Petition for Writ of Certiorari — McGoldrick v. Felt & Tarrant Mfg. Co.

Supreme Court brief1940

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Text

MLY. e:

‘

‘amis ae

Term, 1938

Soom ag th, Sa

JOSEPH D. McGOLDRICK, ‘Comune of the City of New York,

. . Petitioner,

against ; a

FELT & TARRANT MFG. co. “

| Uri te EL mune caer EY; .&

steals diiRed hh pa _

FILE COPY. Asem

_ PETITION FOR WRIT OF CERTIORARI TO THE

“SUPREME COURT OF THE STATE OF NEW

YORK, AND. BRIEF IN SUPPORT THEREOF

Application of Comme Clause to consumers’ sales tax on'sales in |

New York City of dise shipped from sources of supply out- °

- side ‘the State. Error of ‘holding that tax is invalid where non-

discriminatory, and possibility of multiple taxation is absent, Error

of holding that sales made in city dre in interstate commerce merely

because seller for its own convenience chooses to ship from outside :

the State. Holding of court below (1) discriminates against local |

_ business by giving unfair’ competitive advantage to sellers, storing

~ merchandise outside the State; and (2) setiously diminishes local _

tax revenues, by creating extensive immunities and fostering tax

idance and evasion. Conflict between decisions of state courts. -

pi oe a - ie °

‘ May 3, 1939,

Es 3 Witttam C. CHANLER,,

van . © Paxtow Bvarr,

. Sov CuHarves Levine,

ay Counsel for Petitioner,

Municipal Building,

“~. «5

e- * . Borough of Manhattan,

” ere City of New York.

Epmunp B. HENNEFELD,

-¢ Mutton SANDBERG,

JEROME R. HELLERSTEIN,

IM Counsel.

\ \ ~Jovul Printing Ces Tacs 130 Codar St, New York ages?

* .

INDEX

_ Perition: PAGE .

Jurisdiction and timeliness PR nen Enea OS tere 2

Statute the validity of whieh i is involved eon edbiaened 4

Opinions below ~..............-i.c.....cnceanne +

Summary statement of the matter involved ........... 2

Questions presented .................. stanpsis waar meaniaiiseapmeaanaas a aes

Assigninent of errors ..:............ Season siteinadnecicabaine Ae

Reasons for allowance atc Sn ee «6

Breer: | ae. cece ay . .

Statément of the case ..... wcdivess ay ‘eile saldabisaadl steamed ee

Assignment of errors (........-ss:ccccsopssssscssssesssepesnseeegesssues 13

Argument: . |

. —t. The New York City sales tax as applied to

we the respondent’s sales, does Sot impose an

: invalid burden on interstate commerce ........:: 13° >

There-is no undue burden on interstate

tpg Metical. ANION RN i PATS :

Comparable .taxes have always been up-

oe held © ........ II Cg a Boa es ae ee D co “$6

2. Respondent’ s sales do not "require or neces- >

_. ,sarily inyolye interstate shipment,.as that

phrase issused in Wiloil ve v. _Pennsyl-

> vanta Dike Mircssith icles asec. socal pauline Reine 19

Conclusion rich apiece ee. See race oP Serato 2

Appendix A. Provisions of local law... =

Appendix B: Provisions of state enabling aet........ 3

Appendix (1 Memorandum opinion of Court

Ee ea Te ' of Appeals in Felt & Tarrant

GR: ctcticineteciai ees 46

2. Opinion of Appellate Division in

“Felt & Tarrant case

Opinion of Court of Appeals in

- Compagnie | fienerale _Transat-

lantique, Case ....gp......22-.Kiccerrescenieceee 50

See. 4. Opinion of Court of Appeals in’

a. - .- Sears, Roebuck case ; 6

, aN re

ll o ' Pe

2.4

Table of Cases Cited VA

7 ° eye ) gz PAGE

Banker Brothers v. Pennsylvania, 999 U.S, 210.7, 4%,

eee ee ae | 61

Coverdale v.. Arkansas-Louisiana Pipeline Co., 303

ee A II in ikea atch ee Dien cctcanetariozecen Re 13, 61

Edelman rv. Boeing Air Transp, bg 289 U.S. 249, sacha 17; 55 *

Felt & Tarrant Mfg. Co. v. Gallagher, 305 U.S. 15, 16, 17 ©

Gregg Dene Co. v. Query, 286 U. St 472 oon eccnepes: - 17

(iwin, Whffe & Prince 2 ) cee 3 U.S. 434. 3, 1 15

Henneford v. Silas Mason Co.,: hg.-577..... aia “16, ce

“Hinson v. Lott, 8 Wall. 148.0000 02 csssceseseneeee oct

J. Bacon. & Sons v. Martin, 305 U. S, 380. tnt nel

J..D. Adams Mfg. Co. v.,Storen, 304 U. S. | 13, 61

Lewis v. City of Bluefield, an W. Va. 782,188: S.-E.

cB cei ice restore ccc, 8

Matter of C. tunther’ s Sons v. McGoldrick, 279

ne DOR. sdoticsciiinaasle TS es SAM RSIOPIS De Ne Cae :- ao

Matter of Compagnie Gisesale THansatlantique ». Me- pe

oo eB aR ae | ance. | SSMU AUPE 2,4 *

Matter of National Cash Register Co. v. Taylor, 276 .~.

Se ee gS ER i 46, 49, 61

Matter of Sears, Roebuck & Co. us: MeGoldrick, 978

ca 2,4, 51, 52, 53, 54, 55

Matter of West P ublishing Co. vr. Tay lor, 276 N. Y.

RASS oD TERETE: TECEEOO Deere OF Cee C2) emai a a 61 ~

Milk ( ‘ontrol Board v: E isenberg Ferm Produets, 306

US Sea eee iad staeekdunatelenetioasddtedescecruscewdessane stwhSewanidecascceess 2 Sin

ee Minnesota r. Blasius, 290. tr, TE Aceceianisaoicce) Mites

-~ Monamotor Oil Co. v. oe ai ee 14, 15,17, 615°, o.

_Moore rv. N. LY. Cotton Exchange, 270 U.S. 593... 20 = es

Nashville, C.& St. ‘L. Railway Co. vr. W allace, 288 oe.

C2. 2... PRA lic tsssrashcootciuent aha a?

9 ~ rs } sb iii

PAGE

Pacific Telephone & Telegraph Co. v. Gabi: 305 -

Pict I A aes 16

Postal legraph Cable-Co. ads of Richmond, 249 °

" @U. 8. ccna oe OE.

Southern Pacific Company.v. Gallagher, 305 U.S Sareea

sn ae UT cet iehdnmin hrdebecaseeininiaiabtntelaciceobtanasinade re 18 —

Ware & Leland v. Mobile Counts, 209 U. S. 405........... 20

‘wee Live Stock v. Bureau, 303 U. S. ‘250 a +13, 16, 61

Wiloj}. Corporation: v. Pennsylvania, 294 U. S. 169... 5,6, +

\ 14,16, 19,55, 61

__ Woodruff fv. Parham, 8 SRE | 20

x oo. Index to Statutes, ete. %

Ci ivil Practice Act, Art. 76 .«..... PEMA eat RCO fires erie 3, 90

Comptroller’s Regulations, Art. 94 eID Phicceunendled 12

Laws of California of 1935 oe ecccseeeeeeeeeeenqecteceeeee 17,

Kaws of California of 1937 ......»....1....... sccemeintiidialalne aa

Laws of: New York of 1934, ch: 873° eee rears 4, 43, 56

— Local Law No. 20 of 1934 .:.........4;7, 13, 17, 46, 47,.49, 51, 56

Local Law No. 24 of 1934 3 FESR eA: 4, 22, 46, 47, rg ae

RADUIE TGTW DOG, Te OE FI ics scciececneseseceencoweseoptvoreornemnmsonees 40

US.C.A., Title 28, §344, subd. (b) ...250..0..0.0.ceeeeee no ae 2,8

U.S. Constitution, Commerce Clause . 3, 4, 6, 7

: :

» SUPREME COURT OF THE ‘wwTED STATES

ae : Octower TERM, 1938 re

% ; ; ZS

Be ee

oe p/ " MoGotonigft Comptroller “

. the City of New York, .

Petitioner;

against

yt ie ae

Fett & Tarrant Mrc. Co.

Petition for Writ ‘of Certiorari to hese Court

. of the State of New York

To the Rinesilis the Supreme Court of the United States:

e a The petition of Jéseph D. McGoldrick, Comptroller of

the City of New York, Tespectfully shows:

1. Your petitioner’ is the Comptroller of the City of

_* New York, charged by law- with the duty of enforcing the

tax laws here involved. | In conformity with the ‘law ee

New York, your ‘petitioner was duly -stbstituted, prior’

to the decision, of the Court of Appeals sought to be

Teviewed, in place ‘and stead of Fran : J. Taylor, the

former Comptroller, who made the’ origina] determinatiort

of tax liability against the taxpayer. | The petition seé!

.Teview of a decision of the Court of Appeals of the: Staff

of New York holding ‘that, by virtue of the Commerce

Clause, the New York. City sales tax could not be imposed

upon respondent’s sales of comptometer adding machines

- . e . , 5

it A

. ae be

= involved in its na ee ee

| to New York Citys pure Sines, The federal. question was,

‘ind the Court so stated i in ifs remittitur, the sole question

2. The present’case is a companion case to Matter of.

Compagnie Generale Transatlantique v. McGoldrick, 279-.

N. Y. 192; decided an thé ‘saine ’ date, where the tax was —

. likewise invalidated. — A petition. for certiorari in that

- case is being presented together with the present petition..

On the same date was also decided Matter. of Sears, Roe-

buck & Co. Vv. McGoldrick, 279 N. Y. 184,’ rearg. den. 280

_N. Y. mem. p. 76, in which case) however, the tak was

upheld as not violative of the Commerce Clause.

Jurisdiction and Timeliness

a’ The petition for certiorari is made pare 28

SINS.CA., §344, subd. (b); the Court has jurisdiction. to.

grat the writ. “Minnesota v. Blastis, 290 U. S.-1 (1933);

ips Control Board vy. Eisenberg F dim siiniasib gh 306

U. , 09: S. Ct. 528 (1939).

-4. A final order and judgment weré entered in the

office-of fhe. County Clerk of: New York County, on De-

cember 15, 1938, upon the remittitur of the ‘Court of

Appeals filed on December 12, 1938, and upon the order. - - |

of the Supreme Court of the State. of New York, dated

December 12, 1938, making the order and "judgment. ‘of the

‘Court of penn te order of the Supreme Court. There-

after, by order of Mr. Justice Stone, dated February ll, -

. 1939, the petitioner’s time to petition this Court for cer-

tiorari was, exte for a period of sixty days ft rom Feb-. >

-ruary 27, 1939; and, by order of. Mr. Justice Stone, dated

Age 1971939, such time was — extended for a period:

ee ‘3 3. 6

; .

‘of: sixth ‘days from March 15, 1939, which latter date was:

within three months of the priginal entry. of the final

_ order and judgment on December 15, 1938. .On April 3,

1939, petitioner duly filed with the Court of Appeals a

motion for reargument and to aménd the remittitur. On

April 11, 1939, the Court of Appeals. denied, the motion

for reargument_ but granted tle motion’ to amend. On

April 26,1939, dn order was entered in the office of the .

County Clerk: of New York County, making the order of

- the-Court of Appeals ‘dated April 11, 1939,,the order of

the Supreme Court of the $tate of New York. The peti-

tion is*timely, either. by virtue of Mr. Justice Stone’s

orders. of extension, or because of the. decisidh zon the

motion for reargument, the- amendment of the remittitur

gn April 11, 1939, and the’ resultant necessity of entering

new w orders i in the: Court where the record lies. .

5. The detision of the Court of “Appeals was based

solely upon the ground that the tax as applied violated’

. the Commerce Clause of the Federal Constitutidy. This .

