Brief Amicus Curiae — United States v. Butler

FILE COPY

No. 401

din the Supreme Court of the

United States 2

OCTOBER TERM, 1935.

THE UNITED STATES oF AMERICA, PETITIONER

Vv.

| WILLIAM M. BUTLER, ET AL, RECEIVERS OF Hoosac

MILs CORPORATION

ON WRIT OF CERTIORARI TO THE UNITED STATES CIRCUIT

COURT OF APPEALS FOR THE FIRST CIRCUIT

AMICUS CURIAE ARGUMENT BY TEXAS AGRICUL-

TURAL ASSOCIATION IN BEHALF OF PETITIONER.

=

vii.

INDEX’

| PAGE

The tax imposed by the Act is an excise tax........ 2

The, provisions for floor-stock taxes are valid...... 5

The Act does not involve an improper delegation oe

PABIBIMEIVG POWET. cece os

iv.. The Act does not contravene the Fifth Amendment. . 26

. ' The Act does not contravene the Tenth Amendment.. 28

Respondents have no right to question the validity

of the tax because of ‘the appropriation made of

i ED a ees dw ea ee 31

Any question as to the validity of the Act has been

| sy ts by the validating amendment.......... 32

A \

AUTHORITIES.

- Alcolea Vv. Smith, 150 La. 482; 90 So. 769; 24 A.L.R. 815.. 6

_ Arizona Vv. California, 283 U.S. 428................... > §

llings v. United States, 232 U.S. 261................ 27

Brushaber v. Union Pac. Ry. Co., 240 U.S.1..:....... 4, 27

Butler v. United States, 78 Fed. (2d) ree a yu tae 8, 28

Champlin Rfg. Co. v. Commission, 286 U.S. 210......... 16 .

Charlotte Harbor Ry. Co. v. Welles, 260 U.S.8.......... 33

Dorchy V. Kansas, 264 U.S. 286............ Crerercs . . 33

Eisner Vv. Macomber, 252 U.S. 189.......... Sayan Lee ia 4

Field v. Clark, 148 U. S. 649. 7.0... eee, 17, 25

First Savings Bank of Ogden v..Burnet, 53 Fed. (2d) 919. 6

Flint v. Stone Tracy Co., 220 U.S. 107..>............ 4, 26

Georgia Warehouse V. Jolley, 172 Ga. 172, 157 S. E. 276. 5

Hampton & Co. v. United States, 274 U.S. 394..... 17, 18, 24:

Heiner v. Donnan, 285 U.S. 312.............. wie we eee

Heiner Vv. Diamond Alkali Co., 288 U. S. 502............ 18

Modpee VW. Demer, Bet U. BD. GOO. oo ecw sccees $3

_Hoeper V. Commissioner, 284 U. 8. 206................. 28

Jeffrey Mfg. Co. v. Blagg, 235 8 | A Car ee 16

Kansas City So. Ry. Co. v. Road Imp. Dist., 266 U.S. 379: . 33

Knowlton v. Moore, 178 U.S. 41........... Soe 9, 10

Magnano v. Hamilton, 292 U.S. 40°.......... atea aie ee 27

Massachusetts v. Mellon, 262 U.<S. 447... 2.0200... 28

-Michigan Central Ry. Co. v. Powers, 201 U. S. 245..... .. 20

McCray v. United States, 195 U.S. 27.................. 26..

McCullough v. Maryland, 4 Wheat. 316................ 26

Mountain Timber Co. v. Washington, 243 U. S. 219. Puta 16

Nichels Vv. Coolidge,.274:U. 8. G81"... .. 0... Se ee , 7

Panama Ref. Co. v. Ryan, 283 Us-S: 888... 11

Patton v. Brady, 184 U.S. 608............... pr eee 7, 2%

Peck & Company v. Lowe, 247 U. S. 165............... <n

Plymouth Coal Co. v. Pennsylvania, 232 U.S. 531........ ee

Pollock vV. Farmers Loan & Trust Co., 157 U. S. 429 4

Rafferty v. Smith, Bell & Co., 257 U. 8. 226 33

Schechter Corp. v. United States, 295 U.S. 495 29

Schlesinger v. Wisconsin, 270 U. S. 230 28

Stanton v. Baltic Mining Company, 240 U. S. 108 4

United States v. Doremus, 249 U. S. 86 3, 10

United States v. Chemical Foundation, 272 U. S. 1 ll

United States v. Heinszen, 206 U.S.370.............. 33

~ ,

AUTHORITIES (Continued)

PAGE

United States v. Miemiood Grain & Elevator Company;

Oe a ee Ce ee Se

Utah Power & Light Co. v. Pfost, 286 U.S. 165 Lat Te 16

Cooley’s Constitutional Limitations (8th\Ed. ) 988-999,

a 1022 TPCULC TEM Ea Te ee es 4,9 -

in th ii Court of i e

United States te

OCTOBER TERM, 1935

\ 2

No. 401

THE UNITED STATES OF AMERICA, ‘PETITIONER

WILLIAM M. BUTLER, ET AL, RECEIVERS OF. HOOSAC

MILLS CORPORATION

ON WRIT OF CERTIORARI TO THE UNITED STATES CIRCUIT

COURT OF APPEALS FOR THE FIRST OIRCUIT

ae:

AMICUS CURIAE ARGUMENT BY TEXAS AGRICUL-

TURAL ASSOCIATION IN BEHALF OF PETITIONER. —

The primary issue raised by this appeal is the

validity of the Agricultural Adjustment Act, being

the Act of Congress of May 12, 1933, c. 25, 48 Stat.

31, as amended by an Act of Congress approved

August 24, 1935, (Public 320, 74th Cong., 1st sess.).

This primary issue involves the questions : (i) Is

the tax imposed by the Act a direct or an excise tax?;

(ii) Are the provisions for floor-stocks taxes valid? ;

(iii) Does the Act involve an improper delegation of

legislative power?; (iv) Does the Act contravene the

Fifth Amendment?;. (v) Does the Act contravene the

Tenth Amendment? ; (vi) Do the Respondents have

the right to question the validity of the Act imposing.

a tax upon them because of the exercise of the fiscal

2

power of Congress in appropriating the funds raised

by such taxes?; (vii) If the Agricultural Adjustment

Act, c. 25,48 Stat. 31, was invalid as originally

enacted, has the Congress, by the Act approved August

24, 1935, Public 320, 74th Cong., 1st sess., ratified

the assessment and collection ‘of taxes under the

original Act so that the validity of the assessment

and collection of the taxes involved in this case

cannot be now questioned.

The questions will be discussed in the order stated.

i.

The Agricultural Adjustment Act, c. 25, 48 Stat.

31, has as its purpose the raising of revenue. This

is made evident by the provisions of the Act, including

the provisions regarding the use to be made of the

funds raised by the‘taxes assessed and collected under

the terms of the Act.

