Case ID: ny-super-ct_54/html/0371-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court.—Truax, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

GEORGE W. McLEAN, Receiver of Taxes in the City of New York, Respondent, v. THE MANHATTAN MEDICINE COMPANY, Appellant.
    
      Demand before action, as to necessity of—Necessary to sustain an auction against a corporation for unpaid taxes.
    
    Where a statute requires a demand, it is a condition precedent to the action, and the action itself is not a sufficient demand.
    The statutes in relation to the collection of taxes assessed on incorporated companies, require payment thereof to be demanded from the president or other proper officers before proceedings are taken for their collection. Such demand is a condition precedent to the maintaining of an action to recover such taxes.
    Before Sedgwick, Ch. X, Truax and Dugro, JX
    
      Decided March 14, 1887.
    This is an appeal from a final judgment entered on an order overriding a demurrer, and from such order.
    
      The complaint alleges the appointment of the plaintiff as receiver of taxes in the city of New York, and his entry upon the duties of his office as such receiver.
    It alleges that, at all the times therein mentioned, the defendant was and is a domestic corporation organized and existing under the laws of the state of New York, and having its principal office or place of transacting its financial concerns in the city and county of New York.
    That the defendant was, under the direction of the commissioner of taxes and assessments of the city and county of New York, and by deputy tax commissioner to such duty by them assigned, duly assessed for the purposes of taxation in and for the year 1881, upon, its capital stock in the sum of $20,000, and that such assessment was duly made in the city and county of New York.
    That such assessment was duly confirmed by the Board of Alderman, and that a tax, in the year 1881, was duly imposed by such board upon the said defendant in.the city of New York for the sum of $524.
    That, on the 24th day of October, 1881, the corrected assessment roll, showing said assessment and the amount of said tax, was duly delivered by the Board of Aldermen of the city of New York to Martin T. McMahon as receiver of taxes with a warrant annexed thereto, given under the hands and seals of five more of the members of the said Board, directed to him as such receiver of taxes, and commanding him to collect said tax, which warrant was in due form of law.
    That, on the 15th day of January, following the year in which the said tax was imposed, as aforesaid, the said tax remained, and still does remain, wholly unpaid, and in arrear.
    The defendant demurred to the complaint upon the ground that it appeared upon the face thereof that the complaint did not state facts sufficient to constitute a cause of action.
    
      
      Saunders, Webb & Worcester, attorneys, and Thorn-dike Saunders of counsel for appellant, on the question considered in the opinion, argued:
    A specific “ demand ” is a prerequisite to action, and should have been alleged in the complaint.
    I. The law requires the receiver of taxes to demand the payment of the tax upon capital stock from the president or other proper officer; and, if not paid, to proceed in the collection thereof in the same manner as in other cases. N. Y. City Consol’d’n Act, 1882, § 848.
    Then, as in other cases, he may recover tax in arrears on January 15, etc., by suit. Ib. 1882, § 863.
    It is not required by this law that the receiver shall demand tax from individuals assessed in the city of New York. Hence the decision in the case in 50 N. Y. Super. Court, 533 (McMahon v. Platt), to the effect that no demand is necessary, though good for that class of cases, is inapplicable to a cause alleged against a corporation for tax on its capital stock where a demand is specifically required by statute.
    n. Where the statute requires a demand, it is a condition precedent to the action. Thompson v. Gardner, 10 Johns. 404; Parker v. Rule’s Lessee, 9 Cranch, 65.
    III. The action itself is not a sufficient demand. That is enough where there is an agreement to pay and it should not be extended. Downes v. Pœnnix Bank, 6 Hill, 297.
    While in, cases of taxation, though action may be maintained, yet there is no promise founded on an agreement. Burroughs on Taxation, § 105.
    IY. This section 848, requiring demand, is not repealed by section 863.
    The two sections can be read so as to stand, and should be so read that both may be operative. Beebe v. Estabrook, 79 N. Y. 246; Kerr v Dougherty, Ib. 327.
    Y. The complaint was insufficient in not containing an allegation of “ demand.” Bristol v. Rensselaer and Saratoga R. R. Co., 8 Barb. 160.
    