‘ground of objection to the tax was raised by the taxpay er

(respondent here) at the hearing before the petitioner to

* review petitioner’ S preliminary determination of tax-lia- *>

bility (R. 39). Thereafter, it was again raised in ‘the pro-

Reding brought in the Appellate Division under. Article 78

of the Civil. Practice Act of the State’ of ‘New. York

AR. 11-12). - The Appellate Horio sustained. the ‘objec- .

tien and annulled petitioner’s determination . (R. 121-124).

Upon further appeal to the Coutt of Appeals, it was the

sole objection urged by the taxpayeg in the Court of Ap- °

peals. ‘The’ remittitur, as amended, provides that the ©

. order. of. the Appellate _ Division Baca: from was ~

: affirmed, oo A

‘ °

¢ >.

ae :

e : "

- a."

upon’ the sole govund that the City“ ‘Sales Tax

‘ Law as here applied violates the Commerce Clause

(Art. I, See. 8, Clause 3) of the Constitution of. te :

United States re (280 N. x. mem. p.°

anf

The Statute the Validity of Which Is Involved,

6. The statute. the constitutionality of ° which .

involved is the New York City sales tax law, Local Law :

No. 20 of 1934 (officially printed at ‘p. 143° of Local Laws _

of the Citigs of the State for 1934 as No. 21), as amended.

by Local Law No. Pc of 1934 (officially printed at p. 164

as No. 25), and by Local Law No. 23 of 1935 (p. 138), all

enacted ‘pursuant to authority conferred by Laws of New

York of 1934, ch: 873, p. 1805. “These loca] laws, and the

enabling: -act authorizing them, have been and continue to—

be renewed annually. The provisions of the local law are

-printed as. Appendix A, .the provisions of the . state . .

enabling act, as ani B. ie re

Opinions Below a ot See

7. The tesmneegndiine opinion of the Court of — ,

is reported in 279 N. Y. 678, the opinion of the Appellate

‘Division in 254 App. Div. 246... ‘The opinions of the Court

of Appeals in. the companion Compagnie Generale Trans-

. atlantique case is in 279 N; Y, 192, which affirmed 254 App. .

- Div. 237. The opinion of the Court of Appeals in Matter

of’ Sears, Roebuck & Co. v. McGoldrick, decided on the

. same day- but: sustaining ‘the tax, is reported in 279 N. Y.

184, rearg. den. 280 N. Y. mem. page 76, the memorandum

. ‘opinion of the Appellate Division. in 254 App. Div. 669.

i Copies of the opinions of the Court of Appeals in the

' . threé vases and: of: the Appeliate Division i in this»case are .

attached hereto as o Aopen Cc.

po?

Sunsmsery Statement of the Matter Involved

‘8. The City sales tax law in question, imposes a non-

discriminatory tax of 2% upon every. sale of tangible per--

_ sonal property in- the City of New York, the tax being

- paid and borne by. the purchaser. A sale ‘is defined as:

‘‘any..transfer of title or possession or both’’; a retail

" gale as, a sale ‘‘for any purpose other than‘for resale’’

The Tespondent’s ‘sales which were the. subject of the ie |

were-made in a manner described more fully” in the sub- ©

joined brief. The sales orders were procured in New York

City and called for: the sale and delivery there of stand- ~ ;

‘ard items of equipment—comptometer adding machines—

sold ftom standard price ligts and not made up specially :

to fill a particular order. . Respondent had extensive stor-

age facilities at its New York City place of business where .

“it made a practice of testing and overhauling the thachines |

‘

after receipt from its Chicago plant and ‘before delivery

_to the customer. . However, it chose not to utilize these.

storage facilities but instead, drew the machines to’ fill the

orders from its ‘Cieago stock. oe ee

“Questions Presented. |

9. The questions presented. in the case are as follows:

(a) Does’ the New York, City tax as appli y

. * respondent's sales Gf comptometers im an

‘unconstitutional burden on ihterstate com-:

-merce? | Pn

(b) Do resp indent? s. antes of cpmptometers “require -

: or nécessarily involve transportation across the”

state ‘boundary’ -in.the sense in which those

words were used in Wiloil- Corp. v. Pennsyl-

ania, et Uy S. 169, 174 —

i> 2

- Assignment of Errors

10. «Iti is submitted that the Court of Appeals sila

(a) ie: ‘holding that ‘the New York City sales tax

as applied to the respondent’s sales constituted -

an unconstitutional burden on ‘interstate com-

merce.

(b) In holding that the sales which were the sub-

ject of the tax were contracts for: interstate

_ shipments, or otherwise required.or necessarily -

involved interstate commerce, giving in so hold-

ing an erroneous sas bless of the Wiloil

case, supra.

2 merce Clause to affirm the determination of the

Appellate Division, and annul petitioner’s s de-

termination of .tax liability. ae

Reasons for Allowance of the Writ

- The reasons relied on by petitioner for icbanee.

of bs writ are as follows: - ~.

(a) Petitioner contends ‘that in holding that the City

sales tax law a& applied to respondent's sales constitutes

an unconstitutional burden on interstate commerce the.

‘Court of Appeals has decided a federal question of sub-_

stance in a,way probably not in accord with the applicable

decisions of this Court, which we cite in_the ‘sukjoined

brief: for, the Court has held invalid a typé of local con-

sumers’ tax which (i) does not discriminate against. or —

otherwise burden .interstate ecommerce, and. (ij) is so lim-

ited ‘in its operation im. there i is no possibility of multiple

‘taxation. ‘or ; - ..

“second federal question of substance in a way probably

not in accord with applicable -decisions of this, Court.

Wiloil Corporation Vv. Pennsylvania, 294 U. S. 169 (1935),

and Banker Brothers v. Pennsylvania, 222 U. S,° 210

<1). as : ‘ >

\, (c) These are test cases. A great many "proceedings

are pending which’ await their final outcome. @arge num-

bers of purehasers and sellers and sums of money running

into millions of dollars annually are involved. In New

York City, in ‘particular, a huge business is done every

year in a tmhanner similar to: that: here described, for a

large number of. purchasers in the City of New York place: .

orders which, by reason, of the seller’s own choice or con-

venience, are filled from out- of-state sources...

jsion of the Court of Appeals unduly limits °

the taxing power of the States, andidoes so in such a way

as to Bive industries a motive for moving their plants or —

warehouses out of the State while maintaining selling offi- -

' ces within the State. By thus causing a loss of wealth and

employment to the State, it: will- bring’ about a shrinkage

of revenue from other taxes.

The Commerce Clayse should: ‘not be twisted into’ .a

device to prejudice local vendors by subjecting them to

unjustifiable competitive disadvantages ‘in their appeal

to the same local market. . A considerable number of states

and localities are imposing consumers’ taxes like the New |

York City sales. tax here involved, and “@Pe_undonbtedly

confronted with precisely the same question under the

C ‘ommerce Clause. ;

} g

(e) The decision of the Court of Appeals that re-

spondent’s sales taxed are in interstate commerce, con-

flicts with the decision of the highest court of the State

of West Virginia where a similar question was raised and

_-decided. Lewis v. City of Bluefield, 117 W. Va. 782, 188

S. E. 237 (1936). | petite

Wuererorr, petitioner prays that a writ of certiorari

may be issued out of and under tlie. seal of -athy wigs

- directed to the Supreme Court .of the State of New York, .

in and:for the County of New York, commanding that |

Court to certify and send to this Court, on,a day certain

to be therein designated, a full and compl: ‘te transcript

of the fecord and all proceedings of the said Court in this

cause, to the end that the case nay. be reviewed and deter-

mined in this Court, as provided in 28 U.S.C. A., §344,

subd. (b); and that the final order and judgment of the

_ said Court, and every part thereof, may be reviewed and

corrected by this Court in conformity with the ‘Constitu-..

tion and laws of the United States: and that the said final

order and judgment may be reversed and petitioner’s

original determination of tax liability on the part of the

respondent confirmed; and petitioner prays for such other

and further relief as to this, Court may seem just. and

proper; and petitioner. will ever pray.

Dated: New York, N. Y. May 3, 1939.

Josep D. McGotprick,

/ _ Comptroller of ‘the City of New York,

: Petitioner, orate : -

By ‘Sou. CuakLes Levine,

Counsel for. Petitioner,

Municipal Building,

Borough of Manhattan, — '

City of New York.

SUPREME count OF THE UNITED STATES

No. - Ocroser TERM, 1938 .

JosePx’ D. McGotprick, Comptrollez of

the seid of New York, Ga

etait,

“against

Feit & TarRANt Mrc. Co.”

BRIEF IN SUPPORT OF PETITION

_ FOR CERTIORARI

Seiten of the Case

The respondent is. an Illinois corporation engaged’ in

the ‘business of manufacturing and selling comptometer

- adding and. calculating .machines (R.° 39-40). Its factory

and main office are in Chicago. Together with the Comp-

tometer Company, its wholly owned subsidiary and agent,

it maintains a place of business in. New York City (RK 74,

64-66), and sells, rents, repairs, and services comptometers

and parts of comptometers (R. 101). |

| There is no dispute as to the taxability of any of these

activities except the sales of fully equipped comptometer —

machines by the respondent ‘to business offices in the New .

York City market (R. 39-40). As to’ these, the main fact

relied on is that, although the immediate source of the ma-

chines is the New York City stockroom, their original

souree is the Compagy’s Illinois factory (R. 58).

- 10

The Company has extensive storage ‘fecilities in New

York City. It always-has on hand there.between 250 and

300 comptometers in standard sizes,—an amount sufficient

to fill orders for six months ‘if the machines were new (R.

66-67, 75, 85, 108).. These it_testifred were used solely for-

loans to customers. pending arrival of new “machines from

Chicago, or pending repairs (R. 67-68). Despite these

-ample “storage facilities, respondent chooses to fill its

orders from Chicago stock. - | .

Comptometers are not specially built or manufactured -

_to fill a particular order (R. 49-50, 56, 66). They are of

only two general types: hand driven and electrically oper-

. ated, and they come in only four sizes (R. 66-67).

The sales in dispute are made in the following inanner :

| The orders taken by New York salesmen are sent .by

the New York office to Chicago (R. 55-56). Although these

‘orders are first mailed or brought to-the New York office,

they must, at the respondent’s insistence, be nominally ad-

dressed to Chicago’ (ibid.). But it‘is only after they have

been noted and entered in New York City that the New

York office sends them to Chicago (R. 43, 56). There is no

evidence that the customer knows either that the order is

- to be sent to Chicago, or that the machines will come from

there.

Order forms contain a printed statement that they are

subject to confirmation in Chicago (Taxpayer’ s Exhibit 1,

pp. 75-76). These forms contain no space for the indica-

tion’ of such confirmation (ibid.).* There is.no evidence

that the customer is ever informed that his order has or

has not “been confirmed. ~There is no evidence that the

Chicago office ever fails to confirm an order. Prices are

fixed, not in Chicago, but-in-New “York on the basis of a

standard price list (R. 57). The New York office fixes the

11 a

trade-in value of old machines (R. 82). The machine sold

is not specially built, but is a stock product (R. .66-67).

The requirement of Chieago confirmation serves ‘no pur-

~pose other than to check inaccuracies in price quoting ————

. “and to allow for adé@rtionat -eredit checking (R. 57). . 2

The Company packs the machine in a carton and ships.

it—not to the customer--but to-itself at New York (R. 58). °

The customer .-is’ not concerned at all with this delivery, is

not the consignee, is not covered by tlie insurance, and of

course, does not pay the freight (R. 70-71). The Com-

pany has no choice but to ship directly to its New. York

place of business rather than to the customer, because the

machine on its arrival here is not in a deliverable state

(R. 58-59). There is ‘‘a great deal of breakage’’ in tran-

gy sit which must be repaired in‘the New York workroom

_(ibid.). In addition; testing, overhauling and adjusting

must be done here (R. 65, 71). These activities may take

three or fout days, and ‘it is not until they are completed

that the New York office can make delivery to the customer

(R. | aoe : ‘

The Company’s obligation does not cease with its fest- _

ing and overhauling of the machine in New York. Each’

' contract of sale requires it, as an essential part thereof,

‘‘to keep the above Comptometer while in posses-

sion of (name of customer) in complete — repair for.

one year from date free’ of all charge for Tepairs”’

(R. 76, a0. 51).

