People of State of New York v. Jersawit, 352
| Decision Date | 07 January 1924 |
| Docket Number | No. 352,352 |
| Citation | 44 S.Ct. 167,263 U.S. 493,68 L.Ed. 405 |
| Parties | PEOPLE OF STATE OF NEW YORK v. JERSAWIT |
| Court | U.S. Supreme Court |
Messrs. Robert P. Beyer, of New York City, and Claude T. Dawes, of Albany, N. Y., for petitioner.
Mr. Henry B. Singer, of New York City, for respondent.
This case comes here upon certiorari, 262 U. S. 741, 43 Sup. Ct. 706, 67 L. Ed. 1209, to review a decision apportioning a claim in bankruptcy for taxes presented by the State of New York. 290 Fed. 950. On December 22, 1920, a petition was filed against the Ajax Dress Company a manufacturing or mercantile corporation of the State of New York and it was adjudicated a bankrupt. The State filed a claim for a tax for the year between November 1, 1920, and October 31, 1921, and for 'penal interest,' under sections 209 and 219-c of the Tax Law of New York (Consol. Laws, c. 60). Section 209 provides that:
'For the privilege of exercising its franchise in this State in a corporate or organized capacity every domestic corporation * * * shall annually pay in advance for the year beginning November First * * * an annual franchise tax, to be computed by the tax commission upon the basis of its entire net income for its fiscal or the calendar year next preceding.'
The Company ceased business on the day when the petition was filed and the Courts below held that the tax was to be apportioned to the time, somewhat less than two months, that the franchise was exercised. By section 219-c of the same tax law the tax is to be paid on or before January 1 of each year and if it is not paid the corporation liable shall pay 'in addition to the amount of such tax * * * ten per centum of such amount, plus one per centum for each month the tax * * * remains unpaid.' The Courts below held that this latter liability was a penalty and therefore not to be allowed, but allowed six per cent. upon the tax as apportioned, to the date of payment. The State says that it is entitled to the statutory interest or none.
On the main question the Circuit Court of Appeals rightly recognized that the construction of the state law by the State Courts should control, but found nothing nearer than People ex rel. Mutual Trust Co. v. Miller, 177 N. Y. 51, 69 N. E. 124, where a different statute was held to tax the privilege of carrying on the business as actually exercised and therefore to create an apportionable liability. If the State Court should decide that the present act was to be construed in the same way we should bow, but until it does so we must regard the meaning as...
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