The Act is captioned as “an Act * * * to raise

revenues for extraordinary expenses incurred by

reason of such emergencies, to provide emergency

relief with respect to agricultural indebtedness.” The»

language used in section 9 (a), is “to obtain revenues

. for extraordinary expenses incurred by reason of the

National Economic emergency, there shall be levied

processing taxes as hereinafter provided. ” Section

9 (b) provides that “the processing tax shall be at

such rate.” Section 19 (a) provides that “the taxes

provided in this title shall be collected by the Bureau

of Internal Revenue under. the direction of the Sec-

retary of the Treasury. Such taxes shall be paid into —

- the treasury of the United States.” Section 19 (b)

provides that “all provisions of law, including penal-

ties, applicable with respect to taxes imposed by

section 600.of the Revenue Act of 1926, and the pro.

vision of section 626 of the Revenue Act of 1932, shall,

—

3

in so far as applicable and not inconsistent” be ap-

plied with regard to taxes imposed by this Act, with

certain ‘provisions allowing the Secretary of the

‘Treasury to permit a postponement of the payment

of the taxes levied by this statute. Provision is made

by sectign 19 (c) fpr the borrowing of money from

._ the Reconstruction Finance Corporation with which

to pay taxes imposed by the Act. Section 12 (b)

appropriates the proceeds derived from all taxes im-

posed under the Act. Sections 15 and 16 primarily

deal with the subject of taxes imposed by the Act..

The tax is imposed upon the processing of com-

modities; the amount, not the rate, being dependent

upon the quantity processed. The imposition of the tax

is not conditioned on a failure of persons to conform

their business operations to certain regulations, but |

is imposed upon the processing of the commodity.

The language of the Act evidences that the purpose

of the legislation has a relation to the raising of rev-

enue..This is'the test as to whether it is a yevenue

measure. Usted States v. Doremus, 249 Uz S. 86;

Arizona V. California, 283 U. S. 423 (455-456). The

Act meets this test. — ae ae

The Constitution divides: the taxing power of the

general government into two great classes. -It grants

to the general government plenary and absolute power

to levy direct taxes, subject to the limitation that

_ they be apportioned among the several states in pro-

portion to population, and a like power to lay and

' collect duties, imposts and excises, subject to the limi-

tation that they be uniform throughout the United

States. The Sixteenth Amendment did not extend the

taxing power to new subjects, but only removed the

necessity which might have otherwise ‘existed for an

apportionment among the states of taxes laid on in-

ee

os

J , i

come. “The term ‘excises’ is applied to the taxes laid

upon the manufacture, sale, or consumption of com-

' modities within the country, upon licensing to pursue

occupations, and upon the corporate "privilege. ” This

~. Court has held “that direct taxes, in the constitu-

tional sense, embrace not only taxes on lands and

capitation taxes, but all burdens laid on real or per- |

sonal property because of its ownership; and also

taxes on the income of such property.” Cooley’s Con-

stitutional Limitations (8th Ed.) 988-999, 1022; Pol-

lock v. Farmers Loan & Trust Company, 157 U. S.

429; Knowlton v. Moore, 178 U.S. 41; Flint v. Stone

Tracy Company, 220 U. S. 107; Brushaber v. Union

Pacific Ry. Co., 240 U. 8. 1; Stanton v. Baltic Min-

ing Company, 240 U. S. 103; Peck & Company Vv.

_ Lowe, 247 U.S. 165; Bisner V. Macomber, 252 U.S.

189.

The question then arises: Are the taxes imposed

by the Agricultural Adjustment Act “excises”? _

_ Section 9 (a) provides that “the processing tax

shall be levied, assessed \and collected upon the first

domestic. processing of the commodity, whether of

domestic production or imported, and shall-be paid by

the processors.” As applied to cotton the Act de-

fines the term “processing” to mean “the spinning,

manufacturing, or other processing (except ginning)

of cotton; and the term ‘cotton’ shall not include cot-

ton linters.” As applied to wheat, rice and. corn, the.

term is defined to mean the milling or other processing

of the commodities; as applied to tobacco, the term is

defined to mean the manufacturing or other process-

ing thereof; as applied to hogs, the term is defined to

mean the slaughter for market; and as applied to all

other commodities, it is defined to mean “any manu-

facturing or other processing involving the change in

' the form of the commodity or its preparation for mar-

& 5

ket” * * *, The meaning of the word as involved in

this suit must be construed in connection with its

associate words “spinning” and “manufacturing.”

Georgia Warehouse v. Jolley, 157 S. E. 276, 172 Ga. -

172. It refers to the conversion of cotton through

_ manufacturing into usable articles of commerce. The

term means more than the mere separation of the

“lint cotton from the seed and the baling of the lint

cotton, for the language of the Act expressly includes

ginning of cotton from the meaning of the term. This.

definition of the word brings the tax squarely within

the language “excises usually look to a particular

subject, and levy burdens with reference to the Act

of manufacturing them, selling them, ete.” Knowl-

ton V. Moore, 178 U.S. 41, 88. A tax upon the sale,

use or manufacture of property is the character of

tax that this Court. has held to be an excise, and it is

submitted that the tax imposed by this Act meets

that test. . |

| e

If the tax imposed upon floor-stocks is imposed

solely because of the ownership of property, its valid-

ity may be questioned; but if thg tax isan excise, or

is imposed for administrative purposes to prevent

evasions, then it can be sustained. _ |

The language: of Section 16 (U.S.C.A., Title 7,

sec. 616) is important. This Section provides for a

tax adjustment, using the language “wpon the sale

or other disposition of any article processed” and “is

held for sale or other. disposition.” \ Retail stock of

persons engaged in retail trade are excepted from the

tax imposed by Section 16, sub-section a, but the

exception does not include stocks held in warehouses

or-stocks which are not sold or otherwise disposed of

within thirty days from the effective date of the Act.

PRN aSte teresa gennres tenes acon

6

The tax is imposed upon the holding of the articles

for sale or other disposition. It is a tax levied upon ©

the intended use of articles that have been processed

from a commodity subject to the tax provided in the

Act. The Act does not provide that all persons own-

ing articles processed from a taxable commodity shall

be liable for the tax, but that the tax is imposed on

the holding of the articles for sale or other disposi-

tion. This is not a. tax based upon ownership, but a

tax based upon the use to be made of the article of

_ property. It is a tax upon the holding of the article

in contemplation of sale. The language “other dis-

position” is general, but is clearly limited by the more

specific word “sale,” which immediately precedes it,

to a disposition by sale.