“In this connection, respondent. once a wai for a full

vear after purchase renders a complete service of ‘‘in-

spection, ‘piling, cleaning’’ (R. 51-52, 66). Repairs: are

made and parts installed free of charge in.the New York

headquarters (R..60, 65, 72-73,.76). While the machine is

12 ~—

being repaired, the respondent supplies -without charge |

a substitute machine from dts New York stock (R. 69-70,

_=42).—Phis substitute machine, a replica of the one under

repair,,may be retained by the customer 30 day 8, more

orless (R. 69). 0.

During the first halt of the tax wid’ in question, the |

respondent carried on this work of servicing, overhauling

and repatzing directly, and employed a staff of mechanics

and technicians for this purpose (Documents Nos. 1-3 of ”

Comptroller’ s return, R. 101). In the second half of the

period, “the respondent organized a wholly-owned subsidi-

_ ary, the Comptometer. Vompany, which thereafter earried

on this work (R. 87, 73, 29).

Although the respondent concedes that it seine consid-

: erable local rentals and sales. of. parts, which are taxable,

it has never fulfilled the requirement of state law that it

qualify to do business. within the State (R. 87). In‘ the

middle of 1935, its subsidiary, the Comptometer Company,

received such authority (zbid.); But, both before and after

the appearance on the scene of the Comptometer Company,

the respondent engaged directly, and on its own account, in

“concededly taxable local transactions (R. 301-303).

The City sales tax imposed upon these sales is a general

“non-discriminatery tax of 2%. upon every ‘‘transfer of

. title or possession or both’, in-the City of New York, of

_ tangible personal property purchased for consumption and

not for resale. The tax is paid by the purchasér. It is

ordinarily eollected ‘by the vendor, but if not, is payable by

the purchaser directly to the petitioner as City Comp-

troller. As a matter of state law, the tax does not apply

where goods, although purchased in New York City, ate

to be delivered to“consumers outside the City. Article 94

of the Comptroller’s Regulations; Matter of C. G. Gun-

ass: aaa.

nal

ther’s Sons v. McGoldrick, 279 xv Y. 148 (1938). No

license : required of either purchaser’ or vendor as -a

‘condition of making the sale, : ag

Jurisdictional Statement and Assignment of Efrors |

The C ourt. will fifd these at pages 2 and 6 of the pets.

tion, supra, respectively.

ey s

"POINT I

_ The New York City sales tax, as winiias to-the

respondent’s sales, does not imipose an sosemaen bandon

aR interstate commieres.

The question is whether the tax as applied to respond-

ent’s sales imposes a direct and immediate burden on

interstate commerce. Such burden, to be the basis for in-

validation, wo ild .have to be actual and not merely the- . -

oretical. The main typés of applicable situations in which .

an unconstitutional burden has been found to be present

were recently summarized in Gwin, White & Prince -v.

Henneford, 305 U.S. 434 (1939). It is settled by that and<

other leading cases on the Subject that where a tax is non-

"discriminatory, and where it does not impose unwarranted

licensing? requirements, it will be upheld provided there is

‘no possibility of multiplectaxation. Western Live Stock

v. Bureau, 303 U.S. 250 (1938) ; J. D. Adams. Mfg. Co. v.

®Storen, 804 U. S. 307 (1938) ; Cov erdale Vv. Arkansas-

‘Louistana Pipeline Co., 302 U.S. 604 (1938) ; Gwin, White. -

& Prince v. Henneford, 305 U.S. 434 (1939).

Measured by these standards, the tax at leei is clearly.

valid: }

“pS

‘There is no enti burden on interstate commerce.

1. Purehasers from foreign vendors are required to -

_ pay the same tax as purchasers from*loéal vendors, ‘and

- nomore. Foreign vendors are placed under the same obli-

gation with respect to collecting the tax as local vendors:

Foreign products are not discriminated against. ‘ On the

other hand, local véndors, local products and local busi- ©

ness would be discriminated against were. the tax at bar

to be held invalid. | =

- Interstate commerce is not interfered with by the

imposition of unwarranted licensing requirements, condi- —

tions. precedent to: interstate selling, and the like. No

license is required of purchasers or vendors. If the pur- |

chaser omits to pay the tax, he is not forbidden to make

the purchase; the purchase takes. place just the same.

Fa)

3. Inthe case at bar there is no possibility of multiple

taxation. The tax is not one on the gross receipts of a

vendor imposed by the vendor’s State; it is on the pur-

chases of a local consumer. The tax 1s upon the purely

‘local acquisition of property in the local market.

With respect to analogous taxes on consumers, the

Court has already held. that the state in which the con-

sumer is may tax him. Thus, it has sustained the follow. -

‘ng consumer’s taxes imposed by the buyer’s state, viz.:

-a:motor fuel (sales) tax (Wioil Corporation v. Penn-—-—

‘sylvania, 294 ws. 169 [1933]), a use (sales) tax (Mona-

- motor Oil Co. vy. Johnson, 292 U. S: 86 [1934]),-a pag

ing’’ (sales) tax (J. Bacon & Sons v. Martin, 305 U.S

. 380 [1939]), or a property (sales) tax (Hinson v. Lott, a

Wall. 148 [1868]). On the other hand, the Court has

barred. similis taxes wil by the seller’s state Wd. dD.

Adams Mfg. Co. v. Staren, 304 U.S. 307 [1938]; Gwin,

White & Prince N. Henneford, = U. §. 4384 [1939]).

eSineé the tax on the sales at bar is imposed ‘by the pur-

chaser’s State and the tax could not be imposed on the ~

same sales by the seller’s State, there is no pasgiinnty of

double or multiple taxation. ed

Since. there is no possibility of multiple taxation, theie

‘is no: necessity for allocation, assuming allocation to

be administratively feasible in respect of a tax on a

‘purchaser-consumer.. The fact that multiple taxation

.is not possible itself results in a species of allocation:

New York City taxes New Work City purchasers on their

purchases in that City, and -llinois taxes Illinois pur-

_ chasers on their purchases there.’ Illinois could not claim”

the right’ to tax the purchasers of these comptometers on

their acquisition of property in New York City, any moré

than New York City could tax an Illinois purchaser on’

his acquisition of property in Illinois. The doctrine of

extraterritoriality | as well as that of _multiple taxation

would forbid such a result. : a

4. The decisions of this Court. have never gone so

far as to say that a company'doing some interstate busi-

ness may not, when it enters a foreign state, be compelled

to assume the. burden, borne by domestic sellers, of col-

lecting from its customers ‘and transmitting to the au-

thorities a sales tax imposed upon such customers by local

law. Cf. Monamotor Oil Co. v. Johnson, 292 U.S. 86 (1984) ;

Felt & Parrant,Mfg. Co. v. Gallagher, 305 U. S. , 59

Sup. Ct. 376 (1939). Otherwise, foreign ‘endian eis

obtain unjustifiable advantages over local competitors

oa f

6.’

* - »

who are reguired ‘ collect the 2% tax. Business would

be encouraged to flee the taxing state and seek a -point

of vantage in neighboring states from which to-make the

identical sales fige™ of tax. This) new forms of tax avoid-__

ance and evasjon would be fostered. There is no sound.

reason why respondent. should be permitted to escape the

sales: tax merely because it fills its orders from Chicago

stock instead. of — its adequate storage’ facilities

in. New York City. :

- 16

"Comparable einet have always been upheld.

So far as we are aware, this j is the first. case ne

to this Court in which it has been urged that a retail sales

tax levied upon a purchaser-consumer imposes an invalid

burden on interstate commerce. This “Court has never

held such a tax upon the purchaser invalid.

Moreover, so far as we know, this Court has -never

held invalid a tax imposed by the buy er’s state upon inter-

state sale measured by the value or volume of -the sales.

See, in this éonnection, the scholarly analysis of the cases

-in Locxuart, The Sales Tax in Interstate Commerce, 52.

‘Harvard Law Review 617,629 (1939). :

In every case where this Court has had beforé it.a

tax to which the City sales tax is at all comparable, it

has upheld the tax against attack based uponethe Com-

merce Clause.: Felt € Tarrant Mfg. ‘Co. v. Gallagher, 305

U.°8..” ~ ,°59 Sup: Ct. 376 (January - 1939) ;

Southern Pacific Company v. Gallagher, 305 U. ,

59 Sup. Ct. 389 (January 30, pag Pacific ey &

Telegraph Ca. v. Gallagher, 305 U. . % , 59 Sup. Ct.

396 (January 30, 1939); J. Bacon 2 Sons v. Martin, 305°

- U. S: 380 (January 3, 1939); Western Live Stock v.

’ Bureau, 303 ie . 250. (1938); Henneford v.. Silas Mason <..

Co., 300 U.S. 577. (1937); Wuoil- Corporation v. Pennsyl-

& : : “

—vania, 294 U. S. 169 (1935); Monamotor Oil, Co. v. John-

son; 292 U.'S. 86 (1934); Edelman v. Boeing..Air Transp.,

289 U. S. 249 (1933) ; Nashville; C. dé St. L. Railway Co. v. 3

Wallace, 288 U: S. 249 (1933) ; Gregg Dyeing Co. v. Query, -

286 U. = 472 (1932); Banker Brothers v. Pennsylvania,

292 U. S. 210 (1911); Woodruff v. Parham, 8 Wall. 123.

(1868) ; Hinson v. Lott, 8 Wall. 148 (1868). } Ay

The above are’ all instances of non-discriminatory local

taxes applied to ‘transactions connected with interstate |

‘. ecommerce. In almost all, the burden of the tax fell on the

local purchaser-consumer. In almost all, it may bé:added,

the tax was measured by the value or volume of ‘the’ sales.

'.The New York. City sales tax’is not distinguishable in any.

material particular from most of the taxes — in the

cases cited above. - . ‘

The New York City.sales tax is, mor¢over, enitbeid:

- ‘in substance with. the California tat ( Cal. Laws of 1935,’

« ch. 361, as amended by Cal. Laws of. 1937, chs. 401, 671

'~and 683) sustained in Felt & Tarrant Mfq.:Co. v. Gal- ~

lagher, supra, as the following tabular comparison plainly .

shows: : % Pars

: California Tax

1. The°tax is imposed on, the

ptfrchaser at retail of merchandise

purchased for consumption and

not for resale.

2.\ The tax is a given pereent

age-of the sales price.

3. - The tax is paid by the pur-..

. Chaser at> the, ‘time of the sale.

4” The tax is collected by the

vendor, who files the returns.

‘5. If the tax is not collected

by the vendor, it is payable di-

_ rectly by the purchaser to the

sd taxing official.

New York City Tax

1. The tax’is imposed on the

purchaser at retail of merchandise

purchased for cone and

not for resdle.

2. The tax js a given percent-

age of the sales price. &

3. The tax is paid by the pur-°

chaser at the time of the sale. °

_ 4. The tax is collected by the

_ ovendor, who files the returns.

5. If the tax is not collected

by the vendor, it is payable di-

rectly by the Purchaser - to the

= official.

; . e phos ij :

. 3 9 L . ° 18 - . e 4 - .

ie) ; eg . °

: °

California Tax |. _ —New York City Tax

6. The tax law requires the. 6. The: tax law requires the’

vendor ‘to insure payment of the vendor to Mere payment of the -

tax if it fails to make the|collec- tax if it fails to make collections

tions from the tax debtors. . ' , from the tax debtors. |

7. The tax is on a local event, 7. The tax is on a local event,

ic., “the exercise of any right or iie., the “transfer of title or pos-

power * * * incident to the session or. both” for any purpose

ownership °t that ra other other than resale.

than resale. :

‘The fact that the California tax is termed a ‘‘use’’ tax

and the. New York ity tax a ‘‘sales’’ tax is a difference

in“words, not a difference in substance. For, ‘‘use/’ as

defined in the California statute (see paragraph 7 in the -

‘tabular comparison) ‘ above), includes every acquisition of ©

possession and ‘so, every sale. A mere difference in name

between two taxes’ which are substantially the same does

not justify varying c®hstitutional treatment. As stated.

by this Court in a4 Pacific Company v. Gallagher,

supra, 305 U. S. ‘ p. ( Ct. 389, 394:

“State taxes upon’ national commerce ‘or its inci- ©

dents do not depend for their yalidity upon a choice

of words but upon the choice of the thing taxed’’. -

(Italics ours.) * |

oh, ; wr.

