect of such section is therefore to limit the function of the judicial review to the deter- -mination of whether there was any evidence submitted | to the Commissioner of Internal Revenue tending to support the findings of the Commission. Said Section 21(d) therefore deprives. the plaintiff of its property without due process of law in violation of.the Fifth Amendment to the Constitution. . a 14: Under said Section 21(d) de sala ise Adjustment Act, if the processing tax has been either ‘passed on or passed back by the plaintiff, then. the © plaintiff cannot maintain any action to recover the tax, if it is ultimately determined to be invalid, either - for its own account or for the account of the persons to whom the processing tax has been thus passed on _ or passed back by the plaintiff; nor can the persons to whom the processing tax has been thus passed on or passed back maintain such an action on their own “account, but all right of action’ by anyone‘to recover - ‘the tax, if it has been passed on or passed back, has been wholly taken away by said amendments to said Agricultural: Adjustment Act. Moreover, Section 21(a) of said Act and-Section 405 of the Revenue Act of 1935 deprive the Courts of power to render declaratory judgments with respect to such alleged taxes. By reason of the impossibilities of proof here- inabove referred to, the practical effect of said Act will be to deny taxpayers and the plaintiff all means of securing a judicial decision. as to the constitutional- ity of the processing taxes, unless the Court grants the relief herein sought. 15. Plaintiff further shows that by ‘Section 30 of said Amendment of August’ 24, 1935, Section 21(a) was . @ added to said Act, which in substancé provides that ~ no suit to enjoin the collection of any tax imposed by said Act shall be maintained. Plaintiff alleges that © said section is not intended to apply, and does not apply, to the injunction prayed for by this plaintiff - inasmuch as plaintiff has no adequate remedy at law. Plaintiff alleges, however, that if said section should be interpreted as providing that no injunction should - be granted to the plaintiff as prayed for in this cause, then the said section, together with the other provi- sions of said Act, is invalid and in violation of the Fifth Amendment to the Constitution of. the United States, that no person shall be deprived of his property without due process of law, in that said illegal and un- constitutional taxes will be collected from the plain- tiff and the plaintiff will have no remedy to prevent the collection of said unlawful taxes, and will be for- ever deprived of the right in any manner to test the constitutionality ‘of such taxes. 16. Said. Section 21(d) further denies to the plaintiff a complete and adequate remedy at law, because a multiplicity of claims and suits would be required to enforce such rights as are granted thereunder and because’ said. subsection requires that the facts re- quired to be proved thereunder be established to the satisfaction of the Commissioner.of Internal Revenue and makes no provision for a judicial review of his ‘decision. 17. ‘A refund of processing taxes paid by. the plaintiff could not actually be obtained even: if it were possible for the plaintiff to prove the negative facts required by subsection (d) of Article 21, because Congress has 24 not appropriated funds for the payment of such refunds _and plaintiff believes, that in view of the aggregate amount involved, there is a reasonable doubt whether such appropriation would ever be made. ‘ 18. . 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 shall direct the said sums claimed to be due from plaintiff for processing taxes on account of the ricé processed by plaintiff during the month of September, .1935, and the .plaintiff further offers and agrees that at the end of each month here- after it will file processing tax returns with the ‘defend- ant as required by existing laws and regulations and that as and when processing taxes under said returns become due and payable according to existing laws and regula- tions or any extension lawfully granted to the plain- . tiff, it will deposit the amount of such taxes in such manner as the Court may direct, all such deposits to abide the final decree in this cause. .? > Wherefore, plaintiff being without an adequate remedy .at law prays: | | 1: That process issue ‘and be served upon the de- fendant requifing him to appear and answer this bill, but wot under oath, and answer under oath being here- by expressly waived; 2. That pending the hearing of the application for a preliminary. injunction hereinafter. prayed for, a temporary restraining order issue immediately enjoin- ing and restraining the defendant until the hearing of its application for a preliminary injunction or until 4 25 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 of otherwise, any processing taxes under and pursuant to said ‘Agricultural Adjustment Act and any interest or penalty on: account of plaintiff’s failure to pay. said ° processing tax, and from im- posing or giving notice of intention to impose any lien for said taxes upon the property, real or personal, of the plaintiff ; 3.