Hess v. Mullaney

• Decision Date: 23 June 1954
• Docket Number: No. 13533.,13533.
• Parties: HESS et al. v. MULLANEY, Commissioner of Taxation.
• Court: U.S. Court of Appeals — Ninth Circuit

15 Alaska 40, 213 F.2d 635 (1954)

HESS et al. v. MULLANEY, Commissioner of Taxation.

No. 13533.

United States Court of Appeals Ninth Circuit.

May 25, 1954.

As Amended June 3, 1954.

Rehearing Denied June 23, 1954.

COPYRIGHT MATERIAL OMITTED

Faulkner, Banfield & Boochever, H. L. Faulkner, Juneau, Alaska, for appellant Hess.

Medley & Haugland, Seattle, Wash., Collins & Clasby, Fairbanks, Alaska, for appellant Alaska Juneau Gold Mining Co.

J. Gerald Williams, Atty. Gen., John H. Dimond, Asst. Atty. Gen., for appellee.

Before DENMAN, ORR and POPE, Circuit Judges.

POPE, Circuit Judge.

In 1949 the Alaska Legislature, Chapter 10, Session Laws of Alaska, 1949, enacted what purported to be a general property tax for that Territory. It was the first attempt in Alaska to impose an ad valorem tax upon property in the Territory generally. The appellants are taxpayers within the Territory who sought in the court below to procure a determination and adjudication that the law in question is invalid and void, primarily for want of uniformity. In this connection it is asserted that the law violates § 9 of the Alaska Organic Act, as amended, 48 U.S.C.A. § 78, providing with respect to the Territory that all taxes shall be uniform upon the same class of subjects,¹ and that it operates to deny the appellants due process of law under the Fifth Amendment and the equal protection of the law under the Fourteenth Amendment to the Constitution, and is as well violative of the Civil Rights Act, Title 42 U.S.C.A. § 1981, prescribing that all persons shall be subject to "like * * * taxes, licenses, and exactions of every kind, and to no other."

The complaint of Hess alleges that he owns real and personal property of various kinds all situated outside the boundaries of any incorporated city; that in 1949 the defendant Commissioner levied and assessed upon such property a tax of $675.01 which he paid under protest. This sum plus interest he was required to pay he now seeks to recover on the ground of the alleged invalidity of the law.

Alaska Juneau Gold Mining Company alleged in its complaint in intervention that it owned substantial property in Alaska outside any municipality, or any school or public utility district, upon which a tax was levied and assessed in 1949 in the sum of $703. This sum, with interest demanded, intervenor paid under protest and now, like the plaintiff, seeks to recover on precisely the same grounds set forth in the complaint. The appeal is from the judgment, D.C., 102 F.Supp. 430, which in effect rejected the claims of invalidity of the statute.

The principal claim of inequality and lack of uniformity in the law arises out of its different treatment of property outside of incorporated cities, school districts and public utility districts on the one hand, and property within such cities and districts on the other. § 3 provides that for the year 1949 and each subsequent year, "there is hereby levied, and there shall be assessed, collected and paid, a tax upon all real property and improvements and personal property in the Territory at the rate of one per centum of the true and full value thereof." (Note that this language covers all property without distinction.) § 4 provides in part: "The tax levied under the provisions of Section 3 upon the property within the limits of an incorporated city or town, independent school district or incorporated school district in the Territory shall be assessed, collected and enforced in the manner prescribed by the property tax law of the municipality or district * * *. All of the tax levied under this Act which is so collected shall be remitted to such municipalities or school districts * *. Taxes collected hereunder within a public utility district shall be handled in a like manner to those collected in cites or other incorporated municipalities, including collection costs, remissions and school millage levy provisions as set forth herein." § 5 provides that: "The tax levied under the provisions of Section 3 upon property outside the limits of an incorporated city, independent school district, or incorporated school district or public utility district in the Territory shall be assessed, collected and enforced as provided in this Act."