Tt thus appedgs that ‘in “invalidating the City sales tax :

in the case at bar, the Court of Appeals has decided the

case in a way probably not in accord with appijcable deci-

sions of thts Court. :

19,

POINT Bac FT 4)

Respondent’ s sales’ do not “require or necessarily

5 interstate shipment”, as that phrase is used in

Wiloil Corp. v. . Pennaylvania, 24 U. S.-169, 174.

In: -holding that ‘respondent? Ss: -sales required or neces- — i

sarily involved interstate shipment, we submit, the Court

misapprehertded the decisions of this Court in. Wiloil Cor.

~poration .¥. Pennsylvania, 294 U, 8. 169 (1935), and

Banker Brothers v. Pennsylvania, 222 U. S. 210 (1911).

In the Wiloil case, supra, as in the case at bar, the

“sale was made in the buyer’s State called for delivery

of. the merchandise in that jurisdiction, and related to

standard goods. Despite the-fact that the- contrac ts called

for delivery in| Pennsylvania of oil ‘‘f.o.b. Wilmington,

Delaware,”’ this. Court concluded that the contracts did

_not require or necessarily involve interstate shipment,

stating, i in language precisely ite cxace at bar ae U. 5,

at p. 173) :. a ; °

‘‘Appellant was ; not required by: the contracts to

‘ obtain the fuels at Wilmington but was free to

effect performance: by. sipping from any. place”

within or without Pennsyfvaniaj”” ,

~ ..And further. ti jA74): SE de ae ‘7

“There is nothing to jeidieate, legislative purpose °

to discriminate against liquid fuels brought into

Pennsylvania to be delivered in fulfillment of sales

contracts or there to be used or- sold, The com-

“merée: clause does not preyent. taxation ‘of s

by the State in w hich they are found merely because

> brought in from another Stafe, for that, would . >

‘

&: \

ta ia

.. which would have been material had federal regulation

20 :

unduly trammel state power of taxation, and pro: °

dace gross inequality and-injustice. Woodruff v.

Parham, 8 Wall. 123, 137. The limitation appellant -

puts on: §4 would operate to the extent of three

cents a gallon in favor of liquid fuels delivered,

as in this case, from a place in another State,

_ against those’ delivered in Pennsylvania ' from

sources in that Commonwealth over routes’ wholly

” therein.’’ (Italies ours.) — ,

‘The Court indicated in a general way that the tax |

‘was upon the local sales. It pointed out, moreover, that —

the fact that the entire movement of the oil from Dela-

ware into Pennsylvania involved interstate commerce—

_ been involved—was not pertinent, when the inquiry. was |.

directed to state taxation of local sales (p. 175).

Finally, the Court summarized the transaction involved .

and the effect of the tax imposed upon it, as follows (p.

175):

**As interstate transportation was. not required ‘

or contemplated, it may be deemed as merely inci- *

‘dental. Cf. Moore v. N. Y. Cotton ‘Bachange, 270

U..3. ri 604: . Ware d& Leland v. Mobile County,

6° 209: U.S. 405, 412- 413. The act lays no burden on.

inberetabe commerce as such, and if. any can. be said

to result from the imposition, it is indirect and pre-

cisely as that which would have. resulted if deliv-

__eries had been-made exclusively by. intrastate trans-

‘portation from. Pennsylvania s sources.’ /

Conclusion

‘The Commerce Clause does not require that in an effort.

to avoid undue burdens ,on interstate commerce, | sales

made within the State, wie contracts made there, of

. goods shipped; in- (for ‘the seller’s convenience and

* economy ) frm outsile the State, be exempted from

"a general consumer’s sales tax. Such a tax, paid as ‘it is

_ by the*consumer and ‘measured by the volume of sales,

is not. duplicated in any. other State, for the act taxed—

the final passage of possession and title to the res to the

‘consumer—can occur in but one State. Local merchants

myst\be protected against unjustifiable discrimination in

“favor ‘of foreign vendors. The- States must be protected

agains{ the serious impairment of their revenue powers

hy ¢th ncouragement of tax avoidance and evasion.

Respondent’s purchasers obtain the “protection of the Jaws

of New York for their ‘purehases there and should not be

permitted to escape the common burden of all purchasers

in the local market. © © - . .

The petition for edhe should. be granted.

Dated New York,N. Y., May 3, 1939,

Respectfully subinitted,

—$__— WAM C. CHANEY

Paxton Buair,

So, Cuarves Levine,

| ., Counsel for Petitioner.

Epmunp B. HENNEFELD,

Mitton SANDBERG, . oa

Jerome R. HELLERSTEIN,

of Counsel. “3

APPENDIX A

Provisions of Local Law .

LOCAL LAWS OF THE CITY OF NEW YORK

For THE Yrar 1934.

No. 24

A Loeal [a iw to Amend Local Law Number Twenty of the .

Year Nineteen Hundred and Thirty-four to Relieve the

People of the City of New York ‘from the Hardships

and Suffering Caused by Unemploymem and the Effects

Thereof on the Public Health and Welfare, by Impos- -

ing a Tax Upon Receipts from Sales of Certain Prop-

ortes and Rendering of Certain Services in the City of

New York, to Enable Such: City to Defray the Cost of

Granting U nemployment Work and Home Relief.

Be it enacted by the Municipal Assembly of The City

e New York as folloics:

Section 1.° Local law number twenty: of the local laws

ot the city of New York for the year nineteen hundred and

_ thirty-four, entitled: | ‘* A local law to relieve the people of

*the city of New York from the hardships and suffering

caused by unemployment and: the-effects thereof on the -

- public health and welfare, by ‘wposing a ‘tax upon receipts

from sales of certain properties and services in the city of.

New York, to enable such city to defray the cost of grant-

_ ing unemployment work and home relief,’’ is hereby is

amended so as to read as follows:

23 eee

Appendia A

Tax on sales of certain properties . and rendering of

certain services ‘in the city of New York:

Section 1. Definitions.

2. Imposition of tax. F

3. Collection of tax from purchaser,

4. Records to be kept.

5. Returns.

6. Payment of taxes.

7. Determination of tax by the comptroller.

8. Proceedings to recover tax.

9. Notices and limitations of time.

10., Refunds.

11. General powers of the comptroller.

12. “Administration of oaths and compelling

testimony.

13. Reference to tax.

14. Registration.

15. Penalties.

16. Returns to be secret.

17. Disposition of revenues.

18. Application; construction. |

-§ 1. Definitions. When used in this local law:

(a) The word ‘‘person’’ includes an individual, co-

partnership, society, association, joint stock ecompany, cor-

poration, estate, receiver, trustee or any other person

acting in a fiduciary capacity, and any aa selene of

individuals ;

(b) The wore ‘*vendor’’ means a person selling prop-..

.erty or rendering services upon the receipts froin. which a

tax is imposed under section 2 vf this. focal law;

oh ead : oF ; 24 . :

Appendix A

chases property or to.whom are rendered services, receipts’

from which are taxable under section 2 of this local law;

‘(d) The word ‘receipt’? means the amount of the sale

price of any property or the charge for any service speci-.-

fied in section 2 pf this local law, valued in money, whether

received in money or otherwise, including all receipts, cash,

credits and property of any kind or ature (other than

the credit allowed for property of the same kind accepted

in part payment and intended for resale), and also any’

amount. for which credit is allowed, by the vendor to the

purchaser, without any deduction therefrom‘on account of |

the cost of the property sold, the, cost of materials used,

labor or service cost, interest or discougt paid, or any

other expense whatsoever: .

(e) The word ‘‘sale”’ or ‘‘selling’’ means any transfer

of title ar possession or both, exchange or barter, license

to use or consame, conditional or otherwise, in any man-

ner or by any means whatsoever for’a consideration, or

any agreement therefor, and may include the rendering

of any service specified in section 2 of this loéal law;

(f) Fire words ‘‘tangible- personal property’’ meéan--

corporeal personal property ;

“(g)yeA ‘retail sale’? or “sale at retail’ means a sale

to a customer, or to any person for any purpose other than

for resale in the form of tangible personal property::

(h) The word **semi-publie’’ means those charitable

and religious institutions which are supported wholly or

in part-by publie subscriptions or endow ment and are not

organized or operated for profit;

Appendix A

(i) The word ‘‘return’’ includes any amended return

filed or required to be filed as herein provided ;

- .(j) ‘The word ‘‘comptroller’’ “means the” comptroller

of the city of New York. :

$2. Imposition of tax. During the period commence:

ing on December tenth, nineteen hundred and thirty-four,

and ending on December thirty-first, nineteen hundred and

thirty-five, there shall be paid a tax. of two per centum

upor the amount of the receipts from every sale in- the

~_ city of New York of :

(a) Tangible personal property sold at retail, except

those articles described in schedule ‘‘A’’ sedi

(b) Gas, electricity, refrigeration and ie and gas,

electric, refrigeration, steam, telephone arid telegraph ser-

vice, for domestic or commercial use;

( ¢) Food; drink and entertainment i in restaurants, cafes

_ and other establishments including in the amount of such -

receipts any cover or minimum _ or other charge" ‘madete———— =

patrons where the charge to the patron is one dollar or

more, in which event the ta®is imposed on the full amount

of the chargé to each such aaron

(d) Wines and liquors aa other alcoholic beverages,

and drinks compounded thereof or therewith, except beer

or other similar malt beverages, including sales thereof in

restaurants, cafes, bars and other places for consumption

on the premises: | .

- 26

: 4 Appendix A

SCHEDULE A

Cereals and cereal products; Ty

Milk -and milk products; "

Meat and meat products; ae

Fish and fish products;

Eggs and egg products;

\ "egetables "hid vegetable products;

Fruits, spices and salt;

Sugar and sugar produet S, other than candy and

confectionery; *

Coffee, and coffee substitutes; beer or other sim-

‘ilar malt beverages; tea, cocoa and cocoa prqnhete;

other than candy and confectionery ;

, ‘Water, when delivered ‘to the consumer through

, mains and pipes;

, Drugs and medicines’ sold upon a a physician's

i prescription;

’ Newspapers and periodicals. <3

The enumeration in this schedule shall not be deemed

to exclude sales of wines and liquors and other alecholic

| -beverages, soft drinks, and sodas and beverages. such as

are erdinarily dispensed at bars and soda fountains or jn

connection therewith (other than coffee, tea and cocoa,

‘ beer and other similar malt beverages), nor any food.or’

food products unless sold for human consumption, from —

the tax imposed by: this local Jaw. . i

Receipts. from sales or services by or to. the state or

city of New York, and receipts from sales or services by

or to semi-public institutions, and receipts upon which the

state of New York and‘city of New York aré by virtue of

the provisions of the constitution of the United States or

o or

Appendix A

‘otherwise without power to impose a tax shall not be sub-

ject to tax hereunder.

