which the Commissioner had so determined.
The most that the plaintiff can find to support him in these decisions and others of a generally similar character is that exceptions to the operation of section 3224 have been recognized in spite of its plain language.
In Bailey v. George, 259 U.S. 16, 42 S. Ct. 419, 66 L. Ed. 816, the court held that an averment that the taxing statute is unconstitutional does not take the case out of the statute in the absence of extraordinary and exceptional circumstances. This decision has not been overruled either expressly or impliedly.
There remains to be considered the recent decision of the Supreme Court in Rickert Rice Mills, Inc., v. Fontenot (referred to as the Rice Millers' Case), 56 S. Ct. 374, 80 L. Ed. , decided January 13, 1936, in which the cause was remanded to the District Court for the entry of a decree enjoining the collection of the alleged processing tax imposed by the Agricultural Adjustment Act of 1933, as amended (7 U.S.C.A. § 601 et seq.). The basis of that decision is plain. It is that what was called a tax in the statute was never intended to be and was not in fact a tax at all but merely an instrument or weapon for effectuating the regulation of agricultural production, a matter not within the powers of Congress. This is far from holding that the collection of an unconstitutional tax may be enjoined, and does not touch the decision in Bailey v. George.
The plaintiff argues in the case at hand that the Rice Millers' Case should rule because the coconut oil tax is a part of the general scheme of the Agricultural Adjustment Act. This is, however, pure speculation, and I find no substance to support it. The sum of the remaining contentions made by the plaintiff in an endeavor to bring his case within the Rice Millers' decision is that the act is unconstitutional, first, because the act transcends article 1, section 8, of the Constitution, the tax not being laid for the purpose of paying the debts or for providing for the common defense or general welfare (the argument is that the money raised by the tax does not go into the general funds of the United States, but is held intact and ultimately paid to the Philippine treasury; the Philippine Islands being either an independent government or, if not, a single limited possession of the United States); second, that the tax lacks uniformity.
It is unnecessary to decide the constitutional questions raised at this stage of the proceeding. If resolved in favor of the plaintiff, it would simply mean that the tax was unconstitutional because beyond the power of Congress. It would not mean that the levy imposed was not a tax. To reach that conclusion, under the Rice Millers' Case, it would have to appear affirmatively that it was something else, an instrument for the accomplishment of some well-defined and clearly disclosed purpose forbidden to Congress and having no connection whatever with the revenue raising function. I am clearly of the opinion that the principle of the Rice Millers' Case does not apply.
An examination of the bill and affidavits fails to disclose exceptional or extraordinary circumstances which would justify the issuance of an injunction in the face of the statutory prohibition. The amount of tax due is $12,390. Presumably monthly installments of approximately that amount will accrue in the future. The suggestions of multiplicity of suits to recover the tax and of the possibility that Congress may enact legislation forbidding or limiting claims for refund are hardly worth considering. The same may be said of the statement in one of the affidavits that in another judicial district an injunction has been issued, which fact puts the plaintiff at a disadvantage with the competitor thus protected.
The affidavit also alleges that the tax has so increased the cost of producing coconut butter, but which was a substantial part of the plaintiff's business that it can no longer be sold in competition with cocoa butter, and that the plaintiff's business has been thereby injured. There is also an allegation that consumers have increasingly turned to other products made from other competitive materials, such as cottonseed oil. Another statement is that many of the plaintiff's customers have objected to paying the tax when the plaintiff attempted to pass it on to them by including it in the price of the articles sold them and that the plaintiff is threatened with the loss of their business.
These and similar allegations fall very far short of a showing of the exceptional circumstances which have been recognized as a proper cause for the exercise of injunctive relief. They amount in all to a complaint that the tax is oppressive and burdensome, difficult to pass on, and likely to divert business profits to those who deal in competing articles. I have no doubt that most excise taxes have been met by arguments of this nature from reluctant and frequently injured taxpayers. They are, however, considerations which apply to all those upon whom the tax falls. They have to do with the wisdom of the tax, and involve the question of its economic justification. They are properly addressed to the Congress and not the courts.
The motion for preliminary injunction is denied, and the restraining order vacated.
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