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MERKEL, INC. v. RASQUIN

September 5, 1935

MERKEL, Inc.,
v.
RASQUIN



The opinion of the court was delivered by: CAMPBELL

CAMPBELL, District Judge.

This is a motion for a preliminary injunction, effecting a like restraint during the pendency of this action, as prayed for in the bill of complaint with reference to a permanent injunction.

The plaintiff, a New York corporation, having its principal place of business in the borough of Queens, in the city, state, and Eastern district of New York, on August 22, 1935, brought this action for a permanent injunction restraining the defendant, the collector of internal revenue for the First (collection) district of New York, from assessing or collecting from the plaintiff any processing tax or taxes, pursuant to the Act of May 12, 1933, c. 25 (48 Stat. 31, as amended, title 7, §§ 601-620, U.S. Code [7 USCA §§ 601-620]), commonly known as the Agricultural Adjustment Act.

 After argument of this motion, and at the time when its brief was presented, the plaintiff filed an amended bill of complaint.

 That amended bill of complaint is not before me and cannot, and will not, be considered by me on this motion, which is based solely on the original bill of complaint and the affidavit of Herman A. Lauer, verified August 21, 1935, on which the order to show cause was granted.

 Plaintiff by letter accompanying its brief has asked leave to withdraw this motion, presumably to allow it to move on the amended bill of complaint and a new affidavit or affidavits.

 The defendant objects to the plaintiff being allowed to withdraw this motion, and asks as of right for a decision of this motion, and I believe that the defendant is entitled to have this motion decided.

 This is not a trial, nor is it a motion to dismiss, nor could it be, in view of the filing of the amended bill of complaint, which is not before this court for consideration at this time, the court simply knowing that an amended bill of complaint has been filed.

 Therefore the only question now before this court is, Do the facts alleged in the original bill of complaint and the affidavit of Herman A. Lauer, on which this motion is made, justify the issuance of an order enjoining and restraining the collector during the pendency of this action from collecting the tax?

 The plaintiff in its original bill of complaint alleges, in substance, that it is "engaged in the meat packing business, that is to say, the purchasing, slaughtering and packing of hogs, and the conversion thereof into various types of packed, canned and cooked meats. * * *"

 That as a result of certain determinations and orders of the Secretary of Agriculture, the processing tax for which the act provides has been imposed upon hogs.

 That under the act and these determinations and orders of the Secretary, a processing tax for the month of June, 1935, in the sum of $4,187.27 has been assessed by the Commissioner of Internal Revenue against plaintiff, and that by various proceedings the collector, unless restrained, will in a short time collect the amount of the tax, together with the penalty and interest, for which the statute provides.

 The plaintiff further alleges, in substance, that it cannot pay this tax without suffering a depletion of its cash assets, which will preclude its continuing in business; that many of its competitors have obtained orders restraining the collection of the tax, and thereby are enabled to undersell plaintiff in the market; and that "there is pending before the President awaiting his signature" certain amendments to the act which constitute a menace that the right of a taxpayer to sue for a refund of a tax unlawfully imposed will be withdrawn from payers of the processing tax.

 The plaintiff's complaint is based on the claim that processing tax provisions of the Agricultural Adjustment Act are unconstitutional and void.

 Plaintiff predicates its claim for injunctive relief (1) on the nullity of the statutory provision imposing the tax, (2) the hardship which plaintiff will suffer if required to pay the taxes assessed under this statute, (3) the alleged menace that its right to recover by an action at law will be lost by the amendment of the statute alleged to be imminent.

 On the argument of this motion it was conceded on behalf of the defendant, and I will assume, but do not so find, that the prohibition against the maintenance of suit was no broader than section 3224 of the Revised Statutes (Title 26, § 154, U.S. Code, 26 USCA § 154, see 26 USCA § 1543) which reads as follows: "No suit for the purpose of ...


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