Upon each taxable sale or serviee the tax to be col-.

lected shall be stated and charged separately from the sale

price or charge for service and shoWn separately on any

record thereof, at the time when the sale is made or evi-

dence of sale issued. or employed by the vendor and shall

be paid by the purchaser to the vendor, for and on account

of the city of New York, and the vendor shall be liable for

the collection or the service réndered; arid the -vendor shall

have the same right in respect to collecting the tax from

the purchaser, or in respect to non-payment of the tax by

the purchaser, as if the tax were a part of the purchase

price of the property or service and ee at we time

of the sale. . _ 7

| Where a purchaser lias failed to pay and a vendor has

failed to collect a tax. upon a sale or service, as imposed

by this local law, then in addition to all other rights, obli-

- gations and remedies provided,. such tax shall be payable:

by the purchaser directly to the comptroller and it shall

be the duty of the purchaser to file.a return thereof with

, the comptroller and-to pay the tax imposed thereon to the

~ comptroller within fifteen days.after such sale was made

vt service rendered. ea eee 7

The comptroHer may, wherever he deems it necessary

for the proper enforcement of this local Jaw, provide by

régulation that the purchaser shall file returns and pay

e directly to the comptroller the tax herein imposed, at such °

times as returns are es sated tobe filed and payment over»

made by vendors. |

The tax imposed by this local we shail be paid upon

all sales’: made and services rendered on and after Decem-

Appendia A

‘ber tenth, nineteen hundred: and thirty-four, although

made or rendered under a contract dated prior to Decem-

ber tenth, nineteen hundred and thirty-four. Where a

‘service is billed on either a monthly or other term basis,

the bill for such month or other terms shall be a receipt

subject to the tax herein imposed provided that where.

such bill includes a period prior to December tenth, nine-

teen hundred .and thirty-four, or subsequent to December

thirty-first, nineteen hundred and thirty-five, such bill:shall

- be equitably apportioned. ‘The comptroller may provide

-by regulation that the tax upon receipts from sales on the

installment plan may be paid.on the amqunt of each in-

stallment and upon. the date when such installment is due.

He shall provide by regulation for the exclusion of

amounts representing sales where:the contract of sale has

been cancelled and/or. the property returned and/or the

- receipt has been ascertained to be worthless, or, in case

the tax has been paid upon ‘such receipts, for a credit:

and/or a refund of the amount of the tax upon such re- —

ceipts, upon application therefor as provided in section 10.

For the purpose of the proper administration of this

~ local law-.and to prevent evasion of ‘the tax hereby im-

. posed, it shall be presumed that all receipts for property

and services mentioned in this section are subject to the

_ tax until ‘the contrary is established, end the burden of

proving that a receipt is not taxable hereunder shall be *

upén the vendor or the purchaser, unless the vendor shall

have taken from the purchaser a certificate signed by and

bearing the name and address of the purchaser and the

_ number of his registration certificate to the effect that the

property or service was purchased for resale. ,

29. te

i * iat os Appendia A-

- No person engaged in the business of selling property

or services the receipts from which are subject to tax »

under this local law shall advertise or hold out to the

-public ‘in any manner directly or indirectly that the tax

‘imposed by this local law is not considered as an element

in the pms to’ the ae.

§3. Collection of tax from purchaser. ~The comp-

troller shall by regulation prescribe a method or methods

and/or a schedule or schedules of the amounts to be col-

lected from purchasers in respect to-.any receipt’ upon

which a tax is imposed by this local law so qs to. eliminate

fractions of one cent and so that the aggregate collections -

of taxes by a vendor. shall, as ‘far as practicable, equal

. two percentum of the total receipts from the sales and

services of such vendor upon which a tax is imposed by

this: local: law. Such schedule or schedules may provide

that no tax need be collected from the purchaser upon

receipts below a stated sum, and may he amended from

time to time so as to accomplish the purposes herein set

forth.

$4. Records to kept. Every vendor shall keep ree-

ords of receipts and ‘of: the tax payable thereon, in’ such

form as the comptroller may by regulation require. -Such

records shall he offered for inspection and examination at

any time upon demand by the comptroller or his duly

authorized agent or employee and shall ‘be preserved for

.a period of three years, except that thé comptroller may

consent to their destruction within that _period or may

require that they be kept longer.

e 30

Appendix A |

§5. Returns. Every vendor shall file with the comp-

troller a return of his receipts:and of the taxes payable

thereon for the periods ending February twenty-eighth, ~~

May’ thirty-first, August thirty-first and December thirty- ~

first, ntneteen hundred and thirty-five. Such returns "shall

‘be filed. within thirty days from the éxpiration of the

period covered thereby. ‘The comptroller may permit

returns to be made by other periods so as to include all

receipts “during the period from Decembex. tenth, nineteen

hundred and thirty-four, to December thirty-first, nineteen

hundred and thirty-five, inclusive. - ‘Tf he deems it neces- -—

sary in order to insure the payment of the tax imposed

by this local law the comptrollér may require returns of

" receipts to be made for other than the aforesaid periods ;

and upon such dates as he may specify.

_ The form of returns shall be prescribed by the comp-

troller and shall contain such information as he may deem

necessary for the proper administration of’ this local law.

: The comptroller may require amended returns to be filed

-Within twenty days’ after notice and’ to contain the . -in-

formation specified in the notice.

§6. Payment of taxes. At the: time of filing a return

of receipts each vendor shall pay ‘to. the comptroller the

_ taxes imposed by this local law upon the receipts required

té be included in such return. All taxes for the period

for which a return is required to be filed shall be due from

the vendor and payable to the comptroller\on the date.

limited for the filing of the return for such period, without

regard to whether a return is filed or whether. the-return

which is filed correctly shows the amount of receipts and

the taxes due thereon. The comptroller may require any |

“

31 ee i we |

promot A.

Pal sali siete to collect the tax seiaieo by this local

law to file with him a bond, issued by a surety company

authorized to transact business, in this state and approved

by the superintendent of. insurance of this state as to

~ solvency and responsibility, in stich amount as the comp- |

troller may fix, to seeure tlie payment of any tax and/or

penalties due or which may beeome due from, such vendor.

In lieu of- such bond, securities apprdved by the comp-

troller, in such amount as he may prescribe, may be

deposited with him, which securities shall be kept in the

custody of the comptroller and may be sold by hini at

public or private sale, without notice to the depositor

thereof, if it becomes necessary so tg. do in order to

recover any tax and/or penalties due. Upon such sale, the

surplus, if any, above the amounts due under this ‘local

law shall be returned to the person .who ei the

securities. |

§7. Determination of tax by comptroller. If a return

required, by this local law is not filed, or if a return when:

filed is incorreet or insufficient the comptroller shall deter-

mine the amount of tax due.from such infqrmation as he

may be able to obtain and, if necessary, may estimate the

tax on the ‘basis of external indices, such as number of |

employees of the person egncerned,: rentals paid by him,

_ his stock on hand, and/or other factors: The comptroller

‘shall give notice of such determination to.the person liable

for the. collection. and/or payment of. the tax. Such deter-

mination shall -finally and irrevocably fix the tax unless

the vendor or purchaser against ‘whom it is assessed shall

be entitled to and within thirty days after the giving of

_ notice of such determination apply to the comptroller for

: , | Appendia AD .

a heabiene, or shall cause the same to bé veilaned ‘by

certiorari, or unless the comptroller of his own motion

shall reduce the same. If no opportynity fer a hearing

shall have been given to such person prior to the deter-

mination of the comptroller, such person.may within thirty

days after the comptroller shall give notice thereof, apply

_ to the comptroller ‘for ’ a hearing. After such hearing the °

comptroller shall give notice of his determination to.the

applicant. The determination of the comptroller may be

. reviewed by certiorari if application i is made to the ecomp-

troller therefor ‘within. thirty days after the giving of

~ notice thereof. Whenever. under this local law an order

of certiorari is permitted it shall not..be granted unless .

the amount of any tax sought to he reviewed, with penal-

ties thereon, if any, shall ° first deposited with the

comptroller and an undertaking filed with the comptroller.

in such amount and witli such sureties as a justice of

the supreme court of the state of New York shall approve.

to the effect that if such order be dismissed or the tax

confirmed the applicant for the writ will pay all costs and’

charges which may accrue in the prosecution of the certio-

rari. proceeding.

$8. Proceeding to recover tax. Whenever any vendor

or purchaser shall fail to. collect and pay over any tax

and/or to pay any’ tax or penalty imposed by this local

law as in this local law prov ided, the. corporation counsel

shall, upon the request of the comptroller, bring an action

to enforce the pay ment of the same.

As an additional or alternate remedy, the comptroller

may issue a warrant, directed to the sheriff of any county

within the city of New York, commanding him to levy

. °

™ me

| of

Appendix AS fF

upon oni sell the real and personal property of the vendor

or purchaser which may be found within his county, for

the payment of the amount thereof, with any penalties,

and the cost of executing the warrant, and to return such

warrant to the comptroller and to pay to him the money

collected by virtue thereof within sixty days after the ©

receipt of such warrant.. ‘The sheriff shall within five days

alter the receipt,of the warrant file with the clerk of his —

county a copy thereof, and thereupon such clerk shall

enter in the judgment docket the name of ‘the -person

- mentioned. in the warrant and the amount of the tax and

penalties for which the. warrant is issued: and the date

when sueh copy is filed. Thereupon the amount: of such

Ww arrant so: docketed shall become a lien upon the title to

and interest in real property and chattels real of the :

. person against whom the warrant‘is issued in the same

manner as a judgment duly docketed in. the office of such

clerk. The sheriff shall then proceed upon the warrant-in

the same manner, and with like effect, as that provided

by law in respect to executions issued against property

upon judgments of a court of record, and for services in

«Xecuting the. warrant he shall be: entitled to the same

fees, which he may colleet in the same manner. In the

discretion. of the comptroller a warrant of like terms, |

foree and effect may be issued and directed to any officer

or employee of the department of finance, and in the

execution thereof such officer or employee shall haye’ all,

the powers conferred by law uporr sheriffs, but he shall

be entitled to no fee or compensation in excess, of the

actual expensés paid in the performance of such duty.

If a warrant is returned not satisfied in full; the comp-

Appendix A 3 ,

troller may from time to time issue new warrants and

shall also have the same remedies to enforce the amount

due thereunder as if the city of New York had reeovered

judgment therefor and execution thereon had been re-’

turned unsatisfied.

$i. Notices and limitations: of time. “Any notice

authorized or required under .the provisions of this local. °

law may be given by. mailing the.same to the person -for

whom it is intended in a postpaid envelopé addressed to

such person at the address given in the last return filed

by him pursuant to the provisions of this,local law or in

any ‘application made by him or if no return has been

filed’ or application made then to such address as may

be obtainable. The mailing of such notice shall- be pre-

sumptive. evidence of the receipt of the same by the person

to. whom addressed. Any period of: time which is deter-

mined according to the provisions of this local law by the ~

giving of notice -shall commence to run from the date |

of mailing of such notice. 3

The provisions of the civil practice act relative to

limitations of time for the enforcement: of a civil remedy

shall not apply to any proceeding or action taken .to

levy, appraise, assess, determine or enfsrze the collection

of anytax or penalty provided by this local law.

$10. Refunds. The comptroller shall refund any tax

‘iesinaiiaile or illegally collected and = paid to him it

| application therefor shall be made within one year from

the, payment thereof. Such application may be made by

the person upon whom such tax was’ imposed, or by the

vendor, Who’ collected and paid such tax to the-comptroller

«85

Anpendia A

if such vendor establishes to the satisfaction of the

comptroller, under such regulations as he may prescribe,

thai he has repaid to the purchaser the amount for which

. application for refund is made. The comptroller may,

in lied of any refund required to be made; allow credit

therefor’ on subsequent payments due from the applicant.

‘Notice of the determination of- the comptroller of any

application for refund shalt be given to the applicant,

who shall be entitled to a certiorari order to review such

determination, provided application therefor is made

within thirty days after the giving of such notice. An

order of certiorari shall not be granted hereunder except

in accordance with the provisions of, section 7. |

§11. General powers of the comptroller. In addition

to.the powers granted to the comptroller in this local law, '

he is hereby authorized and empowered :

(a) To make, adopt and amend. rules and regulations.

propriate-to-the carrying out of this local law and the

purposes thereof ; Hee nt a

“(b): To extend, for cause shown, the time of filing any.

return for a period not exceeding thirty days; and for

_eause shown, to remit penalties and interest; and to com-

promise disputed claims in connection with the taxes

hereby imposed ;

(ec) To assess, revise, readjust and impose the taxes

authorized to be imposed under this local law;

(d) To request information from the tax commission

of the state of New York relative to any person; and to

afford information to such tax commission relative to any

36 | vara

Appendia A

person, any other provision of this local law to the con-—

pas notwithstanding ; |

~ (e) To delegate his funetions hereunder ie; a deputy

comptroller or other employee or employees of the depart-

ment of finance of the city of New York;

(f) To prescribe methods for determining the receipts

from sales made or services rendered in the city of New

York.’

