Appeal from the District Court of the United States for the Southern Division of the Southern District of Illinois; Louis Fitzhenry, Judge.
Before ALSCHULER, EVANS, and SPARKS, Circuit Judges.
ALSCHULER, Circuit Judge.
The appeal is from a decree dismissing for want of equity appellant's bill filed March 19, 1928, for recovery of money which it had paid appellees, in their official capacity, as license tax on motor fuel sold or used by it in the state during the month of January, 1928, under the provisions of "An Act to impose a license tax on the sale and use of motor fuel," which had been enacted June 29, 1927 (Laws Ill. 1927, p. 758), and which the Supreme Court of Illinois, on February 24, 1928, held to be unconstitutional. Chicago Motor Club v. Kinney, 329 Ill. 120, 160 N.E. 163.
If the tax of which recovery is sought was freely and voluntarily paid, without purpose or intention of the taxpayer at time of payment to question or resist it or recover it back, it may not thereafter be recovered. Chesebrough v. United States, 192 U.S. 253, 24 S. Ct. 262, 264, 48 L. Ed. 432, where it is stated: "The rule is firmly established that taxes voluntarily paid cannot be recovered back, and payments with knowledge and without compulsion are voluntary."
Whether a tax was paid voluntarily or under compulsion involves basically the taxpayer's state of mind at time of payment, and this must be gathered from the evidence. In Illinois Merchants Trust Co. v. Harvey, 335 Ill. 284, 289, 167 N.E. 69, 71, it was well said: "Compulsory payment is primarily a question of fact. No precise rules can be laid down as to what will constitute a compulsory payment though the principle has been illustrated by a number of cases in this and other courts."
If with payment of the tax appellant had submitted a written statement to the effect that it had taken out a license under the act, and without protest or reservation of any kind had made the five monthly payments preceding the one in question; that it was aware that a suit was pending in the Illinois courts questioning the constitutionality of the Motor Fuel Ficense Tax Act, but that it had no interest in that controversy, and was willing to pay the tax because of the benefits to appellant and other distributors of motor fuel in the state through the employment of the tax for the building of hard roads in the state, and the resultant increase in sales of motor fuel and other oil products for automobiles within the state; and that, in any event, the tax did not seriously affect the taxpayer, because in practice the tax was first collected by the taxpayer from its customers by adding the tax to the price of the fuel; and that the taxpayer, without making the protest provided for in the Illinois statutes, paid the tax, well knowing that, if not accompanied by a protest, the tax might at once be paid into the state treasury, and that the state could not, without its consent, be sued to recover the tax; -such state of facts would indubitably indicate in the taxpayer a state of mind in which no element of compulsion entered.
As bearing upon appellant's state of mind at the time of making payment here in question, we point out these record facts:
That, judging from its reported sale and use in Illinois of 4,234,623 gallons of motor fuel for the month of January, appellant was a very large concern, no doubt abundantly able to make resistance to the enforcement of the Motor Fuel Tax Act had it been so disposed.
That, upon the passage of the act, and without any question, it procured a license thereunder, and, as each month passed, made a return for the previous month, and without protest or question paid to the Department of Finance of the state the tax specified in the act.
That appellant knew, or in any event must be held to have known, there was in effect in Illinois during all of that time a statute which provided: "It shall be the duty of every officer, board, commission, commissioner, department, institute, arm or agency brought within the provisions of this Act by section 1 hereof to hold for thirty days all moneys received for or on behalf of the State under protest and on the expiration of such period to deposit the same with the State Treasurer unless the party making such payment shall within such period file a bill in chancery and secure a temporary injunction restraining the making of such deposit, in which case such payment shall be held until the final order or decree of the court." Cahill's Ill. Rev. St. c. 127b, par. 35.
That appellant knew, or must be held to have known, that, if no protest was filed with the payment of the tax, the person to whom it was paid was required to turn it over to the state treasury, in which eyent no action could be brought to recover it, because the state cannot be sued without its consent.
That, as to the five payments preceding the one in question, the tax, after its payment, had passed into the custody of the state treasury, and could not thereafter be recovered from the state.
That, at the time the payment in question was made, the suit to test the constitutionality of the Motor Fuel Tax Act had not been decided, and there is nothing to indicate that appellant's state of mind was then in any respect ...