Before MARIS, MAGRUDER and WOODBURY, Circuit Judges.
This appeal from the judgment of the District Court of the Virgin Islands raises the question of the validity of the assessment in the year 1952 of taxes upon real property in the Municipality of St. Thomas and St. John for the calendar year 1951. The plaintiffs who are owners of real property in the municipality sought a declaratory judgment that the assessment of the taxes in question was invalid and an injunction restraining their collection. The district court found the assessment of the taxes to be valid and denied the injunction. D.C., 110 F.Supp. 716. Four of the plaintiffs thereupon brought the case to this court by appeal.
The principal contention of the plaintiffs is that the assessment here under attack is invalid because it was an assessment for the calendar year 1951 which was made in the year 1952 retroactively without authority in the law or regulations. To evaluate this contention properly we must consider the historical background of assessment procedure in the Islands.
The earlier Danish laws providing for the assessment of taxes upon real estate*fn1 were repealed in the Municipality of St. Thomas and St. John by the Ordinance of the Colonial Council of St. Thomas and St. John approved February 25, 1922*fn2 which provided a new and comprehensive procedure for the assessment and collection of all taxes upon real property in the municipality. By its express terms this ordinance was applicable to the assessment and collection of taxes for the calendar year 1922.*fn3 Also by its express terms the taxes imposed by the ordinance were payable on or before June 30, 1923 for the calendar year 1922 and annually on or before June 30th of each year thereafter for the preceding calendar year.*fn4 Section 22 of the ordinance provided that the assessment of property "as the same appears on the tax-roll last prepared, shall, after it has been corrected, amended and revised" as provided for in the ordinance "constitute the assessment roll for the next calendar year". Section 22 further provided that "as soon after January fifteenth of each year, as is possible, it shall be the duty of the assessor of each assessment district to fill out an assessment schedule showing in detail each separate piece of real property and improvements thereon and in as great detail as is practicable all personal property subject to taxation within the Muncipality belonging, on January fifteenth, to each taxable person whose property, in the opinion of the assessor, should be revalued or reassessed for purposes of taxation." Section 28 required the assessor to give notice to taxpayers of any changes made by him in assessments and Sections 34 and 35 provided for the revision of assessments by a Board of Review and Equalization upon complaint of any person aggrieved by the action of the assessor filed within fifteen days after notice of the assessment has been given to the aggrieved taxpayer.
The Ordinance of 1922 thus imposed a tax for the calendar year 1922 and directed that the assessment of taxable property should be on the basis of the last preceding tax assessment which was to be revalued and corrected by the assessor commencing on January 15th and thereafter upon timely complaint revised by the Board of Review and Equalization.Since the Ordinance was not enacted until February 25th it is obvious that the assessment procedure for the taxable year 1922, which was required to begin January 15th, could not have been begun on that date prior to January 15, 1923. This would appear to have presented no difficulty, however, since the taxes for 1922 were not payable until June 30, 1923.The district attorney asserts as an historical fact, and there is no evidence to the contrary, that after the passage of the Ordinance of 1922 the assessments for each calendar year were made in the following year, commencing on January 15th, the tax being payable on June 30th of that year. It was in this setting that Congress enacted the Act of May 26, 1936 and that the President issued his regulations thereunder.
The system of taxation extablished by the Ordinance of 1922 in St. Thomas and St. John proved to be unsatisfactory.Its separate classifications of cultivated land, pasture land and bush land penalized the cultivation of land and tended to keep it idle and in the hands of a few landowners. The tax rate of 1% did not provide adequate revenue for the municipality. Moreover in St. Croix the Danish tax laws still in force were equally unsatisfactory. Recommendations by the Governor to the Colonial Councils to enact improved tax laws brought no action. Accordingly Congress enacted the Act of May 26, 1936,*fn5 to correct this situation. Section 2 of the act provided that all taxes on real property in the Virgin Islands for the calendar year 1936 and all succeeding years should be computed on the basis of the actual value of such property and at the same rate whether such property was in cultivation and regardless of the use to which it was put.*fn6 Section 3 provided for a tax rate of 1.25% of the assessed value until local tax laws were enacted by the legislative authority of a municipality. The section further provided that if the legislative authority of a municipality failed to enact laws for the levy, assessment, collection or enforcement of any tax imposed under authority of the act within three months after its enactment the President should prescribe such regulations.*fn7
The Colonial Council of the Municipality of St. Croix passed such an ordinance on August 26, 1936 which was approved September 5, 1936,*fn8 but the Colonial Council of the Municipality of St. Thomas and St. John failed to do so. Accordingly the President of the United States, pursuant to section 3 of the Act of 1936, on December 31, 1936 issued regulations for the levy, assessment, collection and enforcement of an assessed valuation of real property tax, at the rate of one and one quarter per cent, in the Municipality of St. Thomas and St. John.*fn9 These regulations are still in force in the municipality and it is under them that the assessment was made which is here under attack. The provisions of the regulation relevant to the present case are these:
"Section 4. The assessor shall upon actual view, list, value, assess and return all property subject to taxation in the Municipality as of Jan. 15, 1937, and each succeeding year thereafter. * * *
"Section 5. In computing the actual value of real property subject to taxation, the assessor shall take in consideration all of the following elements and incidents:
(a) Location and surroundings;
(b) Quality or fertility;
(c) Condition of structures;
(d) Recent cost to the ...