Yonkers Racing Corp. v. State

• Decision Date: 08 June 1987
• Citation: 516 N.Y.S.2d 283,131 A.D.2d 565
• Parties: YONKERS RACING CORPORATION, Respondent, v. The STATE of New York, et al., Appellants.
• Court: New York Supreme Court — Appellate Division

Page 283

516 N.Y.S.2d 283

131 A.D.2d 565

YONKERS RACING CORPORATION, Respondent, v. The STATE of New York, et al., Appellants.

Supreme Court, Appellate Division,

Second Department.

June 8, 1987.

Robert Abrams, Atty. Gen., New York City (Richard G. Liskov and August L. Fietkau of counsel), for appellants.

Bleakley & Schmidt, White Plains (Frederick J. Martin and Timothy G. Griffin of counsel), for respondent.

Before THOMPSON, J.P., and BRACKEN, LAWRENCE and SPATT, JJ.

MEMORANDUM BY THE COURT.

In an action for a judgment declaring unconstitutional a certain tax imposed upon the plaintiff the Yonkers Racing Corporation (hereinafter Yonkers) by the defendant, New York State Racing and Wagering Board (hereinafter the board), and permanently enjoining the board from imposing the tax, the defendants appeal from a judgment of the Supreme Court, Westchester County (Dachenhausen, J.), dated July 8, 1986, which, upon granting the plaintiff's motion for summary judgment, declared unconstitutional the imposition of the tax upon Yonkers by the board, and which permanently enjoined further imposition of the tax upon the plaintiff by the defendants.

ORDERED that the judgment is affirmed, with costs.

Yonkers is a corporation licensed by New York State and the board to conduct harness racing with parimutuel betting at Yonker's Racetrack. In 1982 Yonkers entered into a contract with the State of Connecticut which authorized the live simulcast of races conducted at Yonkers Racetrack to Connecticut off-track betting facilities in exchange for a fee to be paid by Connecticut to Yonkers. As required by Racing, Pari-Mutuel Wagering and Breeding Law § 528(3), Yonkers submitted the contract to the board for its approval. The board granted the approval on the condition that Yonkers pay a tax to New York State on the commissions received from Connecticut. Yonkers accepted this condition and paid the tax to the New York State Department of Taxation and Finance. However, each payment was tendered under protest accompanied by a letter stating that Yonkers believed the tax to be invalid. Thereafter, Yonkers commenced this action seeking to have the tax declared unconstitutional. The court found that the board lacked the constitutional authority to impose the tax. We agree.

The power to tax is vested exclusively in the Legislature, which power may not be delegated to an administrative agency (N.Y. Const., art. III, § 1; Matter of U.S. Steel Corp. v. Gerosa, 7 N.Y.2d 454, 199 N.Y.S.2d 475, 166 N.E.2d 489; Gautier v. Ditmar, 204 N.Y. 20, 97 N.E. 464; Matter of Rego Props. v. Finance Administrator of City of N.Y., 102 Misc.2d 641, 424 N.Y.S.2d 621). Only after the Legislature has, by clear statutory mandate, levied a tax on a particular activity, and has set the rate of that tax, may it delegate the power to assess and collect the tax to an agency. Further, this delegation must be accompanied by proper guidelines set by the Legislature (see, Gautier v. Ditmar, supra; Lang v. Cohalan, 127 A.D.2d 17, 513 N.Y.S.2d 726).

A review of the Racing, Pari-Mutuel Wagering and Breeding Law, under which the defendants assert the authority to impose a tax on the plaintiff's activity, leads us to the conclusion that the board lacked the power to impose the tax and by so doing has unconstitutionally usurped a legislative function. The...