° That notice issue to the defendant advising him that plaintiff is hereby applying for a preliminary injunction. and that plaintiff’s 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, ~iocggerd | by lien or jeopardy or’ by distraint proceedings, Court or: otherwise. any processing taxes under a pursuant to said Agricultural Adjustment Act and any interest or penalty on account of plaintiff’s failure’ to pay said processing tax, and from imposing or giving ‘notice of intention to impose any lien for said taxes upon the property, real or personal, of the plaintiff; 4. That at the final. hearing of this cause said preliminary injunction shall not have been granted, then that a permanent injunction be granted per- manently restraining and enjoining the defendant from assessing or collecting or attempting to assess or collect from the plaintiff in any manner whatsoever, whether by lien or jeopardy or by distraint proceedings, in Court or otherwise, any. processing taxes under and pursuant to said Agricultural Adjustment Act and any 26 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 a it Me 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, invalid and unconstitu- tional; and that the defen@ant 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 sei) be justly entitled. (Sed.) FARMERS RICE MILLING - Ce Ia. By W. P. WEBER, President, (Sed.) McCOY, KING & JONES, . By C. A. McCOY, Attorneys for Plaintiff. State of Louisiana, . Parish of Calcasieu. 7 Before me, the undersigned authority on this day personally appeared W. P.. Weber,: wro having been by me first duly sworn, stated on oath that he is the President of Farmers Rice Milling Company, Inc., a corporation, plaintiff in the above cause, and. that he has been: duly authorized by said corporat*cn to make this affidavit for and in its behalf; that he has ee at Ai do ten aces ee a 27 read the foregoing and above bill and knows the con- tents thereof and that the facts therein. set out are true, except as to such facts as are therein stated on information and belief, and that %s to those facts so stated to be on information and telief; he believes them to be true. _ (Signed) W. P. WEBER. Suboutbes wed Sworn to before me this 26th day of October, 1935. ) (Signed) RUBY RAINS, Notary Public in and for (Seal) Calcasieu Parish, La. EXHIBIT “A.” Filed October 25, 1935. Issued .April 18, 1935. United States Department of Agriculture, Agricultural Adjustment Administration. Administrative Rulings Relating to the 1935 Southern Rice Production ‘Adjustment Program. Explanation. These Administrative Rulings apply to and are part of the Southern. Rice Production Adjustment Contract and. documents pertaining thereto. If any of the provisions are not understood, the Community or County Committee should be consulted. No producer should make out and submit to his Community or County Committee an Application or a Contract . or other documents pertaining thereto with- ~ 28 out knowing. exactly what he must do in ordér 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. (c) “Producer” includes persons owning and oper- ating their own farms; tenants operating farms rented for cash; tenants operating farms under a crop-share lease, contract, or agreement; landlords leasing to share tenants; corporations, copartnerships, or individuals furnishing water for production of rice on a share basis; and such other persons or classes of persons . as the Secretary may determine to be eligible to sign Southern Rice Production Adjustment Contracts.:. (d) “Participation in the production of rice” means sharing as a producer in any manner in the produc-. tion of rice on a farm. , _(e) “Farming Operation” means the production of rice or the participation in the production of rice by a producer. (f) “Application” means any Application for Rice Acreage Allotment (forms Rice 1 and 2) heretofore or hereafter executed by any producer. “Application i a tn i 29 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. (j) “1935” means the period from January 1, 1935, to December 31, 1935. | . (k) “1934” means the -period from January 4. | 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 Louisiana .means the period of -the calendar years eo ” 30 1929 to 1933, inclusive, and 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. 31- . (u) “Official figures” means the records of acreage and production prepared. by the United States Depart- ment of Agriculture. . . (v) A “barrel” means 162 pounds of rough rice. . _ 1 -(w) A “bushel” means 45 pounds of rough rice. II. Determination of Allotments and Quotas.—1. The ment.