In First Savings Bank of Ogden v. Burnet, 53

Fed. (2d) 919 (920), the Court considered the lan-

guage “loss sustained from a sale or other disposition

of property,” as used in Section 202 (a) of the Rev-

enue Act of 1921, and said,

* * * “We feel constrained to hold that the

rule of ejusdem generis is applicable in constru-

ing the phrase, and _ that it relates only to such

dispositions of property as are like sales.” —

‘In Alcolea v. Smith, 90 So. 769, 772; 150 La. 482;

24 A. L. R. 815, the Court considered the language ~

“sale or other disposition” and said:

* * * “The word ‘sale’ conveys no such idea,

nor do the words ‘or other disposition’ . which

_ follow it, since a sale is an alienation, a parting

with, and ‘or other disposition,’ following the

_ word ‘sale,’ means an alienation, or parting with,

ejusdem generis as sale; and either the sale of. a

thing or other disposition of it is the antithesis

of the keeping of the thing and the appropriating

of it to oneself.” . |

_ —__

7

It seems clear that the meaning of the term, “or

other disposition,” following the word “sale,” is

limited to such a disposition as would be within the

meaning of the word “sale.”

.It is upon the holding of the article for one pur-

pose, therefore,—the. purpose of sale—that the tax is

imposed. The tax, being imposed upon the holding of

the article for a. particular purpose, meets the test

of an excise. | ) |

| This position is sustained by the holding in Patton

v. Brady, 184 U. 8. 608, eying a Court considered

a statute assessing and levying/a tax upon articles

“held and intended for sale.” ‘In the opinion in that

case, the Court said:.

*** “The tax on manufactured tobacco is a

tax on an article manufactured for consumption, -

and imposed at a period intermediate the com-

mencement of manufacture and the final con:

sumption of the article,” | ;

and held the tax imposed by the statute to be an

excise,

The construction here contended for of the pro-

visions of the Act imposing a tax on floor stocks

appears to be a reasonable construction and consistent

with the legislative intent. .When so construed, the

‘Act is valid.

It is a general and fundamental rile that if a

statute be reasonably susceptible of two interpreta-

tions, one of which. would render it unconstitutional

and the other valid, the Courts will adopt that con-

struction which will uphold its validity; there being

a strong presumption that the law-making body in-

tended to act within, and not in excess of, its con-

stitutional authority. Plymouth Coal Co. v. Pennsyl-

vania, 232 U.S. 531.

| - 8

These provisions of the Act being reasonably sub-

ject to a construction (consistent with the apparent

legislgtive intent) under which the Act would be

upheld, it is respectfully submitted that the Act

should be given that construction and upheld.

If the Act had not contained provisions for floor- .

stock taxes and the adjustment thereof, it would, both

theoretically and practically, have been possible for

. designing persons, having knowledge in advance of

the effective date of the Act, to circumvent the levy

of the tax. Having knowledge that the Act would

become effective at a later date, processors could have

manufactured large stocks of articles for future sale

‘and use, and have avoided thereby payment of the

tax on the commodities processed in the manufacture

of such stocks. In contemplation of the suspension or

expiration of the Act,’they could in like manner have

avoided taxes by refraining from processing articles.

Such evasions were prevented by the provisions of

the Act providing for floor-stock taxes. The pro-

visions were necessary to make sure that the tax fell

equally upon all processors. These provisions of the

Act were proper to insure uniformity and equality

and to prevent attempted evasions of the plain pur-

pose and intent of the Act. ‘The provisions were

necessary for the equal enforcement and proper ad-

ministration of the features of the Act which: impose

a tax on the processing of commodities.

The assignments of exgor filed by Respondents in .

the Circuit Court of Appeals raised, among other

questions, the contention that.the processing and floor

taxes, “if excise taxes, are not uniform throughout

the United States; and are therefore not authorized

under the Constitution.” Butler v. United States, 78

Fed. (2d) 1.(2). It is essential to the validity of an

excise imposed’ by an Act of Congress that it be “uni-

9

form throughout the United States.” United Siates

Constitution, Art. I, sec. 8, cl. 1; II Cooley’s Consti-

tutional Limitations (8 Ed.) 988.

In Knowlton v. Moore, 178 U. S. 41 (106, 108),

the Court said: ?

** * “By the result then of an analysis of the

history of the adoption of the Constitution it

becomes plain that the words ‘uniform through-

out the United States’ do not signify an intginsic

but simply a geographical uniformity.”

* * * “But what the Constitution commands is

the imposition of a tax by the rule of gedgraphical

uniformity, not that in order to levy such a tax

objects must be selected which exist uniformly in

the several states.” (Italics ours) -

The tax is imposed upon the processing of the

commodity without limitation as to where the com-

modity is produced or where processed. The manu-

facturing in Texas of cloth from cotton is made the

subject of the tax, without regard as to where the

cotton was produced. The manufacturing in Massa-

chusetts or- North Carolina’ of. cloth from cotton is

made the subject of the tax, without regard as to

'. Where the cotton was produced. The tax is levied on

the processing of the cotton into cloth, and this with- -

out limitation or restriction as to the place of produc-

tion or the place of manufacture. Great quantities

of cotton are produced in Texas, ‘but if any cotton is~

produced in. Massachusetts, that fact is not generally

known.. The quantity of cotton consumed in manu-

facturing processes in Texas is relatively less than

the amount consumed in manufacturing processes in

‘other states, but the tax is imposed with uniformity.

wherever the processing is done. The tax is imposed

“by the rule of geographical uniformity,” but the

object of the tax does not exist uniformly in the sev-

: 10

“

eral states and, indeed, it is not necessary “that in

order to levy such a tax objects must be selected which

exist uniformlv in the several states.” Knowlton v.

Moore, 178 U. S. 41.

iii. +)

‘ The opinion, of the Circuit Court of Appeals in

this case discusses the power of Congress to control

or regulate the production of agricultural commodi-

ties and concludes that the power of contro] and regu-

lation over such matters is left to the states. Whether

that question ‘is determinative of the issues involved

in this case depends. upon whether the Act in ques-

tion is a revenue measure or only an attempt to regu-

late and control the production, of the commodities

named in the Act.

It has heretofore been shown that the Act pro-

vides for the raising of revenue and that it meets the

test stated in United States v. Doremus, 249 U. S. 86:.

™\“Have the provisions in question any relation

to the raising of revénue?” )

It has been shown that the tax is iene: upon

the processing of a commodity without regard to the

manner in which,the processor may conduct his busi-

ness, and that it is a tax on the use of commodities

and not a tax imposed because of failure to conduct

a business according -to some prescribed regulation.

Apparently the Circuit Court of Appeals did not re-

gard this question as determinative of ‘the issue, be-

cause the Court said:

“The isgue of whether under the Act there has

been any unauthorized delegation by Congress

of its legislative powers is, decisive of the case

before this Court.”

11

Does the Act involve an unauthorized delegation

of the legislative powers of Congress?

