Jurisdictional Statement — Lane v. Gallman

IN THE SUPREME COURT OF THE UN

OCTOBER TERM, 1977

No.

In the Matter of the Application of

JOHN LANE, JR.,

Appellant,

for a Judgment Under Article 78 of

the Civil Practice Law and Rules, etc.

V-

NORMAN F. GALLMAN, President, et al.,

constituting the STATE TAX COMMISSION OF

THE STATE OF NEW YORK,

Respondents

On Appeal From the Court of Appeals

of the State of New York

JURISDICTIONAL STATEMENT

DECEMBER 1977 JOHN LANE

14 Wall Street

New York, N.Y. 10005

Tel.: 212-233-7780

JOHN LANE, JR.

Attorneys for Appellant

INDEX

Opinions Below

Statement or the Grounds on Which

the Jurisdiction of This Court

Is Invoked

Constitutional and Statutory

Provisions Involved

I. Fourteenth Amenament to

United States Constitution

II. New York Tax Law Sec. 605

III. New York Tax Law Sec. 654

Questions Presented

Statement of the Case

IT. Pacts ..+see-s

II. When and How the Federal

Questions Were Raised

and Decided Below

The Federal Questions Are

Substantial

tH

.

The Due Process Question

The Equal Protection

Question

4

Conclusion

Page

28

32

atts

Appendix A--Decision of the

State Tax Commission ..... Ae#l

Appendix B--Memorandum Decision

of the Appellate Division of

the Supreme Court of the

State of New York ...e«-e«+ee Bel

Appendix C--Order of New York Court

of Appeals Dismissing Appeal

Sue SGeOnee . « és 66 es 6 8 C-1

Appendix D--Order To Show Cause

Containing Temporary Stay ... Del

Appendix E--Order of New York

Court of Appeals Denying

Motion for Vacation of

Sua Sponte Dismissal ..... E«#l

Appendix F--Notices of Appeal .. Fel

Appendix G--Letter From Appel-

lant to Presiding Justice

of Appellate Division, 3rd

Department, dated October

Fe) + ere ee ee ee ae

Appendix H--Davis v. District

of Columbia, Docket No. 1969,

D.C. Tax Court, Opinion Filed

December 22, 1965 (excerpt) .. He-l

-iii- ihe

Table of Authorities

Lawrence v. State Tax Com-

mission, 266 U.S. 276

CASES: ®

ne « « ¢ * & 6 & eee 9, 47f> 18,

American Commuters Association 24, 25

r 405 F.2d 1148 (2d

Cie 156s} xp ba ‘ . 24 id Martin v. Gage, 281 Ky. 95,

134 S.W. 2d 966 (1939) .. 26

G.W.R. Co. v. ham,

I SSS ch Matthews v. Huwe, 269 U.S. 262

(1925) . ss wie ae 6ue tS

Davis v. District of Colum- z

bia, Docket No. 1969, D.C. Miiler Bros. Co. v. Mary-

Tax Court, Opinion Filed land, 347 U.S. 340 (1954). 24

D ——— oe coe oe lg 8S, FG

= <r P In re Opinion of the Jus-

District ot Columbia v. Davis, tices, 58 N.H. 500, 190

371 F.2d 064 (D.c. Cir.),; Bese GOL CARST) «§ « 2 2 te

cert. denied, 386 U.S.

y cm 2, 14,19, People ex rel. Cohn v. Graves,

si del aiaitale og? 36° 27° 300 U.S. 308 (1937)... 18, 24, 25

28, 33

24, 25

Shaffer v. Carter, 252 U.S. 37

Forester v. Culpepper, 194 Ga. P (1920) |

44 olbe Bas co O

ee eee ee Tumey v. Ohio, 273 U.S. 510

Greene v. Wisconsin Tax Com- [aeeye © & @ 6s 2 we 2 ee GF

mission, cool Wis. 531, 266

' 26 United States v. Jin Fue

N.W. 270 (1936) Moy, O41 U.S. 304 (1961) . 2, 13, 19,

Kennedy v. Commissioner, 256 33

' —E. 74

— - Walters v. City of St. Louis,

347 U.S. 231 (1954) . ... 31

. G 41 App. Div.

Sars Stet s. 24 +4 . ° Wisconsin v. J.C. Penney Co.,

ae ee ds 16, 29 311 U.S. 435 (1940) . . .. 24

Wood v. Tawes, 181 Md. 155, 28

° A.2d 850 (1942), cert.

denied, 318 U.S. 788 (1943) 27, 28

-V-

CONSTITUTIONAL PROVISIONS:

Due Process Clause, Fourteenth

Amendment, U.S. Constitution 10,

Equal Protection Clause, Four-

teenth Amendment, U.S.

stitution . oe

STATUTES:

28 U.S.C. Sec. 1257(2)

Maryland Code Art. 81, Sec.

279(1), as amended ”

1959 Laws, Ch. 482 ,

N.Y. Tax Law Sec. 605

N.Y. Tax Law Sec. 654

OTHER :

Iowa Law Review, Vol. XXII,

No. 2 (1937)

24

10,

19

18, 21,

IN THE SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1977

No.

In the Matter of the Application of

JOHN LANE, JR.

Appellant,

for a Judgment Under Article 78 of

the Civil Practice Law and Rules, etc.

Vv.

NORMAN F. GALLMAN, President, et al.,

constituting the STATE TAX COMMISSION OF

THE STATE OF NEW YORK,

Respondents

On Appeal From the Court of Appeals

of the State of New York

JURISDICTIONAL STATEMENT

Appellant appeals from the final

order of the Court of Appeals of the

State of New York, dated and entered

April 28, 1977, dismissing appellant's

appeal sua sponte. The finality of said

order was deferred by an Order To Show

~~

Cause Containing Temporary Stay, signed

by Judge Jacob D. Fuchsberg of that court

on Juiy 26, 1977, as more specifically

shown below.

Appellant requests remand to the New

York Court of Appeals for full consider-

ation of the constitutional issues of

this case (summarily dismissed by it) in

light of United States v. Jin Fuey Moy,

241 U.S. 394, 401 (1961), as applied by

the U.S. Court of Appeals for the D.C.

Circuit in District of Columbia v. Davis,

371 F.2d 964 (D.C. Cir.), cert. denied,

386 U.S. 1034 (1967)--a case indistin-

guishable from the one at bar, and allow-

ed to stand by this Court. If remand is

inappropriate, then this Court should

proceed to hear and decide the merits.

-3-

OPINIONS BELOW

The State Tax Commission's decision

is not reported. It is set forth in

Appendix A, infra.

Appellant's petition for redetermin-

ation was initially filed in the New York

Supreme Court, Albany County, which

transferred the matter, without opinion,

to the Appellate Division of the Supreme

Court for initial disposition pursuant to

Section 7804(b) of the Civil Practice Law

and Rules.

