Earl Warren: Number 82, International Harvester Credit Corporation, et al., versus Allan J Goodrich, et al. Mr. O'Brian.
John Lord O'Brian: May it please the Court. This case is here on direct appeal from the New York Court of Appeals jurisdiction having been noted by this Court last October. It involves a controversy between the appellants who were manufacturers of tractors and motor vehicles and the action of the State Tax Commission in levying what is called colloquially, the highway use tax of New York City. The parties submitted their dispute by a stipulated case in accordance to the New York practice to the Appellate Division of the Third Department which -- which it decided against the -- the appellants and appeal was taken to the Court of Appeals. The Court, the majority of the Court wrote no opinion but affirmed one Judge, Judge Van Voorhees, dissenting in an -- a short and very strong opinion which is part of the transcript of record before you. The -- if I may briefly state the facts instead of the question at law the furthest, I think I can make it relatively clear and also narrow the issues. These appellants, I make no distinction between them, the International Harvester Company and the Brockway Company are the same both, what I I say for one applies to the other. As the International Credit Company here, Harvester Credit Company, is merely the assignee of the rights of the Harvester Company. It's a -- it's a finance corporation. It has nothing to do with the issue here. In the spring of 1953, the -- these two companies sold to the Eastern Carting Company three tractors, International sold two and Brockway one. These tractors are the motored, the motor vehicle that hitch on to the trailers and tow them. And at that time each of these vendors took a -- took a conditional sales contract after a down payment. And those contracts were recorded as required by law. And there is no question in this case anywhere of lack of good faith on the part of anybody. The -- that was in February and March of 1953, that these vehicles were purchased. In the following January, the Eastern Carting Company having before them on all of these contracts, the appellants exercising their rights under the contract replevied their -- their tractors. That was in accordance with the legal procedure provided. They were sold at public auction bid in by the two appellants. The International Company immediately resold its tractors. One to a Massachusetts Corporation, which ceased to have anything to do with New York, the highways. The other, too, was connected to the corporation. Brockway still had possession of it. This -- this replevin then took place in -- in January, in a -- I beg you pardon, January 22nd of 1954. April 21st following that, the State Tax Commission for the first time gave notice that it was attaching under its -- under the lien provided by statute all three or two of these -- two of these tractors and the proceeds of the sale of the third. It being the contention and the -- the State Tax law and I can narrow this proceeding somewhat, this highway tax law, in the case before you, presents no question of the right of the State to levy the tax in the -- measured in the way that it is measured in the statute. That is to say, there's as in addition to other taxes, this tax shall be from the carrier except where the carrier is not the owner of such vehicular unit and the tax shall be joined and -- and I beg your pardon, where the carrier is not the owner, the tax should be joined in several liability upon both the owner and the carrier. This tax is based on the gross weight of each particular vehicle and the number of miles it is operated on the public highways in this State and so forth. The tax for each vehicle shall be computed by multiplying the number of miles operated on the public highways in the State by the appropriate weight group. That is, these are tractors of more than 18,000 pounds. When an vehicular -- well I will not read the rest of it because it doesn't apply to it. Now, the next section provide how this tax is to be paid -- is to be paid. There's no dispute between the parties as to the -- the first section of this statute. We raise no question of the validity of the way the tax is to be measured or its fairness. But when it comes to the payment of the tax then our controversy arises. At the time of filing a return, that is once a month, as required by this article, each carrier shall pay the Tax Commission, the tax imposed for a period covered by the return. The regulation, the company regulation provide -- that's in detail, how that is to be done. The form of the return should be filed once a month. And the tax shall be due and payable at the time of filing the return and so forth. Now then, the fees, taxes, penalties and interest, accruing under this article shall constitute a lien upon all motor vehicles and vehicular units of each such carrier. The lien shall attach at the time of the operation of any motor vehicle or vehicular unit of such carrier within the State and it shall remain effective until the fees, taxes, penalties and interest are paid or the motor vehicle is sold. Such liens -- that this where our dispute arises. Such liens -- well that's a lien for all the taxes of the carrier, not -- not the taxes on our particular unit. This carrier operated, it is stipulated, 15 of these vehicles at -- at this time. Except the law says such lien shall be paramount to all prior liens or encumbrances of any character and to the rights of any holder of the legal title in or to such motor vehicle or vehicular unit. Now, the -- the case as presented on the part of the appellees is -- is a case presented on the theory of lien priority, the State having enacted this statute. The appellees that take the position that that lien is paramount to all other rights in these vehicles. Our position is a very simple one, that shocking as it may sound, our vehicles have been seized. Our property interest in our vehicles have been seized to pay the total liabilities of a carrier for the highway use taxes, penalties and interest for which we are not liable, have not been liable and could not be liable under the statute. Now, the reason from my making this last statement in this form is this. This statute contained another section, which is not necessary to go into here, providing that the -- in those instances where the carrier is not the owner of the vehicle. The owner may file the return on his own behalf and -- and maintain the records required by the statute. And he shall be jointly and severally liable with the carrier for the payment of the tax. Now, the first anomaly here is that the Attorney General has ruled in a formal opinion, which is quoted in the briefs of both of the parties here, has ruled that the holder of a -- that a conditional vendor, which we were originally here, is not an owner. And that he is not liable for the payment of the tax nor is he permitted to file under this section, the necessary documents which would clear away any lien on the vehicle. That is the first element in this case that gives singularity to it and takes it a little out of the -- takes at the great deal out of the ordinary. Now, the -- the --
Felix Frankfurter: Would you mind -- would you mind giving an illustration of -- of what would be if (Inaudible) on that carrier if -- if the conditional vendor is not, who would be an owner without being a carrier?
