Staley, Chief Judge, Freedman and Coffin,*fn* Circuit Judges.
This appeal raises the important question of the power of the Legislature of the Virgin Islands to authorize the private sale to a designated grantee of a specific plot of land owned by the Government of the Virgin Islands.
In 1961 a plot of land, consisting of 1,010 square feet, at Domini Gade No. 8T, St. Thomas, was escheated to the Government of the Virgin Islands pursuant to a judgment entered by the district court. A few months later the Legislature passed and the Governor approved Act No. 876, which authorized the Governor to transfer the plot to the Department of Property and Procurement "for sale at a reasonable price to Mr. Steadman Hodge, to be used solely for construction of a home thereon." The Governor transferred the property to the Department for sale to Mr. Hodge and the Commissioner of Property and Procurement by deed granted and conveyed it to Mr. Hodge on June 8, 1962 for the sum of $200. The deed recited that the Commissioner had determined that $200 was the reasonable price for the property.
Shortly thereafter plaintiff brought suit on his own behalf as a taxpayer and on behalf of all other taxpayers of the Virgin Islands against the Government of the Virgin Islands, the Commissioner of Property and Procurement and Hodge, to have the sale set aside on the grounds that Act No. 876 was invalid, that the purchase price paid was not a "reasonable price" as required by the Act and that the property could only be sold at public, judicial sale under the escheat provision of Title 15, § 126 of the Virgin Islands Code. The district court dismissed the action for lack of capacity of plaintiff to maintain it as a taxpayer. We reversed the dismissal in Smith v. Government of the Virgin Islands, 329 F.2d 131, 4 V.I. 489 (3 Cir. 1964), and held that plaintiff*fn1 was qualified to bring the action because there was no requirement that a taxpayer must show his liability for any minimum amount of taxes either in absolute terms or in relation to the amount of the property involved in the suit, or to show any special damage to himself different in character from that suffered by the general body of taxpayers.*fn2
The case then proceeded to trial and the court below entered judgment declaring the conveyance to be void. Smith v. Government of the Virgin Islands, 240 F. Supp. 809, 5 V.I. 124 (D.V.I.1965). From this judgment the defendants have taken this appeal.
Act No. 876 is a special as well as a private law, for it arbitrarily authorizes the transfer of a plot of land to a designated individual, and excludes all others who might wish to buy it.*fn3 We must determine the effect of two of the prohibitions on special laws laid down in 48 U.S.C. § 1471 (Act of July 30, 1886, ch. 818, § 1, 24 Stat. 170). That section creates an absolute bar against special legislation in any of twenty-four enumerated cases, among these, the "granting to any * * * individual [of] any special or exclusive privilege * * * whatever." The section further provides: "In all other cases where a general law can be made applicable, no special law shall be enacted in any of the Territories of the United States by the Territorial legislatures thereof."*fn4
The Act of 1886 from which § 1471 is derived was taken from the Constitution of Illinois*fn5 and was meant to be coextensive with it.*fn6 Similar prohibitions against special laws are common in state constitutions.*fn7 In Illinois, as in other states, the prohibition against the granting of any special or exclusive privilege to any individual has been interpreted as intended to prevent "the enlargement of the rights of one or more persons in discrimination against the rights of others,"*fn8 and protects any right which is a subject of state legislation.*fn9 Legislation focused even less narrowly than Act No. 876 has therefore been stricken down in Illinois and in other states. A few cases will illustrate the operation of the principle. In Harvey v. Clyde Park District, 32 Ill.2d 60, 203 N.E.2d 573 (1965), the Supreme Court of Illinois held that a statute granting the Park District immunity from liability for negligence violated the constitutional provision because it arbitrarily and unconstitutionally discriminated against the plaintiff. Viewing the statute by its effect on individuals who were injured by the negligence of government agencies the Court said there was no reason why one who was injured by a Park District truck should be barred from recovery while one who was injured by a city truck should be allowed to recover. To the extent that recovery was permitted or denied on such an arbitrary basis, a special privilege