The memorandum decision of the

Appeliate Division is reported at 49 App.

Div. 2d 963, 373 N.Y.S.2d 700. It is set

forth in Appendix B, infra.

Appellant's motion to the Appellate

Division for leave to appeal to the New

York Court of Appeals, dated December 1,

1975, was denied without opinion on

ole

March 25, 1976, 38 N.Y.2d 711, 348 N.E.2d

619, 384 N.Y.S.2d 1025.

On appeal as of right, the New York

Court of Appeals rendered no opinion. Its

unreported order of April 28, 1977,

dismissing the appeal sua sponte, without

opinion, with the statement that "no

constitutional question is directly

involved," is set forth in Appendix C,

infra. (The fact of dismissal is listed

in 42 N.Y.2d 823, 364 N.E.2d 1353, 396

N.Y.S.2d ____ (Adv. Sheet No. 4, Aug. 23,

1977, at CVIII).) Its subsequent Order To

Show Cause Containing Temporary Stay (un-

reported), signed July 26, 1977, and

entered July 28, 1977, is set forth in

Appendix D, infra. The motion made by

order to show cause, for vacation or stay

of the dismissal and for oral argument,

was subsequently denied by order entered

September 9, 1977, without opinion,

Se

unreported, set forth in Appendix E,

infra.

STATEMENT OF THE GROUNDS ON WHICH THE

JURISDICTION OF THIS COURT IS INVOKED

(i) This is a proceeding brought by

appellant under Article 78 of the New

York Civil Practice Law and Rules to

review a decision of the State Tax Com-

mission that as a matter of law (there

being no dispute as to the facts) appel-

lant was taxable on income earned out-of-

state during the last ten months of 1965,

after he had admittedly abandoned his

only New York abode (his parents' home)

and was no longer in fact a resident of

the state, and was thus no longer subject

to the tax imposed by law on every resi-

dent of the state (including out-of-state

income) but only subject to the tax im-

a

posed on nonresidents of the state (lim-

ited to New York income).

(ii) The judgment or decree sought

to be reviewed is the order of the New

York Court of Appeals, dated and entered

April 28, 1977, dismissing the appeal sua

sponte (Appendix C, infra).

Since there was no hearing, no peti-

tion for rehearing was filed. Rather, by

timely Order To Show Cause Containing

Temporary Stay (Appendix D, infra),

signed July 26, 1977 (within the time

otherwise allowed for a petition for

rehearing), and entered July 28, 1977,

appellant moved the same court for an

order vacating or staying the sua sponte

dismissal and adhering to its prior de-

termination that "this appeal will con-

tinue in its normal course and the Court

will not act sua sponte."

(A copy of the Order To Show Cause,

Te

with the Petition therefor showing (i)

the Court of Appeals' retraction of its

prior determination not to dismiss sua

sponte, and (ii) three serious misstate-

ments of fact by respondents in their

brief to the Court of Appeals on the

merits, was forwarded to this Court

under letter of July 27, 1977, for

information re the extension of time to

docket theretofore granted (No. A-53).)

The Order To Show Cause stayed the

operation and effect of the dismissal

order "until ten days after the service

upon counsel for Appellant of an order

determining this application." (The

temporary stay was expressly sought in

order to preserve appellant's right of

appeal to this Court pending decision on

the motion. )

The motion to allow the appeal to.

continue to oral argument was denied by

=

order dated and enteredSeptember 9, 1977.

As of December 5, 1977, a copy of said

order had not been served upon appellant

by either the Court of Appeals or re-

spondents. The order was dictated to

appellant by the court clerk's office on

December 6, 1977, and appellant under-

stands he was finally served by respond-

ents by mailing on that date.

Notices of appeal were filed on

December 6, 1977, in the New York Court

of Appeals and in the Appellate Division,

Third Department, of the New York Supreme

Court, since appellant is uncertain which

of those courts is possessed of the

record. They are set forth in Appendix F,

infra.

(iii) Jurisdiction of this Court is

invoked pursuant to 28 U.S.C. Sec.

1257(2), this being an appeal which draws

into question the validity of New York

=9e

Tax Law Secs. 605(a)(1) and 654 on the

grounds that, (1) as construed by the New

York courts, they are repugnant to the

Constitution of the United States, and

(2) the decisions of the New York courts

upholding the statute constitute ad hoc

adjudication in violation of the Consti-

tution of the United States.

(iv) Cases sustaining the jurisdic-

tion of this Court are:

Lawrence v. State Tax Come

mission, 286 U.S. 276,

282-83 (1932)

Chicago G.W.R. Co. v. Basham,

249 U.S. 164 (1919)

United States v. Healy, 376

U.S. 75, 76-80 (1964)

Tumey v. Ohio, 273 U.S. 510,

515 (1927)

Matthews v. Huwe, 269 U.S. 262

(1925)

aie

CONSTITUTIONAL AND STATUTORY PROVISIONS

INVOLVED ®

IT. Fourteenth Amendment to United

States Constitution

The Fourteenth Amendmerit to the

United States Constitution provides in

pertinent part:

Section 1. * * * nor shall any

State deprive any person of

life, liberty or property,

without due process of law;

nor deny to any person within

its jurisdiction the equal

protection of the laws.

II. New York Tax Law Sec. 605

Section 605 of the New York Tax Law

provided in pertinent part (at all times

here pertinent):

Sec. 605. Resident and non-

resident defined

(a) Resident individual. A

resident individual means an e

individual:

(1) who is domiciled in

this state, unless he main-

tains no permanent place of

abode in this state, maintains

oltte

a permanent place of abode

elsewhere, and spends in the

aggregate not more than thirty

days of the taxable year in

this state, or

(2) who is not domiciled

in this state but maintains a

permanent place of abode in

this state and spends in the

aggregate more than one hundred

eighty-three days of the tax-

able year in this state, unless

such individual is in the armed

forces of the United States

during an induction period.

(b) Nonresident individuaL

A nonresident individual means

an individual who is not a

resident.

/ Omitted subdivisions re-

late oniy to estates or

trusts 7

(e) Cross reference. For

effect of change of an individ-

ual's resident status, see sec-

tion six hundred fifty-four.

N.Y. Tax Law Sec. 605, McKinney's Bk. 59,

2nd Vol., at 272-73 (1975).

III. New York Tax Law Sec. 654

Section 654 of the New York Tax Law

wh Do

provided in pertinent part (at all times

here pertinent):

Section 654.

(a) General. If an indi-

vidual changes his status dur-

ing his taxable year from res-

ident to nonresident, or from

nonresident to resident, he

shall file one return as a

resident for the portion of the

year during which he is a res-

ident, and one return as a non-

resident for the portion of the

year during which he is a non-

resident, subject to such ex=

ceptions as the tax commission

may prescribe by regulation.