      George P. Andrews, counsel to the corporation, on the questions considered in the opinion, argued:
    The The omission in the complaint of any allegation of a demand for the tax of the kind mentioned in R. S., part I., chapter 13, title § 17, is the principal ground of defendant’s demurrer, the defendant’s contention being that no action will lie till such a demand has- been made. The plaintiff, on the contrary, claims that .the fact that the tax was unpaid on the 15th day of January following the year of its imposition, ipso facto, gives rise to the cause of action.
    A perusal of the title in question, 2 R. S. (Banks’ 7th ed.) p. 1038, convinces that the demand provided for in § 17 is merely one feature of the scheme blocked out in the subsequent sections of the title for the collection of taxes against corporations. It is part and parcel of that particular method of collection, the preliminary step therein. It is not a condition precedent to any other companion method of collection that may exist.
    The statute under which the present action is brought (§ 863, N. Y. City Consolidation Act of 1882) says boldly and without qualification: “ Any tax duly imposed for personal property upon any person or corporation in the city or county of New York, and which shall remain unpaid and in arrear on the fifteenth day of January succeeding the year in which it shall have been imposed, may be recovered with interest and costs, by the receiver of taxes of said city, in an action in any court of record in this state.”
    The statute, a local one, is a re-enactment of chapter 334, Laws of 1867, entitled “An act in relation to the collection of arrears of personal taxes in the city of New York.” The act, as its title indicates, prescribes a scheme for the collection of taxes in this city. That scheme is complete in itself and contains no requirement for a demand.
    By the terms of this Act of 1867 corporations and persons are put on an equal footing in this respect. No demand is required of either, and no good reason exists why there should be a demand. The tax is evidently regarded as a simple claim or debt to be enforced like any other claim or debt, by an action at law.
    On the other hand, the demand prescribed in the collection scheme provided in the Revised Statutes, has a raison d’etre. It is a condition precedent to an extraordinary remedy for the collection of the tax, a proceeding by the Attorney General of the state to sequester the property of the corporation and if need be to suspend the exercise of its corporate functions until the tax be paid.
    The general and the local schemes are evidently separate and distinct, and bear no relation one to the other.
    The same reasoning applies to the demand prescribed in section 848 of the Consolidation Act; it is a re-enactment of section 15, art. 2, chap. 230, Laws of 1843, entitled “ An act for the collection of taxes in the city of New York.” It is independent of the Act of 1867. The local scheme provided by the Act of 1843, so far as it has not been repealed, is still in force, although not contained in the Consolidation Act. Mayor v. Buell, 12 Daly, 494; Laws of 1843, chap. 230, art. 2, §§ 15-21, p. 320; §§ 18-21 Repealed Laws, 1862, chap. 152.
   By the Court.—Truax, J.

The principal reason assigned to us why the complaint does not state facts sufficient to constitute a cause of action, is, that it does not allege that a demand was made by the receiver of taxes upon the president or other proper officer of the defendant, before the commencement of the action. The general method in which the taxes imposed upon incorporated companies are to be collected, is prescribed by title 4, chap. 13, part 1, of the Revised. Statutes, Banks’ 6th ed., p. 979.

These provisions are modified in a slight degree by title 1, chap. 16, of the Consolidated City Act of 1882.

Section 1, of the act first above cited, provides that “ all moneyed or stock corporations deriving an income from their capital or otherwise, shall be liable to taxation on their capital in the manner hereinafter prescribed.”

Section 18 [17] provides that “the collector shall demand payment of all taxes assessed on incorporated companies from the president or other proper officer of such companies, and if not paid shall proceed in the collection and payment thereof in the same manner as in other cases.”

This provision became a part of the Consolidated City Act, and is section 848 thereof.

Now, the proceeding authorized by this title of the Revised Statutes, and by the title of the Consolidated Act above referred to, is, among other things, the collection of a tax which has been duly imposed upon an incorporated company, and which remains unpaid.

This section says that, before the collector—or in the city of New York the receiver—of taxes shall proceed in the collection of taxes, he shall make a demand upon the president or proper officer of the company taxed.

No such demand has been alleged in this case.

Where a statute requires a demand it is a condition precedent to the action, and the action itself is not a sufficient demand. Thompson v. Gardner, 10 Johns. 404; Downes v. Phœnix Bank, 6 Hill, 297.

Section 848, which requires the demand, is not repealed or modified by section 863.

Section 848 says, that the officer shall proceed in the collection of a tax, and then section 863 provides the manner in which the officer shall proceed in the collection of the tax, namely: “ He shall proceed in an action in any court of record in this state, and may recover the tax with interest and costs in such action.”

Since the plaintiff must amend in this particular point, there is no reason why he should not allege in his amended complaint that the defendant is a corporation deriving an income or profits from its capital or otherwise, and so avoid the other objections to the complaint raised by the defendant.

The judgment and order below are reversed, and the demurrer to the complaint is sustained with costs, and with leave to the plaintiff to amend the complaint on payment of such costs.

Dugko, J., concurred.