was granted in violation of the constitutional prohibition. In Cox v. State, 134 Neb. 751, 279 N.W. 482 (1938), the Supreme Court of Nebraska held invalid as a special law a private bill which waived for the plaintiff alone the sovereign immunity of the state, enabling him to recover damages for the negligence of the state's agents. The Court indicated that in according preferred status to plaintiff the bill made an unreasonable distinction between him and similarly situated citizens whose recovery for similar injuries would be barred. In Bentley v. Commonwealth ex rel. State Board of Dental Examiners, 239 S.W.2d 991 (Ky.1951), a resolution of the state legislature which authorized a named individual to practice dentistry as if he had been duly licensed and directed the State Board of Dental Examiners to issue a license to him was held void as special legislation. In Clark v. Meade, 377 Pa. 150, 104 A.2d 465 (1954), it was held that a statute which removed some offices of the city government from the civil service requirements and the ban on political activity of its home rule charter, leaving under civil service and barred from political activity the employees of all other city offices who were engaged in similar work, violated Article III, § 7, of the Constitution of Pennsylvania, P.S., which is similar to § 1471 and contains a like prohibition against the passage of any local or special law granting to any individual any special or exclusive privilege or immunity.*fn10
Act No. 876 singled out Hodge from all other citizens and discriminated against them by granting to him an exclusive privilege to acquire the parcel of land. This arbitrary action violated the specific prohibition of § 1471 against the passage of a special law "granting to any * * * individual any special or exclusive privilege * * * whatever."
Act No. 876 also violates the prohibition in § 1471 against the enactment of a special law "where a general law can be made applicable." Such a general law already existed when Act No. 876 was enacted. This was the escheat law (15 V.I. Code § 126) which prescribes in detail the procedure for the sale of property which has been escheated to the Government of the Virgin Islands. It requires public sale by the marshal after notice prescribed by the court, ultimate judicial confirmation of the sale and conveyance of the property to the purchaser by the marshal. It provides for the vacation of a sale if the bids received are disproportionate to the value of the property and if it appears to the court that on a resale a higher price can be obtained which would exceed the successful bid by at least ten per cent, exclusive of the expenses of a new sale.
While legislative action presumptively is proper,*fn11 Act No. 876 clearly is without any reasonable foundation and therefore is arbitrary and invalid on its face. It is a special law for the sale of a specific parcel of real estate to a designated individual, adopted at a time when, under 15 V.I. Code § 126, a general law existed for the sale of government property.
Appellants contend, however, that § 1471 is inapplicable to the Virgin Islands because it deals with the legislatures of territories "now or hereafter to be organized." While the Virgin Islands constitute an "unincorporated" territory, it does not follow from this that they are also an "unorganized" territory. The question whether a territory is "incorporated" into the United States did not exist when § 1471 was adopted. It originated later in the problems which arose from the territorial acquisitions by the United States after the Treaty of Paris in 1899 following the Spanish-American War. The distinction originated with Mr. Justice White in one of the Insular Cases,*fn12 which dealt with the difficult problem of the extent to which the guarantees of the Constitution of the United States applied in the newly acquired territories. See generally, Coudert, The Evolution of the Doctrine of Territorial Incorporation, 26 Colum.L.Rev. 823 (1926).
The continuing significance of the incorporation of a territory was summarized by Chief Justice Taft in Balzac v. People of Puerto Rico, 258 U.S. 298, 311, 42 S. Ct. 343, 348, 66 L. Ed. 627 (1922): "Incorporation has always been a step, and an important one, leading to statehood." Congress therefore has been careful to bestow incorporation only when it has already determined that the territory is destined for statehood. In adopting the Revised Organic Act of the Virgin Islands in 1954 Congress made it clear that although it was providing a detailed frame of government for the Islands this was not to be taken as an indication that it had destined the ...