It will not. be questioned that the Congress cannot

delegate its discretion under the Constitution to de-

termine what. the law should be or its power to enact

such law. It cannot be questioned that the Congress

may select \nstrumentalities for the purpose of ascer-

taining facts upon which the operation of a law may

depend, or give authority to administrative officers to

determine the existence of facts, or give power to

administrative officers to prescribe rules in the en-

forcement and administration of a law, or give to

administrative officers the duty to carry out a*legis-

lative policy declared by the Congress. -: United States

v. Chemical Foundation, 272 U. S. 1, 12; United

States v. Shreveport Grain &:Elevator Co., 287 U.S. °

77 (85); Field v. Clark, 143 U. S. 649 (693). The

rule is clearly stated in-Panama Refining Co. et al v.

Ryan et al, 293 U. S. 388 (426):

** * “The Congress manifestly is not permit-

ted to abdicate, or to transfer to others, the es-

sential legislative functions with which it is thus

vested. Undoubtedly legislation must often ‘be

adapted to complex conditions involving a host

of details with which the national legislature can-

not deal directly. The Constitution has never

been regarded as denying to the Congress the

necessary resources of flexibility and practicality,

which will enable it to perform its function in

laying down policies. and establishing standards,

while leaving to selected instrumentalities the

making of subordinate rules within prescribed

limits and the determination of facts to which the

policy as declared by the legislature is toe apply.

ithout capacity to give authorizations of that;

» sort we should have the anomaly of a oe

power which in many circumstances calling for

its exertion would be but a futility.”

®. +. ie ; 12 .¢

be &

The issue here is: Does the Act, delegate the power

:, to make, the law, or does it only confer authority to

suance of the law, in its execution?

ascertain the facts and to exercise discretion, in pur-

a Section 1 of the Act declares :

gress

“That the pr sent acute economic emergency

_ being in part the consequence of a severe and

increasing disparity between the prices of agri-

cultural and other commodities, which disparity

has largely destroyed the purchasing power of

farmers for iffdustrial products, has broken down

the orderly exchange of commodities, and has .

seriously impaired the agricultural assets sup-

porting the national credit structure, it is hereby

_ declared that these conditions in the basic indus-

try, of agriculture have affected transactions in |

agricultural commodities with a national public

interest, have burdened and obstructed the nor-

mal currents of commerce in such commodities.”

| Section 2 (1) declares that it js the policy of Con-

“To.estabMsh and maintain such balance be-

tween the production and consumption of agri-

cultural commodities, and such marketing condi-

tions .therefor,. as.-will re-establish prices to

farmers. at a level that will give agricultural

commodities a purchasing power with respect to

articles that farmers buy, equivalent to the pur- —

chasing power of agricultural commddities in the

' base period.” ; :

As applied to cotton, the base period is fixed at

from Augusty909 to July 1914.

_” Seetion 3 directs the Federal Farm Board and all

departments and agents of. the government, excepting

the Federal intermediate credit bank, to sell to the. _

Secretary of Agriculture, and: authorizes the Secre-

tary of Agriculture to purchase, all cotton now owned.

“~

13

by them. Provision i is vail for settlements necessary |

in the acquisition of the full legal title.of such cotton. .

Section 4 authorizes the Secretary to borrow

money upon the cotton so purchased.

Section 5 authorizes the Reconstruction Finance

Corporation, to make loans to the Secretary of a

| to be used in acquiring the cotton. ,

. Section 6 authorizes the Secretary to enter: into

option contracts with producers ot cotton; evidently

contemplating that such option contracts shall involve —

the cotton to be. purchased be the aaicnid under

Section 3. .

| Section ‘8 provides that in effecting the policy de-

a clared’ (Section 1 and Section 2), thé Secretary of

Agriculture shall have power .

“To provide for reduction in the acreage or

reduction. in the production for market, or both,

_ of any basic agricultural commodity, through

- agreements with producers or by other voluntary

' methods, and to. provide for rental or benefit

payments . in connection therewith or upon -that

part of the production of any basic agricultural

commodity required for domestic a in

such amounts as the Secretary deems fair and

reasonable, to be paid out of‘ any moneys: avail-

able for such payments.” |

This language indicates that the Secretary is em-

powered: to provide for rental benefit payments in

connection with reduction agreements and that he is

empowered to providé for rental or benefit payments

‘upon “that part of the production of any basic agri-

cultural commodity required for domestic consump-—

tion.” -

Section 9 (a) provides that,

“To obtain revenue f6r extraordinary expenses

incurred ~~ reason of the national economic

14

emergency, there shall be levied processing taxes .

as hereinafter provided. .When the Secretary of

Agriculture determines that rental or benefit

payments are to be made with respect to any:

basic agricultural commodity, he shall proclaim.,

such determination, and a processing tax shall be

in effect’ with respect to such gommodity from,

° the beginning of the marketing year therefor

next following the date of such. proclamation.

The processing tax shall be levied, assessed, and

: collected upon the first domestic rocessing of .

the commodity, whether of domestic production

, or imported, and shall be paid by the processor.”

It is provided that the tax shall terminate: at the

end of the current marketing year when the Secretary

proclaims that the rental or benefit ‘payments shall

be discontinued and jt is directed that the marketing ~

year shall be ascertained and nee by regula-

tions of the Secretary.

Section 9 (b) provides:

“The processing tax shall ™ at such rate as.

equals the difference between the current average |

farm’ price for the commodity and the fair ex-—

change value of the commodity” * * *.

- Iteis provided in this section that if the Secretary = |

has reason to believe the tax, at the rate prescribed,

will bring about such reduction in the domestic con-

sumption of the commodity as to’result in an accu-

mulation of surpluses or in a reduction of farm

; prices, then that after notice and hearing and a find-

ing that such results would follow, the processing tax _

shall be at such rate as will avoid the accumulation

of surpluses and depression of prices:

Section 9 (c) provides that,

* * * “the fair exchange value of a commodity.

shall be -the price therefor that will give the

commodity the. samé purchasing power, with re-

spect to articles farmers buy, ‘as such commodity

_

-had° during the base, period” * * * “and the cur-

-rent average farm price and the fair exchange

value shall be ascertained by the Secretary of

Agriculture ‘from available sigtistics of the. De- ;

ere of Agriculture.” (Italics ours)

Section 10 (c) pr6vides that the Secretary, with —

the approval of the Pyesident, may make “regula- _

tions establishing conyérsion factors for any com-

-modity and artide sed therefrom to determine

the amount of tax ‘« posed or refunds to. be made

with respect thereto.”

_ Section 12 (a) makes an appropriation to the’

Secretary for administrative, expenses and for rental

and benefit payments. |

* Section 12 (b) appropriates the proceeds derived

from taxes imposed by: the Act for expansion of mar-

kets, removal of surpiuses, administration expenses,

rental and benefit payments and refunds on taxes.

