BAILEY, COLLECTOR OF INTERNAL REVENUE, ET AL.
v.
GEORGE, TRADING AND DOING BUSINESS AS VIVIAN COTTON MILLS, ET AL.
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A cotton manufacturer challenged the constitutionality of a federal tax imposed under the Child Labor Tax Law of 1919 for allegedly employing children, and sought an injunction against the tax collector's collection efforts. The Supreme Court reversed the lower court's injunction, holding that the statutory prohibition against suits to restrain tax assessment or collection applies even when a taxpayer claims the tax is unconstitutional, and that the manufacturer had an adequate legal remedy by paying the tax under protest and then suing for recovery.
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Mr. Chief Justice Taft delivered the opinion of the court.
The decree entered herein by the District Court and appealed from, directly, to this court, under § 238 of the Judicial Code, recited that the complainants operated a manufacturing plant for the production of cotton goods in Gaston County, North Carolina; that the defendant was a Federal Collector of Internal Revenue; that on the ground that complainants had employed children in their factory within the limits of ages prescribed in § 1200 of the act of Congress, known as the Child Labor Tax Law, approved February 24, 1919, c. 18, 40 Stat. 1057, 1138, they were under its terms assessed the sum of $2,098.06; that they filed a claim for abatement of the same, which was denied, that the Collector was about to make the exaction by distraining* complainants’ property, levying on it and selling it, that the act of Congress purporting to authorize the assessment was invalid under the Constitution of the United States, and on these grounds permanently enjoined the Collector from proceeding to collect the assessment.
An examination of the bill shows no other ground for equitable relief than as stated in the order. The bill does aver “That .these your petitioners have exhausted all legal remedies and it is necessary for them to be given equitable relief in the premises ”; but there are no specific facts set forth sustaining this mere legal conclusion. Section 3224, Rev. Stats., provides that “ No suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court.” The averment that a taxing statute is unconstitutional does not take this case out of the section. There must be some extraordinary and exceptional circumstance not here averred or shown to make the provisions of the section inapplicable. Dodge v. Brady, 240 U. S. 122, 126. In spite of their averment, the complainants did not exhaust all their legal remedies. They might have paid the amount assessed under protest and then brought suit against the Collector to recover the amount paid with interest. No fact is alleged which would prevent them from availing themselves of this form of remedy.
The decree of the District Court is reversed and the cause remanded with directions to dismiss the bill.
Reversed.
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Flora v. United States, 362 U.S. 145 (U.S. 1960)…[including the Cheatham case] have established the rule that the proper course, in a case of illegal taxation, is to pay the tax under protest or with notice of suit, and then bring an action against the officer who collected it”); Bailey v. George, 259 U. S. 16, 20. (1922) (“They might have paid the amount assessed under protest and then brought suit against the Collector . . . .”). This view of Cheatham also corresponds to that of the Court of Appeals in this case. 246 F. 2d, at 930. See also Bushmiaer…
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Bob Jones Univ. v. Simon, 416 U.S. 725 (U.S. 1974)…motives to the Service ignores the fact that petitioned has not shown that the. Service’s action, is without an independent basis in the requirements of the Code. Moreover, petitioner’s argument fails to give appropriate weight to Bailey v. George, 259 U. S. 16 (1922). In that case, the Court held that the Act blocked a pre-enforcement suit to enjoin collection of the federal Child Labor Tax, although •the tax was challenged as a regulatory measure beyondthet taxing power of Congress. . Significantly, the…1 / 2
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Graham v. du Pont, 262 U.S. 234 (U.S. 1923)…en approved in Shelton v. Platt, 139 U. S. 591; in Pittsburgh, etc., Ry. v. Board of Public Works, 172 U. S. 32; in Pacific Steam Whaling Co. v. United States, 187 U. S. 447, 451, 452; in Dodge v. Osborn, 240 U. S. 118, 121, and in Bailey v. George, 259 U. S. 16. The District Court recognized the sweep of these decisions in respect of the contention of the complainant that the assessment of this tax and the threatened distraint to collect it were barred by limitations under the statute, and was of opinion…
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Join FLexlaw to unlock all legal intelligenceAuthorities Cited (14 total)
- Taylor v. Secor, 92 U.S. 575 (U.S. 1875)
- McCRAY v. United States, 195 U.S. 27 (U.S. 1904)
- Hammer v. Dagenhart, 247 U.S. 251 (U.S. 1918)
- New Jersey v. Anderson, 203 U.S. 483 (U.S. 1906)
- Poindexter v. Greenhow, 114 U.S. 270 (U.S. 1884)
- Houck v. Little River Drainage Dist., 239 U.S. 254 (U.S. 1915)
- Dodge v. Osborn, 240 U.S. 118 (U.S. 1916)
- Cummings v. Nat'l Bank, 101 U.S. 153 (U.S. 1879)
- Cheatham v. United States, 92 U.S. 85 (U.S. 1875)
- Snyder v. Marks, 109 U.S. 189 (U.S. 1883)