§12. Administration of oaths and compelling testi-

mony. The eomptroller or his employee duly designated

and authorized by the.comptroller shall have power to

administer oaths and take affidavits in relation to any

matter or préceeding in the exercise of the powers and

duties of the comptroller under this local law. The comp-

troller shall héte power to subpoena and_ require the

attendance of witnesses and the production: of books,

papers and documents to secure information pertinent to .

the performance of his duties hereunder and of the en.

forcement of this local law, and to examine them in rela.

tion thereto, and to issue commissions for the examination .

of witnesses who are out of the state or unable to attend

before him or excused from attendance.

A justice of the supreme court either in court or at

chambers shall have power summar'ly to enforce by

proper proceedings the .attendance-and testimony of wit-

nesses, and the production and examination of books..

papers and documents called for by ‘the subpoena of the

~ comptroller hereunder.

Any person who shall refuse to testify or to prduce

books or records or who shall testify falsely in any mate

Appendix A

rial matter pending .before the comptroller hereunder

shall be guilty of a misdemeanor; and punishment for |

which shall be a fine of not more than one thousand dol-

lars or imprisonment for. not more than one year, or both

such fine and imprisonment. Mt |

The officers, who serve the comptroller’s -summons or

“subpoena hereunder and witnesses attending in response

thereto shall be entitled to the same fees as are allowed to

officers and witnesses in civil cases in courts of record,

except as herein otherwise provided.

$13. Reference to tax. Wherever reference is made

in sales tags or placards or ‘advertisements to this tax,. .

such reference shall be substantially in the following form:

“City sales tax for relief of unemployed,’’ except that in

any evidence or memorandum of sale issued or omproyer

by the «endor the word ‘‘tax’’ will suffice.

$14. Registration. On or before January tenth, nine-

teen hundred and ‘thirty-five, or in the case of vendors

commencing business after January séventh, nineteen hun-

dred and thirty-five, or opening new places -of business

after sucli date, within three days after such commence:

-nent.or opening, every vendor required to collect the tax

imposed by this local law shall file with the comptroller a.

certificate’ of registration in a form prescribed by the.

comptroller who shall within five days after such registra-

tion-issue without charge to each such vendor a (certifi-

cate of authority empowering such vendor to collect. the _

tux from the purchaser) and duplicates thereof for each

additional place of business of such vendor. Each certifi-

cate or duplicate shall state the place of business to which

it is applicable. Such certificates of authority shall be

38:

Appendix A

prominently displayed in the places of business of the

vendor. -A vendor who has no regular place of doing busi-

ness shall attach such certificate to his cart, stand, truck,

or other merchandising device. Such certificates shall be

non-assignable and non-transferable and shall’ be sur-

rendered immediately to the comptroller upon the vendor’s

ceasing to do business at the place therein named.

A vendor shall fuse to accept a certificate that any

property or service upon which a tax is imposed by this

local law is purchased for resale and ‘shall collect the tax

imposed by this loeal law unless the purchaser shall have

filed a certificate of registration and received a certificate

of authority to collect the tax imposed by this local law:

provided; however, that the payment of the tax by such

_purchaser shall not relieve the purchaser of the duty

herein imposed upon such purchaser to- collect® the tax

upon any resale made by him; but such purchaser who

shall thereafter file a certificate of registration and receive

a certificate of authority to collect the tax may, upon

application therefor, receive a refund of the taxes paid by

him upon property and services thereafter resold by him .

and upon the receipts from which he shalk have collected’

and paid over to the comptroller the tax herein imposed.

“§ 15. . Penalties. Any person failing to file a return |

or to pay or pay over any tax to the comptroller within-

the time required by this local law shail be subject to a -

penalty of five per centum of the amount of tax due, plus

one per centum of,such tax for each menth of delay or

fraction thereof excepting the first-month after such re-

~turn was required to’ be filed or such tax became due; but

the comptroller, if satisfied that the delay was excusable,

- Appendix A

may remit all or any part of such penalty. Such penalty

shall be paid and disposed of in the same manner as other

revenues from this local law. Unpaid penalties may be

enforced in the same manner as the tax imposed by: this

local law. . ics

Any vendor or purchaser and : any officer of a corporate

vendor or purchaser failing to file a return required by

this loeal law, or filing or causing to be filed or making or

causing to be made or giving or causing to be given any

return, certificate, affidavit, representation, testimony or

statement required or authorized by this local law, which

is wilfully false, and any vendor and any officer of a cor- —

_ porate vendor wilfully failing to file a registration certifi-

cate or to display or surrender the certificate of authority

as required by this local law or assigning or transferring

- Such certificate of authority, and any vendor and any

officer of a corporate -vendor wilfully failing to: charge

separately from the sales price’ the tax herein. imposed, or

wilfully failing to state such tax separately on any evi-

dence of sale issued or employed by the vendor, or wil- '

fully failing or refusing to collect such tax from the pur-

chaser, and any vendor and any officer of a corporate

vendor who shall refer or cause reference to be made to _

this tax in .ny sales tag, placard or advertisement in, a -

form other than-that required by this local law, shall, in

addition to the penalties herein or elsewhere ‘prescribed,

he guilty of a misdemeanor, punishment for which shall be

a fine of not more than one thousand dollars or imprison-

ment for not more than one year, or hoth such fine and

imprisonment.

The certificate of- the onslinhiillen to the effect that a

tax has not been paid, that a return has not been filed, or

’ ; . ; 40

Appendix A

that information has not been supplied pursuant to the

provisions of this local law, shall be presumptive evidence

thereof.

§16.. Returns to be secret. 1: Except in acévrdance

with proper judicial order or as otherwise provided by

law, it shall be unlawful for. the comptroller or any officer __

or employee of the department of financa'to Ai

make known in any manner the receipts or thgr informa-

tior. relating to the business of a taxpayer“ontained in |

any return required under this local law. The officers

charged with the custody of such returns shall not be

-required to produce any of them or evidence of anything

contained in them in any action or ‘proceeding in any court,

except on behalf of the comptroller in an action or pro-

ceeding under the provisions of this local law, or on behalt

of any party to any. action or proceeding under the. provi-

sions of this loéal law when the returns or facts shown

thereby are directly involved in such action or proceeding.

in either of which events the court may require the pro-

_duetion of, and may admit in evidence, so much of said

returns or: of the facts shown thereby, as are pertinent to

the actionor proceeding and no more. Nothing herein

shall be construed to prohibit the delivery to a taxpayer

or his duly authorized representative of a certified copy

of any return filed in connection with his tax nor to pro-

‘hibit the publication of statistics so classified as to pre-

vent the identification of particular returns and the items |

thereof, or the inspection by the corporation counsel or.

other legal representatives of the city, or by the district

attorney of any’ county. within the city of New York, of

the return of any taxpayer who shall bring action to set

Appendiz A

aside or review the tax based thereon, or against whom

an action or proceeding has been instituted for the collec- .-

tion of a tax or penalty: Returns shall be preserved for

three years and thereafter until the eomapeorney orders

them to be-destroyed. sides

2, Any offense against subdivision one of this section

shall be punished by a fine not exceeding one thousand ~

dollars. or, by imprisonment not exceeding one year, or

. both, at the discretion of the court, and if the offender be

an officer or employee of the city he shall be dismissed

from office and be incapable of holding any public office

in this city for a period of five years thereafter. -

$17. Disposition of revenues. All revenues and

monies resulting from the imposition of the taxes imposed

by this local law shall be paid into the treasury of the city

of New York and shall not be credited or deposited in the

- general fund of the city of New York, but shall be de-

posited in a separate bank account or accounts, and shall

- he available and used solely and exclusively for the pur-

pose of relieving the people of the city of New York from

the hardships and suffering caused by unemployment

including the repayment of monies borrowed or to be bor-

rowed in anticipation of this tax.

§18. Application; construction. If any provision of —

- this loeal law, or the application thereof to-any person or

.cireumstances, is held invalid, the remainder of this local

_law, and the application of such provisions to other: per- |

sons or circumstances shall not be affected thereby. This

local law shall be construed in conformity pith chapter

Appendia A

eight hundred seventy three, laws of nineteen hundred and

‘thirty-four, pursuant to which it is enacted.

o“

Sec. 2. Effective date of local law. This local law

shall take effect immediately..

The City of New York, Office of the City Clerk, Ss:

I hereby certify that the foregoing is a true copy of a

local law passed by both branches of the Municipal Assem-

bly of The City of New York and approved by the Mayor.

on December 28, 1934, on filé in this office.

MicnakEu J. Cruise,

City Clerk.

— 43

| APPENDIX B

Jager Provisions of State Enabling Act

| LAWS OF NEW YORK |

CuaPren 873

- Act to Enable, Temporarily, Any City of the State

~More to Adopt and Amend Local Laws, Imposing in

Any Such City Any Tax and/or Taxes Which the Legis-

°elature Has or Would Have Power and Authority to

Impose to Relieve the People of Any Such City from —

the Hardships and Suffering Caused by Unemployment _

and to Limit the Application of Such Local Laws.

Became a law August 18, 1934, with the approval of the

Governor. Passed, on-emergency. tend by a two-

.thirds'vote. * | :

The People of the State of New York; represented i im Sen.

ate and Assembly, do onaet as follows:

Section 1. Notwithstanding any other ‘provision of

' - law to the contrary, any city of the state having a popula-

tion of one million inhabitants or more acting through its

local legislative body, is hereby authorized and empowered -

until December thirty-first, nineteen hundred thirty-five

to adopt and amend local laws imposing in any such city

any tax and/or taxes which the legislature his or would.

have power and authority, to impose ‘to relieve the people

by unemployment and make provision for the collection

thereof by the chief fiscal officer of any such city. The

tax or-taxes imposed pursuant to such local laws shall be

effective only during the period commencing when this.act.

becomes effective and .ending December thirty-first, nine-

‘

Appendiz B

‘teen hundred thirty-five, or any portion of such period.

A tax imposed hereunder shall have application only

‘within the territorial limits of any such city. and ‘shall be

in addition to any and all other taxes.

This act shall not authorize the imposition of a taxon

any transaction originating and/or consummated outside

of the territorial limits of any such city, notwithstanding:

that some act be necessarily performed “with respect to

such transaction within: stich limits.

This act shall not authorize the imposition of a tax on

a non-resident of such city.or on account of any transac-

_-tion by or with a non-resident of such city, except when

imposed without discrimination as between residents and

non-residents, on account of tangible property actually

lecated or income earned, or trades, businesses or profes-

sions carried on within such city, or on account of trans-

fers, retail salés or other transactions actually made or

consummated within such city by a non-resident while

within such city. A corporation shall’ not be deemed a

- non-resident. by reason of th» fact its principal place of

business is not: within the city.

| A person who has a permanent place of abode without

such city and lives more than seven months of the year

out of such city shall be deemed a non-résident within the

meaning of this act.

| Provided, however, that nothing herein contained shall

limit or prevent the imposition of a tax on gross. income

or a tax on gross receipts of persofis, firms and corpora-

tions doing business in ‘any such city. No such person.

firm or corporation, how ever, shall be subject to the impo- ,

sition. of more than .one tax by any such city on gross

income or gross receipts under the provisions. of. this act.

Appendix B ;

§2. Revenues resulting from the imposition of taxes

authorized by this act shall be paid into the treasury of.

any such city and shall not be credited or deposited in

the general fund of any such city, but shall be deposited in

a separate bank account or accounts and shall be available

and used solely and exclusively for the relief purposes for

‘which the said taxes have been imposed under the pro-

visions of this’ act. ‘

Such legislative body may authorize the performance

of public work for the relief purposes aforesaid to he paid

for-out of the tax or taxes, imposed under this act, and

whieh may be undertaken other than by contract by such

municipal corporation, during the | period aforesaid,

through and under its local emergency work bureau or by.