This Section directs the Secretary of Agriculture and

the Secretary of the Treasury to establish the

amounts, over and above the appropriation made by

Section 12 (a) currently required for the purposes —

of the Act and authorizes the Secretary of the Treas-

ury, out of any money not otherwise appropriated, to

advance to the Secretary of Agriculture the-amount

so estimatet. The amounts so advanced are later to.

be deducted from the proceeds of the tax pers by:

the Act. ©

Section 14 declares the legislative intent that the

provisions of the Act-are separable. —

' Section 16 provides for taxes on. floor-stocks at ~

the rate-or in an amount equal to the processing tax -

“which would be payable with respect to the ‘com-

modity from which: processed if the processing: had >

occurred”.on the date the tax first takes effect and

for adjustments of such fax. ‘

, ".

16

These are the provisions of the ‘Act involved in

- this. case.

{

- The suit originated by the United States. filing a

claim with the Receivers for processing and floor .

taxes levied against Hgosac Mills Corporation under

Section 9 and Section 16 of the Act. It is not a suit

to restrain the levy of a tax or. the disbursement of, -

funds under-the appropriation mz by the Act, but,

in so far as Respondents are ‘eonesenall, it. is an

attempt to defeat the payment of the. taxes levied.

. The issue involved-is the validity of what has been

done under the Act, and not the validity of a threat-

ened action. This distinction is important..

Whéiher the adjustment or reduction authorized ©

by Section 9 (a) and 9 (b) amount to an improper

delegation of power is not involved because the taxes

in-issue were not levied in connection with any such

_. adjustihent or reduction-and in the administration of

_., the Act there has not ben any attempt to adjust the’

rate under either of these provisions. Mountain Tim-

_ber Co. Vv. Washington, 243 U. S. 219; Jeffrey Mfg.

Co. V. Blagg, 225 U. S. 571 (576); Utah Power &

Light Co. v. Pfgst, cos U. S. 165 (186) ; Champlin

Rig. Co. V. Commission, 286 U. S. 210 (235).. These -

’ provisions of the Act appear to be separable, and even

§

if they were determined to be improper delegations of

legislative power, nevertheless the provisions on

which rest the tax involved in this case would remain

‘in force. Instead of appearing evident that the Con-

gress would not have enacted the provisions imposing

the tax, independently. of those which allow the ad-

justment, the wording of the Act indicates that ‘the

Congress would -have enacted the provisions imposing

the tax, independént of those provisions which permit

| the adjustment.

> , 17 :

But, even if it be considered that the. Congress

would not have: énacted the provisions imposing the

tax, independently of the provisions authorizing the

-adjustment,: these latter provisions are sustainable

_. under the decisions of this Court. The authorized

adjustment of -the rate is to prevert surpluses ‘and

the depression of farm. prices, clearly indicating that

these provisions do not contemplate an increase in

the base rate provided for by Section 9 (a), (b) and-

(c), but a reduction, when necessary, to prevent the

conditions described in the Act.

In Field v. Clark, 143 U.S. 649 (680-697), the

Court sustained a statute conferring upon The Pres-

_ ident authority to suspend, by proclamation, the free -

introduction of certain commodities when he was sat-

isfied that any country proaacing such, articles im-

posed duties or other taxes upon. products. of the

United States, which he determined to be reciprocally

unequal or unreasonable.

In Hampton & Co. v. United States, 276 U. S. 394

(404-412), the Court sustained an Act empowering

The President to increase or decrease duties to equal-

ize differences ascertained by him between domestic

production and the cost of producing like articles ‘in

competing foreign countries. The Act ‘involved pro- .

vided that in ascertaining the differences in cost of —

production The President -should, in so far as he

found it practical, take into consideration: .f

** * (1) the differences in conditions im pro-

duction, including wages, costs of material, and

other items in costs of production of. such 9r sim-

_ va te: in wn hag Ray + com-

peting foreign countries; e differences in —

_ the’ wholesale selling prices of doukstic and for-

eign articles in the principal markets of the.

United States; (3) slit granted to a for-

18

; eigtr iain _ a fineigin government, or by a

person, partnership, poco or association i in

a foreign country; and (4). any other advantages

or disadvantages in competition.”

Speaking of this Act the Court said: Ce oe

“What The President was required to do was

> merely an execution of the-Act of Congress, . It: ~

was not the making of law. He was the mere

agent of the law making department to ascertain

. and declare the event upon Which its expressed.

_. will_was to take effect.”

It is not conceivable that there would be ‘any

greater difficulty to determine that a tax was causing

the accumulation. of surpluses and depression of farm

prices, than it would be to determine the cost of pro-

duction, including wages, materials and other items

entering into such cost of similar articles in the

United States and in competing foreign countries,

and the advantage granted to foreigh producers by -

foreign . governments and any other advantages ad

disadvantages in. foreign competition.

‘If the Act involved in Hampton & Co. v. United

States, 276 U.S. 394, prescribes a certain and definite

criteria to be taken into consideration i in ascertaining

the differences, assuredly, the Act involved in this |

case speaks . with equal certainty. . The authority

granted the Secretary to make adjustments is analo-

gous to the power upheld in Heiner v. Diamond Alkali

Co., 288 U. S. 502 (504-507).:

The issue of unauthorized delegation of legiglative

power is then, so far as this case is concerned, re-

duced to the question, “Does the Act delegate to the

‘Secretary. the legislative authority to determine a tax

rate, and, the time when it shall take effect and end;

or does the Act prescribe the formula for computing

the rate of tax, and the time when it shall. begin and

~

19

end, depending upon the existence of facts to be ascer-

tained by the. Secretary?” ee ve ee

The Act provides that “the processing tax shall be

_ at such rate as equals the differencé between the cur-*

rent average farm price for the commodity and the

fair exchange yalue of the commodity” * * * “the

fair exchange value of a commodity. shall be the price

therefor that will give the commodity the same pur-

chasing power, with respect to articlés farmers buy, os

as such commodity had during the base period (Aug-

_ ust 1909 to July 1914) * * * and the current average

farm price and the fair exchange value shall be ascer-

tained by the Secretary of Agriculture from available

statistics of the Department of Agriculture.” |

This is the formula for computing the rate of tax.

‘Does it fix a certain criteria to be used in computing

the rate? " “ ee |

The practice of the Department of Agriculture to

collect and publish statistical facts concerning agri-

cultural productions and markets has been in exis-

tence for a long period of years. Congress was evi-

dently familiar with this practice and in general with

the statistical information available in the ‘Depart-

ment because. it provided that the “current ‘available

farm price and the fair exchange values” should be

ascertained by the Secretary from such statistics. The

facts were so ascertained.” (R.11)/) °°

Determination of the “current average farm price

and the fair exchange value” involved the application

_ of elementary principles of mathematics to the “avail-

able statistics of the Department of Agriculture.”

The determination of the tax from “the current aver-

age’ farm price-and the fair exchange value” at such

rate as equals the difference’ between the current...

. avérage farm price for the commodity and the fair

20

exchange value of the commodity involved no more

. than the application of principles of mathematics to

the figures previously determined. (R. 11).