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 ‘obtaifed 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. a ‘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 basé 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. 32 The total quotas assigned to producers in each state .shall not in any event exceed the state quota for that State. 3. If the total of allotments and quotas deter- - mined according to the provisions of sections 1 and 2 of this numbered ruling, in any state, is less than the State Allotment and State Quota such excess may be allocated to producers by the State Committee, sub- ject to approval by the Secretary or his authorized . + agent. ; 4. The Allotment and Quota are based upon the personal production history of the producer, regardless of where the rice was produced and are the. measure of such history. The producer’s produc- tion history shall not be transferred except as the State Committee shall, in writing, approve transfers . made pursuant to the provisions of subsections a, b, and c of this numbered paragraph 4 of Administra- tive Ruling II. All requests for transfer of produc- .-—- tion history shall be in writing, signed by, or on behalf of the producer by his duly authorized agént, 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- eae Nee ert trees cena eer iepiese rie tenes on. ansnamannntin 33 ship and succession to the producer’s farming opera- tion. (b) If a well or canal operator voluntarily sells his well or canal system and has not: executed an application, his production history ‘shall be- trans- ferred to such successor, provided that the former well or canal operator was not engaged in farming opera-. tidns in 1934, (c) If a partnership is dissolved before an applica- tion for an allotment and quota has been executed by or on behalf of the partnership, its records of rice production for the base period shall be divided among the partners in such proportions as is agreed upon by. the partners or their authorized representatives in writing submitted to the State Committee. 5. In all figures representing final determination of individual allotments and quotas, fractions amount- ing to one-half a unit or less shall be dropped and fractions amounting to more than one-half a unit shall be considered a whole unit. 6. If a producer during the base period had oper- ated in more than one state, he shall apply for an allotment and quota to the State Committee of each state in which he had farmed during the base period. Only the history earned by the producer in that state shall be presented to the State Committee in his Application. No producer shall be assigned Allot- ments and Quotas in two or more states, larger in the aggregate, than the Allotments and Quotas assign- able to him in. one state, had all of his farming opera- ‘ tions been confined to that one state. 7. The sum of all Allotments and a all . Quotas within a State shall not in any event exceed the State Allotment and Quota, respectively. 34 III. Transfer of Allotment and Quota.—The pro- ducer’s Allotment and Quota shall not be. transferred — except as the State Committee shall in writing approve transfers made pursuant to the provisions. of sub- sections a, b, c, and d of this Ruling III. In no event shall the: State Committee approve the transfer of an Allotment or Quota by reason of foreclosure, execution, or any forced sale. All- a processor or: other person who paid the tax) who would have been entitled to a refund or credit pur- suant, to the provisions of subsections (a) and (b)° of ‘section 16, had the tax terminated Ly 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 would 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 the satisfaction of the Commis- ’ sioner, and the Commissioner shall find and. declare 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 respect ‘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 interest, 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 maintained in any Court, unless prior to the expiration of six months after the date on which such, tax imposed by this 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 of the Treasury, may prescribe) is filed by the person entitled thereto; (2) - 52 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 for limitations under the Judicial Code, as amended, on jurisdiction of such Courts based upon the amount 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 atténdance of the claimant or of any officer or employee of the ‘claimant, or the attendance of any other person having knowledge 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 Ra arnt ee ne 53 summons, and to produce such books, papers, cor- respondence, memoranda, or other records as the Commissioner may deem relevant or ma- terial, and~ to give testimony or answer in- terrogatories, under oath, relating to any matter affect- ing the findings to be made by the Commissioner pur- suant to subsection (d) of this section. The provisions of Revised Statutes 3174 and of Revised Statutes 3175 shall te applicable with respect ‘to any summons issued. pursuant to the provisions of this subsection. Any witness summoned under this subsection shall. be paid, by the party on whose behalf such witness was summoned, the same fees: and mileage as are paid ‘witnesses in the Courts of the United States. All in- formation obtained by the Commissionér pursuant to this subsection shall be available to the Secretary of Agriculture 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 abatement. 