Mendoza Fur Dyeing Works, Inc. v. Taylor

• Decision Date: 31 December 1936
• Citation: 5 N.E.2d 818,272 N.Y. 275
• Parties: MENDOZA FUR DYEING WORKS, Inc., v. TAYLOR, Comptroller.
• Court: New York Court of Appeals Court of Appeals

272 N.Y. 275

5 N.E.2d 818

MENDOZA FUR DYEING WORKS, Inc.,

v.TAYLOR, Comptroller.

Court of Appeals of New York.

Dec. 31, 1936.

Certiorari proceeding by the Mendoza Fur Dyeing Works, Incorporated, to review the determination of Frank J. Taylor, Comptroller of the City of New York, in denying petitioner's application for a refund of the sales tax paid pursuant to Local Laws, No. 24, under protest. From an order of the Supreme Court, Appellate Division (247 App.Div. 368, 287 N.Y.S. 396), sustaining a certiorari order granted at the Special Term, New York County, in favor of petitioner, the Comptroller appeals.

Order of Appellate Division reversed, and certiorari ordered dismissed.

O'BRIEN and LEHMAN, JJ., dissenting. Appeal from Supreme Court, Appellate Division, First department.

Paul Windels, Corp. Counsel, of New York City (Meyer Bernstein, Oscar S. Cox, and Frank J. Derrick, all of New York City, of counsel), for appellant.

George J. Beldock and Lawrence Bloomgarden, both of New York City, for respondent.

A. Joseph Geist, George E. Netter, and Isaac Katz, all New York City, for Great Northern Fur Dyeing Corporation and Joseph H. Lowenstein & Sons, Inc., amici curiae.

HUBBS, Judge.

The respondent was engaged in the business of dyeing and processing fur skins owned by dealers and manufacturers. Respondent does not trade in, buy, or sell fur skins. It does, however, in performing the service of dyeing and processing, use certain chemicals and dyestuffs purchased by it. Such chemicals and dyestuffs, except so far as they may adhere to or be incorporated into the skins processed, are consumed in its service operations.

In 1934 the Legislature, by chapter 873 of the laws of that year (Extra Session), authorized the city of New York, enacting through its local legislative body, to adopt and amend local laws imposing any tax or taxes which the Legislature would have power and authority to impose, to relieve the people of the city from hardships and suffering caused by unemployment. Pursuant to such authorization, the local legislative body of the city in 1934 adopted Local Law No. 24 (published as Local Law No. 25, in Local Laws, 1934, pp. 164-175), imposing a tax upon the sale of tangible personal property to any person for any purpose other than for resale in the form of tangible personal property, the tax to be paid by the purchaser and collected by the seller.

Acting under the authority conferred upon him by law, the comptroller of the city of New York adopted certain rules and regulations. By article 34 thereof it was provided that a purchaser who disposes of tangible personal property in any other manner than by resale becomes the consumer thereof; that persons engaged in cleaning and dyeing industries are rendering a service and are not in the business of selling tangible personal property; that a dyer, including a fur dyer, is the consumer of all articles of tangible personal property purchased and used by him in connection with the service he renders; and that he is required to pay the tax to his vendors. By section 39 of the regulations the liability of a fur dyer for the tax on tangible personal property sold to and consumed by him is reasserted and it is specified that persons who sell tangible personal property to such service industries are required to collect the tax.

A tax was collected upon the sale of dyestuffs and chemicals purchased by the respondent. It applied to the comptroller for a refund of the tax paid. The application was denied. It thereafter petitioned for a certiorari order to review the determination of the comptroller. The order was granted, the determination reviewed and annulled by the Appellate Division upon the ground that, prior to dyeing, the materials dyed are colorless, and after the application of the dye the materials acquire a hue or color; that, therefore, the chemicals maintain their chemical character after completion of the dyeing process; that, in view of such fact, the dyer is not the ultimate consumer and the sale to him is not taxable; and that, if the comptroller's determination were confirmed, a double tax would result.

Reference is made to other rules and regulations made by the comptroller which are said to be in conflict with the rules and regulations here involved. The promulgation of such rules and regulations does not tend to establish the legality or illegality of the rules and regulations in question.

Section 1(g) of the local law reads: ‘A ‘retail sale’ or ‘sale at retail’ means a sale to a customer, or to any person for any purpose other than for resale in the form of tangible personal property.'

Section 1(f) defines ‘tangible personal property’ as ‘corporeal personal property.’

Obviously, the fur dyer is not engaged in the business of reselling chemicals and dyestuffs as such or as tangible personal property. Its business is that of rendering skilled services and performing labor upon the property of others. The fact that in so doing it is required to use and consume chemicals and dyestuffs is incidental to the services rendered. As stated in United States v. Fur Dressers' & Fur Dyers' Ass'n (D.C.) 5 F.(2d) 869, 872: ‘The defendants [i. e., the fur dressers and fur dyers] neither buy nor sell furs. They only dress and dye furs belonging to others at their places of business. Dyeing and dressing furs do not constitute trade or commerce, but only the performance of labor.’

The only cases in this jurisdiction to which we are referred where a question of somewhat similar nature was under consideration are People ex rel. Walker Engraving Corp. v. Graves, 243 App.Div. 652, 276 N.Y.S. 674, affirmed 268 N.Y. 648, 198 N.E. 539, and People ex rel. Foremost Studio, Inc., v. Graves, 246 App.Div. 130, 284 N.Y.S. 906.

In People ex rel. Walker Engraving Corp. v. Graves, supra, the question presented was whether the sale of engraved plates by the engraving company constituted a sale of...