U.S. v. Lewisburg Area School Dist.

• Decision Date: 16 July 1976
• Docket Number: No. 75-2282,75-2282
• Citation: 539 F.2d 301
• Parties: UNITED STATES of America, Plaintiff-Appellant, v. LEWISBURG AREA SCHOOL DISTRICT et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Third Circuit

Page 301

539 F.2d 301

UNITED STATES of America, Plaintiff-Appellant, v. LEWISBURG AREA SCHOOL DISTRICT et al., Defendants-Appellees.

No. 75-2282.

United States Court of Appeals, Third Circuit.

Argued April 22, 1976.

Decided July 16, 1976.

Louise O. Knight, Lewisburg, Pa., for the Lewisburg Area School Dist., Union County, Pennsylvania, the Bd. of School Directors of the Lewisburg Area School Dist.

Paul E. Johnson, Mifflinburg, Pa., for the Union County Bd. of Assessment (Union County Bd. of Commissioners), Union County, Pennsylvania, Kelly Township Tax Collector, and Union County Tax Assessor.

Paul W. Brann, Lewisburg, Pa., for the Union County Treasurer.

Scott P. Crampton, Asst. Atty. Gen., Gilbert E. Andrews, Gary R. Allen, Richard Farber, Attys., Tax Div., Dept. of Justice, Washington, D. C., for appellant; S. John Cottone, U. S. Atty., Scranton, Pa., of counsel.

Before ALDISERT, FORMAN and WEIS, Circuit Judges.

OPINION OF THE COURT

FORMAN, Circuit Judge.

The United States brought suit in the United States District Court for the Middle District of Pennsylvania, naming as defendants the Lewisburg Area School District, Union County, wherein it is situated, and individual officers of each (hereafter called the School District) to obtain a declaration that the Constitution and laws of the United States prohibit the imposition of certain local taxes on the federal employees and their dependents who reside on the federal enclave known as the Lewisburg Federal Penitentiary, and to seek preliminary and permanent injunctions against the assessment and collection of those taxes. The jurisdiction of the District Court was invoked pursuant to 28 U.S.C. § 1345 and § 2201. The taxes in question are a per capita tax of $5 imposed by the Lewisburg Area School District, a per capita tax of equal amount imposed by Union County, and an occupation tax imposed by the Lewisburg Area School District.

The United States claimed that pursuant to Art. I, § 8, cl. 17 of the Constitution ¹ and to 61 P.S. § 355, ² exclusive jurisdiction over the enclave is vested in the United States; that no tax can be imposed on residents of the enclave except by consent of the United States; and that the United States has not consented to the taxes in question. ³

The School District filed a motion to dismiss on the grounds first that the court was without jurisdiction because the United States lacked standing to bring suit, had not exhausted state remedies as required by 28 U.S.C. § 1341 before a federal court could enjoin the collection of a state tax, and had not sought a three-judge court; and secondly that the United States had failed to state a claim on which relief could be granted. The District Court granted the motion to dismiss on the grounds that the United States lacked standing to maintain the action, but went on to consider the merits of the case and to conclude that Pennsylvania, in ceding the Lewisburg enclave to the Federal Government, had reserved the right to tax residents of that enclave and that the United States therefore could not prevail even if it did have standing. Finally, the court held that the occupation tax constituted an "income tax" within the meaning of the Buck Act, 4 U.S.C. §§ 105-110, and therefore, by virtue We have jurisdiction pursuant to 28 U.S.C. § 1291. The order of the District Court before us on review is the order dismissing the complaint. It is clear from the opinion that this order is based not only on a finding by the District Court that the United States lacked standing, but also on the Court's analysis of the merits.

of the provisions of that Act, the United States had consented to the imposition of the tax. ⁴

The court had before it matters beyond the pleadings in the case, including a stipulation of facts and exhibits; it considered affirmative defenses not specifically referred to in the motion to dismiss. Thus the motion to dismiss for failure to state a claim was in essence treated by the District Court as a motion for summary judgment. Neither party makes any objection to this treatment or alleges any factual controversy. The dismissal for failure to state a claim should more properly have been entered by the District Court as an order for summary judgment (Fed.R.Civ.P. 12(b)(6) and 56) and we review it as such. ⁵

