229, 165 Fed. 195; United States Mitis, Company, a New Jersey corporation. Co. v. Detroit Steel & Spring Co. 122 Fed. The attorney general of the common863; Ransome-Crummey Co. v. Marten- wealth and the auditor of public acstein, 167 Cal. 406, 139 Pac. 1060; Lex- counts were made defendants in each. ington Print Works v. Canton, 171 Mass. In the former the Louisville Public 414, 50 N. E. 931; Rosen v. Mayer, 224 Warehouse Company was also a defendMass. 494, 113 N. E. 217. ant; in the latter, the commonwealth's attorney.

The threatened multiplicity of suits and the excessive and oppressive penalties gave jurisdiction in equity.

Greene v. Louisville & Interurban R. Co. 244 U. S. 499, 61 L. ed. 1280, 37 Sup. Ct. Rep. 673, Ann. Cas. 1917E, 88; Ex parte Young, 209 U. S. 145-147, 52 L. ed. 724, 13 L.R.A. (N.S.) 932, 28 Sup. Ct. Rep. 441, 14 Ann. Cas. 764; Oklahoma Operating Co. v. Love, 252 U. S. 331, 336, 337, 64 L. ed. 596, 598, 599, 40 Sup. Ct. Rep. 338.

Mr. Justice Brandeis delivered the opinion of the court:

In the Freiberg Case it was alleged that the whisky was in a general bonded warehouse; 1 that the owner wished to withdraw it for removal in bond to a general bonded [291] warehouse in Massachusetts; and that the defendant warehouseman, acting under provisions of the Kentucky statute, refused to permit such transfer unless the tax in question was paid by the owner. In the Distilleries Company Case the plaintiff alleged that it had in its distillery warehouses large quantities of whisky, most of which was owned by others; that requests were beOn March 12, 1920, the legislature of ing made daily, either to withdraw lots Kentucky passed and the governor ap- from bond upon paying the government proved an act which imposed upon ev- tax, or to have them transferred in bond ery person engaged in the business of to other states; and that the defendants manufacturing whisky, or "in the busi- threatened to enforce heavy penalties if ness of owning and storing" the same any such withdrawal or transfer was in bonded warehouses within the state, permitted without making payment of what was called an "annual license tax" the 50 cents a gallon state tax. In each of 50 cents a gallon upon all whisky, case a motion for an interlocutory ineither withdrawn from bond or trans-junction was made and heard before ferred in bond from Kentucky to a point outside that state. [290] The act took effeet, by its terms, on its approval by the governor. At that time there were stored in such bonded warehouses about 30,000,000 gallons of whisky, worth in bond perhaps $1.50 a gallon. Much of this whisky was owned by citizens of other states, their ownership being evidenced by negotiable warehouse receipts. Shortly after the enactment of the statute two suits were brought in the district courts of the United States for Kentucky, to enjoin its enforcement. The first was brought in the western district, by the J. & A. Freiberg Company, Incorporated, an Ohio corporation; the second in the eastern district by the Kentucky Distilleries & Warehouse

1 Every bonded warehouseman was required to make to the state on June 1, 1920, and monthly thereafter, a report showing all the whisky in bonded storage and the number of proof gallons withdrawn or transferred. The act provided by § 3 that all bonded warehousemen "shall, at the time said reports herein provided for are made, pay to the auditor of public accounts the tax of 50 cents per proof gallon upon each proof gallon of such spirits removed from the bonded warehouse or transferred under bond out of this state, up to the date of making such report; and for the purpose

three judges, under § 266 of the Judicial Code. The substantial questions presented in the two suits were the same. The plaintiff contended, in each, that the Kentucky statute was void under both the state and Federal Constitutions; and in each case the defendants, besides asserting the validity of the act, insisted, among other things, that the suit should be dismissed for want of equity, because there was an adequate remedy at law. The district courts granted plaintiffs the motions, holding that there was no adequate remedy at law, and that the statute was invalid under the Constitution of the state, because it was a property tax, was not uniform in its operation, and was confiscatory. The case comes here by direct of securing the payment of the license taxes herein provided for, the commonwealth shall have a lien on all such spirits stored in such bonded warehouses, together with the other property of the bonded warehousemen used in connection therewith; and in all cases where the spirits so removed or transferred were owned or controlled by another than the bonded warehouseman, then the bonded warehouseman shall collect and pay the tax due on such spirits so removed or transferred under bond, and shall be subrogated to the lien of the commonwealth." [Acts 1920, p. 29.]

