MacGregor v. Johnson-Cowdin-Emmerich, Inc.

• Decision Date: 03 March 1930
• Docket Number: No. 253.,253.
• Citation: 39 F.2d 574
• Parties: MacGREGOR v. JOHNSON-COWDIN-EMMERICH, Inc. NEW YORK TRUST CO. v. SALEMBIER et al.
• Court: U.S. Court of Appeals — Second Circuit

39 F.2d 574 (1930)

MacGREGOR v. JOHNSON-COWDIN-EMMERICH, Inc.

NEW YORK TRUST CO. v. SALEMBIER et al.

No. 253.

Circuit Court of Appeals, Second Circuit.

March 3, 1930.

White & Case, of New York City (Carlos L. Israels and Jesse E. Waid, both of New York City, of counsel), for appellant.

Hughes, Schurman & Dwight and Herkimer & Weis, all of New York City (Walter M. Weis and Ralph S. Harris, both of New York City, and Ernest L. Wilkinson, of Flushing, N. Y., of counsel), for appellees.

Before L. HAND and SWAN, Circuit Judges.

L. HAND, Circuit Judge.

The defendant is a New York corporation, having its principal place of business in the borough of Manhattan, but owning a mill in the borough of the Bronx which was covered by a mortgage to the appellant, in trust for a group of bondholders. On April 22, 1927, the plaintiff before judgment filed a creditor's bill against it, and upon its consent the court appointed receivers. They entered upon the mill, and remained in possession until June 11, 1929, when they abandoned it by leave of court. The city of New York levied taxes upon the mill for the years 1926, 1927, 1928 and 1929, which the receivers refused to pay. On June 30, 1928, the mortgagee got leave to foreclose, the court directing that the receivership be extended for the benefit of the mortgage. Upon appeal this provision was struck out, and the foreclosure proceeded with the mortgagee out of possession, either individually or by receiver. The District Court refused to compel the receivers to pay the taxes, and the mortgagee appeals. His theory is that taxes on realty create a personal obligation, having priority in receivership to other claims, and that the assets should be marshalled to exonerate the mill, or that he be allowed to anticipate his claim in subrogation. As to those taxes accruing after the receivers' entry, he argues that taxes are in any case an expense of occupation, with which the receivers should be charged.

Section six of the New York Tax Law (Consol. Laws, c. 60) assesses all real and personal property within the state, the personal property of a corporation in the tax district which is its principal place of business, the realty in that of its situs (section 11); the tax district in the town or city (section 2 (4). The assessors prepare their rolls by August first and give notice of hearings (sections 36, 37). By September fifteenth they lodge the completed rolls with the city or town clerk as the case may be (section 39); the boards of supervisors before February first extend the taxes, affix their warrant and deliver a copy of the roll to the city or town clerk (sections 58, 59). The collector upon receipt of the roll and warrant posts public notice that he will receive payment at a given time and place (section 69), mailing notices to such non-resident owners of realty as advise him (section 70). After thirty days the collector must call upon each resident for payment (resident owners of realty being made personally liable), and may distrain upon default (section 71); but there is no provision for any action at law. Upon the expiration of his warrant the collector makes return to the county treasurer as to what he cannot collect out of the personal property (section 82), and in the case of real property the amount with collection charges constitutes a lien (section 89), to be enforced by sale through the county treasurer under article seven. These sections apply to cities and towns so far as they do not conflict with local law (section 95). We understand section 299, which authorizes supplementary proceedings after distress, to be limited to cases where the collector might originally distrain.

Under the New York charter (Laws N. Y. 1901, c. 466 as amended) the assessment books are to be prepared for each borough by October first, and to be kept open for reassessment, in the case of realty until November sixteenth, and as to personalty till December first; after which the assessors prepare the rolls for transmission to the board of aldermen (section 892 as amended by Laws N. Y. 1911, c. 455), which levies the tax (§ 907 as amended by Laws N. Y. 1911, c. 455, and § 910 as amended by Laws N. Y. 1913, c. 680), and delivers it with its warrant to the receiver of taxes (section 911 as amended by Laws N. Y. 1911, c. 455). He gives public notice that they are due, and those levied on realty become liens, one-half on May first, the balance on November first (section 914 as amended by Laws N. Y. 1916, c. 17). As to personal taxes alone the receiver may distrain (section 926 as amended by Laws N. Y. 1915, c. 600), and sue at law (section 836). The charter gives no remedy for the collection of taxes on the realty, except that of sale under title five of chapter 17. Although section 913 requires the receiver to collect all taxes "from the several individuals and corporations assessed * * * in the manner hereinafter prescribed," there is no "manner thereinafter prescribed" for enforcing taxes on the realty as a personal liability.

Thus it is clear that under the general tax law the owner is liable for taxes on his realty, if a resident of the same city or town, and equally clear that he is not, if a "non-resident." We should assume that, if the general law were applicable, the defendant was a resident, since its principal place of business was in the city of New York, where the mill also was; but in People ex rel. Moller v. O'Donnel, 183 N. Y. 9, 75 N. E. 540, the Court of Appeals construed the phrase, "tax district," as meaning a "borough" of New York City in a case which involved the validity of an individual's personal assessment. Judge Cullen suggested that possibly the same rule might not apply to a corporation, perhaps because the provision of section 894 for the change in assessment from one borough to another is given only to "persons." However, all property must be assessed by boroughs (section 892, amended by Laws N. Y. 1911, c. 455), in the case of corporations as well as of persons, for the duplicate provided for in section 893 is not the assessment roll. People ex rel. Manhattan Ins. Co. v. Wells, 91 App. Div. 44, 86 N. Y. S. 456, affirmed on opinion below, 178 N. Y. 609, 70 N. E. 1107. It would appear that consistently the borough is the tax district for a corporation as well as for an individual, even if "person" in the last two sentences of section 894 as amended by Laws N. Y. 1911, c. 455, was not intended to include all taxpayers, which is not clear. A tax against real property situated in another borough from the residence of the owner would not therefore appear to impose any personal liability; it would be assessed as "nonresident" so far as the general tax law was applicable.

It seems to us also that the charter provisions are "in conflict" with the general tax law, if this be not their proper interpretation. The notion of a liability which there is no means to enforce is very unreal, especially in a code which prescribes everything in such detail as the New York Charter. It is of course theoretically possible to say that the lacuna of the charter is filled by the provision of the general law, but the charter was presumably intended in this respect to be self-sufficient, and no case has held the contrary. It is in general true that the executor must pay as debts taxes on the realty (Smith v. Cornell, 111 N. Y. 554, 19 N. E. 271; In re Babcock, 115 N. Y. 450, 22 N. E. 263; In re Gill, 199 N. Y. 155, 92 N. E. 390), though only when they have been levied before the decedent's death (In re Freund, 143 App. Div. 335, 128 N. Y. S. 48; In re Appell, 199 App. Div. 580, 192 N. Y. S. 136, affirmed 234 N. Y. 600, 138...