I STANDING

The United States claims that the actions of the School District in assessing and levying the taxes violate its rights under the Constitution to sovereignty over the land ceded by Pennsylvania for the federal enclave at Lewisburg. Against this claim the School District argues that the exclusive jurisdiction of the United States extends by the terms of the Pennsylvania cession statute only to the ceded lands and not to the persons residing thereon, and that therefore no interest of the United States is being infringed. This argument goes not to standing but to the merits. "The fundamental aspect of standing is that it focuses on the party seeking to get his complaint before a federal court and not on the issues he wishes to have adjudicated." Flast v. Cohen, 392 U.S. 83, 99, 88 S.Ct. 1942, 1952, 20 L.Ed.2d 947 (1968). ⁶

In Data Processing Service v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970), the Supreme Court quoted Flast v. Cohen, supra, 392 U.S. at 101, 88 S.Ct. at 1953, that "In terms of Article III limitations on federal court jurisdiction, the question of standing is related only to whether the dispute sought to be adjudicated will be presented in an adversary context and in a form historically viewed as capable of judicial resolution," and determined that the only two questions relevant to an inquiry into standing are whether the challenged action caused plaintiff injury in fact, economic or otherwise, and whether the interest sought to be protected by complainant is arguably within the zone of interests to be protected or regulated by the statute or constitutional guarantee in question.

It has long been established that the United States may bring suit to protect its sovereign interest notwithstanding the lack of any immediate pecuniary interest in the outcome of the litigation. ⁷ In cases brought by the United States to enjoin sales, use or personal property taxes, imposed by States allegedly in contravention of the Soldiers & Sailors Relief Act, the United States has been held to have standing to protect the statutory right of servicemen to be free of allegedly discriminatory taxes. ⁸ The Supreme Court has recently We do not have to decide whether the Government would have standing in this case if the only interest that it asserted was the protection of the residents of the federal enclave from taxation. The Government makes clear that the heart of this controversy is not merely concern for the federal employees and their dependents residing in the federal area at Lewisburg but the jurisdictional status of the enclave. The interest which the Government seeks to protect is its own exclusive rights as sovereign, and the injury it alleges is a trespass against those sovereign rights.

                reaffirmed that the United States would have standing to sue against the levy of state taxes on Indians.  9  Other cases have upheld the standing of the Government to protect the derivative right of its contractors to be free from state taxation.  10  The School District argues that these cases are distinguishable; that the Government had standing therein not to protect the soldiers from taxation but to ensure that the provisions of the Soldiers & Sailors Relief Act with regard to servicemen's domicile remained intact; that the Government has a special interest in the protection of Indians; and that the involvement, financial and otherwise of the Government with its contractors all form distinguishable bases of standing in the cited cases
                

The United States by act of the Pennsylvania Legislature was ceded certain lands over which it claims exclusive jurisdiction. It seems clear that the United States has sufficient interest in protecting that jurisdiction to apply to the federal court for a declaration as to whether the actions of the local taxing bodies in assessing and attempting to collect taxes in that territory violate its sovereign rights. The acts of the School District against the alleged sovereignty state a claim of injury in fact. The interest sought to be protected is within the constitutional guarantee of Art. I, § 8, cl. 17. Hence we reverse the District Court and find that the United States had standing to sue.

II EXCLUSIVE JURISDICTION

The Lewisburg enclave was purchased by the United States with the consent of the Pennsylvania Legislature for a purpose which brings it within Art. I § 8 cl. 17. ¹¹ The Pennsylvania Legislature consented to the purchase and ceded jurisdiction over the purchased land. ¹² About these facts there is no dispute. At issue between appellant and appellee is whether Pennsylvania ceded only jurisdiction to tax the land and retained jurisdiction to tax persons who reside on the land.

Exclusive jurisdiction as used in Article I means that not only is federal property immune from taxation but that state laws which have not been explicitly or implicitly adopted by the United States, including tax laws to which the United States has not consented, are ineffective over persons or property on the enclave. ¹³

The United States can condemn and occupy state land without any cession of jurisdiction by the state. However, such ownership and occupancy without consent or a cession of jurisdiction by the state legislature does not limit the jurisdiction of the state over the lands, except that the state may not exercise jurisdiction directly over the United States or its instrumentalities. Fort Leavenworth R.R. Co. v. Lowe, 114 U.S. 525, 5 S.Ct. 995, 29 L.Ed. 264 (1885). The cases relied upon by the School District, in which the validity of a tax was held to depend on whether it fell directly on the United States or its...