Reiling v. Lacy

• Decision Date: 11 July 1950
• Docket Number: No. 4508.,4508.
• Citation: 93 F. Supp. 462
• Parties: REILING v. LACY.
• Court: U.S. District Court — District of Maryland

93 F. Supp. 462

REILING v. LACY.

No. 4508.

United States District Court D. Maryland.

July 11, 1950.

Herman T. Reiling, pro se.

Hall, Hammond, Attorney General of Maryland, and Harrison L. Winter, Assistant Attorney General, for defendant.

Before SOPER, Circuit Judge, WILLIAM C. COLEMAN, Chief Judge, and CHESNUT, District Judges.

WILLIAM C. COLEMAN, Chief Judge.

This is a suit brought by the plaintiff, a citizen of Illinois, against the defendant, Comptroller of the State of Maryland, to set aside as void an assessment of Maryland income taxes, including interest and penalty, for the years 1944 and 1945 made against the plaintiff upon his federal salary paid to him in the District of Columbia, while employed in the office of the chief counsel for the Bureau of Internal Revenue of the United States Government.

In his complaint, in addition to asking for a declaratory decree for exemption from the Maryland taxes as aforesaid and that the defendant be permanently enjoined from enforcing the assessment for the disputed taxes, plaintiff asks this Court to declare unconstitutional, as applied to his salary, the Maryland income tax law which imposes a tax on the income of every individual who for more than six months of the taxable year has maintained a place of abode within the State, regardless of whether he is domiciled within the State and of his intention as to continuance of his abode. The alleged grounds of invalidity are that the law violates (1) the due process and equal protection clauses of the Fourteenth Amendment; (2) clause 17 of Section 8 of Article I of the constitution by virtue of which it is claimed Congress has power to exercise exclusive jurisdiction with respect to plaintiff's employment within the District of Columbia and with respect to his salary derived from such employment and the taxing of it; (3) the Commerce Clause of the Constitution; and (4) Clause 1, Section 2 of Article IV of the Constitution which grants to citizens of each state all privileges and immunities of citizens of the several states.

The defendant filed a motion to dismiss the complaint on the ground (1) that the matter in controversy does not exceed the sum or value of $3,000 exclusive of interest and costs as required by Section 1332 of Title 28 U.S.C.A.; (2) that this Court also lacks jurisdiction by reason of Section 1341 of 28 U.S.C.A., which prohibits the District Courts from enjoining the imposition or collection of taxes by a state "where a plain, speedy and efficient remedy may be had in the courts of such State"; and (3) that the complaint fails to state a claim against the defendant upon which relief can be granted. To this motion plaintiff filed a motion to strike and for a default judgment on the ground that the defendant's motion to dismiss was not in proper form and without merit, and, therefore, should be stricken from the record, and that upon such being done, the defendant would be in default for want of an answer to the complaint, and judgment by default should thereupon be entered against him.

The suit being one to restrain an officer of the State of Maryland from enforcing a state statute, the plaintiff also moved for the convening of a statutory three-judge court pursuant to the provisions of 28 U.S.C.A. Sections 2281 and 2284. To this motion was coupled one for a summary judgment, with affidavit supporting the allegations of fact made in the complaint. It appearing that the suit required a three-judge court, pursuant to the provisions of the Code as aforesaid, such court was constituted, and since the allegations of fact made in the complaint are admitted by the motion to dismiss, the case was heard on the complaint and that motion, plaintiff's motion for summary judgment being superfluous, since it alleges no additional facts and raises no additional questions.

Summarized, the material facts thus admitted or not in dispute are the following: The plaintiff is a citizen of the State of Illinois with his domicile therein. The defendant is the duly elected and acting Comptroller of the Treasury of the State of Maryland, and is a citizen of that state and domiciled therein. The plaintiff was born in Illinois, has always retained his domicile there, where he is a registered voter, and has regularly voted in the elections in that state. He owns property there but also owns a dwelling in Chevy Chase, Maryland, where he now resides, as he did during the years 1944 and 1945. He maintains no bank account in Maryland but does maintain one in the District of Columbia. He has never had any intention of abandoning his domicile in or citizenship of the State of Illinois, but on the contrary expects to return to Illinois when he ceases to be employed by the Federal Government, such employment being of indefinite tenure.