The Congress prescribed the rule by which the

rate should be figured and empowered the Secretary:

to do no more than determine the facts, and apply the

facts to the rule and figure the rate from the facts

by the rule. There is no more delegation of legisla-

tive power here than where a state prescribed by law

that a State Tax Board shall ascertain the intangible

values of property for purposes of taxation or that

such Board shall compute an ad valorem tax rate by .

dividing the total of all ad valorem taxes collected

during the previous year by the quotient of the total

valuation of all property within the state divided by

100. The formula is prescribed by legislative enact-

ment, and the administrative officer is directed to

ascertain the facts and by applying them to the fgr-

mula to figure the. rate of tax.

! In Michigan Central Railway Company'v. Powers,

201 U.S. 245, 297, the Court said: '

“It may be laid down as a general preposition

that where a legislature enacts a‘ specific rule for

fixing a rate of taxatjon, ty which rule the ‘rate,

is mathematically d rom facts and events

occurring. within the el and created without

reference to the matter of that rate, there is no

abdication of the legislative ‘function, but, on the

— a direct legislative determination of the

The Secretary is not empowered by these pro-

visions.of the Act to fix the rate; he-is directed to

compute the rate by a formula prescfibed by Con-

gress. The provision of the Act directing the Secre-

tary to.compute the rate does not grant to him author-

ity or discretion to determine what the rate shall be, —

a

‘ but imposes upon him a-duty to determine existing, .,

controlling facts, and figure the rate on these facts

by #he formula prescribed by Congress. . |

. The Act provides that a fax “shall be in effect:

with respect to. such commodity from the beginning

of the inarket year” and that “the market year for

each commodity’ shall be ascertained and prescribed by

regulations of the Secretary of Agriculture.” 7

' Cotton matures, is harvested and sold during par-

ticular seasons of theyear. The same is true of grain

crops, such as-wheat and corn., In deteymining: the

carry-over from year to year 1 Tt has long. been the .

_ custom to treat a certain date as the end of one mar-

ket year and*the beginning of another. These dates‘

are well known and understood, not only by experts:

in the Department of Agriculture, but by the people

who are’ engaged in the planting and production of

_ these commodities and in their marketing and manu-

facture. The language directing the Secretary to,

ascertain “the market year” may well be construed

as’ meaning that the market year for each commodity .

, is as has been previously ascertained by the Secretary

under departmental rules because it is well: known

that:long prior to the enactment of this statute the

Department of Agriculture had recognized certain

dates as the beginning of market years for certain

commodities. If the language of the Act be construed

to mean that the marketing year is as has hereto-

fore been determined by the Secretary under the

regulations prescribed in the Department of Agri-

_. culture, then the Congress has definitely fixed the

. period by referente ;'to an existing determination. .

Such: would be a re ndeh construction of the lan-*

guage and would not do violence to the apparent

legislative intent. . So construed, the provision would

appear to be entirely valid, and if under some other

*

22

construction the provision might be invalid, then that

construction. should be adopted which sea give the -

Act validity.

- On the other hand, if the Congress intended that

the tax should take effect from the beginning of the

market year, the date to be determined in the future

by the Secretary of Agriculture, it is not to be pre- ~

sumed that the Congress intended to delegate to the ©

Secretary an arbitrary discretion to determine, the

market year. This is because legislative bodies are

presumed to act within, and not beyond, their consti-

tutional authority. If the language’ is construed to

mean that the Secretary shali, in the future, ascertain

the market years for the commodity then clearly it

must be held to mean that he shall ascertain the facts

as to what eri _ of time constitutes the market year

for the part commodities involved in the Act.

This would leeks the finding of an existing fact

upon which the tax ‘should operate.

Suppose the Congress had provided for a tax based

upon reasonable market value, such market value to

be ascertained by the Secretary of Agriculture. The

language would not have been indefinite, it would not

delegate a power to determine what the rate of tax

should be, but would have directed an administrative

officer to determine the facts upon which the tax

should operate. Throughout this country Boards of

Equalization, Tax Assessors and Tax Collectors are

daily ascertaining the value of property for purposes

of taxation. There is no more difficulty in finding

the facts as to “the market year” of a commodity

than in determining the market value of a commodity

_or other article of property subject to taxation.

Sections 2, 8, and 9 should be read together in

determining whether there has been an unauthorized

delegation of the power to determine when the tax .

_ shall become effective. ee .

. Section 2 declares it to be the policy at Congress |

” to establish and maintain an equality between pro--

duction and consumption of agricultural commodities

that will re-establish to farmers prices which will give

_agricultural commodities a purchasing power, as

related to articles consumed by. farmers, equivalent

to the purchasing power of such commodities during

“\ the base period. In enacting the law and declaring’

this policy, the Congress found, in effect, that such

“equality did not at the tim@ exist. , |

Section 8 empowers the Secretary, in order“to ef-

fectuate the policy of Congress, to provide-for a re-

. duction. in acreage and production for marketing

“through agreements with producers or other volun- °:

tary methods” and to make provision for rehtal or

benefit payments in connection with such reduction

or upon that part of the production required for do-

-Mestic consumption. |

Section 9 provides that when the Secretary deter-

mines “that rental or benefit payments are to be made

with respect to any’ basic agricultural commodity, he

shall proclaim: such determination and -a. processing *

tax shall be in effect with respect to such commodity.”

The voluntary reductions and the rental and bene-

fiPpayments ate to be made, if at all, for the purpose

of attaining the policy of the Act. Current consump-

tion in domestic,and foreign markets is to be con-.

sidered as well as the cost of agricultural commodities

to the consumer. The Secretary, is to determine,

. through the agencies available to him, when a suf-

ficient number of producers are willing to enter into -

a voluntary reduction program to effectuate the de-

clared poliey Of the Act. The Congress has deter-—

=a

v

_ 24

mined that there is an inequality between production

and consumption; that to establish the desired prices,

reduction in acreage and rental and benefit payments

- should be made. The time when the reduction will ac-

complish the desired is a fact to be found. The practi-

' eability of effectuating the policy depends upon the

willingness of a sufficient number of producers to

‘enter into voluntary agreements for a reduction of

acreage and production with which may be associated

rental and benefit payments, and effectiveness of such

-in accomplishing the desired equality in prices.

The Congress has established the. standards and

has directed the Secretary to find the existence of

certain facts. The Secretary is not empowered to

prescribe a tax or the date that a tax shall become

effective, but Congress has prescribed a tax, and pro-

vided that it shall become eff@ctive upon the existence

of certain facts, to be determined by an administra-

tive officer. ~

: As was said in Samsitein & Co. V. United States,

276 U.S. 394 (407):

“Congress may feel itself unable siceiaiaibeiil

to determine exactly when its exercise of the leg-

islative power should become effective, because

dependent on future conditions, and it may leave

the determination of such time to the decision of

-an Executive, or, as often happens in matters of

state legislation, ‘it: may be left to a opular vote

of the residents of a district to be affected by. the

legislation.” "* * *

“‘The- true distinction, therefore, is, between

the delegation of power to make the law, which

necessarily involves a discretion as to what it

shall be, and conferring an authority or discre-

tion as to its execution, to be exercised under and

in pursuance of the law. The first- cannot be

made to the latter no valid objection can be

made.’ ”

25

The statute involved in Field v. Clark, 143 U. S.

