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

United States Court of Appeals for the Ninth Circuit1956-04-10No. No. 14593

232 F.2d 153

Summary · law.co

Holding. The court affirmed the lower court's judgment, holding that Section 31 of the Organic Act of Guam imposes a territorial income tax and that the appellees, as officials of the Guam government, possessed implied statutory authority to enforce and collect it.

Residents of Guam challenged the territorial government's collection of income taxes, arguing that no valid tax existed and that the collecting officials lacked legal authority. The court examined whether Congress's 1950 enactment of Section 31 of the Organic Act of Guam—which made U.S. federal income tax laws applicable to the territory—created an enforceable territorial income tax. The court found that prior case law (Laguana v. Ansell) had already established that Section 31 does impose a separate territorial income tax and that Guam's government is the proper enforcement agency.

The plaintiffs contended that the individual defendants lacked statutory authorization to collect the tax because neither Congress nor the Guam Legislature had explicitly named them as collectors. The court rejected this argument, holding that Congress's enactment of the territorial tax implicitly authorized the Guam government to enforce it. The court noted that the Governor is required by law to execute applicable laws, and that the tax revenue flows to the territorial treasury with no allegation of misappropriation or excessive collection.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Whether Section 31 of the Organic Act of Guam creates a separate territorial income tax
Whether Guam government officials have legal authority to enforce and collect an income tax absent explicit statutory designation
Whether the appellants stated a genuine issue of material fact or only questions of law

Procedural posture

The district court granted the defendants' motion for summary judgment; the plaintiffs appealed, challenging both the absence of factual disputes and the legal conclusions regarding the tax's validity and the officials' authority.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

majority opinion

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 appel lees, 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 to collect the taxes and (3) that the officials collecting the taxes do not have statutory authority to do so. The first two points have been settled by Laguana v. Ansell, D.C.Guam, 102 F.Supp. 919, affirmed 9 Cir., 212 F.2d 207, certiorari denied 348 U.S. 830, 75 S.Ct. 51, 99 L.Ed. 654. It was held in the Laguana case that Section 31 imposes a separate territorial income tax to be enforced by the proper officials of the Government of Guam. We adhere to our affirmance of that holding.

It is the position of the appellants that since there is no statute enacted by either the United States Congress or the Guam Legislature which specifically authorizes these appellees to levy and collect income taxes, they are without authority to do so.

The enactment by Congress of the statute creating the territorial tax in Guam and the provision of the law to the effect that the tax be collected and used, for the government of Guam, included the implied provision that the Government of Guam was the proper enforcement agency. Section 6 of the Organic Act, 48 U.S.C.A. § 1422, expressly provides that the executive authority of the Government of Guam shall be vested in the Governor and that he “shall faithfully execute the laws of the United States applicable to Guam, and the laws of Guam.” The appellee Taitano is the Director of the Department of Finance and has the responsibility for the collection of all governmental taxes on the Island of Guam. During the period with which we are here concerned, the appel lee Kennedy, as appointee of Director Taitano, was functioning as the Commissioner of Revenue and Taxation and was charged with the enforcement and administration of the territorial income tax.

It is clear that the appellees were clothed with the authority to enforce the territorial income tax imposed by Section 31 of the Organic Act of Guam. There is no complaint that excessive amounts were collected, nor is there a contention that any portion of the taxes did not reach the repository designated by Congress, i. e., the Guam Treasury.

Judgment affirmed.