Top Tile Bldg. Supply Corp. v. New York State Tax Com'n

• Decision Date: 12 May 1983
• Citation: 94 A.D.2d 885,463 N.Y.S.2d 558
• Parties: In the Matter of TOP TILE BUILDING SUPPLY CORP. et al., Appellants, v. NEW YORK STATE TAX COMMISSION et al., Respondents.
• Court: New York Supreme Court — Appellate Division

Page 558

463 N.Y.S.2d 558

94 A.D.2d 885

In the Matter of TOP TILE BUILDING SUPPLY CORP. et al., Appellants, v. NEW YORK STATE TAX COMMISSION et al., Respondents.

Supreme Court, Appellate Division Third Department.

May 12, 1983.

Lorentz W. Hansen, White Plains, for appellants.

Robert Abrams, Atty. Gen. (Francis V. Dow, Asst. Atty. Gen., of counsel), for respondents.

Before MAHONEY, P.J., and SWEENEY, KANE, CASEY and WEISS, JJ.

MEMORANDUM DECISION.

Appeal from a judgment of the Supreme Court at Special Term, entered September 20, 1982 in Albany County, which dismissed petitioners' application, in a proceeding pursuant to CPLR article 78, to annul a determination of the New York State Tax Commission which upheld in part and modified in part notices of determination of additional sales and use taxes due.

Following a formal hearing, respondents modifed in part (in petitioners' favor) notices of determinations and demands for payment of sales and use taxes due, and as modified, denied applications for revisions. Respondents' determination was made October 23, 1981 and, as appears from an affidavit in the record, the determination was served upon petitioners by certified mail sent the same day. These proceedings were commenced by service of a notice of petition and verified petition on February 26, 1982. Petitioners did not deposit the tax, penalty and interest due nor did they file an undertaking (Tax Law, § 1138, subd. par. ). Special Term held that these omissions deprived the court of jurisdiction and dismissed the petition without reaching the issue of the timeliness of the proceeding.

Initially, we note that Special Term failed to address itself to those aspects of the petition which first attacked the constitutionality of section 1138 (subd. par. ) of the Tax Law and, in the amended petition, alleged violation of due process in the manner respondents construed the statute. The court limited its decision to finding that failure to pay the tax at issue or post an undertaking deprived the court of jurisdiction. While an article 78 proceeding is generally the proper vehicle to determine whether a statute, ordinance or regulation has been applied in an unconstitutional manner (Matter of Overhill Bldg. Co. v. Delany, 28 N.Y.2d 449, 458, 322 N.Y.S.2d 696, 271 N.E.2d 537), the rule is different when the issue is the constitutionality of legislative action (Matter of Kovarsky v. Housing & Development Admin. of City of N.Y., 31 N.Y.2d 184, 191, 335 N.Y.S.2d 383, 286 N.E.2d 882). It has consistently been held that a proceeding under article 78 is not the proper vehicle to test the constitutionality of legislative enactments (Press v. County of Monroe, 50 N.Y.2d 695, 702, 431 N.Y.S.2d 394, 409 N.E.2d 870). However, this court may, and, in reliance on CPLR 103 (subd. ), does hereby remedy the procedural infirmity by converting the article 78 proceeding to a declaratory judgment action and thereupon reach the merits (Matter of Ames Volkswagen v. State Tax Comm., 47 N.Y.2d 345, 418 N.Y.S.2d 324, 391 N.E.2d 1302). In our analysis, we find that this court has held that payment of...