649 (680), provided that “so often as the President

shall be satisfied that the government of any eountry.

producing and exporting” certain commodities *im-

posed duties upon agricultural products of the United

States which “he may deem to be reciprocally unequal

and unreasonable,’ he shall havé the power and it

shall be his duty to suspend” * * * “the provisions

of this Act relating to the free introduction of sugar”

and other named commodities, “for such time as he '

shall deem just.” Speaking of this statute, the Court

said: :

* * * “But when he ascertained the fact that -

duties and exactions, reciprocally unequal and

unreasonable, were imposed upon the agricultural

or other products of the United States by a coun- |

try producing and exporting sugar, molasses, .

coffee, tea or hides, it became his/duty to issue a

proclamation declaring the suspension, as to that

country, which Congress had determined should

occur. He had no discretion in the premises ex-

cept in respect to the duration of the suspension

so ordered. But that related only to the enforce-

ment of the policy established by Congress. As

the suspension was absolutely required when the

President ascertained the existence of a particu-

lar fact, it cannot be'said that in ascertaining

that fact and in issuing his proclamation in obe- -

dience to the legislative will, he exercised the ©

function of making laws. Legislative power was

exercised when Congress declared that the sus-

pension should take .effect upon a named contin-

gency. What the President was required to do

was simply in execution.of the act of Congress.

It was not the making of law. He was the mere

agent of the law-making department to ascertain

and declare the event upon which its expressed

will was to take effect.” (Italics ours)

26

\ ; |

vlt was impossible for the Congress to ascertain in

advance the facts which the Secretary is directed to

determine. ' What he was to do in this relation was

not a matter of making law or prescribing a. tax, but

the determination of facts upon which the Act of

Congress should operate.

When the policy of Congress has been attained or .

the facts upon which the reduction program is to be

begun and rental and benefit payments’ made no long-

er exist, there will be a termination of the tax. A

finding that the- conditions upon which the operations

of the law originally depended no longer exist does

not involve any: more exercise of legislative discretion

than the original finding of the existence of such con-

ditions.

| It is submitted that the rate a the tax is to be |

determined upon readily ascertainable facts; that the

determination of “the marketing year” does not in- _

volve the exercise of legislative discretion; that defi-

nite standards are prescribed as to the time when

the tax shall become effective and as to the time when.

it shall end.

. iv. |

The right to select objects and prescribe rates of

taxation is reposed in the Congress. It is not for the

Courts to weigh the reasonableness of the tax, either

as to rate or objects upon which it is imposed. Pat-

‘ ton V.:.'Brady, 184 U. 8S. 608; McCray v. United

States, 195 U. S. 27 (58); Flint v. Stone Tracy Co.,

220 U. S. 107 (167). “The power to tax involves the

power to destroy.” McCullough v. Maryland, 4 Wheat.

316. *"

27

In Billings v. United States, 939 U. S. 261 (282),

it is said:

aes “lt ig also settled: beyond dispute that the

Constitution is not ‘self-destructive. In other

words, that the powers which it confers: on the

one hand it does not immediately take away on |

the other; that °is to say, that the authority to

tax which is given in express terms is not limited

or restricted by the subsequent provisions of the

Constitution or the amendments thereto, especial-

ly by the due process clause of: the Fifth ———

- ment.”

In Brushaber v. Union Pacific R. R. Go. 240 U..

S. 1 (24), the Court said:

. “So far as the due process clause of the Fifth

Amendment is relied upon, it suffices to say that

there is no pasis for such reliance since it is

equally well settled that such clause is not a limi-

tation upon the taxing power conferred upon

Congress by the Constitution; in other words,

that the Constitution does not confliet with itself

by conferring-upon the one hand a taxing power

and taking the same power away on the other

by the limitations of the due process clause.”

Magnano v: Hamilton, 292 U. S. 40 (44), cites

Brushaber v. Union Pacific R. R. Co., 240 U. S. 1,

and makes the following statement:

ide “Except i in rare and special instances the

due process of law clause contained in the Fifth

Amendment is not a limitation _ the taxing

Potion.” conferred upon Congress by the Consti-

ution.”

The “rare and special instances” are illustrated

by cases like Nichols v. Coolidge, 274 U. 8S. 531;

28

_ Schlesinger v. Wisconsin, 270 U. S. 230; Heiner v.

~ Donnan, 285:U. S. 312; and —— V. Commissioner,

284 U. S.. 206. |

; The tax imposed by this Act is not’ like the taxes '

. considered in the cases cited as illustrating the in-

stances referred to in the quotation from Magnano v.

Hamilton, 292 U.S. 40.

_ The assessment of the tax imposed by t the Act in .

question ‘is upon the cotton processed and the amount

of the tax is determined by the quantity of cotton

processed. The power of the Congress to classify, for

_ purposes of taxation, where thé cldssification bears

a reasonable relation to the purpose of the law, can-

not be questioned. The-processing of agricultural

- commodities has\been classified for purposes of tax-

ation. The classification appears to have a reason-

able relation to the purpose of the Act. It cannot be

contended either that the Congress cannot classify

for the purposes of taxation, or that if this be a

classification, that it is an unreasonable and arbi-

trary classification.

V.

_. The assignments of error.in the Circuit Court of

Appeals and the opinion of the Circuit Court of Ap-

peals in this case raise the question as to whether the

Act is an attempt upon the part of the Congress to

regulate activities solely within the control of the

State. Butler v. United States, 78 Fed. (2d) 1. The

question raised is whether the Act violates the Tenth

Amendment.

It seems tHat this question is ruled by Massachu-

' setts v..Mellon, 262 U. S. 447 (478-488), and not by

Schechter Corporation v. United States, 295 U. S.

_ ©.

are ie

495. The Massachusetts case involved the validity

of an Act. of Congress appropriating money to be

appoytioned ainong such of the several states ag might ~

accept and comply with its provisions,-for the purpose

of cooperating to reduce maternal and infant mor-

tality and protect health. A bureau was provided to

administer the Act in cooperation with state officers. °

' The Act did not require the states to accept its bene-

fits or undertake- to enforce upon the states or the

people of the states obedience to any requirement of

law, but left it optional with the states whether they

accepted or rejected its benefits. The)contention ‘was —

made that the Act constituted an attempt upon the -

part of the general government to induce the states.

_ to yield a portion of their sovereign rights. The

Court said: , .

lel ee enacted it with the iherior

. purpose of tempting them to yield, that purpose.

may be effectively frustrateél by the — ex-

pedient of not yielding.”