N.Y. Tax Law Sec. 654(a), McKinney's Bk.

59, 2nd Vol., at 339 (1975).

QUESTIONS PRESENTED

1. Whether New York State has

jurisdiction, constitutionally, to tax

appellant's income earned out-of-state

during the last ten months of 1965, after

he had admittedly permanently abandoned

his only New York abode (his parents’

o13-

home) and was no longer in fact a resi-

dent of the state, did not own property

in the state, no longer enjoyed benefits

in the state, and was a de facto resident

of another state.

2. Whether a state may constitution-

ally make ad hoc, discriminatory applica-

tion of its income tax laws in order to

maximize the tax, by reaching precisely

opposite conclusions as to the legal

effect of the identical statutory pro-

visions in two cases upon facts identical

(so far as relevant), and even citing the

first to support the second, opposite

result. |

3. Whether this case should be re-

manded to the New York Court of Appeals

for full consideration of the constitu-

tional issues of this case (summarily

dismissed by it) in light of United

States v. Jin Fuey Moy, 241 U.S. 394, 401

ait.

(1961), as applied by the U.S. Court of

Appeals for the D.C. Circuit in District

of Columbia v. Davis, 371 F.2d 964 (D.C.

Cir.), cert. denied, 386 U.S. 1034 (1967)

--a case indistinguishable from the one

at bar and allowed to stand by this Court

STATEMENT OF THE CASE

I. Facts

Appellant agrees with the following

indings of fact in the respondents’

~

decision:

2. Until March 1, 1965, peti-

tioner resided with his parents

in Yonkers, New-York. He finish-

ed law school in June, 1964, and

worked for a New York City law

firm until February, 1965. He

applied for a direct commission

into the Air Force Reserve and

received a commission in January,

1965.

3. On March 1, 1965, petitioner

reported to his duty station at

the office of the General Counsel,

United States Air Force, Pentagon

Building, Washington, D.C. From

-15-

March until November, 1965, he

rented an apartment in Arlington,

Virginia under a six month lease.

He then moved to another rented

apartment in Alexandria, Virginia

which he held under a yearly

lease and which he kept until

1967. Both apartments were chosen

so as to be suitable after peti-

tioner's planned marriage in

September, 1965.

4, Petitioner spent more than

30 days in New York State between

January 1, 1965, and February 28,

1965. He spent no time in New

York State between March 1, 1965,

and December 31, 1965.

5. The deficiency amounts to

$50.75 including interest. The |.

refund claimed is for withholding

tax in the amount of $35.20.

It is not questioned, and the record

establishes, that appellant has never

resided in New York after March 1, 1965,

and has never at any time ever had an

interest, whether ownership or rental or

otherwise, in any place of abode in the

State of New York.

Accordingly, since true domicile for

tax purposes necessarily imports

==

residence, appellant as a matter of law

could not be domiciled in New York within

the meaning of the Tax Law after March l,

1965. Therefore, respondents' only other

purported finding of fact--that "l. Peti-

tioner was during 1965 and prior years, a

domiciliary of New York State"--was a

conclusion of law, constitutionally er-

roneous under the Due Process Clause (as

shown infra), and (as also shown infra)

directly inconsistent with its own and

the Appellate Division's conclusion in

Kritzik v. Gallman, where it was held:

"When petitioners moved to Connecticut in

July, they no longer maintained a per-

manent place of abode in New York. They

could not, therefore, meet the statutory

requirements for residents." 41 App. Div.

2a 994, 344 N.Y.S.2d 107 (1973).

It is also unquestioned that after

March 1, 1965, appellant did not actually

elTe

enjoy any benefits in New York and was not

legally entitled to benefits concomitant

with living or working there.

IL When and How the Federal Questions

Were Raised and Decided Below

In its brief in the Appellate Divi-

sion (p. 9) the Tax Commission opened its

defense of the tax under attack by going

on the offense, and the spearhead of the

offense was the proposition that the

constitutionality of the tax in issue

had been upheld by the United States

Supreme Court, viz.:

ARGUMENT

THE FETITIONER WAS SUBJECT

TO NEW YORK STATE INCOME

TAX AS A RESIDENT OF NEW

YORK STATE FOR THE ENTIRE

YEAR 1965 UNDER THE PRO-

+ - eee OF TAX LAW, SEC.

05.

The United States Supreme Court

has upheld the right of a state

to tax a person domiciled therein

on income derived from outside

sources (Lawrence v. State Tax

=| =

Commission, 286 U.S. 276 (1932);

People ex rel. Cohn v. Graves, 300

U.S 305 (1937) 7).

The petitioner readily admits

that he was domiciled in New York

State during the entiie year of

1965 and that he spent more than

30 days in New York State from

January 1, 1965 to March 1, 1965.

It is submitted that these facts

alone subject him to New York

State income tax as a resident for

the entire year under the provi-

sions of Tax Law, Sec. 605(a)(1).

In the first sentence of text above,

respondent effectively introduced into

this case in the Appellate Division the

question of the constitutionality of the

tax in issue, specifically, the question

of the state's jurisdiction to tax under

the Due Process Clause of the Fourteenth

Amendment to the United States Constitu-

tion.

The undersigned attorney for the

appellant herein upon argument informed

the Appellate Division in substance of

the constitutional question involved in

o19<

taxing a nonresident (before entering or

after leaving a state) upon income earned

outside the taxing state; referred the

court to the latest authoritative case,

District of Columbia v. Davis, 371 F.2d

964 (D.C. Cir.), cert. denied, 386 U.S.

1034 (1967), wherein the tax had been on

income earned by a nonresident before

taking up residence in the District; that

the tax had been held unconstitutional,

and the unconstitutionality reversed, but

the tax nullified by construing the

statute as not intended to tax the income

in question, per United States v. Jin

Fuey Moy, 241 U.S. 394, 401 (1961).

In addition, counsel mentioned an

issue of the Iowa Law Review (Vol. XXII,

No. 2, 1937) containing a symposium of

eight articles on state income taxation,

a copy of which had been procured for the

convenience cf the court.

a26=

Appellant's argument time (15 min-

utes) was inadequate to the task, and

counsel addressed a letter after argument

to Honorable Michael E. Sweeney, the

Justice who presided on the day of argu-

ment, to identify properly a number of

items which had been referred to, par-

ticularly the citation to District of

Columbia v. Davis, supra, in the fifth

paragraph of the letter as the case cited

to the court on argument. A copy of said

letter was sent at the same time to re-

spondents, who did not object in any

respect to its accuracy or consideration

by the court. The letter is attached as

Appendix G, infra. (Appellant understands

that the oral argument to the court was

not recorded. )

It should be noted that the hearing,

i.e., argument, before the Appellate

Division was the first before any court.

a2i«

The matter had been transferred to the

Appellate Division from the Supreme Court,

Albany County.)