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. 54 (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, gr interest, which accrued, before, on, or after the date of the adoption of this amendment under this - title (whether an overpayment or otherwise), and to any suit for the recovery of any amount of tax which results fram an error in the computation of the tax or from duplicate 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 of the Tariff Act of 1930. RETURN TO RULE TO SHOW. CAUSE WHY TEMPORARY ang es ION SHOULD NOT ISSUE. ; Filed Oct 28th; 1935. (Title Omitted.) To the Honorable the Judge of the District Court of the United States in and for the Eastern ‘District of Louisiana: Now into Court comes Rufus W. Fontenot, Acting ‘Collector of Internal Revenue, Defendant in the above © entitled and numbered cause, through Rene A. Viosca, United States Attorney in and for the Eastern District of Louisiana, and Robert Weinstein, Assistant United States Attorney for said District, his attorneys, and. by virtue of the rules and practice of this Court re- quiring the defendant in rule to file all defenses to the rule on the date set for the hearing on the application for a temporary injunction, and with full reservation of all of his rights under the pleadings in this cause, 55 answers the rule by stating that for lack of sufficient information to justify a belief he denies all of the allegations of paragraph two, three, four, five, six, seven, eight, nine, ten, eleven, twelve, thirteen, four- teen, fifteen, sixteen, seventeen and eighteen of the Bill of Complaint, and also denies the allegations of paragraph one with the exception of the statement relative to the defendant, which statement‘is admitted. Your Respondent further avers that the proceedings should be dismissed for the reasons that this Honor- able Court has no jurisdiction and that the Agricul- tural Adjustment Act is constitutional, valid and . enforceable. : Wherefore, your Respondent prays this Honorable Court to dismiss the Bill of Complaint at Complain- ant’s costs and to ‘refuse granting any injunction in these proceedings, ‘and for all.general and equitable relief. (Signed) RENE A. VIOSCA, United States Attorney. (Signed) ROBERT WEINSTEIN, Asst. United States Attorney. (Verification. ) State of Louisiana, Parish of Orleans. Before me, the undersigned authority, personally came Rene A. Viosca, who is-the United States At- torney for the. Eastern District of Louisiana, who in his oath says: That in his aforesaid official’ capacity he is of counsel for defendant in the above case; that he has drawn the return to the rule to show cause and that all the allegations of fact therein are. true and ~ correct to the best of his knowledge, information and belief. (Signed) RENE A. VIOSCA. 56 een to and subscribed = me this 28th day of October, 1935. (Signed) CLAUDE D. SHAW, Deputy Clerk, U. S. District Court, Eastern District of Louisiana. MOTION TO: DISMISS: Filed. Oct. 28, 1935. (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 Internal Revenue, defendant in the above entitled and numbered cause, ty Rene A. Viosca, United States Attorney-in and for the Eastern District of Louisiana, and Robert Weinstein, Assistant United States At- torney for said: District, his, attorneys, with full re- servation of his rights to further plead in this cause, ‘and moves the Court to dismiss the Bill of Complaint filed herein, with costs to be paid by the Complainant -upon the following grounds and for the following. reasons: ; I. That this Court is without jurisdiction to restrain or enjoin the collection of taxes herein involved, or to hear and/or determine the issues presented by said bill of complaint because: ‘1. Section 3224 of the Revised Statutes of the United States prohibits the maintaining in any Court - of a suit for the purpose of restraining the assessment ° and/or collection of Federal Tax. 57 2. Section 21-A of the Agricultural Adjustment Act, as amended, prohibits the maintaining in any Court of a suit for the purpose of restraining the assessment and/or collection of any processing tax under the said Agricultural Adjustment Act. 3.. The bill of complaint sets forth no facts which, if true, would entitle complainant to the relief prayed for in a Court of Equity. 