A bill in equity to restrain the collection of state taxes under
a statute alleged to violate the federal Constitution should not be
dismissed on bill and answer upon the ground that the statute
affords an adequate legal remedy by payment under protest and
action to recover when the allegations of the bill put in doubt
whether, if that remedy were pursued and the claim allowed,
satisfaction of it could be secured certainly and within a
reasonable time out of the fund designated by statute as the source
of such payments. P.
287 U. S. 10.
Reversed.
These were four suits by retail merchants seeking to enjoin
collection of taxes on gross sales, measured by progressively
increasing rates. All the bills invoked the due process and equal
protection clauses of the Fourteenth Amendment, and, in two of
them, it was claimed also that the tax operated as a direct burden
on interstate commerce. By stipulation, the cases were heard
together and disposed of by one opinion of the three-judge District
Court. The cases were treated as submitted upon bill and answer, as
well as upon plaintiffs' motion for preliminary
Page 287 U. S. 10
injunctions and defendants' motions to dismiss, and all suits
were dismissed. The tenth section of the Kentucky statute, referred
to in the court's opinion, is copied below.**
PER CURIAM.
After interlocutory injunction had been granted, these cases
went respectively to final hearing upon motions to dismiss the
bills of complaint, and these were dismissed solely upon the ground
that plaintiffs had an adequate remedy at law. The Court is of the
opinion that the decision cannot be sustained merely upon the face
of the
Page 287 U. S. 11
statute invoked (Kentucky Acts of 1930, chap. 149, § 10) in
view of the allegations of the bills of complaint that the only
remedy provided is to obtain warrants upon the general fund of the
state in the hands of the state treasurer to be paid if and when
funds are available for the payment of such warrants in the usual
and orderly course; that there are now outstanding many such
warrants drawn by the auditor of public accounts upon the general
fund in the hands of the state treasurer, which have been
outstanding since June, 1927, and cannot be collected by the owners
or holders for lack of funds in the treasury, and that there were
at the time of the beginning of these suits outstanding warrants
aggregating $9,880,502.76 drawn by the auditor of public accounts
upon the state treasurer, presented for payment but not paid for
lack of funds.
See State Budget Commission v. Lebus, 244
Ky. 700, 703, 714, 51 S.W.2d 965, as to warrants outstanding.
Defendants' answers denied the above-mentioned allegations, but it
does not appear that there has been a hearing upon evidence of the
issue tendered, and no findings of fact upon the subject have been
made by the courts below.
The decrees are reversed, and the causes remanded to the
District Courts, of three judges, for final hearing upon the
merits, without prejudice to a determination upon evidence with
respect to the questions of the status of outstanding warrants upon
the general fund in the state treasury, and whether warrants of the
sort contemplated by § 10 of the act in question are accorded
preference in payment over other warrants and the basis, if any,
for the assurance that such preference will be continued so that,
in the event of actions by the plaintiffs at law under § 10,
they would be afforded a certain reasonably prompt and efficacious
remedy.
Davis v. Wakelee, 156 U.
S. 680,
156 U. S. 688;
Atlantic Coast Line R. Co. v. Doughton, 262 U.
S. 413,
262 U. S. 426.
* Together with No. 28,
Levy, et al. v. Lewis et al.,
and No. 29,
J. C. Penney Co. v. Same, both from the
Western District of Kentucky, and No. 30,
Kroger Grocery &
Baking Co. v. Same, from the Eastern District.
**
"§ 10. No suit shall be maintained in any court to restrain
or delay the collection or payment of the tax herein imposed upon
any ground whatever, but the aggrieved taxpayer shall pay the tax
as and when due, and, if paid under protest, may at any time within
two years from the date of such payment sue the Auditor of Public
Accounts in an action at law to recover the tax so paid, with legal
interest thereon, from the date of payment. If it is finally
determined that said tax, or any part thereof, was wrongfully
collected for any reason, it shall be the duty of the Auditor of
Public Accounts then in office to issue his warrant on the
Treasurer of the Commonwealth of Kentucky for the amount of such
tax so adjudged to have been wrongfully collected, together with
interest thereon, and the Treasurer shall pay same out of the
General Fund of the State. A separate suit need not be filed for
each separate payment made by any taxpayer, but a recovery may be
had in one suit for as many payments as may have been made, and
which are not barred by the limitation of two years herein
imposed."
