from the carriers, and I feel that I am constrained therefore to hold that the tax act is unconstitutional as applied to the carriers.
As to the questions raised by the intervening employees of the Atlantic Coast Line Company: The decision in the first Alton Case apparently does not pass upon the question whether a compulsory retirement system, financed in whole or in part by compulsory contributions from the employees themselves would be unconstitutional. The system set up by the two acts in question here, however, seems to be subject to many of the constitutional objections raised by the Supreme Court in the Alton Case, notably in the reduced annuities if the employee wishes to continue in service after reaching the age of sixty-five; the provision as to payment to persons who have reached the age of sixty-five, at the date of enactment of the Retirement Act; and provisions for retirement of those whose services have been performed before the date of the act, and who may have contributed nothing in support of the retirement system.
In addition to this, it is clear from the statements of those in charge of the two bills that Congress did not intend to enact them, if the expense was not to be borne in part by the carriers, and that no part of the burden should rest upon the government.
The defendants have moved to dismiss both the bill and the intervening petition upon the ground that equity has no jurisdiction, relying upon R.S. § 3224 (26 U.S.C.A. § 1543): "No suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court."
The Supreme Court has held where the remedy at law is sufficient the act controls, but that "in cases where complainant shows that in addition to the illegality of an exaction in the guise of a tax there exist special and extraordinary circumstances sufficient to bring the case within some acknowledged head of equity jurisprudence, a suit may be maintained to enjoin the collector." Miller v. Standard Nut Margarine Company, 284 U.S. 498, 52 S. Ct. 260, 263, 76 L. Ed. 422.
In think that the case at bar presents extraordinary circumstances, rendering relief in equity necessary. It is clear that, if this tax be illegal, the carriers will suffer irreparable loss. There will be serious disruption in the relations between the carriers and their employees. Many employees will have relinquished their employment with the carriers within the next year, upon the assumption of the permanency of their annuities provided for in the Retirement Act, and their positions will be filled by others. Rate adjustments may depend upon the validity of the tax. Reorganization plans will be delayed. Great accounting expense will be imposed upon the carriers, and this will be necessary from the fact that exact records are available only in the offices of the carriers. The cost of this will approximate some $700,000, and this sum would be entirely lost if the tax should hereafter be declared illegal in an action at law.
For these reasons I think that equity has jurisdiction of this suit.
The plaintiffs have moved to strike certain testimony introduced by the defendants, and the latter have moved to strike certain testimony offered by the plaintiffs. While certain of the matters brought out by the defendants' questionnaires are, I think, incompetent, they have had no influence on my decision, and, without going into detail as to my reasons, I overrule both motions, largely because I think the testimony objected to is of slight materiality.
The defendants the Railroad Retirement Board and its individual members will be enjoined from making any order, or from instituting or taking any step toward the institution of any actions, proceedings, or prosecutions, designed to compel plaintiffs or their officers or any of them to assemble, compile, or furnish any of the information and records required, or which may be required, to be furnished under said Retirement Act.
And the defendant Guy T. Helvering, individually and as Commissioner of Internal Revenue, will be enjoined from making any order and from instituting or taking any steps toward the institution of any actions, proceedings, or prosecutions designed to compel plaintiffs or their officers or any of them or the interveners to pay any amount pursuant to the tax act, and from demanding, collecting, or attempting to collect, any such amount from plaintiffs or the interveners or any of them.
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