Appeal from the Order of the United States District Court for the Middle District of Pennsylvania (D.C. Civil Action No. 75-678).
Aldisert, Forman and Weis, Circuit Judges.
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*fn1 and to 61 P.S. § 355,*fn2 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.*fn3
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 of the provisions of that Act, the United States had consented to the imposition of the tax.*fn4
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.
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.*fn5
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, 20 L. Ed. 2d 947, 88 S. Ct. 1942 (1968).*fn6
In Data Processing Service v. Camp, 397 U.S. 150, 25 L. Ed. 2d 184, 90 S. Ct. 827 (1970), the Supreme Court quoted Flast v. Cohen, supra 392 U.S. at 101, 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.*fn7 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.*fn8 The Supreme Court has recently reaffirmed that the United States would have standing to sue against the levy of state taxes on Indians.*fn9 Other cases have upheld the standing of the Government to protect the derivative right of its contractors to be free from state taxation.*fn10 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.
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.
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 ...