McLean v. Jephson

• Decision Date: 07 October 1890
• Citation: 25 N.E. 409,123 N.Y. 142
• Parties: McLEAN v. JEPHSON.
• Court: New York Court of Appeals Court of Appeals

123 N.Y. 142

25 N.E. 409

McLEAN

v.JEPHSON.

Court of Appeals of New York.

Oct. 7, 1890.

Appeal from supreme court, general term, first department.

F. L. Minton, for appellant.

John G. H. Meyers, for respondent.

RUGER, C. J.

This was an application to the supreme court by the receiver of taxes in the city of New York, under section 857 of the city charter, (chapter 410, Laws 1882,) for a warrant to enforce the payment of a tax upon personal property by a non-resident. The section authorizing the proceeding reads as follows: ‘In case of the refusal or neglect of any person to pay any tax imposed on him for personal property, if there be no goods or chattels in his possession upon which the same may be levied by distress and sale according to law, and if the property assessed shall exceed the sum of one thousand dollars, the said receiver, if he has reason to believe that the person taxed has debts, credits, choses in action, or other personal property, not taxed elsewhere in this state and upon which levy cannot be made according to law, may thereupon, in his discretion, make application within one year to the court of common pleas of the county, or the supreme court, to enforce the payment of such tax.’ The application was based upon a petition alleging the imposition of the tax upon the defendant in the year 1883, as a non-resident doing business and having capital invested therein, in the city of New York. An order to show cause why the relief asked should not be granted was issued and served upon the defendant, and, upon the return-day thereof, he appeared and showed that he was at the time the alleged assessment was made, and for a long time previous thereto had been, a resident of the state of New Jersey, and had never transacted business in the city of New York, except as the agent of a corporation organized and doing business in the state of New Jersey as a manufacturer of carriages; that the company had a wareroom in the city of New York for the exhibition and sale of its own manufactures; and that defendant had charge of such wareroom as its agent. These facts were undisputed, and must be considered as conclusively established in the further consideration of the case.

The authority of the assessors to make the assessment in question is claimed to have been derived from section 1, c. 37, Laws 1855, which reads as follows: ‘All persons and associations doing business in the state of New York as merchants, bankers, or otherwise, either as principals or partners, whether special or otherwise, and not residents of this state, shall be assessed and taxed on all sums invested in any manner in said business the same as if they were residents of this state, and said taxes shall be collected from the property of the firms, persons, or associations to which they severally belong.’ This statute clearly defines the limits of the power possessed by the assessment officers, and their jurisdiction depends upon the existence of the facts stated in the statute. To authorize an assessment under this statute, it is indispensable that the person assessed shall, in fact, have money invested in a business carried on by him in this state, either as a principal or partner. Assessors cannot acquire jurisdiction to make such assessments by determining that they have it, and their authority to act must always depend upon the existence of the jurisdictional facts described in the statute. The facts stated conclusively show that the defendant was not doing such business in the city of New York, either as a principal or a partner, and that he did not have any money invested in the business there carried on. That business was carried on by the corporation of which the defendant was agent, and the money invested in it was the property of that corporation. The court below conceded that, if the facts stated had been known to the tax commissioners, they could not lawfully have made an assessment against the defendant; but it was claimed that the act of the commissioners in making it was judicial and could not be assailed collaterally, and that the defendant should have adopted some means, either by appearing before the tax commissioners when they sat to review assessments, and urged his non-liability to taxation, or, by certiorari from the determination of the assessors, raised the question of his liability. There is no prerogative of the government which is more liable to abuse than that which authorizes it to seize and appropriate the property of the citizen for public purposes, and none which is regarded with more jealous scrutiny by the courts. The authority of its officers to exercise the powers of taxation has uniformly been carefully scrutinized and limited to the express warrant of the statute, and cannot be extended by implication or construction. This is especially the case where its demands may be enforced by fine and imprisonment, and it would be contrary to the traditions of our people, as well as to principles of justice and law, to permit the liberty of the citizen to be jeopardized by a strained and doubtful construction of a statute. The defendant has, confessedly, been assessed upon property which he did not own, and is now threatened with imprisonment, unless he pays the illegal exaction. The only authority the tax commissioners had to assess the personal property of a non-resident was in the event that he employed it in carrying on a business in this state, as principal or partner. But the defendant had been taxed upon an investment which he never made, and upon a business carried on by other parties. This has been done upon the theory not that he had property and was carrying on such business, but because he was negligent in failing to examine the assessment lists, and, by omitting to do so and obtaining a correction of them, has been rendered liable to the payment of a tax on proerty which he did not own. The property assessed could not have been taken for the payment of this tax, as it did not belong to the person against whom it was levied, and the strange anomaly is presented of an assessment against a person for property which he did not own, under an act which authorizes an assessment only upon his property invested in business, and in respect to property which could not be taken in payment for the tax, although such property alone is pointed out by the act as the fund from which the tax is to be collected. Upon such a foundation is built up a personal claim against the alleged tax-payer, which is sought to be enforced by imprisonment. The ground upon which it is claimed to be sustainable, is that the tax commissioners have decided that he was a tax-payer, and, in so doing, acted judicially, and therefore their determination cannot be attacked collaterally. It is argued that, public notice by publication having been given that the assessment rolls of New York city had been completed and would be open for inspection and review at a certain time and place in that city, the defendant, having failed to examine...