Unconstitutionality under the Due

Process Clause was also urged in the

motion to the Appellate Division for

reargument or leave to appeal, and in the

motion to the Court of Appeals for leave

to appeal, both without objection from

opposing counsel. It was further urged in

appellant's brief in its appeal as of

right thereafter taken to the Court of

Appeals, whereupon respondents for the

first time alleged that the issue had not

been raised below. A copy of the letter

to Justice Sweeney, referred to above,

appeared at page 72 of the Record on

Appeal to the Court of Appeals.

Regarding the equal protection

violation, appellant asserted unconstitu-

tional ad hoc application of the tax law

afte

by the Appellate Division as violating

the Equal Protection Clause in its brief

in its appeal as of right to the Court of

Appeals. It is evident that this question

could not have been urged in the Appel-

late Division before its decision was

issued which constituted the equal pro-

tection violation.

The Appellate Division's memorandum

decision and denial of reargument and

leave to appeal made no reference what-

ever to the constitutional question rais-

ed by appellant.

The Court of Appeals' order dismiss-

ing sua sponte the appeal taken as of

rightstated that "no constitutional ques-

tion is directly involved," thereby rulng

against appellant on the merits of the

constitutional questions but without dis-

cussion-+*and also without hearing oral

argument, even though, in reliance upon

=23-

that court's prior jurisdictional deter-

shankar that the matter would proceed to

argument, appellant had proceeded with

full briefing of the constitutional

questions.

THE FEDERAL QUESTIONS ARE SUBSTANTIAD >

I. The Due Process Question

The first issue in this case is

whether appellant's out-of-state income

earned during that portion of the taxable

year after appellant had permanently

terminated residence in the state is,

and may constitutionally be, taxable

under the New York Tax Law. Respondents

and the New York courts have construed

the Tax Law as imposing a tax on such

income.

The foregoing construction presents

a grave constitutional question.

afte

It is fundamental that the Due Pro-

cess Clause of the Fourteenth Amendment

to the United States Constitution pro-

hibits a state from taxing beyond its

territorial jurisdiction. Miller Bros. Co.

v. Maryland, 347 U.S. 340 (1954).

The constitutional basis for state

taxing jurisdiction is actual enjoyment

of benefits in the state, or legal enti-

tlement to benefits while living or work-

ing there. Shaffer v. Carter, 252 U.S.

37, 50-53, 57 (1920); Lawrence v. State

Tax Commission, 286 U.S. 276, 279-80

(1932); People ex rel. Cohn v. Graves,

300 U.S. 308, 313 (1937); Wisconsin v.

J.C. Penney Co., 311 U.S. 435, 444 (1940);

Miller Bros. Co. v. Maryland, supra,

347 U.S. at 344-45; cf. American Com-

muters Association v. Levitt, 405 F.2d

1148, 1152-53 (2d Cir. 1969). Also neces-

sary is power to enforce the tax. Shaffer

~2$~

v. Carter, supra, 252 U.S. at 4°.

Thus a resident of a state, because

personally actually within the jurisdic-

tion of the state and enjoying benefits

there, is taxable on all income, in-state

and out-of-state. Lawrence v. State Tax

Commission, supra; People ex rel. Cohn v.

Graves, supra. And a nonresident--because

the state has only in rem jurisdiction

and not personal jurisdiction over him--

is subject to tax only to the extent he

owns property in the state or carries on

a business, trade, or profession in the

state. Shaffer v. Carter, Supra, 252 U.S.

at 53, 57.

Under facts virtually identical in

all material respects to the present case,

one court has squarely held a tax such as

that here in issue to be unconstitutional,

Davis v. District of Columbia, Docket No.

1969, D.C. Tax Court, Opinion Filed

@26-

December 22, 1965, at 12 (Appendix H,

infra), modified on appeal, 371 F.2d 964

(D.C. Cir., cert. denied, 386 U.S. 1034

(1967); the highest court of one state

has held in an advisory opinion that such

a tax would be invalid, In re Opinion of

the Justices, 88 N.H. 500, 190 At1.801,

806 (1937); the U.S. Court of Appeals for

the D.C. Circuit and the highest courts

of four states have held that such a tax

presents grave constitutional questions

and have construed the tax statutes in

issue so as to avoid deciding those ques-

tions. District of Columbia v. Davis,

371 F.2d 964 (D.C. Cir.), cert, denied,

386 U.S. 1034 (1967); Kennedy v. Commis-

sioner, 256 Mass. 426, 152 N.E. 747

(1926); Greene v. Wisconsin Tax Commis-

sion, 221 Wis. 531, 266 N.W. 270 (1936);

Martin v. Gage, 281 Ky. 95, 134 S.W.2d

966 (1939); Forester v. Culpepper, 194 Ga.

a2Te

744, 22 S.E.2d 595 (1942). Indeed, the

D. ©. Circuit in Davis, supra, regarded

the New York statute here in issue as a

clear example of one which did not pur-

port to tax out-of-state income in the

nonresident portion of the taxable year,

before the taxpayer moved into or after

he left the state. 371 F.2d at 967-68 &

n. 2.

We have come across no case in any

jurisdiction wherein an effort was made

to impose an income tax upon income of

the character and under the circumstances

of the case at bar. The only reported

case apparently not in accord is Wood v.

Tawes, 181 Md. 155, 28 A.2d 850 (1942),

cert. denied, 318 U.S. 788 (1943). The

value of Wood is depreciated by the Mary-

land Legislature's later amendment of its

tax statute expressly to avoid taxing

out-of-state income earned during the

-28~

nonresident period in the year of a resi-

dence change into or out of the state.

Maryland Code Art. 81, Sec. 279(41), as

amended by 1959 Laws, Ch. 482. Moreover,

the D.C. Tax Court and the D.C. Circuit

did not follow the Wood case in Davis

even though it was relied upon by the

D.C. Government.

The case at bar is one of first

impression for this Court.

II. The Equal Protection Question

Appellant's primary argument to the

New York courtswas for construction of

the Tax Law to avoid the serious due pro-

cess question in I above. Oddly enough,

the most direct support for appellant's

construction of the Tax Law was the very

decision of the Appellate Division which

that court cited to support its finding

for respondents in this case.

li

-29-

In Kritzik v. Gallman, 41 App. Div.

2d 994, 344 N.Y.S.2d 107 (1973), a tax-

payer who would have benefited from being

considered a resident for the entire tax-

able year was denied resident status and

taxed as a nonresident for the period

after he terminated residence in the

state. There was no basis whatever in the

stipulated facts or elsewhere in the

record of that case for a finding of a

change of domicile, and the Appellate

Division made no mention of a change of

domicile. The decision turned entirely on

the absence of a place of residence in

the state.