‘its publie welfare or, other department under the super-

vision and control of its local emergeney work - bureau.

These. provisions shall be. effective notwithstanding ‘any

provisions contained in any charter, or in any general,

special or local laws to the contrary and notwithstanding

any such provisions therein contained requiring such work

as may be undertaken to be let by contract.

§3. This act. shall take ‘effect immediately.

State or New York, DepaRTMENT/oF State, ss. :

I have compared the preceding with the original law -

on file in this office, and do hereby certify that the same is

a correct transcript therefrom and of the whole of said

original law. |

Evwarp J. Fryxy,

Secretary of State.

46 ae

| @PPENDIX c

1. Memorandum Opinion of Court of Appeals i in

Felt & Tarrant Case

‘In the Mafter of Fert & Tarrant Mre. Co., Respondent,

against Josern D. McGovprick, as Comptroller of the

City of New York, Appellant. :

. Appeat from an order of the Avpellate Division of the

Supreme Court in the first judicial department, entered

May 27, 1938, which annulled a determination of the

Comptroller of the City of’ New York assessing against

petitioner a sales tax.pursuant to Local Law No. 20 of

1934 (published as No. 21), as amended by Local Law

No. 24 (published as No. 25).

—

‘ Sandberg and Bernard A. Sherris of counsel) for ap-

/Newton K. Fox, for respondent.

Order affirmed with costs, upon, the authority of

Matter of National Cash Register Co. v. Taylor (276

N. Y. 208). No opinion.

Concur: CRrase, CuJ., Leman, O’Brien, Hunps,

LovGurayn, Fincu and Riprey, JJ.

“aT .

A ppendiz C

2.‘ Opinion of. Appellate: Division in

3 Felt & Tarrant Case

In the Matter.of the Application of Fert & Tarrant Mre.

Co., Petitioner, for an Order of Certiorari against

Fuank J. Taywor, Comptroller of ‘the City of New

York, Respondent.

‘ CERTIORARI ORDER granted out of the Supreme Court on

the 10th day of March, 1937, and directed to Frank J.

Taylor, comptroller of the city of New York, commanding

him to certify and return td the office of the clerk of the _

county of New York all and singular his proceedings had

and determination made in assessing a sales tax deficiency

against the petitioner, pursuant to Local Law No. 20

(published as No. 21) of the New York City Local Laws

of 1934, as amended. by Local Law No., 24 (published as

_ No. 25) of the New York City Local Laws of 1934, known

as the New York City Retail Sales Tax Law.

Newton K. Fox, for the petitioner.

Frank J. Derrick of ‘counsel [Oscar S. Cox and Ber-

nard H. Sherris with him on the brief; William C. Chan-

‘ler, Corporation Counsel, attorney], for the respondent. |

; E F

(iLENNON, J. It is conceded -by the petitioner that the.

tax on certain items amounting to $148.55 was properly

levied and ‘consequently, having paid $3,122.53 the full

umount assessed, it seeks a refund of the difference, |

amounting to $2,973.98, with interest from February 19,

I'37, the date of. payment.

The petitioner, Felt & Tarrant Mfg. Co., is an Illinois.

corporation. It has never qualified to do leet in the

State of New York. It has its principal office and place of

) Appendix Cc

business in Chicago. and is engaged in the business of -

manufacturing. and selling comptometers, adding and cal-

culating macliines. The company has no manufacturing

plant, warehouse or other depository in the State of New

York. ~All manufaeturing is done at Chicago. It main-

tains an office in New York city for the purpose of solicit-

ing orders for comptometers. This business is done by a

_ principal solicitor and his assistants. The authority - of.

the employ ees is restricted to the soliciting of orders. The.

agreement under w hich they work provides as follows:

- “It is’ Mutually Understood and Agieed _

. “4. Phat the said party of the Second Part is merely

a solicitor for orders, and that all orders taken must be

‘submitted to and approved by the Felt & Tarrant: Mfg. |

Co. and'that all sales and deliveries shall be madé by hae

Felt & Tarrant Mfg. Co.’’ :

A standard, form of order blank ‘is used. The order is

addressed to ‘‘Felt & Tarrant Mfg. Co. ” The order blank

contains. the foliowing statement: ‘All orders ‘subject

to the acceptance of an officer of the company in Chicago.”

If the order is approved by an officer in Chicago, .it is

sent to-its billing department there.’ A comptometer is

then appropriated to. the contract of sale by the shipping

~ department and. its serial number is inserted in the upper

‘right-hand corner of the order. The machines ‘are then

packed in individual cartons for shipment by a common

--eatrier in Tllinois to the purchaser here. The shipping

“order is then turned over to the billing department, where

an invoice is made out for the’ specific machine. The

invoice, which is sént from Chicago to the customer, show

the Tl ial number of the cumptomptor which was shipped.

Appendix C

The invoice has a statement on its face: ‘‘Make all

_ cheeks payable to Company—remit directly to Chicago.”’

All remittances are received and collections made at the

company’s home office. ‘No billings or collections are

made in New York-city. No comptometers are kept in

New York for the purpose of sale. There are some which

are used for what is called ‘‘repair loans’’ and ‘demon-

stration purposes. “Repair loans’’ refer to: machines

which are. loaned. to customers. in the-event that those pur-

chased \direetly become defective and need repair. The

servicing -of the comptometers is done by the Comp-

tometer Company, a Delaware lati authorized to.’

do businéss in New York.

It was stated on the argument that the practice

émployed by petitioner in the conduct of its business was |

followed for a long period of time prior to the enactment: —

of the New York city sales tax. The petitioner in the sale

and shipment.of its machines from,.Chicago to New York |

is engaged in interstate commerce, and consequently the .

-* municipal authorities have no ) right to impose a tax upon

the. receipts. :

We can find no fundamental difference in the facts |

now under review from those which were before the court

in Matter of National Cash Register Co. v. Taylor (276

‘N.Y. 208). There Judge Lenman said: ‘*The power

of the State of New York to tax receipts derived from

’ transactions in interstate commerce is limited by the pro-

visions of the Constitution of the United States. The

power of the city of New York to tax receipts from sales .’

is conferred upon it by statute (Laws of 1934, ch. 873).

The power so. conferred cannot transcend the limitations

imposed upon the power of the State by the Constitution

A ppendir |

_of the United States, and it is restricted further by limi

tations imposed by the State in the enabling. act. That

act provides expressly that it does not ‘authorize the

imposition of a tax on any transaction originating and /or

consummated outside of the territorial limits of any such

city, notwithstanding -‘taat some act be necessarily per

formed with respect to such transaction . within such

limits.’ *’

For the reason assigned, the determination of tlic

comptroller should be annulled, with fifty dollars costs’

Martix, V. J. O'Mauneyv. Uxtermyer and Dore, J).

eoneur. *

Determination unanimously annulled, with fifty dollars

costs and disbursements to the petitioner. Settle order on

notice.

3. Opinion of the Court of Appeals in Compagnie

Generale Transatlantique Case

In the Matter of the Application of .Compacyir GEexeRaL

. TRANSATLANTIQUE, Respondent, against JoserH D. Mu

“Gotprick, as Coinptroller of the City of New York,

Appellant.

ApreaL from an order of the. Appellate Division of the

Supreme Court in the first judicial department, entered

June 14, 1938, in a proceeding under article 78 of the

Civil Practice Act, in so far as such order annuls a deter

mination of- the Comptroller of the City of New York

assessing a sales tax deficiency against the petitioner for

Appendix C .

the period from December. 10, 1934, to December 31, 1935,

under New York City Local Law No. 20 (published as

No. 21) of 1934, as amended by Local Law No. 24 (pub-

lished as No, 25) of 1934. The assessment in question was

against the petitioner, as the purchaser of fuel oil from

the Standard Oil Company, which maintained plants or

storage tanks’ in the State of New Jersey. The order of

the Appellate Division stated that the determination of

the Comptroller with respect to deliveries originating in

New Jersey should be annulled and in other respects con-

firmed; and also directed that the defendant return to the

petitioner the amount (less a stated sun) of such defi-

eiehey sales tax whieh had previously been. deposited,

under protest, with the Comptroller ‘by petitioner. The |

sum not ordered returned represented the amount of tax

which was conceded to be payable on certain deliveries of

fuel oil supplied from localities within the -City of New

York. As to such part of the assessed tax the deter-

mination of the Comptroler was confirmed.

William C. Chanler, Corporation Covasel (Sol

Charles’ Levine, Edmund B. Hennefeld and

Jerome RR. Hellerstein of counsel), for ap-

pellant. : |

Herbert WK. Stockton for respondent.

H. Maurice Fridlund and. James R: Roberts for

Nirlin, Campbell, Hickox, Keating & MeGranun,

“ye camict curiae, - °

Crane, Cn. Je:

This appeal involves the same question as that pre-

sented in its companion case, Matter of Sears, Roebuck

A asin Cc.

€& Co. v. McGoldrick (279 N. Y. 184). Should the prin-

ciples. there stated lead to a different result on the facts

in this case? a

The Standard Oil Company, having numerous oil tanks

in New Jersey, by New York contract sold and delivered

oil to the respondent’s steamships at its. piers in New

York City. A tax upon these sales for the period from

December 10, 1934 to December’ 31, 1935, has been set .

- aside below, as an illegal burden upon interstate com-

merce. The only distinction upon. the facts in this case

and those in the Sears, Roebuck & Co. case rests in the

nature of the respondent’s business. The respondent buys

two classes of oil for steamships—fuel oil, and Diesel

fuel oil: In the briefs these are referred to as ‘‘Standard

Bunker Fuel Oil’’ and ‘‘Standard Diesel Fuel Oil.’’ The

storage tanks containing large quantities of these ots are

at Bayonne, New Jersey. ;

The contract for the period in question for fuel oil is

contained in a letter accenting an offer to extend a pre-

vious fuel oil contract- until December 31, 1936. It states

that the Standard Oil Company of New Jersey is to’

supply the total fuel oil requirements at New York of all

the. oil. burning vessels of the Compagnie (enerale Trans-

atlantique during the period of the contract up to a maxi-

mum of four million barrels per vear. The maximum

price is fixed at $1.10 per barrel, with provision for in-

creases. The contract for the Diesel fuel was also made

at New York for a period up to December 31, 1935, not to

exceed fifteen thousand barrels in any one month, and up

to, but not exceeding one hundred thousand barrels dur-

ing the term of one year. Delivery shall be made _ by ‘

‘Appendix C

barge provided by the seller to the buyer’s vessel at dock

within the harbor limits at New York, or to the buyer’s

vessel alongside dock of seller at New York. The price

varies according to the place of delivery. _ ,

These two companies have been doing business for

many years, and it was well understood that the oil of

the Standard Oil Company of New- Jersey was stored in

thousands of tanks in Bayonne, ‘New Jersey. So far as

this record shows, it had no storage facilities ‘in New -

York’ City. As the Normandie or the Paris or the

‘Champlain or the Lafayette approached the harbor in

New York, messages were sent to the Standard Oil Com-

pany’s office in New York City indicating the amount

of fuel that would be necessary, and with the docking of

' the steamer at the steamship company’s pier, barges of

the oil company would soon be alongside prepared to |

_ pump the oil into the steamer’s tanks. The oil was

brought from New Jersey by the oil company’s barges.

Both the Standard Oil Company of New Jersey and the

_Compagnie Generale Transatlantique were doing business

‘in the City of New York. * The latter had its piers. and

office at the foot of Fiftieth Street, and places of business —

at 19 State Street and 610 Fifth Avenue, Manhattan. The

. “Offices of the Standard Oil Company_of.New Jersey were

-at 26 Broadway, New York City. |

Unless there be some material difference between the

sales in this case and those.in the Sears, Roebuck: case,

_ we shall be obliged to sustain the tax. What difference do

_ we find? In the first place, the Standard Oil Company of

New Jersey maintains a large number of oil tanks in’

. Bayonne, New Jersey and the vicinity. The steamship

company knew that the nature of the business required oil

oH,

Appendix C

to be stored in large quantities, and that the oil company

had such a plant, and delivered its oil by drawing it off

from these tanks into ships at Bayonne, or else into

barges, to be carried to vessels at the Port of New York.

