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Henrietta Mills v. Rutherford Co.

Supreme Court of the United States · 1930 · Civil Procedure

Civil ProcedureEquityFederal CourtsTax InjunctionsAdequate Remedy at Lawequityadequate remedy at lawtax collection

Facts

Henrietta Mills, a North Carolina corporation, sought to prevent Rutherford County from collecting taxes based on a valuation above sixty percent of actual fair market value. It alleged that its property was assessed far above true value while all other assessable property in the county was assessed at only sixty percent of true value, in violation of the Fourteenth Amendment. After the county board declined to pass on its objections, the corporation appealed to the State Board of Assessment, which reduced the assessment but still fixed it above the amount the corporation claimed was proper. The corporation alleged it had already paid an amount equal to the tax that would be due on the lower valuation it asserted was lawful.

Issue

Whether a federal court of equity may entertain a suit to enjoin collection of a state property tax when the taxpayer has an adequate legal remedy, and whether a North Carolina statute allowing injunctive relief in state court creates an equitable right enforceable in federal court notwithstanding the federal rule limiting equity jurisdiction.

Rule

Under the federal statutory prohibition on suits in equity where there is a plain, adequate, and complete remedy at law, a federal court may not enjoin tax collection unless enforcement would cause irreparable injury or other special circumstances bring the case within a recognized head of equity jurisdiction. A state statute that is merely remedial and authorizes injunctive relief in state court cannot enlarge the right to proceed in a federal court sitting in equity; only a new substantive equitable right created by state law may be enforced in federal equity, and even then only if consistent with the Constitution and laws of the United States.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Maple Foundry, a Tennessee corporation, owns manufacturing equipment in Knoxville. It files suit in federal district court seeking to enjoin collection of a county property tax, alleging the assessment violates the Fourteenth Amendment because its property was valued at full market value while comparable property was systematically assessed much lower. Tennessee law allows a taxpayer to pay the tax under protest and then sue for a refund in court.

Should the federal court grant equitable relief?

Explanation. The governing rule is that federal equity cannot be used to restrain tax collection when there is a plain, adequate, and complete remedy at law. A pay-under-protest refund action is the kind of legal remedy the Court treated as adequate. The existence of a federal constitutional claim does not itself justify an injunction, and the limitation concerns equitable proceedings, not subject-matter jurisdiction.