Smith ex rel. Themselves All Other Taxpayers of the Virgin Islands v. Gov't of the Virgin Islands

• Decision Date: 28 February 1964
• Docket Number: No. 14,545,14,545
• Citation: 4 V.I. 489
• Parties: DAVID SMITH and ERWIN GROSS, on behalf of themselves as taxpayers and on behalf of all other taxpayers of the Virgin Islands, Appellants v. THE GOVERNMENT OF THE VIRGIN ISLANDS, MARIO LEWIS as Commissioner of Property and Procurement and STEADMAN HODGE
• Court: U.S. Court of Appeals — Third Circuit

4 V.I. 489

DAVID SMITH and ERWIN GROSS, on behalf of themselves as taxpayersand on behalf of all other taxpayers of the Virgin Islands, Appellants v. THE GOVERNMENT OF THE VIRGIN ISLANDS, MARIO LEWIS

as Commissioner of Property and Procurement

and

STEADMAN HODGE

No. 14,545

United States Court of Appeals Third Circuit

Argued at Charlotte Amalie January 28, 1964

Decided February 28, 1964

See, also, 329 F.2d 131

Suit by plaintiffs on behalf of themselves and all other taxpayers of the Virgin Islands to declare illegal and void the conveyance of a piece of escheated property in St. Thomas and for injunctive relief. The District Court granted a motion to dismiss the suit upon the ground that the plaintiffs lacked the requisite capacity to maintain it and the plaintiffs appealed. The Court of Appeals, Maris, Circuit Judge, held that the plaintiffs had capacity to bring the suit under 5 V.I.C. § 80, which enables a taxpayer to maintain an action to restrain illegal acts by a territorial officer or employee, or the wrongful disbursement of territorial funds.

Judgment reversed and cause remanded for further proceedings.

[COPYRIGHT MATERIAL OMITTED]

HARRY DREIS, St. Thomas, Virgin Islands, for appellants

JOSEPH N. TAUBER, Asst. Attorney General, JOHN W. NEWMAN, St. Thomas, Virgin Islands, for appellees

Before MARIS, STALEY and ALDRICH, Circuit Judges

MARIS, Circuit Judge

The plaintiffs, David Smith and Erwin Gross, suing on behalf of themselves and all other taxpayers of the Virgin Islands, brought this suit in the District Court of the Virgin Islands against the Government of the Virgin Islands, Mario Lewis, its Commissioner of Property and Procurement, and Steadman Hodge, to declare illegal and void the conveyance of a piece of escheated property in St. Thomas by defendant Lewis to defendant Hodge for the sum of $200, and for injunctive relief. The defendants filed answers and moved for the dismissal of the suit upon the ground that the plaintiffs lacked the requisite capacity to maintain it. The district court granted the motion and dismissed the suit. The plaintiffs have appealed.

5 V.I.C. § 80 provides:

"§ 80. Taxpayers' suits

"A taxpayer may maintain an action to restrain illegal or unauthorized acts by a territorial officer or employee, or the wrongful disbursement of territorial funds."¹

[1-5] We are satisfied that under this statute the plaintiffs had capacity to bring the present suit and that the district court erred in holding otherwise. The purpose of the statute is the salutary one of enabling taxpayers to obtain the aid of the district court to restrain any illegal acts of territorial authorities or any illegal diminution of territorial funds or property either through the unlawful creation of territorial debt, the unlawful expenditure of territorial funds or the unlawful alienation of territorial property. Such suits are freely entertained at common law in most of the states and territories² and serve a very useful public purpose in keeping within legal bounds the actions of government officers, especially in dealing with the public property and funds. Particularly are such suits useful in territories, such as the Territory of the Virgin Islands, where the territorial governor is appointed from Washington and neither he nor the executive officers and employees appointed by him are answerable to the voters of the territory or subject to impeachment or removal by the elected territorial legislature. Buscaglia v. District Court of San Juan, 1 Cir. 1944, 145 F.2d 274, cert. den. 323 U.S. 793; Reynolds v. Wade, 9 Cir. 1957, 249 F.2d 73. In the Buscaglia case the Supreme Court of Puerto Ricoand the Court of Appeals for the First Circuit upheld the right of a Puerto Rican taxpayer to maintain a suit to restrain the alleged illegal expenditure of insular funds, and in the Reynolds case the Court of Appeals for the Ninth Circuit upheld the right of a taxpayer in the Territory of Alaska to maintain a similar suit. The following statement by the Supreme Court of the Territory of Hawaii in Lucas v. Amer. Haw. E. & C. Co., 1904, 16 Hawaii 80, 86-7, is equally pertinent:

". . . The right of a taxpayer to bring suit to restrain a public officer from doing an illegal act has been settled in this jurisdiction since the case of Castle et al. v. Kapena, 5 Haw. 27 (1883). If the question could be considered an open one we should follow the rule laid down in Crampton v. Zabriskie, 101 U.S. 601, and in R.P.R.R. Co. v. Hall, 91 U.S. 343, cited in Castle v. Kapena. It is not necessary that the plaintiff should show actual damage to himself and to all others similarly situated, as is contended by the Assistant Attorney General. The cause of action is the alleged improper awarding of a contract, after a call for tenders based on indefinite specifications. If there has been a violation or evasion of the law requiring the awarding of the contract to the lowest bidder, after a public advertisement for tenders, damage is presumed to result to all taxpayers. The object of the suit is to prevent the violation of the law. The consequences which may result in case the law is disregarded are so obvious that no proof of actual pecuniary damage is necessary. In Crampton v. Zabriskie the court on page 609 says: '. . . From the nature of the powers exercised by municipal corporations, the great danger of their abuse, and the necessity of prompt action to prevent irremediable injuries, it would seem eminently proper for courts of equity to interfere upon the application of the taxpayers of a county to prevent the consummation of a wrong, when the officers of the corporations assume, in excess of their powers, to create burdens upon property-holders. Certainly in the absence of legislation restricting the right to interfere in such cases to public officers of the state or county, there would seem to be no substantial reason why a bill by or on behalf of individual taxpayers should not be entertained to prevent the misuse of corporate power.' The plaintiff comes within the rule, andno further showing as to damages is necessary under the facts in this case."

[6-9] In our view the alleged minuteness of the amount of the present taxpayers' interests may not be urged as a ground for denying them standing to sue. For the statute does not...