Under date of April 19, 1949, defendant mailed to the plaintiff a notice of estimated assessment of Maryland income tax, including interest and penalty, in the total amount of $208.75, for the calendar years 1944 and 1945. The notice stated that this assessment would become final unless paid within 15 days from the date of the notice, and also, if not so paid, the defendant would enforce collection of the assessment by entering a tax lien against plaintiff's salary, wages or property. The assessment contained no information disclosing upon what basis the amount of the tax claimed to be due and owing was computed.

Upon receipt of this notice plaintiff requested of the defendant a computation showing the basis of the assessment and also an abatement of it on the ground that it was unconstitutional. Thereupon defendant furnished such computation which disclosed that the tax was assessed on account of the salary which the plaintiff received from the Federal Government for his services as aforesaid within the District of Columbia. This salary was regularly paid by United States Treasury check by disbursement officers regularly stationed within the District of Columbia, and these salary checks were actually received by the plaintiff within the District.

If the plaintiff pays the amount of the tax assessed, such cannot be recovered, because, pursuant to Maryland law, refund of state taxes is prohibited unless claim for same is filed within three years from their due date, and in the present case this period has expired, and, therefore, if the amount of the assessment is not paid it will become, by virtue of Maryland law, a lien upon all property, including all salary or other compensation for personal services due and owing to the plaintiff at the time the lien attaches.

On these facts there are thus presented two major questions: (1) Does this Court have jurisdiction to hear and determine the case on its merits? And, (2) Is the Maryland income tax law and the assessments thereunder made against the plaintiff, for the years here in question, unconstitutional as applied to the plaintiff, by reason of the fact that he, although residing in Maryland, is not a citizen thereof nor employed therein, nor does any part of his salary on which the Maryland income tax is assessed arise from any funds in Maryland?

Taking up the first of these questions, it is a three-fold one. It involves, first, the point whether the requisite amount in controversy exists pursuant to the provisions of Section 1332 of Title 28 U.S.C.A., the pertinent part of which provides that: "(a) The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $3,000 exclusive of interest and costs, and is between:

"(1) Citizens of different States; * *."

Second, there is involved the point whether jurisdiction can be sustained regardless of the amount in controversy, by virtue of Section 1343(3) of Title 28 U.S.C.A., one of the Civil Rights Acts, the pertinent part of which is: "The district courts shall have original jurisdiction of any civil action authorized by law to be commenced by any person: * * *

"(3) To redress the deprivation, under color of any State law, * * * of any right, privilege or immunity secured by the Constitution of the United States or by any Act of Congress providing for equal rights of citizens or of all persons within the jurisdiction of the United States * *."

Third, there is involved the point whether, even if this Court has jurisdiction under the aforementioned sections of Title 28, it is prohibited from exercising jurisdiction by virtue of Section 1341 of Title 28 U.S. C.A., commonly known as the Johnson Act, the pertinent part of which provides: "The district courts shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State."

Taking up these three points in the order just given, first, as respects the amount in controversy, the complaint shows on its face that the total amount of the tax in issue is only $208.75, including penalties and interest. Since it is well settled that in tax cases of this kind the amount in dispute is the amount in controversy, jurisdiction cannot be sustained under Section 1332 of Title 28, upon which plaintiff relies, nor upon the companion Section 1331 which gives to the District Courts similar original jurisdiction of all civil actions wherein the matter in controversy exceeds the sum or value of $3,000 exclusive of interest and costs and arises under the Constitution, laws or treaties of the United States. As was said in Healy v. Ratta, 292 U.S. 263, at page 269, 54 S.Ct. 700, at page 703, 78 L.Ed. 1248: "It is true that, where there is no method at law to test the legality of a tax without risk of incurring a penalty, the imminence of the penalty may involve such a threat of irreparable injury as to satisfy the requirements of equity jurisdiction. See Matthews v. Rodgers, 284 U.S. 521, 526, 52 S.Ct. 217, 76 L.Ed. 447. But the inability of a taxpayer to litigate the...