Reynolds v. Wade, 15135.

• Decision Date: 21 October 1957
• Docket Number: No. 15135.,15135.
• Citation: 17 Alaska 401,249 F.2d 73
• Parties: Woodrow W. REYNOLDS, on Behalf of Himself and All Other Taxpayers Similarly Situated, Appellant, v. Hugh WADE, as Treasurer of the Territory of Alaska, John McKinney, as Director of Finance of the Territory of Alaska, Don M. Dafoe as Commissioner of Education of Alaska and A. H. Ziegler, William Whitehead, Mrs. James March, Mrs. Myra Rank and Robert F. Baldwin as Members of the Board of Education of the Territory of Alaska, Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

17 Alaska 401, 249 F.2d 73 (1957)

Woodrow W. REYNOLDS, on Behalf of Himself and All Other Taxpayers Similarly Situated, Appellant, v. Hugh WADE, as Treasurer of the Territory of Alaska, John McKinney, as Director of Finance of the Territory of Alaska, Don M. Dafoe as Commissioner of Education of Alaska and A. H. Ziegler, William Whitehead, Mrs. James March, Mrs. Myra Rank and Robert F. Baldwin as Members of the Board of Education of the Territory of Alaska, Appellees.

No. 15135.

United States Court of Appeals Ninth Circuit.

October 21, 1957.

Howard D. Stabler, Juneau, Alaska, Henry C. Clausen, Richard G. Burns, San Francisco, Cal., for appellant.

J. Gerald Williams, Atty. Gen., Edward A. Merdes, Henry J. Camarot, Deputy Attys. Gen., for appellees.

Before ORR, LEMMON and FEE, Circuit Judges.

ORR, Circuit Judge.

The District Court of Alaska dismissed an action brought by appellant, a taxpayer, on behalf of himself and others similarly situated, to restrain certain officials of the Territory of Alaska from making alleged unlawful expenditures of territorial funds, and from administering a territorial statute concerned with publicly furnished transportation to non-public schools.

It seems to be agreed that in the event the appellant has capacity to sue, under Alaska law, the allegations of his complaint are sufficient to require that he be permitted to proceed with his action.¹

The right of a taxpayer to bring an action to enjoin officials from proceeding in an unlawful manner is recognized in an overwhelming number of states and two territories.² Appellees take the position that we are not at liberty, in this circuit, to travel the road charted by the numerous state decisions on the subject, because of a road block thrown up in the case of Sheldon v. Griffin, 9 Cir., 1949, 174 F.2d 382, 383. This contention was sustained by the trial court. To the contrary we conclude that Sheldon v. Griffin does not present such an obstacle because of a different factual situation existing in the instant case.

In the Griffin case the plaintiff, alleging that he was a citizen and taxpayer of Alaska, sought to have an amendment to the Unemployment Compensation Code of Alaska declared invalid for asserted irregularities in the course of the measure's passage. The amendment provided for a merit system of credits upon employers' contributions for unemployment compensation, and also reduced the waiting period for unemployment benefits. This court held that the complaint presented no justiciable controversy, because:

"* * * The amendment under attack adds nothing to the burden of the taxpayers of Alaska. The unemployment compensation fund administered by the Commission is made up of contributions exacted from employers in accordance with regulations prescribed by the Commission, plus fines and penalties collected pursuant to the provisions of the Act. Alaska Compiled Laws 1949, § 51-5-5. There is nothing in the pleading or proof to indicate that the plaintiff has a particular right of his own to which injury is threatened, or any interest distinguishable from that of the general public in the administration of the law. To entitle himself to be heard he is obliged to demonstrate not only that the statute he attacks is void but that he suffers or is in imminent danger of sustaining some direct injury as the result of its enforcement, and not merely that he suffers in some remote or indefinite way in common with the generality of people. Frothingham v. Mellon, 262 U.S. 447, 488, 43 S.Ct. 597, 67 L.Ed. 1078. * * *" (Italics supplied.)

It will be noted that this court in reaching its decision relied in part on the doctrine expounded in the case of Commonwealth of Massachusetts (Frothingham) v. Mellon, 1932, 262 U.S. 447, 43 S.Ct. 597, 67 L.Ed. 1078. We think the reliance was proper, inasmuch as there was no relation between the plaintiff as a taxpayer and the effect of the amendment to the Unemployment Compensation Code. There, the plaintiff failed to show special injury resulting to him from the operation of the new measure. His attempt to set out some indefinite relationship in common with people generally was not enough.

Since the creation of a merit system for contributions to the unemployment compensation fund, and the reduction of the waiting period for unemployment benefits did not add to the taxpayer's burden, a mere citizenship and taxpaying status, without more, did not justify a challenge by the citizen taxpayer.

The instant case is readily distinguishable in that the statute in question puts a burden upon the Territorial taxpayer. The administration of the transportation to non-public schools is financed through the General Fund, into which the general tax revenues of Alaska citizens and residents flow. Here, the plaintiff and those similarly situated as taxpayers do suffer injury when there is an unlawful expenditure of public funds.

The question of whether an Alaskan taxpayer, suing in his private capacity, has standing to challenge the validity of a statute enacted by the Alaskan Territorial Legislature, and enjoin funds appropriated for its administration, is one of first impression in this circuit.

The great majority of states allow a taxpayer to sue to enjoin state officials from alleged unlawful expenditure of tax-derived state funds.³ The principle that the taxpayers are the equitable owners of public funds is often stated to support the majority rule. Also, the decisions allowing taxpayers' suits against municipalities and counties are often employed as authority to sustain taxpayers' actions against states.

The decisions denying this type of suit distinguish between a taxpayer's suit against a municipality, where the action is considered analogous to a stockholder's action against a private corporation, and a suit against a state, where the sovereign of the state is in question.⁴

The law is settled that a Federal taxpayer cannot sue to enjoin alleged unlawful expenditure of funds from the Federal treasury in the absence of a showing of a direct, special injury. Commonwealth of Massachusetts (Frothingham) v. Mellon, 1923, 262 U.S. 447, 43 S.Ct. 597, 67 L.Ed. 1078. There, an original action in the Supreme Court by Massachusetts against the Secretary of the Treasury, challenging the constitutionality of a Congressional statute, was decided together with a similar action by a Federal taxpayer. The Supreme Court restated its rule allowing taxpayers' suits against municipalities, approving the reasoning employed, but held that the relation of a taxpayer of the United States to the Federal Government was so minute and indeterminable that no basis was afforded for equitable relief.

The Supreme Court announced the doctrine that "The party who invokes the power must be able to show not only that the statute is invalid, but that he has sustained or is immediately in danger of sustaining some direct injury as the result of its enforcement, and not merely that he suffers in some indefinite way in common with people generally." 262 U.S. at page 488, 43 S.Ct. at page 601.

The principle...