The opinion of the court was delivered by: STERN
The Court is presented with a suit for declaratory judgment, brought under the Declaratory Judgment Act, 28 U.S.C. § 2201, and the Shipping Laws of the United States, 46 U.S.C. §§ 3 et seq. Plaintiff seeks to prevent the Internal Revenue Service (the "IRS") from attaching the wages of three of its employees, seamen G. Glendenning, Kenneth Kramlich and Nelson Sala.
Plaintiff and defendants the United States and the IRS Commissioner (the "government") cross-moved for summary judgment, raising the issue of whether the IRS may garnish the wages of seamen to satisfy the seamen's tax liabilities in spite of a provision in the shipping laws exempting seamen's wages from "attachment or arrestment from any court." 46 U.S.C. § 11109. The government also moved, as a threshold matter, to dismiss for lack of jurisdiction.
The Court heard oral argument on July 22, 1985. We now deny the government's motion to dismiss for lack of jurisdiction and grant summary judgment upholding the IRS's garnishing power. We also grant plaintiff's motion for summary judgment freeing it from liability for honoring such levies. Our decision on these issues renders moot the remaining issue concerning the Court's power to enjoin the IRS's attachment powers.
Plaintiff Sea-Land Service, Inc. ("Sea-Land") operates vessels in foreign and interstate commerce, maintaining approximately 5,000 seamen on its U.S. vessel payroll. Defendants Glendenning, Kramlich and Sala have been employed as seamen aboard Sea-Land's ships.
Beginning on April 2, 1984, The IRS served Sea-Land with notices of levy on the wages of defendants Glendenning, Kramlich and Sala for taxes, penalties and interest owed to the federal government by the seamen. In each case Sea-Land informed the IRS that it could not honor the levies because the shipping laws precluded the withholding of seamen's wages. Sea-Land further noted its belief that, in the event it paid over the wages to the IRS, it would be liable for the double wage penalty described in the shipping laws at 46 U.S.C. § 10313(g). When the IRS persisted in its demands, Sea-Land filed this action to ascertain whether it must respect the IRS levies.
The complaint contains three counts. Count one seeks a judgment declaring whether Sea-Land must honor the IRS levies. Count two asks the Court to enjoin the IRS from levying on the wages of Sea-Land's seamen and from enforcing the levies, pursuant to 26 U.S.C. § 6332(c). Count three seeks a declaration that if Sea-Land must comply with the levies, it will neither violate Title 46, United States Code, Section 11109, nor incur double wage liability under section 10313(g).
I. The Government's Motion to Dismiss for Lack of Jurisdiction.
The government offers the threshold argument that plaintiff's claim in count one is barred by the Declaratory Judgment Act, 28 U.S.C. § 2201. That statute restricts the court's power to grant declaratory relief by providing that federal courts shall issue declaratory judgments "except with respect to Federal taxes . . . ." 28 U.S.C. § 2201(a).
It is, however, well-settled that the exception for federal taxes does not bar actions by non-taxpayers who seek neither to restrain the assessment of taxes nor to dispute the taxpayer's ultimate tax liability. Kentucky Welfare Rights Organization v. Simon, 165 U.S. App. D.C. 239, 506 F.2d 1278, 1284 (D.C. Cir. 1974), rev'd on other grounds, 426 U.S. 26, 48 L. Ed. 2d 450, 96 S. Ct. 1917 (1976); Church of Scientology of Celebrity Centre v. Egger, 539 F. Supp. 491, 494 (D.D.C. 1982); Henshel v. Guilden, 300 F. Supp. 470, 472 (S.D.N.Y. 1969); Hoye v. United States, 109 F. Supp. 685, 686 (S.D. Cal. 1953). In Hoye, for example, a city comptroller sought a judgment declaring whether he was required to honor an IRS levy on the wages or pension of a city employee. 109 F. Supp. at 686. The Hoye court recognized that the comptroller faced an intractable conflict between two sets of laws:
The city of Los Angeles merely holds as a trustee the money which is due to the defendant taxpayer, Champion. Furthermore, under the law of the State of California, Sec. 710, Cal. C.C.P., the plaintiff Hoye as City Controller cannot pay money owed by the city of Los Angeles to anyone other then the one to whom the money is due unless and until there is filed with him an authenticated abstract of judgment of a court showing that the person is entitled thereto. If the plaintiff, Hoye, recognized the demand and levy by the Collector and paid the sum of $121.71 therein demanded, the ...