Sunshine Anthracite Coal Company v. Adkins

1. The 19½% tax imposed by § 3 (b) of the Bituminous Coal Conservation Act (1937) on sales of such coal by producers, "which would be subject to the application of the conditions and provisions of the code provided for in § 4, or of the provisions of § 4A," applies to producers who. are not members of the code, although under § 4 the provisions of the code are for code members only. P. 391.

A contrary construction would read the 19½% tax out of the Act, (since by § 3 (b) code members are exempt from it); the essential sanction of the Act would then disappear and its effectiveness would be seriously impaired. Section 4 is made expressly applicable "only to matters and transactions in or directly affecting interstate commerce." It seems plain that the tax was intended to apply only to those sales by non-code members which "would be" subject to regulation under § 4. P. 392.

2. The constitutionality of the Act is upheld over the contentions that the 19½% tax is not a tax but a penalty; that Congress lacks power to fix minimum prices for bituminous coal sold in interstate commerce; that there has been an invalid delegation of legislative and judicial power; and that the division of bituminous coal into code and non-code classes is improper, Pp. 393 et seq.

3. The taxing power of Congress may be used as a sanction for the exercise of another granted power. P. 393.

4. The regulatory provisions of the Act are within the commerce power; they apply only to sales or transactions in, or intimately affecting, interstate commerce. P. 393.

5. Price control is a means available to Congress for the protection and promotion of the public economy. P. 394.

Courts are not concerned with the wisdom, pdlicy or appropriateness of this legislation. But the state of the bituminous coal industry and its history and public importance, plainly support the judgment of Congress that price-fixing and the elimination of unfair competitive practices were appropriate methods for prevention of the financial ruin, low wages, poor working conditions, strikes, and disruption of the channels of trade which followed in the wake of the demoralized price structures. P. 394

[p382] 6. Congress may modify the prohibitions of the Sherman Act by placing the machinery of price-fixing in the hands of public agencies. P. 396.

7. Congress may single out a particular industry and remove as to it the penalties of the Sherman Act. P. 396.

8. The commerce clause empowers Congress to stabilize an interstate industry through a process of price-fixing which safeguards the public interest by placing price-control in the hands of its administrative representative. P. 396.

9. The standards specified by § 4, II (c) of the Bituminous Coal Act to control the Commission in fixing maximum and minimum prices binding code members, are adequate, and there is no invalid delegation of legislative power. P. 397.

10. In the matter of price-making, code members are subordinated by the Act to the Commission, so that there is no delegation of legislative authority to the industry. P. 399.

11. The definition of bituminous coal in the Act, § 17 (b), is adequate as a standard for the Commission's action in determining what coal is subject to the Act. P. 399.

12. The Act makes no invalid delegation of judicial power to the Commission for determining whether a particular coal producer falls within its provisions; and it grants sufficient judicial review. P. 400.

13. A contention that the Act, by classifying the coal as code and non-code and applying the 19½% tax to the latter alone, violates the Fifth Amendment, is rejected, since the procedural features satisfy due process, and the Fifth Amendment has no equal protection clause; nor is uniformity required by the commerce clause. P. 400.

14. A judgment sustaining on review a determination by the Bituminous Coal Commission that a producer's coal is "bituminous" within the meaning of § 17 (b) of the Bituminous Coal Conservation Act, thus subjecting him to the 19½% tax laid on sales by producers who have not joined the code, is res judicata in a suit by the producer to enjoin the Commissioner of Internal Revenue from collecting the tax. P. 401.

15. Where Congress has created a special administrative procedure for determining the status of persons and companies under a regulatory Act, and has prescribed a procedure satisfying due process, that remedy is exclusive. P. 404.

[p383] 16. In the circumstances of this case, appellant is not entitled to relief from payment of taxes accrued during the litigation since the date fixed by the decree below. P. 404.

Affirmed.

from a decree of the District Court dismissing a bill to enjoin the collection of taxes. See also 31 F. Supp. 125 and 105 F. 2d 559.

Mr. Henry Adamson, with whom Mr. George O. Patterson was on the brief, for appellant.

This case does not challenge either directly or indirectly any order of the Commission, and, in any event, there is no privity between the National Bituminous Coal Commission or its successor and the appellee herein.

No power to hold hearings and make determination of what is or is not bituminous coal within the meaning of the Bituminous Coal Act of 1937 is delegated by the Act, either directly or inferentially, to the National Bituminous Coal Commission or its successor.

If the statute be construed as delegating to the Commission power to determine the object to which the law is to be applied, without fixed standards, it is invalid as an unconstitutional delegation of legislative power. If it be construed as delegating power to exercise the judicial function of construction of the Act, then it is invalid as an unlawful delegation of judicial power.

Construction of the Act as to the meaning of "bituminous, semi-bituminous and sub-bituminous" is a judicial function and can not be delegated to an administrative tribunal.

Since appellant is a non-code producer, sale of appellant's coal is not subject to the application of provisions of the Code provided for in § 4 or of the provisions of § 4-A, and therefore is not subject to the so-called 19½% tax.

