Collier Advertising Service v. City of New York

• Decision Date: 11 April 1940
• Parties: COLLIER ADVERTISING SERVICE, Inc., v. CITY OF NEW YORK et al.
• Court: U.S. District Court — Southern District of New York

32 F. Supp. 870

COLLIER ADVERTISING SERVICE, Inc., v. CITY OF NEW YORK et al.

District Court, S. D. New York.

April 11, 1940.

Kaufman & Weitzner, of New York City (Samuel H. Kaufman, Emil Weitzner, and Howard W. Fensterstock, all of New York City, of counsel), for plaintiff.

William C. Chanler, Corp. Counsel, of New York City (Sol Charles Levine, Milton Sandberg, and Meyer Bernstein, all of New York City, of counsel), for defendants.

CLANCY, District Judge.

In this suit plaintiff seeks a declaration that it is under no legal duty and has no legal right to charge any tax to or collect any tax from purchasers making purchases of 12¢ each or less under the 2% Sales Tax Law enacted by the City of New York in 1934 and annually reenacted since or by the Rules and Regulations promulgated by the City Comptroller purportedly pursuant to that law and that it cannot be required to pay a tax to the City on the ground that both Law and Regulations violate the due process and equal protection clauses of the 14th Amendment and exceed the power conferred upon the City by the State Enabling Act, Chapter 873, Laws of 1934. Prayer for relief includes a prayer for an injunction against the collection of the tax from plaintiff vendor.

The defendant moves to dismiss the suit on the ground that the Court has no jurisdiction of the action under the terms of the Johnson Act, 28 U.S.C.A. § 41, subd. 1, which reads: "No district court shall have jurisdiction of any suit to enjoin, suspend, or restrain the assessment, levy, or collection of any tax imposed by or pursuant to the laws of any State where a plain, speedy, and efficient remedy may be had at law or in equity in the courts of such State."

In August, 1934, there was enacted Chapter 873 of the Laws of that year, authorizing any City of the State, having a population in excess of one million inhabitants, through its local legislative body, to adopt local laws imposing any tax which the legislature had or would have power and authority to impose. The Municipal Assembly of New York City thereupon enacted Local Law No. 24 of 1934, p. 164, published as No. 25, imposing a tax of 2% on the amount of receipts from the sale of tangible personal property within the City. We hold that the tax imposed by this law is imposed by or pursuant to the State Law. In John Hancock Mutual Life Insurance Co. v. Pink, 276 N.Y. 421, 12 N.E. 2d 529, it was held that taxes assessed and collected under the terms of Local Law No. 9 of 1934, which imposed certain taxes for carrying on a business in New York City and which, like the Sales Tax Law here involved, was adopted by the Municipal Assembly under the authorization of Chapter 873 of the Laws of 1934 were imposed by the Laws of the State.

We further believe that relief may be had in the State Courts which meets the prescription of a "plain, speedy, and efficient remedy." Art. 78, C.P.A., to which the Local Law confines the disappointed taxpayer, provides for a review in the nature of the old time certiorari proceeding; for a stay (§ 1299); for a raising of constitutional and jurisdictional questions (§ 1296, subds. 2, 3 & 5); for restitution and, in a proper case, for damages (§ 1300). If...