Roosevelt Raceway, Inc. v. Monaghan
| Decision Date | 05 July 1960 |
| Citation | 202 N.Y.S.2d 646,11 A.D.2d 206 |
| Parties | Application of ROOSEVELT RACEWAY, INC., Petitioner-Respondent, For an order, v. George P. MONAGHAN, as Commissioner of Harness Racing and constituting the State Harness Racing Commission, Appellant. |
| Court | New York Supreme Court — Appellate Division |
Paxton Blair, Sol. Gen., Albany, of counsel (Edward Siegfried, Albany, on the brief; Louis J. Lefkowitz, Atty. Gen., attorney), for appellant.
Samuel I. Rosenman, New York City, of counsel (George Morton Levy, Mineola, Max Freund, Robert A. Kirtland and Ernest A. Gleit, New York City, on the brief; Rosenman, Goldmark, Colin & Kaye, New York City, and George Morton Levy, Mineola, attorneys), for petitioner-respondent.
Samuel D. Smoleff, New York City, of counsel (Earle K. Moore, New York City, on the brief; Samuel D. Smoleff, New York City, attorney), for Citizens Union as amicus curiae.
Before BOTEIN, P. J., and RABIN, VALENTE, STEVENS and NOONAN, JJ.
The Harness Racing Commission has appealed from an order at Special Term, in a proceeding pursuant to Article 78 of the Civil Practice Act brought by petitioner Roosevelt Raceway, Inc., directing that petitioner's construction account be credited with federal income taxes paid or hereafter to be paid, and requiring the Commission to correct its records accordingly. The underlying facts and relevant statutory and constitutional provisions have been set forth in Presiding Justice Botein's opinion in Blaikie v. State Harness Racing Comm., 11 A.D.2d 196, 202 N.Y.S.2d 659, and which it is intended should be read in conjunction with this opinion.
The Attorney-General raises questions for the first time, in the form and scope they are presented upon this appeal, as to the constitutionality of Section 45-a of the Pari-Mutuel Revenue Law (L.1956, c. 837, McK.Unconsol.Laws, § 7603-a), if that law is construed as the petitioner contends it should be. The Attorney-General argues that the uses to which petitioner seeks to put the construction account funds would be violative of Article VII, Sections 7 and 8, of the State Constitution, which provide:
§ 7. 'No money shall ever be paid out of the state treasury or any of its funds, or any of the funds under its management, except in pursuance of an appropriation by law; nor unless such payment be made within two years next after the passage of such appropriation act; and every such law making a new appropriation or continuing or reviving an appropriation, shall distinctly specify the sum appropriated, and the object or purpose to which it is to be applied; and it shall not be sufficient for such law to refer to any other law to fix such sum.'
§ 8. 'The money of the state shall not be given or loaned to or in aid of any private corporation or association, or private undertaking; nor shall the credit of the state be given or loaned to or in aid of any individual, or public or private corporation or association, or private undertaking, but the foregoing provisions shall not apply to any fund or property now held or which may hereafter be held by the state for educational purposes.'
It should be noted that not only is this constitutional question raised for the first time on this appeal, but it is the only constitutional provision that appellant claims has been violated.
In Presiding Justice Botein's opinion in Matter of Blaikie, referred to above, it was concluded that the funds in the construction account are not 'moneys of the State' nor 'moneys under the control', and we adopt that conclusion and the reasons underlying it for all purposes in this opinion. The Attorney-General, in his brief, equates funds under the State's management, as provided in the aforementioned Article VII, Section 7 of the Constitution, with funds under its control, and we are in agreement. Since the moneys which are the subject matter of this proceeding are not in the State treasury, nor State funds, nor under its management, they do not come within the interdiction of the Constitutional provisions relied upon by the State; and so this argument must fall at the very threshold of our consideration. See additionally, People ex rel. Evans v. Chapin, 101 N.Y. 682; Clark v. Sheldon, 106 N.Y. 104, 12 N.E. 341.
Nor is title to these funds in 'a state of suspension', as stated in the dissenting opinion of Mr. Justice VALENTE. Title is always in the track, just as securely as the track has title to the State's original share of the betting pool until such time as it actually makes payment to the State. These payments are to be made, the statute provides, at such regular intervals as the Commission may require, and 'when collected', paid by the Commission into the State treasury.
As to the other points raised by appellant, the 1956 law provides in clear and unmistakable language that a so-called capital improvement track is entitled to receive from its construction account a sum of money, net after Federal income taxes paid thereon, equal to the cost of the improvements approved by the Commission; and Special Term therefore construed the 1956 law correctly in that regard. Furthermore, the legislative intent with respect to the 1956 law was so clear that the 1959 law was not a clarification but was in effect an amendment of the earlier statute, and therefore not binding in a judicial proceeding affecting the earlier statute (City of New York v. Village of Lawrence, 250 N.Y. 429, 447, 165 N.E. 836, 841; People ex rel. Mutual Life Ins. Co. v. Board of Supervisors of City and County of New York, 16 N.Y. 424, 431, 432).