1920.

appeal under § 238 of the Judicial Code. I distillers and warehousemen, sustained We shall consider first the validity of in Greene v. E. H. Taylor, Jr. & Sons, 184 Ky. 739, 212 S. W. 925, this tax is the tax. First. The attorney general concedes not upon the business or occupation of that the tax, if a property tax, is in- the warehouseman. A particular lot of valid, since it does not comply with the whisky may pass through a dozen bondrequirements of a property tax specified ed warehouses without one of them bein § 171 of the state Constitution. It is ing obliged to pay the tax. For the only all property of the warehouseman required to do so is he not "uniform upon same class subject to taxation," 2 and, who has the whisky on storage at the The though [292] called an "annual" tax, was time of its removal from bond (governnot intended to be such. He contends, ment), tax paid, or when it is transhowever, that the tax is, as stated in the ferred in bond to another state. title of the act, a license tax upon "the tax is made primarily payable by the business of manufacturing" distilled warehouseman, and to secure its payspirits, and upon "the business of owning ment the state is given a lien upon the bonded warehouse and the whisky therein. But and storing such spirits in Section 181 of the state the warehouseman is a collection agency warehouses." Constitution authorizes license or oc- merely, empowered to get reimbursecupation taxes; and statutes imposing ment through subrogation to the state's such taxes, measured by the amount of lien on the whisky of others, which ulthe product, have been repeatedly sus- timately bears the burden of the tax. tained by its highest court. Raydure v. Nor is the alleged business of merely Estill County, 183 Ky. 84, 209 S. W. owning and storing whisky in bond made 19; Strater Bros. Tobacco Co. v. Com. taxable. So long as the whisky is stored One may own and store the 117 Ky. 604, 78 S. W. 871. Here we are in bond within the state, it is free of concerned only with the taxes which are the tax. alleged to be on "the business of own- whisky for years in the hope of selling ing and storing such spirits in bonded it at a profit, and yet be free from any warehouses." The question is whether, obligation ever to pay this tax, if, before as to such, this 50 cents a gallon tax is its removal from bond within the state, an occupation tax or is a property tax. the whisky is sold to another, or if, while The question is one of local law, so that so owned, it is destroyed or forfeited to a decision of it by the highest court of the government. Likewise the tax is not one imposed upon the business of ownthe state would be accepted by us as conclusive. But the validity of the stat-ing, storing, and removing whisky from ute does not appear to have been passed bond. For the tax would become payWe are, able on account of whisky removed, alupon by any Kentucky court. therefore, called upon, as were the dis- though there had not been storage for trict courts, to determine this question any appreciable time; thus, the tax would be payable on whisky if it had been removed from the warehouse imof state law. mediately after the approval of the act. Nor is the tax one on the business of removing liquor owned. For the tax is payable in respect to any lot of whisky removed; and a single transaction does not constitute [294] engaging in the business, be it that of buying and selling whisky or in the business of otherwise using it. In fact, the tax is one imposed 1; Raydure v. Estill County, 183 Ky. 84, 97, 209 S. W. 19.

is the tax The name by which described in the statute is, of course, immaterial. Its character must be determined by its incidents; and, obviously, it has none of the [293] ordinary incidents of an occupation tax. Unlike the tax of 14 cents a gallon upon rectifiers, sustained in Brown-Forman Co. v. Kentucky, 217 U. S. 563, 54 L. ed. 883, 30 Sup. Ct. Rep. 578, and the tax of 2 cents a gallon upon 2 If the tax in question were a property 3 It was admitted that it would be clearly tax there would be double taxation of this property and the uniformity clause would be violated, because the whisky has never void, as being confiscatory, unless it was been put into a separate class; and under assumed that it was to be levied only once, another statute, all whisky stored in bonded-namely, when the whisky is withdrawn warehouses was required to be assessed by the state tax commission at its fair cash value; and taxes at the rate of 40 cents per $100 of value were payable thereon. Ky. Stat. § 4019, as amended March 5, 1918. Compare Campbell County v. Newport, 174 Ky. 712, 723, L.R.A.1917D, 791 193 S. W.

from bond, or when it is transferred in bond to another state. Compare Sallsbury v. Equitable Purchasing Co. 177 Ky. 348, 4 That an isolated transaction would not, 351, 353, L.R.A.1918A, 1114, 197 S. W. 813. under the law of Kentucky, constitute engaging in a business, see Hays v. Com. 107

645

1920.

GOULED v. UNITED STATES.