4. Complainant-has a plain, adequate and complete remedy in the ordinary course of law. Il. That the United States of America is the real party in interest, which may not be sued without its con- sent. ITT. That there is no actual controversy 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. Ws This proceeding is prohibited by the provisions of. the Declaratory Judgment Act, as amended, and can- not be maintained. (Revenue Act of 1935, approved August 31, 1935, Section 405). 58 Dated: this 28th day of. October, 1935. (Sgd.) RENE A. VIOSCA, : United States Attorney. (Sgd.) 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, Revenue. Docket No. 322—In Equity: A. B. Dore, doing business under the name of The Dore Rice Mill, versus Rufus. W. Fontenot, Indigidually and as porn Collector of Intgnal Revenue. Docket No. 323—In Equity: United Rice Milling Products Co., Inc., ' _- versus Rufus W. Fontenot, Individually and as Nene Collector of Internal Revenue. oo a 59 Docket No. 324—In Equity: Baton Rouge Rice Mill, Inc., versus , Rufus W. Fontenot, Individually and as Acting Collector of Internal Revenue. | Docket No. 325—In Equity: T. Simon ; ® versus Rufus W. Fontenot, * Tuidividually and as Acting Collector of Internal Revenue. Docket No. 326—In Equity. Levy Rice Milling Company, Inc., vers Rufus W. Fontenot, Individually and as Acting ‘Collector of Internal Revenue. Docket No. 327—In Equity: Farmers- Rice Milling Company, Inc., | . versus : Rufus. W. Fextenot, Individually and as Acting Collector of Internal Revenue. Docket No. 328—In Equity: Noble-Trotter Rice Milling Co., Inc., ; versus Rufus W: Fontenot, Individually and as Acting Collector of Internal Revenue. Considering the stipulation and agreement of coun- ‘sel for all parties made this day in open Court; It is Ordered that the above numbered and entitled cases be and they are hereby consolidated for the 60 purpose of trial and that the affidavits and evidence offered in one Casi be considered to apply to all. (Signed) JOHN McDUFFIE, Judge. . >! ‘> New Orleans, Louisiana, October 28, 1935. State of Louisiana, Parish of Orleans. - Before me, the undersigned authority, on this day personally appeared W. M. Reid, known to. me, who being by me first duly sworn in terms of law deposed and said on his oath as follows: My name is W. M. Reid. I reside in New Orleans, Louisiana, and am Executive Secretary of the Rice ° Millers’ Association. My principal duties are the preparation and interpretation of statistical and econ- omic data with regard to the rice milling industry. I have been engaged in the rice milling business since 1909, and from 1916 to 1928, I personally operated a rice mill; I am thoroughly familiar with the rice milling industry in all of its phases. I have 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 idle rough rice, consider the fact that they will have to pay a _ processing tax on the milling of such rough rice. How- ever, this is simply one of the many factors entering into the miller’s determination of what he ought to 61 pay for rough rice. As a practical matter, when the rice miller negotiates for the purchase of a given lot of rice, he first estimates*what he believes he could get for such rice after milling on the existing market for clean rice and rice products. He then estimates what he thinks it will-cost him to process the rough rice into its various grades and products, and in this esti- mate is included the amount of the processing tax, as well as other taxes. Having made these. estimates, he determines what he ought to pay for the rough rice. However this is not necessarily what he does pay, be- cause each individual miller is buying in competition with other millers. Thus, if other millers are paying more than he thinks he ought to pay, he has to meet the price the others are paying, if he is. to get any rice. No individual miller makes the rough rice market. It is a market made of the composite pur- chasing of all millers in the particular terri- tory. While the estimates above referred to are made with regard to the market for clean rice and rice products at the time of the purchase of the rough rice, that market, however, does not neces- sarily control since rough rice is not ordinarily milled, and the clean rice and products sold until several months after the purchase of the rough rice. Since the market for clean rice and rice products fluctuates from day to day and month to month, the prospects of the future market has a bearing on what the miller may have to pay for rough rice. Optimism with reference to the future market for clean rice on the part of a sufficient number of rice millers will force up the market for rough rice, and all millers will have to meet the increased price of rough rice (if they are to have any rice at all), even though some of them may be pessimistic as to the future. market. For example, the present market price of rough rice is quite high with reference to the present market prige for clean rice and rice products. In _ other words, using