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United States, in order to protect national forest by the killing and removal of deer, which had increased in such large numbers that forage was insufficient for their subsistence, was entitled to injunction against state officers from interfering with persons killing deer thereon under authority of United States officials.

Appeal from the District Court of the United States for the District of Arizona.

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Suit by the United States against George W. P. Hunt, as Governor of Arizona, and othDecree for complainant [19 F.(2d) 634], and defendants appeal. Modified and affirmed.

ers.

*100

to remove some of the deer from *the reserves to other lands, but these entirely failed, as did other means. The district forester, acting under the direction of the Secretary of Agriculture, proceeded to kill large numbers of the deer and ship the carcasses outside the limits of the reserves. That this was necessary to protect the lands of the United States within the reserves from serious injury is made clear by the evidence. The direction given by the Secretary of Agriculture was within the authority conferred upon him by act of Congress. And the power of the United States to thus protect its lands and property does not admit of doubt, Camfield v. United States, 167 U. S. 518, 525, 526, 17 S. Ct. 864, 42 L. Ed. 260; Utah Power & Light Co. v. United States, 243 U. S. 389, 404, 37 S. Ct. 387, 61 L. Ed. 791; McKelvey v. United States, 260 U. S. 353, 359, 43 S. Ct. 132, 67 L. Ed. 301; United States v. Alford, 274 U. S. 264, 47 S. Ct. 597, 71 L. Ed. 1040, the game laws or any other statute of the state to the contrary notwithstanding.

Appellants interfered with these acts of the United States officials and threatened to arrest and prosecute any person or persons attempting to kill or possess or transport such deer, under the claim that such officials were proceeding in violation of the game laws of the state of Arizona, the observance of which would have so restricted the number of deer to be killed as to render futile the attempt to protect the reserves. Three persons who had killed deer under authority of United States officials were actually arrested. Thereupon suit was brought to enjoin appellants from continuing or threatening such interference, arrest or prosecution. The court below, after a trial, found for the United States, and entered a decree in accordance with the prayer of the bill, with the limitation, however, that the decree should not be construed to permit the licensing of hunters to kill deer *Mr. Justice SUTHERLAND delivered the within said reserves in violation of the state opinion of the Court.

*97 *Messrs. Earl Anderson and John W. Murphy, both of Phoenix, Ariz., for appellants.

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*The Attorney General, Wm. D. Mitchell, Sol. Gen., and Robert P. Reeder, Sp. Asst. to the Atty. Gen., both of Washington, D. C., for the United States.

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[1] The Kaibab National Forest and the Grand Canyon National Game Preserve, covering practically the same area, are situated north of the Colorado river in Arizona. They were created by proclamations of the President under authority of Congress. During the last few years deer on these reserves have increased in such large numbers that the forage is insufficient for their subsistence. The result has been that these deer have greatly injured the lands in the reserves by overbrowsing upon and killing valuable young trees, shrubs, bushes, and forage plants. Thousands of deer have died because of insufficient forage. Attempts were made under the direction of the Secretary of Agriculture

game laws. United States v. Hunt (D. C.) 19 F.(2d) 634.

[2] While the Solicitor General does not concede the authority of the court to make *101

this limitation, he is content *to let the decree stand. We therefore pass the matter without consideration and accept the opinion and decree below, with the modification that all carcasses of deer and parts thereof shipped outside the boundaries of the reserves shall be plainly marked by tags or otherwise, in such manner as the Secretary of Agriculture may by regulations prescribe, to show that the deer were killed under his authority within the limits of the reserves.

Thus modified, the decree is affirmed.

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

(49 S.Ct.)

(278 U. S. 55)
UNITED STATES v. CAMBRIDGE LOAN &
BUILDING CO.

Argued Oct. 23 and 24, 1928. Decided
Nov. 19, 1928.

No. 46.

Internal revenue 7(30)-Building and loan association held exempt from federal taxation though having power under state law to borrow money and loan to outsiders (Revenue Acts 1918 and 1921, § 231).

