831 F.2d 916 (9th Cir. 1987), 86-3728, Greisen By and Through Greisen v. United States

Docket Nº:86-3728, 86-3828.
Citation:831 F.2d 916
Party Name:David J. GREISEN, By and Through his father and natural guardian, Ronald E. GREISEN, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee. Mary Elizabeth BEATTIE and Catherine Anne Beattie, minors, Through their next friend, J. Patrick BEATTIE, Plaintiffs-Appellants, v. UNITED STATES of America, Defendant-Appellee.
Case Date:November 05, 1987
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 916

831 F.2d 916 (9th Cir. 1987)

David J. GREISEN, By and Through his father and natural

guardian, Ronald E. GREISEN, Plaintiff-Appellant,

v.

UNITED STATES of America, Defendant-Appellee.

Mary Elizabeth BEATTIE and Catherine Anne Beattie, minors,

Through their next friend, J. Patrick BEATTIE,

Plaintiffs-Appellants,

v.

UNITED STATES of America, Defendant-Appellee.

Nos. 86-3728, 86-3828.

United States Court of Appeals, Ninth Circuit

November 5, 1987

Argued and Submitted Aug. 4, 1987.

William M. Bankston and Steven T. O'Hara, Bankston, McCollum & Fossey, P.C., Anchorage, Alaska, for plaintiff-appellant in No. 86-3728.

David G. Shaftel, Anchorage, Alaska, for plaintiffs-appellants in No. 86-3828.

Ernest J. Brown, Washington, D.C., for defendant-appellant.

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

Before GOODWIN, ANDERSON and BRUNETTI, Circuit Judges.

GOODWIN, Circuit Judge:

These three separate claims, consolidated in the district court, challenge the assessment of federal income tax on payments from Alaska's Permanent Fund Dividend Program. Plaintiffs seek refund of taxes paid, claiming that Alaska's distribution of its energy wealth to the state's residents through the program is a "gift," exempt from federal taxation. On cross-motions for summary judgment, the district court granted the government's motion, finding that the payments were not gifts, and that they were "income" within the meaning of the sixteenth amendment and the Internal Revenue Code.

In 1976, the people of the State of Alaska amended their constitution to establish the Alaska Permanent Fund, financed by at least 25 percent of the state's annual oil

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and mineral proceeds. Alaska Const., Art. IX, Sec. 15. The goals of the fund are: (1) to conserve a portion of the revenues earned from mineral resources for all generations of Alaskans; (2) to maintain the safety of the fund's principal while maximizing total return; and (3) to maintain a savings device allowing maximum use of disposable income from the fund for purposes designated by law. Alaska Stat. Sec. 37.13.020 (1983).

In 1980, the state legislature enacted the Permanent Fund Dividend Program to distribute annually a portion of the fund's earnings to each of the state's adult residents. The 1980 Act was intended: (1) to provide equitable distribution of a portion of the state's energy wealth to Alaskans; (2) to encourage people to remain Alaska residents, thereby reducing population turnover in the state; and (3) to encourage awareness and interest in the management of the fund. 1980 Alaska Sess.Laws Ch. 21 Sec. 1(b).

In 1982, the Supreme Court struck down as violative of equal protection the 1980 Act, finding that no valid state interest supported the payment of increased dividends to long-term residents. Zobel v. Williams, 457 U.S. 55, 65, 102 S.Ct. 2309, 2315, 72 L.Ed.2d 672 (1982). Anticipating a possible ruling by the Supreme Court, the Alaska legislature enacted "backstop" legislation, which became operative shortly after Zobel, codified at Alaska Stat. Secs. 43.23.005-.095 (1983). The legislature did not amend the stated purposes of the 1980 Act when it adopted the 1982 legislation.

