New York State Dept. of Taxation and Finance v. St. Regis Group (Mohawk Akwesasne Reservation)

• Decision Date: 28 December 1995
• Docket Number: No. 1,No. 3,No. 2,1,2,3
• Citation: 635 N.Y.S.2d 980,217 A.D.2d 214
• Parties: NEW YORK STATE DEPARTMENT OF TAXATION AND FINANCE, Appellant, v. ST. REGIS GROUP (MOHAWK AKWESASNE RESERVATION) et al., Respondents. (Action) NEW YORK STATE DEPARTMENT OF TAXATION AND FINANCE, Appellant, v. Wayne STEHLIN et al., Respondents. (Action) NEW YORK STATE DEPARTMENT OF TAXATION AND FINANCE, Appellant, v. ST. REGIS GROUP (HOGANSBURG, NY) et al., Respondents. (Action)
• Court: New York Supreme Court — Appellate Division

Page 980

635 N.Y.S.2d 980

217 A.D.2d 214

NEW YORK STATE DEPARTMENT OF TAXATION AND FINANCE, Appellant, v. ST. REGIS GROUP (MOHAWK AKWESASNE RESERVATION) et al., Respondents (Action No. 1.)

NEW YORK STATE DEPARTMENT OF TAXATION AND FINANCE, Appellant, v. Wayne STEHLIN et al., Respondents.

(Action No. 2.)

NEW YORK STATE DEPARTMENT OF TAXATION AND FINANCE, Appellant, v. ST. REGIS GROUP (HOGANSBURG, NY) et al., Respondents.

(Action No. 3.)

Supreme Court, Appellate Division Third Department.

Dec. 28, 1995.

Dennis C. Vacco, Attorney-General (Peter H. Schiff of counsel), Albany, for appellant.

Pease & Willer (Daniel S. Pease of counsel), Massena, for St. Regis Group, respondent.

Zdarsky, Sawicki & Agostinelli (K. Michael Sawicki of counsel), Buffalo, for Wayne Stehlin, respondent.

Before MIKOLL, J.P., and MERCURE, CREW, YESAWICH and SPAIN, JJ.

YESAWICH, Justice.

Appeals (1) from an order of the Supreme Court (Demarest, J.), entered May 13, 1994 in St. Lawrence County, which, inter alia, granted certain defendants' motions to dismiss the complaints in action Nos. 1 and 2 for lack of subject matter jurisdiction, (2) from an order of said court, entered October 12, 1994 in St. Lawrence County, which, upon reargument, adhered to its original decision in action Nos. 1 and 2, and (3) from an order of said court, entered October 18, 1994 in St. Lawrence County, which granted certain defendants' motion to dismiss the complaint in action No. 3 for lack of subject matter jurisdiction.

Each of these actions arises from the stop and seizure of a tractor-trailer hauling cases of liquor, apparently owned and imported into New York by one or more Native American Indians, and destined for delivery on the Mohawk Akwesasne Reservation in St. Lawrence County. The vehicles involved in action Nos. 1 and 2 were stopped because of a perceived violation of the Truck Mileage Tax provisions (see, Tax Law art. 21); the third stop was the product of surveillance conducted by State Police and the State Office of Tax Enforcement after a tax investigator received a tip that a shipment of liquor was being transported to the reservation in a specified trailer. In each instance, the documentation possessed by the driver was found to be inadequate, in that it did not identify a registered liquor distributor as the importer of the cargo, and otherwise failed to meet the requirements of the Tax Law (see, Tax Law § 427). The trucks and cargo were seized pursuant to Tax Law § 1845.

Plaintiff then moved in each case for an order confirming the temporary seizure (see, Tax Law § 1845[c] ), and commenced separate actions for forfeiture of the liquor (see, Tax Law § 1845[d] ). Defendants, St. Regis Group (action Nos. 1 and 3), and Wayne Stehlin and T.N.C. Trading, Inc. (action No. 2), opposed the confirmation motions and moved to dismiss the forfeiture actions, claiming that subject matter jurisdiction was lacking. In turn, plaintiff opposed these motions and, in action No. 1, cross-moved for summary judgment. In action No. 2, Stehlin and T.N.C. Trading cross-moved for dismissal of the complaint in the interest of justice.

Supreme Court issued a joint decision in action Nos. 1 and 2, concluding, inter alia, that Federal law preempts State enforcement of the tax laws in question with respect to Indian transactions, and that it therefore had no jurisdiction over these actions. The court dismissed the forfeiture actions and then treated the motions to confirm the temporary seizures as moot. (New York State Dept. of Taxation & Fin. v. St. Regis Group, 161 Misc.2d 383, 613 N.Y.S.2d 833).