Building and loan association incorporated and recognized as such under state law and conducting its business in accordance with laws of state in which it was incorporated, held exempt from federal taxation under Revenue Acts 1918 and 1921, § 231 (40 Stat. 1076, and 42 Stat. 253), though having power under state law to borrow money and loan to outsiders.

On Writ of Certiorari to the Court of Claims.

Suit by the Cambridge Loan & Building Company against the United States. Judgment for plaintiff, and defendant brings certiorari. Affirmed.

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*The Attorney General and Mr. T. H. Lewis, Jr., of Washington, D. C., for the United States.

Mr. L. L. Hamby, of Washington, D. C., for respondent.

Mr. Justice HOLMES delivered the opinion of the Court.

This is a suit brought by the respondent to recover the amount of taxes for the years 1918 through 1923, paid under duress, from which it says that it was exempt by the Acts under which the taxes were levied. It re*57

covered in the Court of Claims and a writ of certiorari was granted by this Court, April 9, 1928 (276 U. S. 614, 48 S. Ct. 420, 72 L. Ed. 732).

The respondent is incorporated under the laws of Ohio, by which it is recognized as a building and loan association, and it has conducted its business in accordance with the laws of that State. The Revenue Act of 1918, February 24, 1919, c. 18, § 231, 40 Stat. 1057, 1076, exempts from the taxes in question "(4) Domestic building and loan associations and cooperative banks without capital stock organized and operated for mutual purposes and without profit." The Act of November 23, 1921, c. 136, § 231, 42 Stat. 227, 253, exempts "(4) Domestic building and loan associations substantially all the business of which is confined to making loans to members; and cooperative banks without capital stock organized and operated for mutual purposes and without profit." These are the statutes concerned. No definition is given of building and loan associations, and the question is what scope is to be given to the words.

The rudimentary form of such associations is supposed to be a society raising by subscription of its members a fund for making advances to members in order to enable them to build or buy houses of their own. A member is entitled to borrow on sufficient security an amount equal to his subscription for shares and when the shares are paid up by the instalment payments required and the profits of the company his indebtedness is cancelled. The Government argues that the essence of these societies, what gives them their quasi public character and the only thing that warrants exempting them from taxes, is that their single purpose is to enable people to get When one of them homes of their own. yields to the temptation to enlarge its operations and to make a little money outside, the Government says, it loses its title to its distinctive name and to the exemption that the statute gives. The respondent received a large proportion of *deposits from persons who were not members and it paid interest upon the same, and it also made considerable loans to such persons until the passage of the Act of 1921. Even when the borrower was a stockholder he was required only to subscribe for from one to five shares regardless of the amount of the loan. It is argued that thus the society became a mere money-making institution like an ordinary bank.

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But for such an association to start it must have some money to lend, and the typical member does not have it. Long before Congress dealt with loan and building associations, an esteemed writer upon the subject had insisted on the reasonableness of allowing them to issue full paid stock with fixed dividends, both in his book and upon the bench. Endlich, Building Associations, 2d. Ed. (1895), § 462. Folk v. Capital Savings & Loan Association, 214 Pa. 529, 534, 544, 63 A. 1013 (1906). The same author recognized depositors, § 56, and with more or less qualification the right to lend to outsiders, §§ 314, et seq., and to borrow, §§ 297, et seq. Under the Ohio statute the respondent has these powers, and still, as we have said, is called a building and loan association by that State. The same name was commonly used in other States and similar powers were given with more or less restriction. When Congress exempted such associations from the income tax of course it was speaking of existing societies that commonly were known as such, not of ideals that would have been hard to find. And this is not left to inference alone. Some corporations having been taxed under the Act of August 5, 1909, c. 6, § 38, 36 Stat. 11, 112, which exempted "domestic building and loan associations organized * * exclusively

for the mutual benefit of their members", the Act of February 26, 1917, c. 129, 39 Stat. 1491, 1493, directed the tax to be refunded as “illegally collected" and included the respondent

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

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This interpretation was adhered to for the