._ In the Schechter Corporation case it was said that

the codes involved did not merely give voluntary trade

or industrial associations privileges or immunities,

‘ but involved “the coercive exercise of the law-making

power,” and that

“The codes of fair competition which the stat-

ute attempts to authorize are codes of laws. If

valid, they place all persons within their reach

under the obligation of positive law, binding

equally those who assent and those who do not

. assent. Violations of the provisions of the codes: .

are punishable as crimes.” (I(glics ours)

The distinction between the statute invelved in

the Massachusetts case and the code and statute

30 :

‘involved in the Schechter case is that the one in-

volved in the former made acceptance of its benefits -

optional, while the one involved in the latter made .

obedience to its terms obligatory. ~ — }.

. “The*same distinction exists between the Act in-. ©

volved in this case and the statute and code involved

in the Schechter Corporation case. There ig no pro-

vision in the statute to compel any farmer to enter

into an agreement to reduce the acreage planted to

cotton or any other commodity mentioned in the stat-

ute. There is no provision requiring any farmer to

accept any rental or benefit payments. The language

of the Act is that the Secretary shall have ,power to

provide for reduction in acreage “through agreements

with producers, or by other voluntary methods, and to

-. provide for rental or benefit payments in connection |

therewith.” There is no semblance of a requirement

or an attempt’ to require that any farmer enter into

a reduction agreement; the acceptance of the benefits

of the Act is entirely optional.. The Secretary may —

enter into contracts with such farmers as wish to

contract with him, but there is no provision requiring

any farmer to so contract or to reduce his acreage.

‘When @ voluntary contract is made between the Sec-

retary and a farmer, the Secretary may pay rental

or benefit payments to him from money appropriated

for that purpose. The right of the State, if any

exists, to control commodities to which its land may

be planted remains unimpaired by the provisions of -

this Act. What Congress may have’ hoped would be

the result upon prices and production by the expen-

diture of money appropriated is one thing; and an

attempt upon the part of Congress to control a matter

of purely State concern would be an entirely differ-

ent thing.

) “ -

vi.

. The power of Congress to impose a tax is one’

thing; its. power to make an appropriation is another

> thing. There is a wealth of instances in which —

Congress has made appropriations similar to the

appropriations made in this Act. One purpose for .

which the. money is appropriated is “the removal of.

surplus agricultural products.” In recent years Fed-

eral agencies have-been authorized to buy. agricul-

tural commodities and to lend public money on agri-

cultural commodities. Governmental agencies have

been authorized to lend money to banks and trust ,

companies, to irrigation districts, to cities and towns,

~ and to invest public money in the stocks of state and

national banks. Public. money has been appropriated

to promote the public health in the several states; to

advance education; for social welfare work; in py,

3 viding food for needy and distressed people ; for mak-

ing loans to agricultural and livestock raisers in

drought stricken areas. Many instances might. be

furnished where Federal agencies over a long period

of years have been authorized to spend Federal

money in the relief of physical.and economieal dis-

tresses. There is nothing novel about the appropria-

tion made by this Act.

A citizen might as well be heard to contest the val-

iuity of an inceme or inheritance tax imposed against

him on the claim that a part of the tax paid may later

- be appropriated to some Federal agency to lend to .

some bank, or to some poverty stricken person in

some tenement section of a great city, or to some

drought stricken ranchman in the arid part of West

Téxas, as for Respondents to question the validity of

the tax because of the appropriation of the proceeds. -

~

e.. ae:

Vii.

In the ‘Act approved Augugf 24, 1935 (Public No.

_ 820, 74th Cong., 1st Sess.), amending the Agricul-

P tural’ Adjustment Act, it is provided: — oe

“The taxes imposed under this title, as deter-

‘mined, prescribed, proclaimed and made effective.

by the proclamations and certificates of the Sec-

retary of Agriculture or of the President and by

the regulations. of the Secretary with the ap-

proval of the President prior to the date of the .

a ion of this amendment, are hereby .legal-

‘ized and ratified, and the assessment, -levy, col-—

lection, and accrual of all such taxes” * * *

“prior to said date are hereby legalized and rati- ..

fied and confirmed as fully to all intents and

purposes as’ if each such tax had been made

effective ‘and the rate thereof fixed: ss

by prior. Act of Congress.” * * * “Nothing in

thie section shall be construed to import illegality. ~

to.any act, determination, proclamation, certifi-

cate, or regulation of ‘the Secretary of Agricul-

ture or of the President: done or made prior to

the date of the adoption of this amendment. .

“ * * * “The making of ‘rental and benefit pay-

ments under this title, prior to the date of the

adéption of this amendment, as determined, pre-

sc , proclaimed and made effective by the

proclamations of the Secretary of Agriculture or

of the President, or by regulations of the Secre-

tary” *.* *, “and the adoption of other voluntary

methods prior to such date” * * * “are hereb

legalized and ratified,-and the making of all suc

agreements bee YP ig the initiation of éuch

programs, and the ae ee of all such methods

prior to such date are hereby legalized, ratified,

* and confirmed” * * *, '

The power of the Congress to ratify an illegal

assessment of taxes which was made under the

. 1]

,

,

A eae re eee ee

33

~. faith of congressionsil enactment, and which taxes

the Congress had the power to impose, cannot be

questioned. It is within the pqwer of Congress to so

ratify an illegal assessment of taxes, even after the

commencement of. suit for restitution.. ‘It has been

held that in dedling with the Philippine Islands Con-

. ‘gress may delegate legislative authority to agencies .

selected by it and may ratify the acts 6f such agents,

the same as if the acts had been /Specifically author-

. ized by prior Act. United States v.. Heinszen; 206

U. S. 370; Rafferty v. Smith, Bell & Co., 257 U.S. |

. 226; Dorchy v. Kansas, 264-0. 8. 286; Charlotte Her-

bor Ry. Co. Vv. Welles, 260 UV. S. 8; Kansas City So.—

Ry. Co. v. Road Improvement. Dist., 266 U.S. 379;

Hodges v. Snyder, 261 U.S..600. ° |

‘The ratification of the taxes involved in this suit.

being valid, aif questions of improper delegation of ©

legislative power are answered by the ratifying Act.

It is, therefore, respectfully submitted that the

. processing tax and floor-stocks. taxes are valid ex-

cises; that there has been no improper delegation of

legislative power by the Act involved, and if there .

ever were such, it has been cured by the validating

Act; that the statute does not contravene either the

Fifth or Tenth Amendment; that the Respondents

have no right to question either the’ validity of the

Act or the validity of the assessment and collection

of the taxes involved in this case because of the exer-

cise by Congress’ of its fiscal power to appropriate

= _— of the tax, and that the Act en be

upheld.

Respectfully submitted,

fp GREENWOOD, MoopY AND ROBERTSON,

Attorneys for Texas Agricultural

Association, Amseys Curiae.

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