Fifth Ave. Bldg. Co. v. Joseph

• Decision Date: 22 April 1948
• Citation: 79 N.E.2d 22,297 N.Y. 278
• Parties: FIFTH AVE. BLDG. CO. v. JOSEPH.
• Court: New York Court of Appeals Court of Appeals

297 N.Y. 278

79 N.E.2d 22

FIFTH AVE. BLDG. CO.

v.JOSEPH.

Court of Appeals of New York.

April 22, 1948.

Appeal from Supreme Court, Appellate Division, First Department.

Proceeding in the matter of the application of the Fifth Avenue Building Company under Article 7, of the Civil Practice Act to review a determination of Lazarus Joseph, as Comptroller of the City of New York assessing sales taxes against petitioner. The proceeding was transferred to the Supreme Court, Appellate Division, First Department by an order of the Supreme Court at Special Term, entered in New York County. From an order of the Appellate Division, 272 App.Div. 449, 71 N.Y.S.2d 566, confirming, by a divided court, the comptroller's determination, the petitioner appeals.

Modified and affirmed as modified. Ezra P. Prentice and William H. Crawford, both of New York City, for appellant.

John P. McGrath, Corp. Counsel, of New York City (Solomon Portnow, Isaac C. Donner and Harry Katz, all of New York City, of counsel), for respondent.

FULD, Judge.

In this proceeding brought under article 78 of the Civil Practice Act, petitioner disputes the determination of the Comptroller of the City of New York that it is liable for sales taxes on its purchases of coal from Consolidation Coal Company between December 10, 1934, and December 31, 1942. Petitioner contends (1) that the transactions were not subject to the New York City Sales Tax Laws and (2) that, in any event, if they were, the city may not collect taxes on the sales up to June 30, 1940, for the reason that they have already been paid to the city by the vendor.

Petitioner, a New York corporation, purchased coal over a period of years from Consolidation, a Delaware corporation, through the latter's New York City sales office for use in its building on Fifth Avenue. The purchases were made pursuant to several contracts, all negotiated and executed in New York City, and each explicitly providing that it was subject to acceptance by the seller ‘in New York, New York’. The city addresses of both parties were specified in the agreements as the places to which written notices were to be sent, and no modification, it was recited, was to be effected unless approved by the seller at its local office. The vendor in the first instance paid all shipping charges and received all shipping documents from the carriers. Those documents called for shipment, under the vendor's direction, by rail and by barge from its mines in West Virginia to petitioner at a pier in New York Mcity. It was at that point that petitioner, through its truckmen, first came into contact with the merchandise. Invoices were rendered by the vendor's New York City office, and it was to that place that petitioner, at the other's request, made payments as it received the coal.

A provision added to the contracts in effect after April 1, 1937, called for shipment f.o.b. the vendor's mines in West Virginia, but that insertion occasioned no change whatsoever in the course of dealings between the parties or in the mechanics of shipment or delivery. Throughout the entire period, after that date just as before, the purchases were completed and consummated by the delivery of the coal in New York City to a city purchaser for use in its city building on orders previously taken in the city. In an unbroken chain, every step of the dealings between petitioner and its vendor from inception of negotiations to the final act of payment was had and taken within New York. It follows, therefore, that taxable transactions were consummated in that city (Administrative Code of City of New York, s N41-1.0), and neither the limitations of the State Enabling Act (Matter of United Autographic Register Co. v. McGoldrick, 285 N.Y. 531, 32 N.E.2d 826; affirming 260 App.Div. 157, 21 N.Y.S.2d 129) nor the provisions of the commerce clause of the Federal Constitution (McGoldrick v. Felt & Trarrant Mfg. Co., 309 U.S. 70, 60 S.Ct. 404, 84 L.Ed. 584;McGoldrick v. A. H. Du Grenier, Inc., 309 U.S. 70, 77, 60 S.Ct. 404, 84 L.Ed. 584, decided with the Felt & Tarrant case; see, also, McGoldrick v. Berwind-White Coal Mining Co., 309 U.S. 33, 60 S.Ct. 388, 84 L.Ed. 565, 128 A.L.R. 876;McLeod v. J. E. Dilworth Co., 322 U.S. 327, 64 S.Ct. 1023, 88 L.Ed. 1304), forbid or prevent imposition of the local sales tax.

We turn, then, to petitioner's liability for such taxes.

Petitioner paid the taxes on sales between December 10, 1934, and March 31, 1937, to its vendor, but paid none after that time upon the ground that the f.o.b. provision, then newly inserted in the contracts, rendered the transactions nontaxable. The vendor did not turn over to the city the taxes which it had collected from petitioner and did not itself pay the city the taxes which accrued thereafter. However, in 1943, following an audit of the coal company's books, the city required that the vendor pay to it all taxes with interest and penalties on all sales made for the period from December 10, 1934, to June 30, 1940. Some time later, the comptroller, crediting petitioner only with payments which it had made to its vendor, assessed petitioner for the entire period from December 10, 1934, to December 31, 1942, in spite of the fact that the city had already collected a large part of those taxes from the vendor. Petitioner deposited the amount assessed against it the sum of $2,051.57 with the city treasurer.

Since the city received no sales taxes on sales made between July 1, 1940, and December 31, 1942, petitioner must pay the tax deficiency for that period. Not so, however, those taxes which the vendor has already paid to the city for sales made between 1934 and June 30, 1940.

The local laws here involved, designed to assure the municipality additional revenue, empowered the city to tax receipts from the sale of tangible personal property within its jurisdiction. However, once the tax on a particular sale has been paid to the city, the...