Sweet v. All Package Grocery Stores Co.

• Court: U.S. Court of Appeals — Second Circuit
• Citation: Sweet v. All Package Grocery Stores Co., 262 F. 727 (2nd Cir. 1919)
• Decision Date: 12 December 1919
• Docket Number: 63.
• Parties: SWEET v. ALL PACKAGE GROCERY STORES CO.

262 F. 727

SWEET v. ALL PACKAGE GROCERY STORES CO.

No. 63.

United States Court of Appeals, Second Circuit.

December 12, 1919

Charles D. Newton, Atty. Gen. (Robert P. Beyer, of New York City, of counsel), for the People of the State of New York.

Gilbert & Gilbert, of New York City (A. S. Gilbert and Francis Gilbert, both of New York City, of counsel), for appellee.

Before WARD, ROGERS, and HOUGH, Circuit Judges.

WARD Circuit Judge.

The state of New York has presented in this equity receivership claims against the All Package Grocery Stores Company, a corporation of the state of New Jersey, as follows:

'For license fee or tax stated against All Package Grocery Stores Company, a New Jersey corporation, the predecessor of defendant, for the privilege of exercising its corporate franchises and carrying on business within the state of New York based on the amount of capital stock employed in New York state, $977.86.

'For license fee or tax heretofore stated against the defendant for the privilege of exercising its corporate franchise and carrying on business within the state of New York $22,517.86.'

Section 181 of the Tax Law (Consol. Laws, c. 60) of the state of New York was amended by chapter 490, Laws 1917, entitled 'An act to amend the tax law in relation to the license tax on foreign corporations,' the material provisions being:

'Sec. 181. License Tax on Foreign Corporations.-- Every foreign corporation, except banking corporations, fire, marine, casualty and life insurance companies, co-operative fraternal insurance companies, and building and loan associations, doing business in this state, shall pay to the state treasurer, for the use of the state, a license fee of one-eighth of one per centum for the privilege of exercising its corporate franchises or carrying on its business in such corporate or organized capacity in this state, to be computed upon the basis of the capital stock employed by it within this state, during the first year of carrying on its business in this state; which first payment shall not be less than ten dollars. * * * The amount of capital upon which such license fees shall be paid shall be fixed by the state tax commission, which shall have the same authority to examine the books and records in this state of such foreign corporations, and the employes thereof as it has in the case of domestic corporations and the comptroller shall have the same power to issue his warrant for the collection of such license fees, as he now has with regard to domestic corporations.'

The remedy which the comptroller had to collect taxes from domestic corporations was provided by section 201, the relevant part of which is as follows:

'Sec. 201. * * * The comptroller may issue a warrant under his hand and official seal, directed to the sheriff of any county of the state, commanding him to levy upon and sell the real and personal property of the person, partnership, company, association or corporation against which such account is stated, found within his county for the payment of the amount thereof with interest thereon and costs of executing the warrant, and to return such war rant to the comptroller and pay to the state treasurer the money collected by virtue thereof, by a time to be therein specified, not less than sixty days from the date of the warrant. Such warrant shall be a lien upon and shall bind the real and personal property of the person, partnership, company, association or corporation against which it is issued, from the time an actual levy shall be made by virtue thereof.'

It is contended that this license fee is not a tax, but a conventional agreement between the state and foreign corporations, whereby they contract to pay a fee in consideration of the privilege of doing business in the state. But we think it quite clear that the license fee is a tax. It is provided for in the state Tax Law, described as a license tax in the title of the amending act, called a license tax in the description of section 181 and is fixed by the state tax commission.

The Court of Appeals of New York in Wise v. Wise Co., 153 N.Y. 507, 47 N.E. 788, referring, among other cases, to two earlier decisions of In re Columbian Ins. Co. (N.Y.) 3 Abb.Dec. 239, and Central Trust Co. v. N.Y.C. & N.R.R. Co., 110 N.Y. 250, 18 N.E. 92, 1 L.R.A. 260, said:

'The contention of the learned counsel for the receiver of taxes rests upon a somewhat novel proposition. It is that from the most ancient times the courts of England have recognized the right of the sovereign, representing the state, to priority of payment over all other claims, though they may have been secured by specific liens; that the people of this state have succeeded to all the prerogatives of the British crown as parts of the common law suitable and applicable to our condition. * * * The general doctrines contained in these cases would seem, upon a superficial view, to go far in support of the contention upon which this appeal is based, although it should be observed that a very important fact present in this case was absent in the cases cited, and that was the existence of a specific

...