The 1982 Act provided dividends of $1,000 to each eligible resident, including minors. 1 The three appellants sued separately for refunds from the Internal Revenue Service for taxes allegedly erroneously and illegally collected from them. Mary Elizabeth Beattie, a minor, sued through her father, J. Patrick Beattie, for a refund of $44.40 plus interest, costs, and attorney's fees for taxes paid on her 1982 and 1983 dividends, totalling $1,386.15. Her sister, Catherine Anne Beattie, also a minor, sued through her father for a refund of $57.40, plus interest, costs and attorney's fees for taxes paid on the identical dividend amounts. 2

David J. Greisen, a minor, sued through his father, Ronald E. Greisen, for the recovery of $2 taxes paid on his 1982 dividend of $1,000, plus interest, costs, and attorney's fees. Each of the three appellants filed timely refund claims with the Internal Revenue Service, all of which were denied.

We review grants of summary judgment de novo. See Bloom v. General Truck Drivers, 783 F.2d 1356, 1358 (9th Cir.1986). Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to prevail as a matter of law. Fed.R.Civ.P. 56(c).

The taxpayers contend that summary judgment was inappropriate because the crucial issue of donative intent is a question of fact. The taxpayers cite Commissioner v. Duberstein, 363 U.S. 278, 289, 80 S.Ct. 1190, 1198, 4 L.Ed.2d 1218 (1960), which held that the determination of an individual's donative intent "must be based ultimately on the application of the fact-finding tribunal's experience with the mainsprings of human conduct to the totality of the facts of each case." Duberstein, 363 U.S. at 289, 80 S.Ct. at 1198. See Olk v. United States, 536 F.2d 876, 878 (9th Cir.), cert. denied, 429 U.S. 920, 97 S.Ct. 317, 50 L.Ed.2d 287 (1976).

The trial court properly distinguished Duberstein and Olk as cases where the property transfers were motivated by interpersonal relations, thus necessitating a factual inquiry into the transferor's state of mind. Beattie v. United States, 635 F.Supp. 481, 487 (D.Alaska 1986). By contrast, the state is the transferor in this case, and the task of determining the legislative intent in creating the dividend program presents a question of law, not of fact. Id. at 487-88. See Trustees of

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Amalgamated Ins. Fund v. Geltman Indus., 784 F.2d 926, 929 (9th Cir.), cert. denied, --- U.S. ----, 107 S.Ct. 90, 93 L.Ed.2d 42 (1986) (statutory interpretation is a question of law); Heard v. Commissioner, 326 F.2d 962, 965-66 (8th Cir.), cert. denied, 377 U.S. 978, 84 S.Ct. 1884, 12 L.Ed.2d 746 (1964) (rejecting a taxpayer's claim that the Duberstein analysis demonstrated that his government-paid annuities were a gift, based on the court's examination of statutory language and legislative history). "Such statutory interpretation does not involve fact-finding. It involves legal analysis beginning with the plain language of the statute and, where appropriate, consideration of the underlying legislative history." 3 Beattie, 635 F.Supp. at 487.

Greisen argues that the trial court erred in finding that the Alaska Permanent Fund dividends constituted income for the purposes of the sixteenth amendment, even if they fall within the definition of income set forth by I.R.C. Sec. 61 (1982). Greisen claims that at the time of the adoption of the sixteenth amendment the term "income" was commonly understood to mean a "coming in" of wealth from a source exterior to the taxpayer. Beattie, 635 F.Supp. at 491. He argues that Permanent Fund dividends do not come from an outside source because they derive from the state's natural resources, which already are owned by the people of the state, as its ultimate sovereigns.

Accepting arguendo Greisen's premise that the people of Alaska have ultimate sovereignty, we reject his conclusion that the people own the state's natural resources. "In adopting their constitution, the people of the State of Alaska have very clearly constituted the state as owner of the natural resources which give rise to the fund in question." Beattie, 635 F.Supp. at 491. See Alaska Const. Art. VIII, Sec. 1 (proclaiming the state's policy of "encourag[ing] the settlement of its land and the development of its resources") (emphasis added); Alaska Const. Art. VIII, Sec. 2...

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