John Lord O'Brian: Well, that's one of the question. [Laugh] We've been trying to secure an answer for from the Commission, Your Honor. The -- under the New York law, frankly, a conditional vendor is the holder of a security interest and the case of the Tax Commission is based on the theory, I think you will find, that a -- that there are just two liens, one of the State and one of the conditional vendor. Therefore, the State is given priority by law and that's the beginning and end of the case.
Felix Frankfurter: There's no owner at all?
John Lord O'Brian: There's no owner at all in this -- in this -- in that -- in that situation. That's one of the anomalies.
Felix Frankfurter: But if --
John Lord O'Brian: Now, the other --
Felix Frankfurter: -- this seizing is suspend.
John Lord O'Brian: I beg your --
Felix Frankfurter: -- this seizing, the personal property filed, there were seized and about personal property, these were suspended, is that it?
John Lord O'Brian: Well, there's another element in this case. After we -- you'll notice that as already said, I hope you'll notice, that after we replevined our property and we were now in the position of having recovered our property and being the sole owners of the property before the State took any action to perfect its inchoate lien. Now, we're perfectly familiar with the cases which hold that where an inchoate lien attaches, it -- it's dated back to the -- when this is liquidated to the time when -- when the lien first acquired. We -- we're perfectly well-acquainted with those cases and I'm not trying to put them to one side. But in this case, the appellees say, secondly, that we had imputed knowledge of this statute and that these appellant took -- wanted to take the risk of selling their -- their tractors on a conditional sale, knowing that this statute undertook to place a lien upon all vehicles owned by the carrier. Then -- or operator, that I should say by the carrier. Then we were put on notice and we are held to the doctrine of implied consent. Now, right in this connection comes the second thing on -- on this question of who owned this property, may I -- may I quote from the appellees' brief.
Stanley Reed: Is this to save the contract in here, Mr. O'Brian?
John Lord O'Brian: I beg your pardon?
Stanley Reed: Is it conditional sale?
John Lord O'Brian: No, it is not. But there's no disagreement between the parties. It's some ordinary --
Stanley Reed: Ordinary --
John Lord O'Brian: -- that with the title was reserved in the -- in the vendor --
Stanley Reed: -- and you --
John Lord O'Brian: --until the property is fully paid for.
Stanley Reed: But you -- you agreed to execute a transfer to the buyer --
John Lord O'Brian: Yes -- yes.
Stanley Reed: -- on payment?
John Lord O'Brian: I -- I think that's correct you using my --
Stanley Reed: I -- I have no question about that.
John Lord O'Brian: Yes.
Stanley Reed: It isn't understood.
John Lord O'Brian: The -- now, let me call attention to the third peculiarity. In our prayer we find ourselves in this case. This is not a prior lien case at all. The cold reality is that we are here today with our property seized. Our property interest, will you call it a conditional vendor's right or whether you call this the reservation of title or what not, it was what is concededly on this record over $5000. And it was seized and has appellees brief state here, this case does not involve the imposition of a tax upon the appellants or upon the trucks, which the appellant -- in which the appellants held a security interest. The New York Highway use tax is imposed upon the carrier, Eastern, and as construed by the Attorney General, the appellants, as conditional vendors, have no liability for the payment of Eastern's taxes. But here, we are with our property seized and the taxes by the way which are included in the claim against us, include, as stipulated here, the taxes measured by the use of our three particular vehicles which is -- which is all right. Secondly, these taxes in -- in of the -- this liabilities, let me say, include taxes incurred by the carrier by the use of vehicles other than these three others, his other 12 vehicles used the roads in this period. And they also include, the taxes incurred for periods both prior to our sale of the trucks to Eastern and subsequent. In fact, these taxes as stipulated include a year -- a year that use of other trucks before our trucks were sold at all. And the taxes in -- then that they include also, of course, the subsequent taxes. But the -- but in this connection, we're not only being coerced to pay these taxes. Many of us pointed out the dissenting opinion below, the bulk of which were accrued to the carrier before we ever saw that carrier. Now, (Voice Overlap)
Harold Burton: Mr. O'Brian --
John Lord O'Brian: -- set --
Harold Burton: Mr. O'Brian, do you conceive that if instead of a conditional sale, you had a chattel mortgage arrangement that your position would have been different?