[p384] The Bituminous Coal Act of 1937 is unconstitutional for the following reasons: (a) The division of a natural class, bituminous coal, into artificial classes of code and non-code for regulatory purposes is unreasonable and arbitrary, and violates the Fifth Amendment. (b) The so-called 19½% tax on-sale price of coal is obviously not a tax, but a confiscatory penalty assessed without fault on the part of the appellant. Exemption from said so-called tax is based not upon difference in either conduct or product, but solely upon membership in the code. Such classification for exemption purposes is clearly unreasonable and arbitrary, and not in any wise a proper, method of accomplishing a proper congressional purpose, and violates the Fifth Amendment. Membership or nonmembership in an organization certainly cannot be a proper basis for classification either for purposes of regulation or taxation. (c) Congress is without power to fix minimum prices for bituminous coal sold in interstate commerce. Nebbia v. New York, 291 U.S. 502, 536; United States v. Rock Royal Co-operative, 307 U.S. 533. Mulford v. Smith, 307 U.S. 38, distinguished.

Attorney General Jackson, with whom Solicitor General Biddle, Assistant Attorney General Arnold, and Messrs, Robert L. Stern, Robert E. Sher, Hugh B. Cox, and Abe Fortas were on the brief, for appellee.

The price-fixing provisions of the Bituminous Coal Act of 1937 are in substance the same as those contained in the Bituminous C&al Conservation Act of 1935. Although the majority of the Court in Carter v. Carter Coal Co., 298 U.S. 238, did not pass upon the validity of these provisions, the dissenting opinions indicated that they were valid.

Since the regulatory provisions apply only to sales in or directly affecting interstate commerce, they are a valid exercise of the federal commerce power. United States v. Rock Royal Co-operative, 307 U.S. 533.

[p385] Statutes fixing prices do not violate the due process clause. Mayo v. Lakeland Highlands Canning Co., 309 U.S. 310. Even if conditions in an industry be deemed material, the burden of proving that the regulation is arbitrary or capricious and of overcoming the presumption of constitutionality is upon the person assailing the validity of the statute, and that burden has not been sustained by appellant here. Moreover, both the record in this case and facts subject to the Court's notice demonstrate that the regulatory provisions are not arbitrary, capricious, or unreasonable.

The circumstances warranting the establishing of minimum prices in the coal industry were substantially the same as those described by this Court in Nebbia v. New York, 291 U.S. 502, with respect to the milk industry.

The price-fixing provisions contain much more detailed standards than those prescribed for the use of the Interstate Commerce Commission and the Secretary of Agriculture in fixing rates under the Interstate Commerce Act and the Packers and Stockyards Act and in other regulatory statutes. The argument that there is an invalid delegation of legislative power is plainly without substance. The definition of "bituminous coal" in § 17 (b) constitutes a satisfactory standard, which is not rendered inadequate because of the possible existence of borderline cases where its application may be difficult. Cf. Shields v. Utah Idaho Central R. Co., 305 U.S. 177.

The grant of authority to the Commission to determine the question of fact as to the status of coal under the Act is not an invalid delegation of judicial power. The decision is reviewable by the courts. Crowell v. Benson, 285 U.S. 22, is not in point; appellant is admittedly engaged in interstate commerce, and no constitutional rights depend upon the factual question here in issue. Cf. Shields v. Utah Idaho Central R. Co., 305 U.S. 177.

[p386] Section 3 (b) provides specifically that producers who become code members are exempt from the 19½% tax. If the tax is not applicable to non-code members, it cannot apply to any one. Both the language of the statute and its legislative history show that Congress did not intend to accomplish any such absurd result.

The 19½% tax is valid regardless of whether it is a tax or a penalty, inasmuch as the regulatory provisions which the section is aimed to effectuate are a legitimate exercise of the commerce power. There can be no question of the power of Congress to impose penalties in order to enforce laws enacted under any of the enumerated powers.

If the tax be a penalty, there can be no improper classification in applying it only to those who fail to comply with the regulatory plan which it is designed to enforce. Furthermore, the choice of whether to subject itself to the tax or the regulatory scheme lay entirely with appellant, and appellant can not complain because the burden of the tax now turns out to be greater than that of the system of regulation which it could voluntarily have accepted instead. In any event, the differentiation between code members and non-code members is valid as a means of equalizing the burdens imposed upon the two groups. New York Rapid Transit Corp. v. New York, 303 U.S. 573, 580.

The decision in Sunshine Anthracite Coal Co. v. National Bituminous Coal Commission, 105 F.2d 559, is clearly res judicata with respect to the status of appellant's ease. Although the National Bituminous Coal Commission and the collector of internal revenue may nominally be different parties, they are in legal effect the same, both representing the United States. Under the statute the Commission determines the applicability of the Coal Act both for regulatory and tax purposes. It is settled that there is privity between officers representing the same government, and that although a judgment entered [p387] in a case against a collector may not be binding in a suit against the United States, a judgment in an action against the United States or its representative is conclusive in a suit against a collector. Tait v. ''Western Maryland Ry. Co.'', 289 U.S. 620.

The District Court also was barred from determining the status of appellant's coal because of the existence of a complete administrative and statutory remedy, the adequacy of which has been demonstrated with respect to appellant itself. Moreover, the power to review the orders of the Commission is vested by the Act exclusively in the Circuit Courts of Appeals (§ 6 (b), (d)). This statutory limitation upon the jurisdiction of the District Courts is valid. ''Anniston Mfg. Co. v. Davis'', 301 U.S. 337.