Shortly after Supreme Court issued the orders dismissing action Nos. 1 and 2, the US Supreme Court decided Department of Taxation and Fin. of N.Y. v. Milhelm Attea & Bros., 512 U.S. 61, 114 S.Ct. 2028, 129 L.Ed.2d 52 (hereinafter Milhelm Attea), which upheld the constitutionality of a regulatory scheme designed by New York to ensure compliance with its laws requiring that taxes be collected on cigarettes sold, on Indian reservations, to non-Indians. Relying on this new articulation of the scope of Federal preemption in Indian affairs, plaintiff sought reargument of the motions in action Nos. 1 and 2. Reargument was granted but Supreme Court, distinguishing Milhelm Attea, adhered to its former decision. The court, citing its previous decisions, thereafter dismissed the complaint in action No. 3. Plaintiff appeals from the orders entered in each of the three actions.

Defendants maintain, both on their motions for dismissal--which, technically, raise only the threshhold question of whether State courts have jurisdiction to decide the matters at hand--and in opposition to plaintiff's motions to confirm the temporary seizures, that Federal law preempts New York authorities from enforcing, in Indian country, State tax and regulatory laws via the mechanisms set forth in Tax Law § 1845. This precise argument need not be confronted, for the seizures did not occur in Indian country (see, 18 U.S.C. § 1151), a fact acknowledged by defendants on oral argument, and because the Federal laws upon which defendants rely--including those governing Federal seizure and enforcement proceedings--are not, by their explicit terms, applicable to the fact patterns presented by these cases. Notably, 18 U.S.C. § 1161, the statute that incorporates State law into the Federal scheme of liquor regulation in Indian country, expressly states that "[t]he provisions of sections 1154, 1156, 3113, 3488 and 3669, of this title, shall not apply within any area that is not Indian country"; the listed sections include those which defendants contend demonstrate Congress' intent to vest exclusive jurisdiction over such matters in the Federal Government.

Here, forfeiture is not being sought pursuant to Federal seizure laws, with respect to which the Federal courts do indeed enjoy exclusive jurisdiction (see, 28 U.S.C. § 1355[a] ), or under any other Federal statute (cf., Fort Belknap Indian Community of Fort Belknap Indian Reservation v. Mazurek, (9th Cir.) 43 F.3d 428, 436 n. 8, cert. denied, --- U.S. ----, 116 S.Ct. 49, 133 L.Ed.2d 15; compare, Thomas v. Best, 104 A.D.2d 37, 40, 482 N.Y.S.2d 368); rather, what is being contested is the applicability of State tax and forfeiture laws. Nor is this an instance where jurisdiction is the exclusive province of the tribal courts (compare, Williams v. Lee, 358 U.S. 217, 223, 79 S.Ct. 269, 272, 3 L.Ed.2d 251). While questions of Federal preemption and constitutional issues are relevant, and may ultimately prove to be dispositive, there is little doubt that the State courts have jurisdiction to resolve matters akin to those presented herein. In short, we find that Supreme Court has jurisdiction of these actions.

We now turn to plaintiff's motions to confirm the temporary seizures, which Supreme Court found were rendered moot by reason of its dismissal of the underlying actions. It is our view that, inasmuch as the record is complete as far as these motions are concerned, and all parties have had an opportunity to be heard with respect thereto, judicial economy is best served by our addressing the questions presented by these motions now (see, State of New York v. General Elec. Co., 215 A.D.2d 928, 929, 626 N.Y.S.2d 861, 863; Furgang v. JMK Bldg. Corp., 183 A.D.2d 1062, 1064, 583 N.Y.S.2d 610, lv. denied 80 N.Y.2d 756, 588 N.Y.S.2d 824, 602 N.E.2d 232).

The overriding question posed is whether there is a "substantial probability that [plaintiff] will prevail on the issue of forfeiture" (Tax Law § 1845[c]. To answer that question, it is necessary to consider not only whether the pertinent State laws have been violated on their face--they clearly were, and defendants do not contend otherwise--but also whether there is merit to the defenses asserted. As to this last issue, we judge it dubious, at best, that defendants will succeed in demonstrating that Federal law leaves plaintiff devoid of authority to enforce general State laws with respect to cargo seized off Indian reservations but destined for delivery thereon, for, as we have...