Summary
recognizing that despite formal remedy available under Kentucky law, taxpayers could not actually collect, “for lack of funds in the Treasury”
Summary of this case from Wal-Mart Puerto Rico, Inc. v. Zaragoza-GomezOpinion
No. 27.
Argued October 21, 1932. Decided October 24, 1932.
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. 10. Reversed.
Mr. Robert S. Marx, with whom Messrs. John C. Doolan, Frank E. Wood, Harry Kasfir, and James W. Stites were on the brief, for appellants.
Mr. S.H. Brown, Assistant Attorney General of Kentucky, with whom Messrs. Bailey P. Wootton, Attorney General, Francis M. Burke, Assistant Attorney General, and Leslie W. Morris were on the brief, for appellees.
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 statute invoked (Kentucky Acts of 1930, c. 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 Commn. 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, 688; Atlantic Coast Line R. Co. v. Daughton, 262 U.S. 413, 426.