Accordingly, the order appealed from should be affirmed, without costs.
Order appealed from affirmed, without costs.
All concur except VALENTE and STEVENS, JJ., who dissent and vote to reverse and dismiss in separate dissenting opinions.
Petitioner-respondent, herein called petitioner, instituted an Article 78 proceeding to compel respondent-appellant State Harness Racing Commission, hereinafter called respondent, to recognize that it is entitled to be reimbursed out of a construction account provided by statute for certain income tax payments made by it to the Federal Government.
This appeal is from an order directing that the construction account be credited with (1) $1,404,664.63, the amount of the income tax paid to the Federal Government on the sum of $2,858,495.38 previously transferred to the petitioner's general funds under Pari-Mutuel Revenue Law, § 45-a, added by the Laws of 1956, ch. 837, McK.Unconsol.Laws, § 7603-a, and (2) directing future similar Federal income tax payments.
There are certain constitutional provisions to which attention is directed at the outset.
Every law which imposes or continues a tax 'shall distinctly state the tax and the object to which it is to be applied.' N.Y.Const., art. 3, § 22. Funds of the state or funds under the management of the state can only be paid by legislative appropriation. The sum appropriated, its object and purpose must be specified (N.Y.Const., art. 7, § 7). All moneys of the state, or moneys under its control can only be paid upon audit by the Comptroller (N.Y.Const., art. 5, § 1). Neither the money nor credit of the state may be given or loaned to or in aid of any private corporation or association (art. 7, § 8). And the power of taxation can never be surrendered, suspended or contracted away except for securities issued for public purposes pursuant to law (art. 16, § 1).
If any one of these constitutional provisions is violated then respondent should prevail. As a matter of fact, in this case everyone is violated. There is no question but that in the statute adopted the Legislature sought to avoid any violation of these constitutional principles (see Opinion of Attorney-General dated March 9, 1956). The question is whether such avoidance was successful, and the answer should be that it was not.
Article 1, § 9 of the State Constitution empowered the Legislature to permit pari-mutuel betting on horse races conditioned upon the state deriving a reasonable revenue from the operation. Except as the constitutional provision permits, the activity is illegal.
Pursuant to the power conferred the Legislature enacted Ch. 254, Laws of 1940, § 2, declaring pari-mutuel betting to be lawful if conducted in the manner and subject to the conditions and supervision provided by the Act, it being the purpose of the Act to derive a reasonable revenue therefrom for the support of government, to promote agriculture and the improvement of horse breeding.
The state tax commission was charged with the financial administration of pari-mutuel betting, and with the authority to prescribe the forms and system of accounting to be employed, while the state harness racing commission was given general supervision and control of pari-mutuel betting with the power to make rules regulating the conduct of such betting.
It is notable that when pari-mutuel betting was legalized it was provided that the Act should be known as the Pari-Mutuel Revenue Law. In § 45 thereof, '[d]isposition of pari-mutuel pools', it was stated at the outset that the association 'shall distribute all sums deposited in any pari-mutuel pool to the winners thereof less fifteen per centum of the total deposits plus the breaks.' McK.Unconsol.Laws, § 7603. Then followed language detailing the state's and the track's percentages of the breaks and of the total pool 'which tax', as to the state's interest, 'is hereby levied.' The bond required of the association had as its stated purpose assurance that tax moneys would be paid and moneys properly distributed to patrons of the pari-mutuel pools who were holders of winning tickets (§ 43, McK.Unconsol.Laws, § 7601) (See Aliano v. Westchester Racing Association, 265 App.Div. 225, 38 N.Y.S.2d 741). The Act thus expressed clearly the dual objectives of the Pari-Mutuel Revenue Law, (1) the protection of the patron and (2) the...
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Roosevelt Raceway, Inc. v. Monaghan
...its effective date. The order sought by Roosevelt was granted at Special Term and was affirmed by a divided Appellate Division (11 A.D.2d 206, 202 N.Y.S.2d 646). The appeal is in this court as of The courts below were concerned principally with contentions, raised in a companion case which ......
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Blaikie, Application of
...right in the individual to demand recovery of moneys already paid out. The decision in the companion case (Roosevelt Raceway, Inc. v. Monaghan, 11 A.D.2d 206, 202 N.Y.S.2d 646) is being handed down herewith. Since the law in this case as declared by the majority is that these are not public......
- Roosevelt Raceway, Inc. v. Monaghan