United States v. Sullivan

• Decision Date: 28 June 1967
• Docket Number: Civ. No. 11928.
• Citation: 270 F. Supp. 236
• Court: U.S. District Court — District of Connecticut
• Parties: UNITED STATES of America, and Lieutenant Stanley D. Schuman, U.S.N., a member of the armed forces of the United States on active military service not a resident of or domiciled in the State of Connecticut, suing on behalf of himself and all servicemen or former servicemen similarly situated and affected v. John L. SULLIVAN, Tax Commissioner of the State of Connecticut, Gerald A. Lamb, Treasurer of the State of Connecticut, Louis I. Gladstone, Comptroller of the State of Connecticut; and Harold M. Mulvey, Attorney General of the State of Connecticut.

270 F. Supp. 236

UNITED STATES of America, and Lieutenant Stanley D. Schuman, U.S.N., a member of the armed forces of the United States on active military service not a resident of or domiciled in the State of Connecticut, suing on behalf of himself and all servicemen or former servicemen similarly situated and affected v. John L. SULLIVAN, Tax Commissioner of the State of Connecticut, Gerald A. Lamb, Treasurer of the State of Connecticut, Louis I. Gladstone, Comptroller of the State of Connecticut; and Harold M. Mulvey, Attorney General of the State of Connecticut.

Civ. No. 11928.

United States District Court D. Connecticut.

June 28, 1967.

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Jon O. Newman, U. S. Atty., David A. Golas, Asst. U. S. Atty., Hartford, Conn., Clinton B. D. Brown and William Masser, Dept. of Justice, Washington, D. C., for plaintiff.

Harold M. Mulvey, Atty. Gen., F. Michael Ahern, Ralph G. Murphy, Asst. Attys. Gen., Hartford, Conn., for defendant.

MEMORANDUM OF DECISION

BLUMENFELD, District Judge.

This is a suit by the United States and Lieutenant Stanley D. Schuman, U.S.N., on behalf of all nonresident or nondomiciliary military personnel now stationed in Connecticut against tax officials of the State of Connecticut. The Government seeks a judgment declaring that Connecticut's sales and use taxes (Chap. 219, Conn.Gen.Stat. § 12-406 to § 12-432, Rev. of 1958, as amended) cannot be collected from nonresident servicemen in respect of property purchased or used by them in Connecticut consistently with the remedial provisions of Section 514 of the Soldiers' and Sailors' Civil Relief Act of 1940 (50 App. U.S.C. § 574 (1964)). A refund of all sums heretofore paid to Connecticut on account of said tax by military personnel who were neither residents nor domiciliaries of this state is also sought.

By agreement of counsel, the question of jurisdiction and the application for a preliminary injunction were postponed until the hearing on the merits.

I. Jurisdiction

The defendants, John L. Sullivan and others, public officials of the State of Connecticut, moved to dismiss the suit against them on the ground that Congress has denied to a federal court jurisdiction of such a case. The specific ground is that this suit is barred by act of Congress, 28 U.S.C. § 1341, 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."

This section grew out of the act of August 21, 1937 (Chap. 726, 50 Stat. 738) which generally withdrew jurisdiction from federal district courts to enjoin the collection of a state tax. See 1A J. Moore, Federal Practice ¶ 0.207, p. 2283 (1959 ed.).

Assuming that § 1341 is applicable, whether "a plain, speedy and efficient remedy may be had in the courts of this State" in the instant case is a difficult and close question. Compare Hillsborough Township v. Cromwell, 326 U.S. 620, 66 S.Ct. 445, 90 L.Ed. 358 (1946) with Spector Motor Service, Inc. v. McLaughlin, 323 U.S. 101, 65 S.Ct. 152, 89 L.Ed. 101 (1944). But the question whether an adequate remedy exists in the state courts is a thicket which need not be entered.

Jurisdiction of this court in the case at bar is based on the fact that the United States is a party plaintiff. 28 U.S.C. § 1345. It is settled law that the right of the United States to sue as plaintiff in a federal district court is not limited by the provisions of § 1341. Department of Employment v. United States, 385 U.S. 355, 357-58, 87 S.Ct. 464, 17 L.Ed.2d 414 (1966); United States v. Arlington County, 326 F.2d 929, 931 (4th Cir. 1964). The rule in this circuit has long been to the same effect. United States v. Woodworth, 170 F.2d 1019 (2d Cir. 1948) (Frank, C. J.); United States v. City of New York, 175 F.2d 75 (2d Cir.), cert. denied, 338 U.S. 885, 70 S.Ct. 189, 94 L.Ed. 543 (1949).

The defendants have attempted to distinguish the Department of Employment case from the instant action on the ground that the proprietary interest of the United States in its instrumentalities (e. g., the Red Cross as in Department of Employment) is more direct and immediate than the interest of the Government as representative of the class of its military personnel. In deciding that there was sufficient interest in the United States to sue, the Supreme Court relied upon the authoritative force of an unbroken line of authority, foremost among which was United States v. Arlington County, supra, 326 F.2d 929. See Department of Employment v. United States, supra, 385 U.S. 355, 358, n.6, 87 S.Ct. 464. Arlington County, like the instant action, was a suit by the United States to declare a state personal property tax invalid as in contravention of the Soldiers' and Sailors' Civil Relief Act of 1940. Its citation by the Supreme Court constitutes approval of the proposition that the United States in its capacity as a plaintiff representative of its military personnel is not bound by the restrictions of § 1341.¹

II.

