Wilson v. Kennedy

• Decision Date: 10 April 1956
• Docket Number: No. 14593.,14593.
• Citation: 232 F.2d 153
• Parties: John WILSON, Leonard White, Paul Bogovich and Elizabeth Tintorri, Appellants, v. B. L. KENNEDY, Ford Q. Elvidge, Howard D. Porter and Richard Taitano, Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

232 F.2d 153 (1956)

John WILSON, Leonard White, Paul Bogovich and Elizabeth Tintorri, Appellants, v. B. L. KENNEDY, Ford Q. Elvidge, Howard D. Porter and Richard Taitano, Appellees.

No. 14593.

United States Court of Appeals Ninth Circuit.

April 10, 1956.

Finton J. Phelan, Jr., E. R. Crain, Agana, Guam, for appellants.

Howard D. Porter, Atty. Gen., Louis A. Otto, Jr., Deputy Atty. Gen., Leon D. Flores, Island Atty., Richard Rosenberry, Deputy Island Atty., Territory of Guam, Agana, Guam, for appellee.

Before STEPHENS and POPE, Circuit Judges, and BYRNE, District Judge.

BYRNE, District Judge.

The basic question for decision in this case is whether the Organic Act of Guam imposes a territorial income tax and, if so, whether the appellees as officials of Guam are authorized to enforce it.

Two of the appellants, who were plaintiffs below, are tax withholding employers, and two are employees from whose salaries taxes were withheld. The appellees, although sued as individuals, are officials of Guam, viz. the Governor, the Attorney General, the Director of Finance and the Commissioner of Revenue and Taxation. It is alleged in the complaint that the defendants illegally required the plaintiffs and others similarly situated to pay income taxes for the use of the Government of Guam. The plaintiffs prayed for the return of the taxes collected, injunctive relief to prevent future collections, and a declaratory judgment declaring that there is no territorial income tax for the Territory of Guam, nor is there any officer of the Territory of Guam authorized to levy, assess or collect a territorial income tax.

In the District Court all parties contended that there were no genuine issues of fact for trial, and each filed a motion for summary judgment as a matter of law. The court granted the appellees' motion.

Although in the trial court the appellants took the position that the only issues were of law and asked for summary judgment, they have specified as a point on appeal, "The court erred in finding that no controverted question of fact existed." They denominate as controverted facts the issue of whether or not the appellees are illegally enforcing an income tax law and whether "the acts of the defendants have deprived plaintiffs of their property without due process of law". There is no dispute as to "the acts of the defendants", i. e. the collection of the taxes and the amounts thereof. Whether such acts are illegal or have deprived appellants of their property without due process of law are issues of law, not fact.

Prior to 1951 citizens of the Island of Guam were subject to taxation under the United States Internal Revenue Code only as to income derived from sources within the United States (former 26 U.S. C. § 252) and no income tax attached with respect to income earned in Guam. In 1950 (effective in 1951) Congress adopted Section 31 of the Organic Act of Guam, 48 U.S.C.A. § 1421i, which provides:

"The income-tax laws in force in the United States of America and those which may hereafter be enacted shall be held to be likewise in force in Guam."

If Section 31 creates a separate territorial tax in Guam, then the income which would have been exempt under the previous law is now taxable.

The appellants contend (1) that Section 31 did not create a separate territorial income tax, (2) that the Government of Guam is not authorized...