Act of 1909 and succeeding Acts including that of 1918 now before us until a few months before the Act of 1921. It was incorporated in Regulations of the Commissioner of Internal Revenue approved by the Secretary of the Treasury as late as January 28, 1921, and up to then no taxes had been levied or paid. In June of that year however the Regulations were modified so as to declare the societies taxable if the amounts borrowed from and lent to nonmembers were out of proportion to the borrowing needs of the members and otherwise to limit the use of such societies as a mask to escape taxation. The present taxes are upheld by the Government on the ground that the respondent is such a mask. It is argued that even admitting all that has been said thus far, a State cannot make a bank exempt merely by calling it a building and loan association. No doubt extravagant cases might be imagined. But these associations are well known and a State is not likely to be party to a scheme to enable a private company to avoid federal taxation by giving it a false name. The statutes speak of "domestic" associations, that is, associations sanctioned by the several States. They must be taken to accept with the qualifications expressly stated what the States are content to recognize, unless there is a gross misuse of the name. The State of Ohio has recognized and still recognizes the respondent as belonging to the class which its name indicates. Very possibly the company has strained its privileges to near the limit but we are not prepared to condemn the nomenclature adopted by the State. When the Act of 1921 was passed and added the words "substantially all the business of which is confined to making loans to members" the respondent conformed to the *statute, by requiring membership as a condition to a loan. The statute did not limit loans to the amount of stock subscribed for. We may add that the net dividends are distributed to members at an equal rate to all.

60

We deem it plain that no taxes were warranted before the Act of 1921, and are of opinion that the taxes under that also were not justified, although as we have said the rights of the company were pressed somewhat far. In coming to this result we have not thought it necessary to go into details of disputed significance, thinking it enough to state

the point of view from which we regard the case.

The assessment was not made until September 18, 1924, up to which time the respondent not unreasonably had supposed itself exempt, and then was taxed retrospectively for the five years before the one then current. In the meantime the respondent has distributed its money in dividends to its members

and they presumably have paid income taxes

on the dividends received. The statute of limitations had run or was running against them when the Government at the last moment filed a motion to remand that would have delayed the case and would have given the statute a further chance to run. The facts alleged in the motion sufficiently appear in the findings of the Court of Claims and so far as material have been assumed in the discussion of the case. Judgment affirmed.

(278 U. S. 92) HERKNESS v. IRION, Commissioner of Conservation, et al. Argued Oct. 8, 1928.

Decided Nov. 19, 1928. No. 3.

1. Courts 282(1), 385(5)-Federal District Court has jurisdiction of bill challenging validity under Federal Constitution of state administrative board, and Supreme Court has jurisdiction on direct appeal (Jud. Code, § 266, as amended [28 USCA § 380]).

Federal District Court has jurisdiction under Judicial Code, § 266, as amended (28 USCA § 380), of bill challenging validity under Federal Constitution of an order of an administrative board of the state, and Supreme Court has jurisdiction on direct appeal from District

Court's decree.

2. Mines and minerals 87-State statute held not to authorize commissioner of conservation to restrict use of natural gas in manufacturing carbon black to persons already in business (Act La. No. 252 of 1924; Act La. No. 91 of 1922, §§ 1-3).

Act La. No. 252 of 1924, in effect embodying provisions of Act La. No. 91 of 1922, which in sections 1-3 provides that natural gas may

be used in manufacture of carbon black under sioner of conservation certain powers of reguconditions imposed by act and giving commislation, held not to give commissioner power to refuse permit to new concerns or persons able and willing to comply with requirements of statute and to restrict use to persons already engaged in manufacture of carbon black in view of the later Act, §§ 5, 11.

Appeal from the District Court of the United States for the Eastern District of Louisiana.

Suit by J. Smylie Herkness against Valentine K. Irion, Commissioner of Conservation,

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

(49 S.Ct.)

and others. From a decree dismissing the bill [11 F.(2d) 386], plaintiff appeals. Reversed.

Messrs. John W. Davis, of New York City, and Maurice Bower Saul and Allen S. Olm

sted, 2d, both of Philadelphia, Pa., for appel

lant.