the estimates above referred to, the cost ts 21 (d) of the Agricultural Adjustment At that they -_ shall establis#that no part of the processing tax has bten passed on to the consumer or taken out of the pricé paid the producer before they are allowed to re- cover any, processing taxes paid. - ’~ . Section/8“(3) of the Agricultural Adjustment Act gave..thesSecretary 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 milliig industry, and at the same time issued a license applicable to all mills. This marketing agree- ment and thé“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 t « aK espe CR a RS eal a he hk ae ure a LEI ECR ASAI ' 66 e . . effective July 21, 1934, set out the minimium 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 owt and enforcement of the 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 ricé was milled, (b) the “conversion charge for such quantity of | rough rice and prevailing at the ume of such omer, sale or delivery, and . v _(c) the publishtd car lot rail rate for transporting such rough rice from thé customary point of delivery to the miller’ S mill, and ; (d) the pdevdnkihaptbve assessment for such quan- tity of rough. rice and prevailing when such rice, was milled ; _ Provided, however, that 3 any sites 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.taaximum discount. The determination of the Millers Commit-— tee as to whether or not clean rice is actually éxported (8 "67 ‘shall be. final and conclusive, subject’ to’ appeal to the Secretary. Said minimum amounts, below. which this section provides that clean rice shall not be offered - .for sale, sold, or delivered by a miller, apply f. 0.’ b. the-miller’s mill. ; i 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 ricé, ‘and (c) if cotton or paper inner linings. or regular burlap outer slips are used for the clean rice, an additional five (5) cents per barrel of rough rice, or (d). if any other type of container is used for.the clean rice, the actual-in- voice price for the container used. The-Sectetary may ‘at any time and from time to time during the effective period: ‘increase or decrease the amount of, and/or change the basis of computation of, the conversion charge.” Ae One of the main purposes, if not actually thé 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 pricg. 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 Jn the Matter of W. * ATLA 14 PU Is PeCoN Oe A ered: pela estive mee re 2 19 OO RB MEMS OT TENS ONS i 68 i M: Lesion, R. Q. eee 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: 11, 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 tg this license. This nerge 11 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 4 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 €. E. Everitt; clean rice lot numbered 43 on the books of the re- the books of the respondent and purchased from C. E. 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 3 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 puedes (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 Ate 2. $4.50 Second Head Rice—4 pounds at 3c :....... oF Screenings Rice—6 pounds.at 2%4c ........ 15 Brewers Rice—2 pounds at 2c ..,......... .04 Total yield per barrel—112 pounds. Wee We 8 bic ae ere $4.81 plus Approximate revenue from by-products (25c per barrel of 162 pounds) ....... 25 Total revenue Se 06 Competitive bidding basis prior to the ‘processing. _ tax law requiring payment of a processing tax in cash: The above $5.06 is the gross value of milled rice articles and by-products resulting- from a "162 pound barrel. of rough rice. The mill. would deduct’ from this gross figure the conversion’ charge, this conversion figure including the mills ex-- pense for processing the rough rice, and the estimated profit. Assuming that this conversion would be 60c per barrel, the mill would then bid the producer $5.06, less the 60c conversion, or $4.46 per barrel for the rough rice. The affiants solemnly swear that they have used and. seen. records of various rice mills estab- lishing the basis as outlined above. Competitive Bidding Basis after the Processing Tax Law requiring Payment of a Processing Tax in Cash: Since the beginning of the 1933 croy movement, which 77 _ 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 1c 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 records 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 aloné or mixed. The greater portion of the milled rice sales are straight mill run lots without blending. 78 a _ 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., prgperly.. 