City of New York v. Feiring

CLARK, Circuit Judge

(dissenting).

I think the amendment of Bankruptcy Act, § 64, sub. a, by the Chandler Act did not lessen the force of New York City v. Goldstein, 299 U.S. 522, 57 S.Ct. 321, 81 L.Ed. 384, for that upheld the city’s claim to priority by merely citing In re Atlas Television Co., 273 N.Y. 51, 6 N.E.2d 94, 96, which had sustained a like priority in state assignment proceedings expressly upon the ground that it was a tax claim. In the Atlas case the court rejected any other basis for priority on the authority of In re Northern Bank of New York, 163 App.Div. 974, 148 N.Y.S. 70, affirmed 212 N.Y. 608, 106 N.E. 749, and then said of our decision in In re Lazaroff, 2 Cir., 84 F.2d 982— reversed in New York City v. Goldstein, supra — which had denied priority: “We might agree with that conclusion if the local law did not contain other provisions which indicate that the obligation imposed upon the vendor is in the nature of a tax. * * * We must look to the substance of the obligation. From that point of view it seems clear that the city is entitled to a priority. It has imposed a tax as sovereign and to meet a need which concerns the welfare of the state. It has provided that the vendor of property must pay the tax to it. * * * The local law provides that the ‘vendor shall pay the tax,’ and the city is entitled as sovereign to priority for such payment.”

This seems to me clear enough; I do not believe its force is impugned by later analyses of the ultimate incidence of the tax — as on the purchaser — to avoid claims of double or extraterritorial taxation, Merchants Refrigerating Co. v. Taylor, 275 N.Y. 113, 124, 9 N.E.2d 799; McGoldrick v. Berwind-White Coal Mining Co., 309 U.S. 33, 60 S.Ct. 388, 84 L.Ed. 565, 128 A.L.R. 876, or the windfall of a refund of a tax improperly collected. Kesbec, Inc. v. McGoldrick, 278 N.Y. 293, 16 N.E.2d 288.

In actual fact the obligation, of the vendor has all the characteristics of a fax: an absolute duty to pay, regardless of his failure to collect; a liability for all taxes, even though he need not collect on sales less than 12 cents (as established by the Comptroller’s Regulations authorized by the law) ; and enforcement against him by suit or tax distraint. I do not see why this is not properly a tax levy against both vendor and purchaser, as seems the city’s obvious intent, certainly so far as remedies are concerned. But whomever this tax is said to be “on,” it is evident that when it is not paid, the vendor will generally be the one proceeded against; and in that event he shall pay “the tax.” I do not believe his bankruptcy changes its character. Compare Barbee v. Oklahoma Tax Commission, 10 Cir., 103 F.2d 114, affirming In re Kanaly, D.C.W.D. Okl., 23 F.Supp. 995; 18 N.Y.U.L.Q.Rev. 135; 40 Col.L.Rev. 1241, 1245.