In re Leavy, 415.
| Decision Date | 13 July 1936 |
| Docket Number | No. 415.,415. |
| Citation | 85 F.2d 25 |
| Parties | In re LEAVY et al. CITY OF NEW YORK v. JERSAWIT. |
| Court | U.S. Court of Appeals — Second Circuit |
Paul Windels, Corp. Counsel, of New York City (Paxton Blair, Meyer Bernstein, and Sol Charles Levine, all of New York City, of counsel), for claimant-appellant.
Samuel Sturtz, of New York City, for trustee-appellee.
Before L. HAND, AUGUSTUS N. HAND, and CHASE, Circuit Judges.
The trustee in bankruptcy of Service Hardware Company sold at public auction through the United States auctioneer stock and fixtures of the bankrupts and received $2,643.56 from the purchasers. The city of New York demanded payment from the trustee of $52.87, being 2 per cent. of the amount he received out of the auction sale and in addition $8.70 as a penalty and interest. This claim having been presented to the bankruptcy court was rejected by the referee, whose decision was affirmed by the District Judge. From the order which dismissed the reviewing petition the present appeal was taken. We think the matter was not properly decided in the court below.
The rejection of the item of $8.70 by the court is not questioned, but the city insists that the claim as to $52.87 should have been allowed because the imposition of the sales tax and a payment of the amount of it out of the bankrupt's estate in no way would impede the government of the United States in the performance of its functions.
The sale was held on January 28, 1935. Under Local Law No. 24 of the Municipal Assembly of the City of New York (Loc. Laws 1934, p. 166, No. 25, § 2), a tax of 2 per cent. was imposed on "tangible personal property sold at retail." A "retail sale" is defined in the act (page 165, No. 25, § 1 (g) as a sale to any person for any purpose other than for resale in the form of tangible personal property. It is not questioned that the auction sale in this case was a retail sale within the meaning of the act.
While the amount claimed was based upon a percentage of the proceeds of a sale made by a trustee in bankruptcy in liquidation of an insolvent estate, pursuant to order of the bankruptcy court, we think the imposition upon the trustee of a duty to collect that amount from the purchaser at the auction cannot be regarded as unlawfully burdening an instrumentality of the government.
In the case of In re Flatbush Gum Co., 73 F.(2d) 283, 284, we had before us the question whether a sale by a receiver in bankruptcy in liquidation of an insolvent estate was taxable under the New York State Tax Law (Consol.Laws, c. 60). We held the state act inapplicable because it contained no language clearly embracing such a sale by a receiver. But in chapter 394 of the Laws of 1935 the State Tax Law (section 390 (a) was so amended as to define the word "person" as including "an executor, administrator, receiver, trustee or other fiduciary." Had the act contained that definition, when the case of In re Flatbush Gum Co., was before us, we could hardly have avoided answering what we there characterized as "the rather baffling question of what is, or what is not, the imposition of a state tax upon an instrumentality of the government of the United States."
By the Municipal Law, which we must construe in the present case, "person" is defined in section 1 (a) as including a "receiver, trustee or any other person acting in a fiduciary capacity." Loc.Laws 1934, p. 165, No. 25. But under that law the sales tax is not imposed upon the vendor (here the trustee), for, according to section 2 thereof, it is to "be paid by the purchaser to the vendor, for and on account of the city of New York, and the vendor shall be liable for the collection or the service rendered; and the vendor shall have the same right in respect to collecting the tax from the purchaser, or in respect to non-payment of the tax by the purchaser, as if the tax were a part of the purchase price of the property or service and payable at the time of the sale." The trustee in the case at bar neglected to collect the tax from the purchaser, perhaps in order to test the validity of the Municipal Sales Tax when applied to...
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California State Board of Equalization v. Sierra Summit, Inc
...the judicial sale was only required to pay the same tax he would have been bound to pay if he had purchased from anyone else." In re Leavy, 85 F.2d 25, 27 (CA2).4 Nor is the bankruptcy trustee so closely connected to the Federal Government that the two "cannot realistically be viewed as sep......
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In re West Coast Cabinet Works
...to that which was before the Court of Appeals of the Second Circuit in such case, City of New York v. Jersawit (In re Leavy et al.), 1936, 85 F.2d 25. Contrary to the Board's assertion, we feel that according to the construction placed upon the New York City sales tax by the Court in the ca......
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North Dakota v. United States
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In re Sonner, Bankruptcy No. 80-01317.
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