Norman v. Boaz, 85 Ky. 557, 560, 4 S.
W. 316; Negley v. Henderson Bridge
Co. 107 Ky. 414, 54 S. W. 171; Louis-
ville Trust Co. v. Stone, 46 C. C. A. 299,
107 Fed. 305, 309. And if the equitable
remedy was available in the state courts,
it was not lost by suing in the Federal
court. Davis v. Gray, 16 Wall. 203, 221,
21 L. ed. 447, 453; Cowley v. Northern
P. R. Co. 159 U. S. 569, 40 L. ed. 263, 16
Sup. Ct. Rep. 127. Nor is the equitable
jurisdiction lost because, since the filing
of the bill, an adequate legal remedy
may have become available. Beedle v.
Bennett, 122 U. S. 71, 30 L. ed. 1074, 7
Sup. Ct. Rep. 1090; Busch v. Jones, 184
U. S. 598, 46 L. ed. 707, 22 Sup. Ct. Rep.
511. We have no occasion, therefore, to
consider other reasons urged why the le-
gal remedy, if any, would have been in-
adequate.

Third. The attorney general moved that these suits be abated, relying upon the amendment to § 266 of the Judicial Code by Act of March 4, 1913, chap. 160, 37 Stat. at L. 1013, Comp. Stat. § 1243, 5 Fed. Stat. Anno. 2d ed. p. 984, which declares that if, before the final hearing of an application to restrain the enforcement of a statute or an order made by an administrative board or commission,

"a suit shall have been brought in a
court of the state having jurisdiction
thereof under the laws of such state
[297] to enforce such statute or order, ac-
companied by a stay in such state court, of
proceedings under such statute or order,
pending the determination of such suit
by such state court, all proceedings in
any court of the United States to re-
strain the execution of such statute or
order shall be stayed pending the final
determination of such suit in the courts
of the state."

on the plaintiff's whisky. A restraining
order to that effect issued.

Whether this suit in the county court
was of such a character as to entitle the
state officials to stay the proceedings in
the Federal court we do not decide.
Strictly speaking, it was not "brought

to enforce" the statute in question; but it is, at least, arguable that it might have been accepted by the state officials as a means to that end, and so have fulfilled in substance the statutory See House Report No. requirement. 1584, 62d Cong. 3d Sess. But whether this is true or not, it was not "accompanied by a stay in such state court of proceedings under such statute," within the meaning of the Judicial Code. The stay contemplated by Congress is a general one, which would protect, among others, those who had already sought The protection in the Federal court. restraining [298] order issued in the purely private litigation between third parties in the county court left the plaintiffs in the suits before us subject to all the danger of irreparable injury against which they had sought protection in the Federal courts. Affirmed.

1. The constitutional guaranties against unreasonable searches and seizures and selfcrimination should be liberally construed. [For other cases, see Search and Seizure; Criminal Law, III. b, in Digest Sup. Ct. 1908.]

Appeal

objections

when in time evidence wrongfully obtained. 2. An objection to the introduction in evidence in a criminal case of a paper surreptitiously taken from the office of the accused by a representative of the Federal government is in time, though not made before trial, where such objection was made promptly upon the first notice the accused had that the government was in possession

The suit pending in the state court was this: A liquor dealer who owned whisky in a distillery warehouse had, prior to the enactment of the statute here in question, caused it to be bottled in bond, and had paid thereon the 2-cent a gallon state tax imposed under the Law of 1917. He claimed the right to withdraw the whisky from bond without payment of the 50-cent a gallon tax; and brought suit in a county court to enjoin the warehouseman from preventing his doing so. The latter set up this 1920 act.. Thereupon, the plaintiff, by 7 "You are hereby enjoined from requiramended petition, joined the attorneying from the plaintiff or his agents or disgeneral and the auditor as codefendants, tiller in charge payment of the 50-cent per and prayed that they be enjoined from gallon tax on his whiskies described in the compelling the plaintiff or the ware- petition houseman to pay the 50-cent a gallon tax this court."

of the paper.

c, in Digest Sup. Ct. 1908.]