The Tax Commission's brief in that

case urged, and the Appellate Division

adopted, precisely the construction of

the Tax Law that this appellant urged

upon that court in this case. The Com-

mission argued in that case:

Appellant sought precisely that

=30=

However, it is obvious that

the provisions of section 605

do not relate to individuals

who have changed residence

status during the year as sec-

tion 654 makes particular pro-

vision for change of residence

status.

Since petitioners did change

residence status during 1967,

section 605 does not apply,

and it is clear that petition-

ers were nonresidents for the

part of the year 1967 from

July 27 to December 31.

The Appellate Division held:

Initially, we find no merit

to the contention that peti-

tioners were residents for the

entire year of 1967 based on

paragraph (2) of subdivision

(a) of section 605 of the Tax

Law. Section 654 of such law

is clearly applicable where,

as here, there is a change of

status during the tax year from

resident to nonresident. When

petitioners moved to Connecti-

cut in July, they no longer

maintained a permanent place of

abode in New York. They could

not, therefore, meet the stat-

utory requirements for resi-

dents. (Tax Law, Sec. 605, subd

(a)(2)./ Emphasis added. _

@3l-

result in this case--to be treated as a

nonresident after March 1, 1965, because

of the absence of actual residence and of

a permanent place of residence in the

state. Yet the respondents and the Appel-

late Division refused appellant here the

benefit of that holding. This inconsist-

ent, ad hoc application of the split-year

provision of the Tax Law, sustained by the

New York Court of Appeals, appears to

deny to appellant the equal protection

of the laws in violation of the Fourteen-

th Amendment to the United States Consti-

tution. That Amendment requires that all

persons in the same class be accorded

equality of treatment in the imposition

of state taxes, and that any differences

in treatment of different persons "rest

on real and not feigned differences."

Walters v. City of St. Louis, 374 U.S.

231, 237 (1954)(and authorities cited).

@32-

CONCLUSION

Appellant urges that the New York

Tax Law is unconstitutional insofar as it

has been construed by the New York courts

to tax appellant's income earned outside

the state during the ten months in 1965

after he became a nonresident.

Nevertheless, appellant would still

prefer, as from the beginning, to have

the Tax Law construed as not purporting

te tax appellant's income after he be-

came a nonresident. There is extensive

legislative history, fully presented by

appellant to the New York courts but

completely ignored by them and by re-

spondents, demonstrating that the Legis-

lature did not intend the result reached

by the courts, but rather intended to tax

persons as residents (i.e., on out-of-

state income) only for the period they

=33<

actually are residents.

Understanding that this Court does

not ordinarily review a state's construc-

tion of its own statute, appellant never-

theless does not seek a conclusive consti-

tutional determination by this Court at

this time, unless it is deemed unavoid-

able. The most satisfactory resolution for

all concerned at this time would be for

this Court to reverse on the ground that

there are serious constitutional ques-

tions not adequately considered by the

New York courts, and remand to the New

York Court of Appeals for full considera-

tion thereof in the iight of United

States v. Jin Fuey Moy, 241 U.S. 394,

401 (1961), which requires construction

to avoid grave constitutional questions.

The latest and most authoritative applic-

ation of that doctrine in a pertinent

ease is District of Columbia v. Davis,

o3he

371 F.2d 964 (D.C. Cir.), cert. denied,

386 U.S. 1034 (1967), which is virtually

on all fours and should be considered

controlling here.

Appellant is convinca@ that upon full

and fair consideration, the New York

Court of Appeals could not avoid uphold-

ing appellant's construction of the Tax

Law.

RESPECTFULLY SUBMITTED,

JOHN LANE

JOHN LANE, JR.

Attorneys for Appellant

December 1977

APPENDIX

A-1

Decision of State Tax Commission.

Strate oF New YORK

STATE TAX COMMISSION

In the Matter of the Petition

of

JoHN LANE, JR.

for a Redetermination of a Deficiency or for Refund of

Personal Income Tax under Article 22 of the Tax Law

for the Year 1965.

+ +>

John Lane, Jr. filed a petition under section 689 of the

Tax Law for the redetermination of a deficiency and for

refunds in personal income tax under Article 22 of the

Tax Law for the year 1965. In lieu of a hearing, the peti-

tioner, without counsel, and the Income Tax Bureau, by

Edward H. Best, Esq. (Francis X. Boylan, Esq., of Coun-

sel), have submitted the file pertaining to the deficiency

to the State Tax Commission. Said file has been duly

examined and considered.

IssuE

The issue in this case is whether a domiciliary of this

State who changed his abode during 1965 is a resident

for the entire year or whether he can be considered a

nonresident for part of the year under section 605 of the

Tax Law, and thus entitled to file a nonresident return

for part of the year under section 654 of the Tax Law.

Finpinos oF Fact

1. Petitioner was, during 1965 and prior years, a domi-

ciliary of New York State.

A-2

Decision of State Tax Commission.

2. Until March 1, 1965, petitioner resided with his

parents in Yonkers, New York. He finished law school in

June, 1964, and worked for a New York City law firm until

February, 1965. He applied for a direct commission into

the Air Force Reserve and received a commission in Janu-

ary, 1965.

3. On March 1, 1965, petitioner reported to his duty sta-

tion at the office of the General Counsel, United States Air

Force, Pentagon Building, Washington, D.C. From March

until November, 1965 he rented an apartment in Arling-

ton, Virginia under a six month lease. He then moved

to another rented apartment in Alexandria, Virginia which

he held under a yearly lease and which he kept until 1967.

Botmapartments were chosen so as to be suitable after

petitioner’s planned marriage in September, 1965.

4. Petitioner spent more than 30 days in New York

State between January 1, 1965, and February 28, 1965.

He spent no time in New York State between March 1,

1965, and December 31, 1965.

5. The deficiency amounts to $50.75 inclading interest.

The refund claimed is for withholding tax in the amount

of $35.20.

ConcLvusions oF Law

Petitioner was a New York resident, as defined in sec-

tion 605 of the Tax Law, for the entire year 1965 and

was not entitled to file a return for part of 1965 under

section 654 of the Tax Law as a nonresident. Petitioner

did not change his domicile during 1965. Furthermore,

he remained a New York resident since he had no place

of abode outside of New York for the entire year 1965,

and he did maintain a place of abode in New York for

7

Ams

Decision of State Tax Commission.

part of such year. We must reject petitioner’s argument

that he satisfied the conditions of section 605(a)(1) when

only the latter part of 1965 is considered and that there-

fore he should be considered a nonresident for that part

of the year. The acquisition of a new place of abode or

the abandonment of an old place of abode during a tax-

able year does not cause a change in residence during such

taxable year.

