
    COHEN et al. v. EDWARDS, Internal Revenue Collector.
    (District Court, S. D. New York.
    February 7, 1919.)
    Internal Revenue &wkey;>25 — Adulterated Butter — Finding oe Facts by Department — Review.
    Under Act Hay 9, 1902, § 4 (Comp. St. 1916, § 5978), imposing a special tax on manufacturers of adulterated butter, the decision of the Commissioner of Internal Revenue, pursuant to Act Aug. 2, 1886, § 14 (Comp. St. 1916, § 6226), that a substance is adulterated butter, where no unfairness or irregularity is charged, is conclusive, and not reviewable by the courts.
    At Law. Action by Samuel K. Cohen and Jacob K. Cohen, copart-ners as the New York Butter Packing Company, against William H. Edwards, Collector of Internal Revenue. On demurrer to complaint.
    Demurrer sustained.
    Joseph R. Truesdale, of New York City, for plaintiffs.
    Francis G. Caffey, U. S. Atty., of New York City (Vincent H. Roth-well, Asst. U. S. Atty., of New York City, of counsel), for defendant.
   MAYER, District Judge.

Defendant has demurred upon the ground that upon the face thereof, the complaint does not state facts sufficient to constitute a cause of action.

The complaint alleges that plaintiffs were and now are partners, doing business under the name of New York Butter Packing Company; that on February 10, 1916, the collector of internal revenue demanded of plaintiffs $750 as a special tax as manufacturers of adulterated butter; $500 of this sum representing the amount of the tax and $250 penalty.

Plaintiffs allege that the collector was without authority to exact or collect the $750, and that neither during the period for which the tax was assessed nor at any other time were they engaged in the business of manufacturing adulterated butter.

The complaint then alleges that in March, 1916, they filed with the collector a claim in writing for the abatement of the tax and penalty, addressed to the Commissioner of Internal Revenue at Washington, D. C.; that on or about February 7, 1917, they received notice that the claim of abatement had been rejected, and on the same date they received another demand for the payment of the tax and penalty; that about May 23, 1917, they received notice that additional affidavits furnished them had been considered and rejected; that about the same date there was served upon plaintiffs a warrant of distraint averring nonpayment of the tax and penalty, and authorizing the deputy collector to distrain upon and sell the property of the plaintiffs; that on May 25, 1917, and pending the return of the warrant, the plaintiffs were served with another notice and demand, requiring them to pay the $750 above referred to. The complaint then sets forth that the $750 with interest, making in the aggregate $862.50, was paid under protest on May 25) 1917, and that on June 6, 1917, plaintiffs took an appeal to the Commissioner of Internal Revenue.

There is no allegation in the complaint as to any lack of hearing, nor that any of the administrative decisions complained of were arbitrary. The complaint on its face clearly shows that plaintiffs and the officials (that is, the collector and the Commissioner of Internal Revenue) proceeded in due course along regular and orderly procedure. This action is in purpose and effect nothing more nor less than an attempt to review the finding of fact by the Commissioner of Internal Revenue that plaintiffs were engaged in the manufacture of adulterated butter under circumstances which subjected them to the tax and to the penalty for nonpayment thereof. The single point involved is whether the decision of the Commissioner upon the finding of fact may be attacked in an action such as this.

Section 4 of the Act of May 9, 1902 (32 Stat. 194, c. 784 [Comp. St. §§ 5968, 5978, 6233-6238]), defines adulterated butter and sets forth the requirements laid upon manufacturers thereof. Under this section of the act a tax is assessed. Section 14 of the Act of Congress approved August 2, 1886 (24 Stat. 212, c. 840 [Comp. St. § 6226]), provides as follows:

“That there shall he in the office of the Commissioner of Internal Revenue an analytical chemist and a microseopist, who shall each be appointed by the Secretary of the Treasury, and shall each receive a salary of two thousand five hundred dollars per annum; and the Commissioner of Internal Revenue may, whenever in his judgment the necessities of the service so require, employ chemists and mieroseopists, to he paid such compensation as he may detail proper, not exceeding in the aggregate any appropriation made for that purpose.
“And such Commissioner is authorized to decide what substances, extracts, mixtures, or compounds which may be submitted for his inspection in contested cases are to be taxed under this act; and his decision in matters of taxation under this act shall be final.
“The Commissioner may also decide whether any substance made in imitation or semblance of butter, and intended for human consumption, contains ingredients deleterious to the public health; but in ease of doubt or contest his decision in this class of cases may be appealed from to a board hereby constituted for the purpose, and composed of the Surgeon General of tiie Army, the Surgeon General of the Navy, and the Commissioner [now Secretary] of Agriculture; and the decisions of this board shall be final in the premises.”

Section 4 of the Act of May 9, 1902, makes the provisions of section 14 of the Act of August 2, 1886, applicable to manufacturers of adulterated butter—

“to an extent necessary to enforce the marking, branding, identification, and regulation of the exportation and the importation of adulterated butter.” Oomp. St. § 6238.

It can be seen that the object of inserting the provision in section 7 of the Act of May 9, 1902, was to make applicable to the so-called “Adulterated Butter Act” the remedial provisions of the Act of August 2, 1886, the Oleomargarine Act, contained in the fourteenth section (inter alia) of that act.

Section 14 of the Act of August 2, 1886, supra, provides a careful and complete administrative machinery for determining what substances, extracts, mixtures, or compounds, which may be submitted to the appropriate officials, are to be taxed under the act. Obviously it was realized that the large number of cases of this kind should not be passed upon by the courts in so far as such court action was. invoked to determine the facts. Congress, of course, could have made its own definition in respect of numerous details, but it preferred the wiser procedure which the statute sets forth. Whatever review may be had by direct suit or action, or by any other method," in those cases where the constitutionality of such a statute is attacked, or where it is claimed that no hearing was accorded, or where the conduct of the administrative officer was such that it can be' characterized as arbitrary as matter of law, it is at least certain that where there has been a hearing on contested facts, and arbitrary conduct in the legal sense is not complained of, the decision of the Commissioner is final.

The cases to the foregoing effect are so numerous, when dealing with various statutes in which the same question has arisen, that it is unnecessary to cite them at length. It is sufficient, for the purposes of this case, to refer to Cooperville Co-operative Creamery Co. v. Lemon, 163 Fed. 145, 89 C. C. A. 595.

Holding that the administrative decision complained of is not reviewable, the demurrer must be sustained, and the complaint- dismissed.  