[For other cases, see Appeal and Error, VI.

until further orders of

647

upon each lot of whisky at the time it,
is removed from bond within the state.
The tax might be said to be upon the
act of removal from the bonded ware-
house within the state. But, as stated
by the lower court, "the thing really
taxed is the act of the owner in taking
his property out of storage into his own
possession (absolute or qualified), for
the purpose of making some one of the
only uses of which it is capable; i. e.,
consumption, sale, or keeping for future
consumption or sale.
The whole
value of the whisky depends upon the
owner's right to get it from the place
where the law has compelled him to put
it, and to tax the right is to tax the
value." To levy a tax by reason of own-
ership of property is to tax the prop-
erty. Compare Thompson v. Kreutzer,
112 Miss. 165, 72 So. 891; Thompson v.
McLeod, 112 Miss. 383, L.R.A.1918C,
893, 73 So. 193, Ann. Cas. 1918A, 674.
It cannot be made an occupation or li-
cense tax by calling it so. See Flint v.
Stone Tracy Co. 220 U. S. 107, 148-150,
55 L. ed. 389, 412, 413, 31 Sup. Ct. Rep.
342, Ann. Cas. 1912B, 1312; Zonne v.
Minneapolis Syndicate, 220 U. S. 187, 55
L. ed. 428, 31 Sup. Ct. Rep. 361; United
States v. Emery B. T. Realty Co. 237
U. S. 28, 59 L. ed. 825, 35 Sup. Ct. Rep.
499. The language of the emergency
clause in the act discloses that the legis-
lature considered that it was, in fact,
taxing the whisky.5

As we hold the tax to be one on property, and it is conceded that, if it be such, it is invalid under the state Constitution, we have no occasion to consider whether [295] it would be also invalid under the state Constitution as a license or excise tax, because confiscatory (compare Fiscal Ct. v. F. & A. Cox Co. 132 Ky. 738, 743, 21 L.R.A. (N.S.) 83, 117 S. W. 296; Louisville v. Pooley, 136 Ky. 286, 25 L.R.A. (N.S.) 582, 124 S. W. 315; Sallsbury v. Equitable Purchasing Co. 177 Ky. 348, 351, 354, L.R.A.1918A, 1114, 197 S. W. 813), or for other reasons. Nor need we consider whether it is not also obnoxious to the Federal Constitution, as imposing a burden upon interstate commerce. Compare Heyman v. Hays, 236 U. S. 178, 59 L. ed. 527, 35 Sup. Ct. Rep. 403.

Ky. 655, 658, 55 S. W. 425; Evers v. May field, 120 Ky. 74, 77, 85 S. W. 697; Louiswille Lozier Co. v. Louisville, 159 Ky. 178, 180, 166 S. W. 767.

5 "And whereas the liquor which they are handling and in which they are dealing is constantly in large quantities being removed from the bonded warehouses and disposed of, without the state securing an adequate

Second. The attorney general insists that these bills in equity should have been dismissed because each plaintiff had a plain, adequate, and complete remedy at law. The contention rests upon § 162 of the Kentucky Statutes, which declares that:

"When it shall appear to the auditor that money has been paid into the treasury for taxes, when no such taxes were in fact due, he shall issue his warrant on the treasury for such money so improperly paid, in behalf of the person who paid the same."

Greene v. E. H. Taylor, Jr. & Sons, supra, is cited to show that if the auditor fails in this duty, a writ of mandamus will issue to compel performance. The plaintiffs, it is said, should have paid the tax under protest, and have sued at law to recover the amounts so paid. But when these suits were brought (April and May, 1920), the decisions of the highest court of the state left it at least doubtful whether money so paid could have been recovered at law by the taxpayer, among other reasons, because the money would not have been paid under compulsion of distraint or of a right of distraint, or under a mistake of law or of fact. It was not until November 16, 1920, which was after these appeals had been entered in [296] this court, that Craig v. Security Producing & Ref. Co. 189 Ky. 565, 568, 225 S. W. 729, settled that money paid under such circumstances could be recovered. The court of appeals of Kentucky recognized the doubt arising from its earlier decisions, and, in order to remove the doubt, found it necessary to overrule several of its recent opinions "so far as they conflict with the construction herein given § 162."

It is well settled that "if the remedy at law be doubtful, a court of equity will not decline cognizance of the suit." Davis v. Wakelee, 156 U. S. 680, 688, 39 L. ed. 578, 584, 15 Sup. Ct. Rep. 555. But whatever remedies § 162 is now regarded as conferring, it is clear that, at the time this suit was brought, they were not regarded in Kentucky as sufficiently adequate to oust the jurisdiction of equity to enjoin the illegal collection of taxes. Gates v. Barrett, 79 Ky. 295; license tax thereon, an emergency is hereby declared to exist." [Acts 1920, p. 31.]

6 Compare Louisville City Nat. Bank V. Coulter, 112 Ky. 577, 584, 66 S. W. 425, 427; Couty v. Bosworth, 160 Ky. 312, 169 S. W. 742; Louisville Gas & E. Co. v. Bosworth, 169 Ky. 824, 185 S. W. 125; and the first opinion in Craig v. Security Producing & Ref. Co., rendered March 9, 1920.