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. (Sed.) L. J. BARTEL, . (Sgd.) R. F. GOULD, (Sed.) JAMES J. MAYER. Subscribed and sworn to before me his 28th day of . October, 1935. (Sgd.) HOMER R. ROBINSON, Deputy Collector. DECREE. Filed October 28, 1935. (Title Omitted.) This cause came on hie to be heard upon the: application of the plaintiff for a preliminary injunc- tion, as well as ypon the motion filed on behalf of the 79 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; ae 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 PO a LINO OIE HAMEL RONIGOY LOT LEH ALAN) PPD NP ’ oe ee ee . ~N: 3 90 that the price paid by the appellant or such person for said rice was not reduced by any part of such amount. Appel- lant in said bill of complaint, alleged, as more fully set out in said bill of complaint, that under said Section 21 (d) it had no adequate remedy at law by which it could recover any part of said taxes if same were unconstitutional and _ illegal, and that it was impossible, owing to the peculiar conditions existing in the rice milling industry and in the purchase, milling and sale of rice, for appellant to dis- charge the burden placed upon it by said Section 21 (d), all as more fully set out in appellant’ s bill of complaint. Appellant further alleged that: in said amendment of August 24, 1935, a new section known as Section 21 (a) was added to said Agricultural Adjustment Act, which in substance provided that no suit to enjoin the collection of said processing taxes should be maintained in any court: Appellant further alleged that said section was not in- tended to apply, and did not apply, to the injunction prayed for by appellant, inasmuch as appellant had no adequate remedy at law. Appellant-further alleged that if said sec- tion should be interpreted as prohibiting the injunction - prayed for by appellant, then the said section, together with [fol. 91] the other provisions of said Act, was invalid. and in violation of the Fifth Amendment to ‘the Constitution, that no person shall be deprived of his property without due process of law, in that said illegal and unconstitutional taxes would be collected from appellant and appellant would have no remedy by which he could recover taxes and would have no remedy to prevent the collection of said un- lawful taxes and would be forever deprived of the right to test the constitutionality of said taxes. Appellant further alleged that said Section 21 (d) de- nied the appellant a complete and adequate remedy at law for the various other reasons s 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 which the rough rice mar- ket and the clean rice market is. made, showing that it would be utterly impossible for any rice miller to accu- PER I aN mR Rt md Ag TENE eh OOP EINER MD CHR: — ‘ : ti 91 rately determine whether he had made a profit or a loss on any given transaction, much less prove whether he had passed the tax, or any part thereof, on. Appellant also _ introduced in evidence the affidavit of Homer L. Bruce, a practicing attorney at the bar at Houston, Texas, setting out in detail the proceedings under a complaint brought’ by the Secretary of Agriculture to revoke the license of a rice mill under the Act in effect prior to the present Act. The Secretary of Agriculture sought to revoke the license of [fol. 92] this mill for failure to sell clean rice and rice products processed from rough rice at a price approxi- mately 79¢ higher than the price paid for the rough rice. The affidavit showed that although the Government was able to prove the cost of the rough rice and to trace the particular rough rice into various ‘‘mixes’’ of clean rice and the price procured for these ‘‘mixes’’ of clean rice it was never able to prove that the price procured for the clean rice processed from the particular lot of rough rice was: not 79¢ more than the price paid for the rough ‘rice because of the fact that clean rice is customarily sold in ‘‘mixes’’ of various lots of rice and there was no way to allocate the price procured for the mixéd rice sold to the various lots of rough rice which went into the mix. In the meantime, appellant alleges that for the foregoing reasons and those set forth in its said bill of complaint in said cause, and because the judge of said court in his said order dismissed 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 uncéonstitutionally 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 not ish 5 act tae ESAS ORY ab pS Freeza SOO At Rtas A CSCO RS, LTTE A AE ANT A ET RATS sak ee EE NRA gS ota i Sn cb De PO a EE 92 have dismissed said bill of complaint, but should have over- ruled the same, and upon the hearing should have granted the preliminary injunction as prayed for in said bill of complaint. Appellant would further show that there is now pending in the Supreme Court of the United States a case involving the constitutionality of the said Agricultural Adjustment Act, being the same case in, which the Circuit Court of Ap- peals: for the First Circuit declared the Act to be unconsti- tutional, and that the Supreme Court, according to press dispatches, has set said cause for oral argument on Mon- day, December 9, 1935; that a ‘decision by the Supreme Court of the United States upon the validity of the said Act may be