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Fair Assessment in Real Estate Assn. v. McNary, 454 U.S. 100 (1981)

Fair Assessment in Real Estate Assn. v. McNary

No. 80-427

Argued October 5, 1981

Decided December 1, 1981

454 U.S. 100


Held: The principle of comity bars taxpayers' damages actions brought in federal courts under 42 U.S.C. § 1983 to redress the allegedly unconstitutional administration of a state tax system. Because the principle of comity bars federal courts from granting damages relief in such cases, it is not necessary to decide whether the Tax Injunction Act, standing alone, would bar such actions. Pp. 454 U. S. 107-117.

(a) Prior to enactment in 1937 of the Tax Injunction Act -- which prohibits district courts from enjoining, suspending, or restraining the assessment, levy, or collection of any state tax where a plain, speedy, and efficient remedy may be had in state courts -- this Court's decisions in cases seeking federal court equitable relief against state taxation (handed down both before and after the enactment in 1871 of 42 U.S.C. § 1983's predecessor) recognized that the doctrine of equitable restraint when remedies at law are adequate was particularly applicable in suits challenging the constitutionality of state tax laws because of the delicate balance between the federal authority and state governments, and the concomitant respect that should be accorded state tax laws in federal court. Pp. 454 U. S. 107-109.

(b) The legislative history of the Tax Injunction Act does not suggest that Congress intended that federal court deference in state tax matters be limited to the actions enumerated in the Act. Thus, the principle of comity which predated the Act was not restricted by its passage. Pp. 454 U. S. 109-110.

(c) The post-Act vitality of the comity principle is demonstrated by this Court's 1943 decision in Great Lakes Dredge & Dock Co. v. Huffman, 319 U. S. 293, that federal courts may not render declaratory judgments as to the constitutionality of state tax laws. Although the Act was raised as a possible bar to the suit (as it has been raised in this case), it was found to be unnecessary to determine whether the Act could be construed to prohibit declaratory relief. The decision was based instead on principles of federalism and the necessity of federal court respect for state taxing schemes, thus demonstrating not only the post-Act vitality of the comity principle, but also its applicability to actions seeking a remedy other than injunctive relief. Pp. 454 U. S. 110-111.

Page 454 U. S. 101

(d) Damages actions under § 1983 would be no less disruptive of state tax systems than actions to enjoin the collection of taxes. Recovery of damages under § 1983 would first require a determination of the unconstitutionality of the state tax scheme that would be fully as intrusive as the equitable actions that are barred by comity principles. Moreover, the intrusiveness of such § 1983 actions would be exacerbated by the doctrine of Monroe v. Pape, 365 U. S. 167, authorizing immediate resort to a federal court under § 1983 without first exhausting state remedies -- whenever state actions allegedly infringe constitutional rights. In addition to the intrusiveness of the judgment, the very maintenance of the suit itself would intrude on the enforcement of the state scheme. Pp. 113-115.

622 F.2d 415, affirmed.

REHNQUIST, J., delivered the opinion of the Court, in which BURGER, C.J., and WHITE, BLACKMUN, and POWELL, JJ., joined. BRENNAN, J., filed an opinion concurring in the judgment, in which MARSHALL, STEVENS, and O'CONNOR, JJ., joined, post, p. 454 U. S. 117.

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