The provisions defining residence in terms of permanent

place of abode were added to the income tax law (see

section 350 subdivision 7 of Article 16 of the Tax Law,

the predecessor of section 605) by Chapter 425 of the Laws

of 1922 to affect only those individuals who continuously

from year to year claim a domicile in one state but actu-

ally maintain a home in another state with some degree of

permanence. These provisions have beén interpreted to

mean that the requisite permanent place of abode must

exist for the entire taxable year.

The further provisions added by chapter 462 of the

Laws of 1934 relating to New York domiciliaries and im-

posing the duel requirement that a domiciliary maintain

no permanert place of abode in New York and maintain

a permanent place of abode outside of New York have

been interpreted to impose two separate requirements re-

lating to a permanent place of abode each of which must

be met for the entire taxable year in question and neither

of which has been met by this petitioner. The provisions of

section 654 of the Tax Law relating to two returns thus

apply only where there is a change in residence by reason

of a change of domicile during the taxable year. These

provisions have never been held to apply where there is

only an acquisition or abandonment of a place of abode

even though they were added to the predecessor of section

654 (section 367-a of Article 16 of the Tax Law) by the

same law (chapter 425 of the Laws of 1922), that de-

A-4

Decision of State Tax Commisston.

fined residence in terms of a permanent place of abode.

This construction of the law has been upheld by the courts

in People ex rel. Mackell v. Bates, 278 App. Div. 724.

DEcIsION

ot

The petition is denied. The refunds are denied. The

deficiencies are affirmed together with such interest, if

any, as may be due under section 684 of the Tax Law.

Dated: Albany, New York, March 16, 1972.

STATE TAX COMMISSION

/s/ Norman F. GaLLMan -

Commissioner ©

/s/ A. Bruce MANLEy

Commissioner

/s/ Mitton KoeRNER

Commissioner

B-1

APPENDIX B

MEMORANDUM DECISION OF THE APPELLATE DIV-

ISION, THIRD DEPARTMENT, OF THE NEW YORK

SUPREME COURT (No. 25356, dated October

23, 1975)

(Captions omitted)

Proceeding pursuant to CPLR article

78 (transferred to this Court by order of

the Supreme Court at Special Term, enter-

ed in Albany County) to review a deter-

mination of the State Tax Commission

which denied petitioner's application

for a redetermination of a deficiency

and for a refund in personal income tax

for the year 1965.

Individuals subject to the New York

personal income tax are classified as

either residents or nonresidents as those

terms are defined by Section 605 of the

Tax Law. Section 654 of the Tax Law

governs those situations in which an

individual's status as a resident or a

nonresident changes during his taxable

B-2

year. Claiming that his former resident

status had changed during 1965, petition-

er invoked section 654 and computed his

tax liability for that year under its

provisions. The Tax Commission disagreed,

determining that a higher tax amount was

due from him as a resident, and this

proceeding ensued when petitioner's

application for a redetermination of a

deficiency and claim for a refund was

denied.

The facts are undisputed. Peti-

tioner remained a New York domiciliary

throughout the tax year in question

although he left his former permanent

abode in Yonkers on March 1, 1965 when

he entered military service. For the

balance of that year he maintained a

permanent abode at different locations in

the State of Virginia and did not return

to New York. Sometime after 1965 he

B-3

abandoned his domicile in this juris-

diction.

Insofar as it relates to this case,

a resident individual is defined as one

"# # # who is domiciled in this state,

unless he maintains no permanent place of

abode in this state, maintains a perman-

ent place of abode elsewhere, and spends

in the aggregate not more than thirty

days of the taxable year in this state"

(Tax Law, Sec. 605, subd. / a 7, par.

/-1_/). Petitioner insists that since he

met the conditions of exception after

March 1, 1965, his status had changed to

that of a nonresident during the tax

year. The Tax Commission, on the other

hand, interprets the conditions of ex-

ception as applying to an entire taxable

year and concludes that, when so measured,

petitioner failed to remove himself from

the resident classification during 1965

B-4

because he maintained a permanent abode

and spent more thar 30 days in this

State. Under this construction, as peti-

tioner correctly observes, it would be

impossible for him to effect a change in

his resident status during any taxable

year without making a corresponding

change in his domicile. However, merely

because section 654 of the Tax Law

contains a procedure to be followed when

a change in status occurs during a tax

year, it does not necessarily follow

that such a change is thereby authorized

or made possible in every circumstance.

We cannot say that the Tax Commission's

interpretation of these provisions is

irrational or unreasonable since it is

entirely consistent with prior case law

on related topics (Matter of Kritzik v.

Gallman, 41 A D 2d 994; People ex rel.

Mackall v. Bates, 278 App. Div. 724;

B-5

Matter of Rothfeld v. Graves, 264 App.

Div. 54, affd. 289 N.Y. 583). Accordingly,

its construction must be upheld (cf

Matter of Howard v. Wyman, 28 N Y 2d 434,

438).

Determination confirmed, md petition

dismissed, without costs.

SWEENEY, J. P., KANE, KOREMAN, MAIN

and LARKIN, JJ., concur.

C-1

ORDER OF NEW YORK COURT OF APPEALS DIS-

MISSING APPEAL SUA SPONTE (3 Mo. No. 424

SSD 39, dated April 28, 1977)

(Captions omitted)

The appellant having filed notice of

appeal in the above title and due con-

sideration having been thereupon had, it

is

ORDERED, that the appeal be and the

same hereby is dismissed without costs,

by the Court sua sponte, upon the ground

that no substantial constitutional ques-

tion is directly involved.

S/ Joseph W. Bellacosa

Joseph W. Bellacosa

Clerk of the Court

D-1

NEW YORK COURT OF APPEALS--ORDER TO SHOW

CAUSE CONTAINING TEMPORARY STAY (Clerk's

File No. 601; Index No. 7478-73; dated

July 26, 1977, entered July 28, 1977)

(Captions omitted)

Upon the annexed Petition of

Appellant herein by his attorney, John

Lane, Esq., verified the 24th day of

July, 1977, and upon all papers filed

and proceedings heretofore had herein

and due deliberation having been had, it

is

ORDERED, that the Respondents

herein, constituting the State Tax

Commission of the State of New York,

show cause before this Court at a session

thereof to be held at Court of Appeals

Hall in the City of Albany, on the 29th

Gay of August, 1977, at 10 o'clock, a.m.

on that day, why this Court should not

vacate, or stay the operation and effect

of, its Order entered herein April 28,

D=-2

1977, dismissing sua sponte the appeal

then pending herein fully briefed and

adhere to its prior determination of

July 16, 1976 herein, that "* * *® this

appeal will continue in its normal

course and the Court will not act sua

sponte * * #," but without prejudice to

the consideration of any question @

subject matter jurisdiction which it may

deem warranted at the time of oral argu-

ment; and sufficient reason appearing

therefor, it is

FURTHER ORDERED, without objection

by the Respondents, that the operation

and effect of the Order of this Court

dated and entered herein April 28, 1977,

by and is hereby stayed in all respects

until ten days after the service upon

counsel for Appellant of an order deter-

mining this application; and it is

FURTHER ORDERED, that service of

D-3

this order to show cause shall be suffi-

cient if made by mail upon Louis J.