Mr. Percy Saint, of New Orleans, La., for appellees.

direct appeal. We have no occasion to consider any of the constitutional questions presented. For, in our opinion, the statutes do not purport to confer upon the Commissioner power to refuse a permit to a person able and willing to comply with the requirements prescribed by the statute. See Greene v. Louisville & Interurban Railroad Co., 244 U. S. 499, 508, 37 S. Ct. 673, 61 L. Ed. 1280, Ann. Cas. 1917E, 88; Dawson v. Kentucky Distil

Mr. Justice BRANDEIS delivered the opin- leries Co., 255 U. S. 288, 295, 41 S. Ct. 272, 65

ion of the Court.

This suit was brought into a federal court for Louisiana by Herkness, an owner of nat

*93

ural gas wells, to enjoin the *Commissioner of Conservation and the Attorney General of that State from interfering with the erection, on plaintiff's land, and the operation, of a factory for the manufacture of carbon black from natural gas. The bill alleges that a number of other persons are now engaged in that business and have been for many years with the sanction of the Department of Conservation; that it had been its practice to require persons about to engage in such manufacture to apply for a permit; that one of its rules declares unlawful the erection of such a factory without having first obtained one; that plaintiff was refused a permit; that the sole ground of refusal was the policy recently announced by the Commissioner not to issue a permit for the erection of any new carbon black plants and to gradually reduce the amount of gas which holders of permits to operate existing plants can utilize for that purpose; and that this policy has become a fixed rule of administration. The bill charges that the order refusing to issue a permit to the plaintiff is void, because in excess of the powers conferred by the statutes or which could be conferred under the constitution of the State; and also because it violates the due process clause and the equal protection clause of the Fourteenth Amendment. A re

straining order and an interlocutory injunction, as well as a permanent injunction, were sought. There were adequate allegations of threatened irreparable injury.

[1, 2] The District Judge issued a restraining order. The hearing upon the application for an interlocutory injunction was had before three judges, under paragraph 266 of the Judicial Code as amended (28 USCA § 380); and the case was later submitted by agreement as upon final hearing. The court denied the injunction and dismissed the bill, 11

F.(2d) 386; but later granted a restraining order pending the appeal. As the bill chal lenged the validity under the Federal Consti

tution of an order of an administrative board *94

of the State, *the District Court had jurisdiction under section 266, Oklahoma Gas Co. v. Russell, 261 U. S. 290, 43 S. Ct. 353, 67 L. Ed. 659, and this Court has jurisdiction on

L. Ed. 638.

The conservation of natural resources has been the subject of much legislation in Louisiana.1 The possible wastefulness of the use of natural gas in the manufacture of carbon black was recognized; and the Legislature dealt fully with this use by Act 252 of 1924, which, in effect, embodies the provisions of Act 91 of 1922. State v. Thrift Oil & Gas Co., 162 La. 165, 193, 110 So. 188, 51 A. L. R. 261. No law declares such use necessarily wasteful. Nor has the State purported to confer upon the Commissioner power to refuse a permit to new concerns and to restrict the use to the persons already engaged in the manufacture of carbon black. On the contrary, the use is expressly sanctioned in section 1 of Act 91 of 1922, which declares, "that natural gas may be used in the manufacture of carbon black under the conditions as fixed and imposed by the provisions of" that act. And it is to those conditions and the means of ensuring their observance that the other provisions of the Act relate. Section 2 thereof directs the Commissioner to determine "what percentage of consumption of natural gas produced by each gas well may be used in the manufacture of carbon black, which percentage shall not be less than fifteen

*95

per cent. and not more *than twenty per cent. of the potential capacity of such well. * * *" By section 3 he is authorized to reduce the consumption of natural gas used in the manufacture of carbon black below that minimum "after promulgation for sixty days of an order to that effect, whenever [and only whenever] it is actually necessary to do so in obtaining an adequate supply of natural gas for domestic heating and lighting purposes in the State of Louisiana, and for manu

facturing plants, industries and enterprises isiana, other than those engaged in the manulocated and operated within the State of Lou

facture of carbon black.

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