While the purchase or the contract of sale was made. in

New York, it was with a view of getting ‘this specific oil, .

the product of the Standard Oil Company of New Jersey.

from its plant and tanks in New Jersey. The product in

New Jersey, kept there in tanks, was the thing bargained

. for. “So far as the record in this case goes, the contract

centers around the purchase of the New Jersey oil of the

kind and quantity specified. The delivery at thes Port of

"- New York was made necessary because of the draft of the

steamers. The cost. of transportation from Bayonne to

the Port of New York increased the price.

In the Sears, Roebuck case the purchaser bought an

article in New York according to saniple. As long as he

got what he -ardered, it was indifferent to him whére it

came from. The merchandise was very largely stock goods

and kept for the convenience of the seller at various depots

“throughout the State. The ease -with which the tax could

he evaded by such class of merchandise being stored with.

out the State and sold in New York City by sample was’.

a matter worthy of consideration, as hearing upon com.

petition with New York goods.

~ Here, on the other hand, there is a special product of

the Standard Oil Company of New Jersey which has to be

kept in great receptacles built for the purpose which we

can treat by analogy as a manufacturing plant. . It is the

‘articles of this plant in New Jersey which the purchaser

seeks. At the office of the seller in New York it bargain-

for this oil to be put in its ships.. We think, under the

«5S

Appendix C

principles stated in the Sears, Roebuck case and the au-

’ thorities there cited, that this is a contract for interstate

shipments, and that the tax upon such a sale is a direct

tax upon interstate commerce.

The order should be affirmed with ‘costs.

Fixcu, J. (Dissenting.) The contract involved in

‘ the case at bar admittedly was made in New. York

for delivery .in New’ York of a standard kind of

oil ‘procurable in_ the open market in New York or

elsewhere, at an open market price. While customarily

coming from New Jersey, it is admitted that in some in-

_ stances the seller has resold oil which, pursuant to its

rights under the contract, it had purchased in New York.

When sold and delivered in this State, the fact that it

may be used thereafter in foreign commerce does not pre-

-. Vent it from being taxable as a sale here (Edelman v.

Boeing Air Transport, Inc., 289 U. S. 249). In addition, .

_ since no burden is laid on interstate ecommerce as such,

and no other or different burden than if deliveries had

heen made by intrastate ‘transportation in New York, the

tax is a non-diseriminatory one and cannot in any view

constitute an undue burden on interstate commerce (Wil-

oil Corp. v. Pennsylvania, 294 U. S: 169).

_ ~The order appealed from should be reversed and the

determination of the Comptroller reinstated.

Lanicax, ‘O’Brex, Hvers, LovoHrax and Savvay, IJ.,

concur with Crane, Ch. J.; Fixcn, J., dissents in opinion..

Order affirmed.

"Appendix C.

4. Opinion of Court of Appeals in Sears,

Roebuck Case

‘In the Matter of Sears, Rorsuck & Co., Appellant, against

JosepH D. McGouprick, as Comptroller of the City -of

New York, Respondent: 7

AppraL from an order of the Appellate Division of the

Supreme Court «in the first judicial department, entered

April 29, 1938, which confirmed a determination of the

Comptroller of the City of New York assessing a de-

ficiency sales tax, with interest and penalties, against the

petitioner for the périod from December 10, 1934, +

December 31, 1935, under Local Law No. 20 of "1934

(published as No. 21), as amended by Local Law No. 24 _

(published as No. 25) for@the City of New York.

Robert D. Steefel, SolM. Stroock, Peter I. B. lun \

and Bernard E. Brandes for appellant.

William C. Chanler, Corporation Counsel (Sol C Charles

“\, Levine, Edmund B. Hennefeld,.Jerome R. Hellerstein and

) Milton Sandberg of counsel), for respondent.

Crane, Cu. J...

By Local Law No. 24 (published as No. 25) of 1934,

enacted pursuant to authorization granted by the State *

Legislature (Laws of 1934, ch. 873), the city of New

York imposes, a tax of two pereent upon receipts from

every sale of tangible personal property sold within the |

city. The tax must be paid by the purchaser. to the

vendor, who is required to keep records and make a re-

turn to the Comptroller of his receipts and of the tax

payable thereon. A sale is defined as any transfer of

Appendix C

title or possession, or both, for a: consideration» A sale

at retail is a sale for any purpose other than for resale.

Although ‘ordinarily the tax is collected by the vendor

from the purchaser, the Comptroller may collect the ,tax

(ireetly from the purchaser. Where the vendor fails to

collect. the tax the purchaser is required to file a return

and pay the tax directly to the Comptroller. — Lia

Sears, Roebuck & Co. has been required to pay a tax

~ for-the years 1934 and 1935 upon sales made at its stores

in-New York City, the goods or merchandise being sent

from its warehouses or plants in other States. Payment

has heen resisted under the plea that such a tax is uncon-

stitutional, “as a burden upon interstate commerce. This

tax has been sustained by the Appellate Division.

The petitioner conducts and operates nine retail stores

within the city of New York. The principal office of the

petitioner, which is a New York corporation, is at Chicago,

Illinois. It has no factory or warehouse in the city of

New York .except a piano factory and except one ware-

house in the borough of Brooklyn,’which stores ready to

wear ‘suits, dresses, coats and: other articles of clothing,

piece goods, notions and other light merchandise. Sears, ~

. Roebuck & Co. maintains a control store at Philadelphia,

New York stores and other stores in various parts of the —

east of the United States, and the executives at this con-

trol store have charge of ‘and supervision over the New

York stores. The company also. maintains a factory at

Port Newark, New’ Jersey, where there are manufactured

and- assembled bulky articles, such as mill work, roofer

materials, heating equipment and the like. The articles

involved on this review are described as *‘ship direct -

58 as

Appendix C : .

orders.’’ . Certain articles which are large and bulky, or

which must be assembled and put together before they |

are ready for delivery to the customer, are not kept in

‘stock in the company’s New York stores, but are kept —

either at the contro] store in Philadelphia, or are kept or

‘manufactured upon order; at the factory at Port Newark,

New Jersey. At Boston, Massachusetts, there is the Bos-

ton mail ‘order control store: __ |

The regional auditor gave the following testimony:

“*Q. When you make a-sale or take an order for

this type of merchandise do you have samples at

your store?’ A. There are. samples on ay *

the store and that is all that is in the store; Because

of the type of merchandise, it is entirely too bulky

to carry it-in the stores.”’

The practice, so- the petitioner stated in its petition

for review, is for a customer to come to one of the retail

stores in NeW York City and order the merchandise in

question. He is informed by the salesman hate mer-

chandise is not kept in stock, but must be ordeFed from

either Philadelphia or Port Newark, as the cage may be.

~ His order is taken and if it is a cash transaction, he pays

his money, or, if it is a credit transaction, his credit’ is

checked. A sales slip is made out, which states that the”

merchandise is to be shipped either from the Philadelphia

control store or Port Newark direct tothe customer at his

home within the city of New York. <A duplicate of the

sales slip is sent to Port Newark or Philadelphia. . The

order is filled and is shipped by United States mail or by

common carrier. Thesample of sales slip, taxpayer's

_ Exhibit No. 6, for horsehide coat, size 48, simply has writ-

Appendix C

. ten diagonally across the bottom in lead pencil, “Ship

from Phila control Steres.’’ These sales slips are not

signed by the purchaser.

Approximately eighty-five per cent of the ‘sales at

New York city stores are filled from a stock of merehan-

' dise kept in New York City. As to the remaining fifteen

per cent, the goods are standard merchandise regularly

carried in stock by the company as a retail dealer, none

of which is manufactured to order, with the exception of

mill work. At the nine retail stores during the period in

question the appellant sold $2,750, 857.99 worth of goods.

Of these sales, $2,228,113.59 represented orders. filled from

stock kept in New York city stores or in the warehouse

maintained in Brooklyn. The balance of $462,744.40 con-

sisted of sales filled from stock held in warehouses main-

tained in Philadelphia, Port Newark or Boston.

The two percent tax on the sales of merchandise in the

stores in New York City has been paid. This appeal in-

volves solely the tax on the ‘‘shipped direct’orders.’’ All

parties to the controversy concede that the contracts of

sale or the sales were made in New York City. . The de

livery was made from the company’s warehouse or control

stores according to shipping directions directly to the pur-

chaser’s home.. — c

When the purchaser entered one of the defendant’s

stores and made a contract to buy certain merchandise,

according to the sample displayed, his purpose and object

were to procure the article, irrespective of the place from

which it was delivered. It made no difference to him

whether it came from Philadelphia, Port Newark or Bos-

‘ton. as long as he got it on time and in’good condition.

The delivery from the warehouses of the appellant outside

Fag hagpa vets a Unban <7

A ppendix_C |

the State was a matter of convenience or economy in the

methods of. conducting: the appellant’ buginess.- It can-

not be said. that the shipments oyt of /the State were one

ofthe important features of the” co tract... It was, inci- -

‘dental to the. contract, the bbligation of .the defendant

being to deliver the article purchased. From where it

should come was 4 matter of its choice. '

On these facts, has intetstaté commerce been bierdegsd

or interfered wh in such ‘a way as. to make this city tax

upon the proceeds of. these’ ‘‘s lipped direct orders”’ un

constitutional? T®. ie. first place, Sears, Roebuck & Co.

‘paid no more tax these articles which it had delivered

_from- its stores in Philadelphia or Part Newark or Boston

than it paid on the goods sold and delivered from its nine ..

~stores in New York City. It paid no: more tax than a

seller would have paid or, to be more exact, a purchaser

would have paid, if the goods had begn purchased and de-

livered in New York City from any tor wean” Hae

was here no discrimination: against the interstate com-

merce -or the shipment, of goods . from out the: State.

Neither could there possibly ‘be any double taxation in-

volved. - The “sale was ‘complete :in New York city; ‘the’

price was té bespaid in New York city; in every respect it

was a New York State contract, governed by the laws of

this State. The delivery of standard stock goods, for the

convenience: of the seller was “made from warehouses or.

storeplaces outside of the State. Under such. circum-

‘stances, to permit Sears, Roebuck & Co. to:évade this tax

would really be a discrimination against people doing

\ business within the city of New York with storehouses. or '

\ mills there. Besides, if. such sales were to go untaxed. a-

‘door would be’ open for an evasion, unfair indeed to those”

Se ce

Appendix iy is ty re

ore e-

who did not care to resort to such methods. Merchandise

could be stored or képt outside the State-and sold by sam- _

ple within the State, without paying a tax. ‘Not igs

' merchant can afford such storehouses. No: princi le -of /

- interstate commerce forces us to such a =

“Even interstate business must pay its way.

Telegraph Cable Co. v. City of Richmond, (249 U. 8. =

259). <a Ae ’

-. The counsel have relied upon Matter of National Cas

- Register Co. v. Taylor (276 N. ¥. 208). The sales there . |

were made and consummated ir Ohio where the compariy

approved; ‘accepted and executed the orders or sales. To

- the same effect was Matter of West Publishing Co. ve.

= Taylor (276 N. Y. 55). The reasons and principles here E

-,expressed find their source, or,. rather, their support, in

aged cases as Adams Manufacturing, Co. v. ‘Storen-(304. °

U. 8." 307): ering v. Arkansas-Louisiana Pipe Line

it oe “(303 U. S. 604); Vestern Live Stock v. Bureau o:

| Seppe (303 U.S. on ‘Henneford v. Mgson Co. (3

S. 577) + Wiloil Corp. v. Pennsylvania ( U. S169); °

Mies Oil Co. v. Johnson (292 U. S. 86); Banker = 7"

’ spiepe Co. “v. Commonwealth: pf Pennsylvania: (222

. 8. 210). ;

The order should. be affirmed, with costs.

°6 *.

* . oe

LEHMAN, -O’Bries, Hv BBS, Lov GHRAN, Fincu and Re.

¥ PRY, JJ. concur. ene

) Order ee a

. a

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