Lefkowitz, Attorney General of the State

of New York, attention Francis V. Dow,

Esq., Assistant Attorney General, Depart-

ment of Law, Capitol Building, Albany, New

York 12224, on or before 6 p.m. o'clock

on the 28th day of July, 1977.

Dated: New York, N.Y.

July 26, 1977

S/ Jacob D. Fuchsberg

Judge

(Stamp: )

That service of a copy of this order

be made as aforementioned on or before 6

p.m. July 28, 1977, and the original

order be filed, with proof of service,

immediately after service, in the Office

of the Clerk of the Court at Albany by

certified mail, return receipt requested.

S/ J.D.F.

E-1

ORDER OF NEW YORK COURT OF APPEALS DENY-

ING MOTION FOR VACATION OF SUA SPONTE

DISMISSAL (3 Mo. No. 880, dated September

9, 1977)

(Captions enteved)

A motion having heretofore been

made upon the part of appellant to vacate

this Court's order of dismissal dated

April 28, 1977 &c., and papers having

been submitted thereon, and due delibera-

tion having been thereupon had, it is

ORDERED, that the said motion be

and the same hereby is denied.

S/ Joseph W. Bellacosa

Joseph W. Bellacosa

Clerk of the Court

F-1

NOTICES OF APPEAL

(Identical Notices of Appeal filed on

December 6, 1977, in the New York Court

of Appeals (Clerk's File No 601, Index

No. 7478-73) and in the Appellate Divi-

sion, Third Judicial Department, of the

New York Supreme Court (Index No. 7478-

73))

(Captions omitted)

NOTICE OF APPEAL TO THE SUPREME COURT

OF THE UNITED STATES

NOTICE IS HEREBY GIVEN that John

Lane, Jr., the appellant above named,

hereby appeals to the Supreme Court of

the United States from the final order of

the Court of Appeals of the State of New

York, dated and entered in this proceed-

ing on April 28, 1977, dismissing the

appeal then pending before it from the

final order of the Appellate Division

of the Supreme Court, Third Judicial

Department, dated and entered in the

office of the Clerk of said Court on the

27th day of October, 1975, confirming

F-2

a determination of the Respondent State

Tax Commission of the State of New York,

and dismissing the petition in this pro-

ceeding.

This appeal is taken pursuant to

28 U.S.C. Sec. 1257(2).

Dated: New York, N.Y.

December 5, 1977

Yours, etc.

JOHN LANE, ESQ.

Attorney for

Petitioner-Appellant

Office & P.O. Abdress

14 Wall Street

New York, N.Y. 10005

(212-233-7780)

(Addressees shown as Attorneys

for Respondents and the Clerks

of the respective courts)

G-1

LETTER FROM APPELLANT TO PRESIDING JUSTICE

OF APPELLATE DIVISION, 3RD DEPARTMENT,

DATED OCTOBER 1, 1975

Re: Lane v. Gallman, Index No.

7478-3 Argued September 17,

1975, No. 25356

Honorable Sir:

Respondents (brief, p. 10) referred

the Court to "The New York State Personal

Income Tax," by John Chalmers, Ph.D.,

(1948), pp. 30-42.

Nothing therein conflicts with our

view of the law as set forth in Petition-

er's main and reply memoranda. In fact,

the meaning of such words as "non-resi-

dent" and "domicile" as understood in the

years when they were being incorporated

into the statute (sepp. 34 and 35) are

completely in accord with Petitioner's

position.

One of the sources cited by Chalmers

is a symposium of eight articles with an

introduction by Roswell Magill on State

G-2

Income Taxation published in the Iowa Law

Review (Vol. XXII, No. 2, 1937, copy of

which has been made available for the

convenience of the Court). Helpful here

are:

1. "State Jurisdiction to Tax Income,"

by Henry Rottschaefer, Professor of Law,

University of Minnesota (p. 292, espec.

pp. 310-311, and cases cited: Kennedy v.

Com'r. 256 Mass. 426, 152 N.E. 747, 1926,

Greene v. Wisconsin Tax Comm., 266 N.W.

270, Wis., 1936)

/ The most recent decision on the

same problem as, and in accord with, the

Kennedy case, supra, was the case cited

to the Court on argument: District of

Columbia v. Davis, C.C.A.-D.C. (1967),

371 Fed. 2d 964, cert. denied, 386 U.S.

1034, 87 Sup. Ct. 1487, 18 L. ed. 2d 598 7

2. “Administration of the Personal

Income Tax Law in New York State," by Roy

G=3

H. Palmer, First Assistant Director, New

York State Income Tax Bureau (p. 313),

espec. "Residence" pp. 322-326.

None of the foregoing mentions the

addition of Sec, 367-a (predecessor to

Sec. 654) to the Tax Law by Chapter 425

of the Laws of 1922 (copy enclosed). It

obviously relates to the subject matter

referred to by Rottschaefer (see Item l,

supra).

Respectfully yours,

S/ John Lane

(Copy shown to Attorneys

for Respondents)

H=-1

APPENDIX H

FINDINGS OF FACT AND OPINION OF

THE DISTRICT OF COLUMBIA TAX COURT

(FILED DECEMBER 22, 1965, DOCKET NO. 1969)

[Captions omitted]

FINDINGS OF FACT AND OPINION

The assessing authority of the District of Columbia as-

sessed the petitioner a deficiency in income tax from which

he here appeals on the grounds (a) that it is statutorily in-

valid, and (b) that it is unconstitutional. The respondent

claims that the assessment was proper.

Findings of Fact

1. The petitioner is a domiciliary of the District of Colum-

bia, residing at 4000 Tunlaw Road, Northwest.

2. (a) Up to and ineluding March 31, 1963, the petitioner

was a domiciliary of Michigan, residing in the City of De-

troit, and as such he paid an intangible personal property

tax to Michigan in the amount of $26.71, and an income

tax to the City of Detroit in the amount of $45.41, or a total

of $72.12.

(b) During the above three month period the petitioner’s

income was $5,142.42.

3. On April 1, 1963, the petitioner came to the District of

Columbia and established his residence here, and has since

that date been domiciled in the District.

4. The petitioner filed with the assessing authority of the

District an income tax return for the period from April 1

to December 31, 1963, in which he reported adjusted gross

H-2 (12a)

not decline to pass on the constitutional question, 16 C. J. 8.