Nor is the instant action barred by the general principle of sovereign immunity in that the State of Connecticut has not consented to this lawsuit. The sovereign immunity of a state may not be interposed as a defense when the United States is the party plaintiff. Department of Employment v. United States, supra at 358, 87 S.Ct. 464, citing Principality of Monaco v. Mississippi, 292 U.S. 313, 54 S.Ct. 745, 78 L.Ed. 1282 (1934) and Ex Parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L. Ed. 714 (1908).

III.

And there is no merit to the defendants' contention that the present case should more properly be considered by a three-judge district court in view of 28 U.S.C. § 2281. A three-judge court is required by § 2281 only when an injunction against the operation or execution of a state statute is sought "upon the ground of the unconstitutionality of such statute". This has been construed to apply only when the state statute is challenged as directly conflicting with the mandate of the Federal Constitution. The remedy sought here, if granted, will not completely paralyze the entire operation of Connecticut's statute.

It is now settled that only one judge need sit where a state statute is alleged to be inoperative because of a federal statute which the Supremacy Clause of article VI of the Constitution declares pre-emptive of the state law. Swift & Co. v. Wickham, 382 U.S. 111, 86 S.Ct. 258, 15 L.Ed.2d 194 (1965), overruling Kesler v. Department of Public Safety, 369 U.S. 153, 82 S.Ct. 807, 7 L.Ed.2d 641 (1962). See Query v. United States, 316 U.S. 486, 62 S.Ct. 1122, 86 L.Ed. 1616 (1942).

Accordingly, the defendants' motion to dismiss the complaint because barred by the provisions of 28 U.S.C. § 1341 or for the other reasons enumerated above is denied.

The Merits

It has never been disputed² during the course of this proceeding that Connecticut has been assessing and collecting sales and use taxes from nonresident servicemen on active duty in respect of personal property purchased or used by them in Connecticut, other than in a trade or business.³ Connecticut is one of several states which imposes a retailers' sales and use tax at a statutorily fixed rate against personal property purchased or used within the state. The statute under which such taxes are imposed by Connecticut is the Education, Welfare and Public Health Tax Act (Chap. 219, Conn.Gen.Stat.Rev. of 1958, as amended) commonly referred to as the "Sales and Use Tax Act" (§§ 12-406 to 12-432 Conn.Gen.Stat.Anno.1958).

This case presents the question whether the provisions of the Soldiers' and Sailors' Civil Relief Act bars the defendants from collecting Connecticut sales and use taxes from nonresident servicemen present here in compliance with military orders.

I.

The key provision upon which the plaintiffs rely is part of a comprehensive remedial statute designed "to protect those who have been obliged to drop their own affairs and take up the burdens of the nation." Boone v. Lightner, 319 U.S. 561, 575, 63 S.Ct. 1223, 1231, 87 L.Ed. 1587 (1943). Cf. LeMaistre v. Leffers, 333 U.S. 1, 6, 68 S.Ct. 371, 92 L.Ed. 429 (1943). It is found in Section 514(1) (50 App. U.S.C. § 574 (1)) of the Soldiers' and Sailors' Civil Relief Act:

"For the purpose of taxation in respect of the personal property * * * of any such military person by any State, Territory, possession, or political subdivision of any of the foregoing * * * of which such person is not a resident or in which he is not domiciled * * *, his personal property shall not be deemed to be located or present in or to have a situs for taxation in such State, Territory, possession or political subdivision * * *." (Emphasis added).

The emphasized words were added to the original version of the Soldiers' and Sailors' Civil Relief Act by amendment on July 3, 1944 (58 Stat. 722). A major reason for the enactment of the amendment was that the prior law did "not prevent the State of `temporary residence' from taxing tangible personal property actually located in such State so long as the tax does not depend on residence or domicile." S.Rep.No. 959, 78th Cong. 2d Sess. 1 (1944). See H.R.Rep. No. 1514, 78th Cong. 2d Sess. 2 (1944).

When the section was amended again in 1962 (76 Stat. 768, Oct. 9, 1962),⁴ it was subjected to legislative scrutiny without touching this particular provision because the Senate Committee regarded it as already making it "clear that a serviceman, living with his family and owning personal property in a State other than his State of domicile, is not subject to taxation on his personal property by the nondomiciliary State." S.Rep. No. 2182, 87th Cong.2d Sess. 1 (1962), accompanying H.R. 9747, U.S.Code Cong. & Adm.News 1962, p. 2841. Such approval by a legislative body is meaningful. Cf. Electric Storage Battery Co. v. Shimadzu, 307 U.S. 5, 14, 59 S.Ct. 675, 83 L.Ed. 1071 (1939).

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