Thus it will be seen that upon the face of the statute and according to its terms, § 3 imposes a tax of one per-centum or ten mills upon all real and personal property within the Territory and wheresoever situated. By § 4 such tax upon property within a city, school district, or utility district is to be "assessed, collected and enforced in the manner prescribed by the property tax law of the municipality or district," and the tax thus collected in the municipality or district is to be retained by such collecting entity subject to certain other provisions not here material that amounts collected by certain school districts and not used for school purposes shall revert to the territorial treasurer.²

It is claimed that this system of taxation as prescribed by the law itself is completely lacking in uniformity and equality and that in consequence thereof it is void. It is also asserted that as applied and enforced by the taxing authorities it operates to discriminate against the appellants and in its practical working bears so unequally on persons and property of the same class that it must be held to be unenforceable.

For the purposes of its administration it is provided in the law that assessors shall be appointed for each judicial division within the Territory to whom tax returns are required to be made. The record shows that within the Fourth Division, where the City of Fairbanks and the Fairbanks school district are located, substantially half of the assessable property is within the city and school district. In the First Division the property in the City of Juneau and the Juneau Independent School District constitutes more than twice as much assessable property as in the First Division outside of the municipalities and districts; and the same is true of the City of Ketchikan, also within the First Division. In the City of Anchorage there is nearly twice as much assessable property as in the whole of the Third Division outside of the city and districts.

It is argued that under these circumstances the classification made by the Act between property within and without municipalities and districts is arbitrary and unreasonable; in effect it amounts to an exemption from the tax of all this property within cities and districts; that what the territorial legislature has done has been to levy a tax of ten mills solely on property outside municipalities, school districts and public utility districts. This means, appellants say, that the ad valorem tax for the support of the Territory falls exclusively upon the outside property.

As was suggested in Alaska Steamship Co. v. Mullaney, 9 Cir., 180 F.2d 805, 817, we assume that the uniformity clause of the Organic Act requires the same measure of uniformity and equality which is required by the equal protection clause of the Fourteenth Amendment as applied to State taxing laws. Unquestionably systematic geographical discriminations in the burden of taxation have been held void. Cumberland Coal Co. v. Board of Revision of Tax Assessments in Greene County, 284 U.S. 23, 28, 52 S.Ct. 48, 76 L.Ed. 146. We think that so far as the statute itself is concerned, it will not bear the construction which appellants attempt to place upon it. We observe here no provision for exemption of any property whatever from the 1% ad valorem tax which by the express provisions of § 3 is levied upon "all real property and improvements and personal property in the Territory." It is true that § 4 provides that the tax just mentioned as it applies to property within the limits of cities and districts "shall be assessed, collected and enforced in the manner prescribed by the property tax law of the municipality or district," and the same section also provides that when the tax so levied is collected, it may with certain exceptions be retained by the municipalities and districts for their own purposes. However, there is nothing in the Act to suggest that any part of the 1% tax shall not in fact be collected within the cities and districts. Rather, the unusual and perhaps novel aspect of the Act which gives rise to appellants' principal complaint relates not to who should pay the tax or from what property it should be collected, but rather which unit of government shall get the money.

It is difficult to perceive how so far as this aspect of the law is concerned it could make any difference whether the Territory of Alaska first collected into its treasury all the proceeds of the tax from all sources and then appropriated amounts equal to those collected from the municipalities and districts to such entities, or whether it simply let the cities and districts retain such collections as here provided. It is not unusual for states after collecting taxes on a state-wide basis to make distribution of revenues to municipal corporations, particularly in the case of school districts.³ No requirements of uniformity or of equal protection of the law limit the power of a legislature in respect to allocation and distribution of public funds. Gen. Amer. Tank Car Corp. v. Day, 270 U.S. 367, 372, 46 S.Ct. 234, 70 L.Ed. 635; Carmichael v. Southern Coal Co., 301 U.S. 495, 521, 522, 57 S.Ct. 868, 81 L.Ed. 1245.

It is urged that the statute is invalid because it lacks the necessary mechanics to assure equalization of the assessed values between the different taxing units. The statute creates in each judicial division a Board of Assessment and Equalization. Each such Board is authorized to scrutinize the assessment roll and to take "corrective action" thereon. Any person whose name appears on the assessment roll may apply to the Board with respect to any alleged overcharge, error, omission or neglect of the assessor. Provision is made for an...