319, 320 and 321, Constitutional Law, par. 94.

If, as the petitioner claims, the assessment of an income

tax on his income earned before he came to the District is

invalid, it must be under the due process clause of the Fifth

Amendment. Wright v. Davidson, 181 U. S. 371, 384, 45 L.

Ed. 900, 21 S. Ct. 616, 621; Moses v. United States, 16 App.

D. C. 428, 434, 50 L. R. A. 532; Neild v. District of Columbia,

71 App. D. C. 306, 316, 317, 110 F.2d 246. While the Four-

teenth Amendment is not applicable to the District of

Columbia,’ the Fifth Amendment does so apply.

There can be no question that a state and the District of

Columbia can constitutionally impose an income tax on a

resident based upon or measured by his entire income, even

it part thereof is received or earned without the state or the

District. That is so beeause the state or the District has

jurisdiction of the person of the taxpayer. It is recognized

that a state or the District of Columbia has the constitu-

tional power to impose an income tax when it has juris-

diction of cither the person or the income of the taxpayer.

But the situation is quite different in respect of income

carned when the taxing state or the District has no juris-

diction of cither the person or the income. That is the

situation here in respect of the income earned by the peti-

tioner before he came to the District. The assessing au-

thority assessed an income tax upon the income earned by

the petitioner without the District and while he was neither

a resident nor a domiciliary thereof. The Count believes

that under the due process clause of the Fifth Amendment

such action was without the power of Congress as the legis-

lature for the District to impose the tax; and that since such

uction was called for in Scetion 1 of Title VI and Section 1

- The ruling in Bolling v. Sharpe, 47 US. 497, 98 L. Ed. 88i, 74 8. Ct. 693,

cited by petitioncr, may appear to be contrary, but the ruling was to avoid a

constitutional hurdle m a schoo! discrimination case, and apparently was quite

linaited to such cases. It was held the discrimination was violative of “duc

process

H-3 (13a

of Title X of the District of Columbia Income and Franchise

Tax Act of 1947 (Section 47-1567 and 47-1580 of the Code)

are violative of the Fifth Amendment in so far as the situ-

ation or status of the taxpayer and assessment of the income

tax on his income earned from January 1 to March 31, 1963,

are concerned.

Since the due process clause of the Fifth Amendment does

apply to the District of Columbia, the decisions of the Fed-

eral and State Courts involving the due process clause of

the Fourteenth Amendment are helpful in the solution of

the constitutional question here presented. In Shaffer v.

Carter, 252 U. S. 37, 64 L. Ed. 445, 48 S. Ct. 221, Mr. Justice

Pitney made the observation following:

‘*And, as far as the question of jurisdiction is

concerned, the due process clause of the l’ourteenth

Amendment imposes no greater restriction in this

regard upon the several States than the corres-

ponding clause of the Fifth Amendment imposes

upon the United States.’’

In New York, Lake Erie € Western 2. R. Co. v. Pennsyl-

vania, 153 U.S. 628, 38 L. Ed. 846, 14 S. Ct. 952, it was held

‘*that the power of the state, even in its power of taxation,

in respect to property, is limited to such as is within its

jurisdiction.’’ CF. Wallace v. Hines, 253 U. 8. 66, 64 L.

Ied. 782, 40 S. Ct. 435, and The City of St. Louis v. The Wig-

gins Perry Co., 11 Wallace 423, 20 L. Ed. 192. Also Green

v. Wisconsin Tax Commission, 221 Wise. 531, 266 N. W. 274;

Martin v. Gage, 281 Ky. 95, 134 S. W. 966. In the famous

case of State Tax on Foreign-Ileld Bonds, 15 Wall. 300,

there is found on page 319 this language:

‘‘The power of taxation, however vast in its

character and searching in its extent, is necessarily

limited to subjects within the jurisdiction of the

State.’’

K-4 (I4a)

In respect of, or in connection with the income of the pe-

titioner earned by him without the District of Columbia

from January 1 to March 31, 1963, the District did not have

jurisdiction of either the person or the income of the peti-

tioner. :

There is nothing in Neild v. District of Columbia, 71 App.

D. C. 306, 110 F. 2d 246, or in Mercury Press v. District of

Columbia, 84 U.S. App. D. C. 203, 173 F. 2d 636 (cert. den.

337 U.S. 931) that would deny the conclusion drawn herein

by the Court. In the first case the taxpayers unsuccessfully

invoked the commerce clause, and equal protection clause

of the Fourteenth Amendinent in a case involving com-

merce between the District and areas outside and retroac-

tivity. The second mentioned involved the propriety of

the taxation by the District of newsprint paper in its origi-

nal package. The constitutional question here presented,

is one of first impression.

While in the Neild case it was held that ‘‘when it legis-

lates for the District, Congress acts as a legislature of na-

tional character’’, the opinion does state that Congress in

legislating for the District is subject to those prohibitions

of the Constitution which act directly or by implication

upon the Iederal Government,® which includes, of course,

the due process clause of the Fifth Amendment.

The conclusion of a note, JURISDICTION TO TAX

INCOME AS AFFECTED BY CHANGE OF DOMICILE,

35 Harvard Law Review, page 876, after a discussion of the

problem, is the following:

‘Tt appears thus that, regardless of the charac-

ter of the tax its laws impose, the jurisdiction ‘of the

state of the new domiecil to tax income is limited

except in the rare case mentioned?® either by the ac-

tual lack of jurisdiction or the prohibition on its

exercise placed by the Fourteenth Amendment, to

871 App. D. C. page 310.

®Not sioilir to the present case.

H=-5 (da)

the levy of a tax on or with respect to only so much

of the total income as was acquired after acqui-

sition of the new domicil.’’ (Emphasis supplied.)

The fact that Section 5 of Title VI of the Income and

Franchise Tax Act, Section 47-1567d(a) of the Code, gave

a credit against the 1963 District income tax for the income

tax paid by the petitioner to his former domicil on the in-

come which he earned from January 1 to March 31, 1963,

does not negative or affect the conclusion herein reached.

Even if the credit had equaled or exceeded the deficiency,

which it did not, the due process clause of the Fifth Amend-

ment did not permit the taxation by the District of incoine

earned in a period during which it had no jurisdiction of

either the person or the income of the petitioner.

Conclusion

For the reasons stated the Court holds that a deficiency

in income tax for the calendar year, 1963, in the amount of

$125.18, was erroneously assessed against, and collected

from the petitioner; and that the petitioner is entitled to

a refund thereof, with interest thereon at the rate of 4 per

eentum per annum from March 15, 1965, to the date of the

payment of the refund.

Decision will be entered for petitioner.

s/ Jo. V. Morgan

Jo. V. Morgan

Judge