expected within a reasonable time 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 col- lected under said Act are for the purpose of making these ‘benefit payments and that since the Secretary of Agricul- ture need make no further benefit payments until such time after December 1, 1935, as may be fixed by him, the delay of the Government i in. collecting these taxes which might be occasioned by the granting of the injunction prayed for [fol. 94] herein will not occasion any injury to the .Govern- ment nor will it unduly interfere with the achievement of _ the program set out in said Act if the Act be held constitu- tional. On the other hand, as hereinabove alleged, great and irreparable damage will be done to plaintiff in the event the,law is held unconstitutional unless the injunction here- inafter prayed for is granted. Appellant further shows that unless an injunction pend- ing appeal be granted so as to preserve the status quo, the subject-matter of the suit will be lost and the jurisdiction of this Honorable Court defeated. Such injunction is . necessary to preserve the jurisdiction of this Honorable Court, and in order that appellant may enjoy the just, fruits of a favorable decision on this appeal. The appellant states that itis ready and willikig to give any reasonable bond or other security that may be required 93 by any order of this Court, including the deposit from month to month of the amount of tax due, in a depository to be designated by the court; and therefore prays that this Court make an order granting appellant a preliminary in- junction enjoining and restraining the appellee from as- ' , sessing or collecting or attempting to assess or collect from appellant in any manner whatsoever; whether by lien or jeopardy or by distraint proceedings, in court or otherwise, | the said processing taxes for the month of September and subsequent months and any other processing taxes under . and pursuant to said Agricultural Adjustment Act upon rice processed by appellant, and any-interest or penalty on account of appellant’s failure to pay said processing taxes, and from imposing or giving notice of intention to impose [fol. 95] any lien for said taxes upon the property, real or personal, of the appellant, pending ‘the hearing of appel- lant’s appeal in this case and upon such conditions and terms as to this Court may seem just. C. A. McCoy. McOoy, King & J ones, of Counsel. (fol. 96] Duly sworn fa by C. A.-McCoy. * Jurat: omitted im printing. ‘ __ [fol. 97] Iw Unitep States Circurr Corr or APPEALS ~ No. 7950 Farmers Rice Mitiine Company, Inc., versus Rurus W. Fontenot, Acting Collector of Internal Revenue OrpverR Denyine Motion For PRELIMINARY INJUNCTION. Prenpine Apprat—November 5, 1935 Upon the authority of Rickert Rice Milling Company, Inc., vs. Rufus W. Fontenot, etc., the application for in- Junction in the above numbered and entitled case is denied. 94 [fol. 98} In Unrrep States Crrcurrt Court or APPEALS FOR THE Firta Crmcvuir No. 7937 Rickert Rice Mituine Company, Inc., Appellant, versus Rurvus W. Fontenot, Acting Collector of Internal Revenue, _ Appellee Appeal from the District Court of the Unijed States for the Eastern District of Louisiana Motion. for Preliminary Injunction Pending Appeal Before Foster and Sibley, Circuit Judges, and Strum, . District Judge Orrnion—November 5, 1935 By the Court: On consideration of the application for an injunction to stay collection of taxes levied under the provisions of the Agricultural Adjustment Act, as amended by the Act of August 24, 1935, the Court is of the opinion that the tax- payer has a remedy at law to recover back any taxes jl- [fol. 99] legally exacted and, further, that the previsions -of the Act as amended deprive the Court of jurisdiction to grant injunctive relief. It is ordered that the application be denied. [fol. 190} Clerk’s certificate to SOREGHRG transcript omitted in printing. [ fol. 101] SupreMeE Court or THE UNITED StTaTEs Onper ALLOWING Cenrtorani—Filed November 25, 1935 The petition herein for a writ of certiorari to the United States Circuit Court of Appeals for the Fifth Circuit is 95 granted, and the case is assigned for argument on Monday, December 16, next. And it is further ordered that the\duly certified copy of the transcript of the proceedings below which accompanied the petition shall be treated as though filed in response to such writ. , \ Endorsed on cover: File No. 40,140. U.S. Circuit Court of Appeals, Fifth Circuit. Term No. 586. Farmers Rice Milling Co., Ine., petitioner, vs. Rufus W. Fontenot, Indi- vidually and as Acting United States Collector of Internal Revenue for the District of Louisiana. Petition for a writ of certiorari and exhibit thereto. Fited November 14, 1935. Term No. 586, O. T., 1935. oe Pad TEN AER de ARID RTL GE IP AE ta RA CA ORIN cd RRR --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386009_0294%3A07. Public record. Not legal advice.