John Lord O'Brian: I think a conditional sale is -- is stronger position. But, Your Honor, that very question has been discussed [Laugh] a -- a great deal without conclusion. That Justice Cardozo in the Maclay case raised up, or conjured up quite a number of those refinements of the difference in essence between different kinds of liens, judgment liens, mortgage liens, chattel mortgage liens. And then, if I may use aa an expression of the man I admire very much, he threw up his hands and said it was unnecessary in that case to get into all these refinements. So that --
Harold Burton: (Voice Overlap) -- the State (Inaudible) is the same way as it would be to chattel mortgage.
John Lord O'Brian: Exactly.
Harold Burton: But you insist on that being a difference between the two?
John Lord O'Brian: Yes. And I also -- I'll speak on - of this point later, pardon me. I also claim that at the time the State undertook its -- to impose its lien, you see the State waited 22 -- 27 months. And then for the first time, these appellants learned that the carrier owed back taxes. Now, the other singular feature -- I don't like -- keep using this word but it is a singular feature, is this. Under the New York Statute, this -- this very statute, New York State forbad any information in regarding to -- to tax delinquencies under this statute or tax liens under this statute or any information, whatever related to the -- the -- to the tax imposed, it forbad the disclosure and made it a crime for any person connected with -- with this collection in an official capacity to disclose to anybody, except the owner. So that we -- so that here is something entirely new in tax law. Here is the State by -- we are told, for example, that we are put on notice. Here, you -- you know that this lien was provided by statute and yet you sold your trucks. Well, you consented to what just has happened since.
Speaker: Did you try to get the information?
John Lord O'Brian: The record is silent on that but it -- but it -- I think we may -- that is one of the arguments made by our opponents that we -- we do not show that we attempted to get it. But it was a crime. It's a misdemeanor.
Speaker: It could be a crime to attempt to get it, will it?
John Lord O'Brian: Well --
Speaker: Would be a crime to give to him to you?
John Lord O'Brian: I don't know. But bear in mind, Your Honors, that there is no reason for the appellants to suspect that there are any unpaid taxes here, until the day that they knew, they were properly received.
Speaker: (Inaudible)
John Lord O'Brian: I beg your pardon?
Speaker: You knew there was lien on you, whether you own it or not?
John Lord O'Brian: Yes. I want to discuss that question of lien separately, pardon me, in just a moment, Your Honor.
Earl Warren: Mr. O'Brian, when if we -- if we decided that you were right in that respect, would we reach on to these other questions?
John Lord O'Brian: I beg you pardon?
Earl Warren: If we decided you were right in that respect, we wouldn't reach these other questions --
John Lord O'Brian: No.
Earl Warren: -- would we?
John Lord O'Brian: No. We raised an old question. For example, let me narrow this issue further. I've already said that this case is not like the Capitol Greyhound case or these cases where it's difficult to break down -- break down taxes and -- and allocate taxes. So that your court certainly is very familiar with all of those cases. That isn't this kind of a case In this case, under the regulation of the Tax Commission itself, the -- the owner was obliged to file each month, a statement for each vehicle that he operated, identifying the vehicle, giving the date of the trip, the permit and the vehicle numbers, the destination, the number of miles traveled each day. Can the stat and the regulations then provide? This is in -- in our reply brief to this appendix. That at the end -- that at the end of the month he files his return, he totals for each vehicle separately, how far it has traveled. So that at the time the -- time the Tax Commission seized our property, they had in their possession a complete and accurate statement, presumably it's accurate, of what use have been made on the highway of our vehicle and that is open to them to tax that and when they came to imposing their lien. They were confronted with no difficulty so far as allocating the part of the lien. We frankly concede that although we did not operate these trucks of ours, that -- that we may, that the lien may be fairly enforced against us for the use of our own trucks. But that isn't this case. This case involved not only all the back taxes on the other trucks, but it includes, as stipulated, something over $500 in penalties that were assessed against the carrier because he had filed incorrect returns or he had filed no returns. In other words, penalties for a misbehavior of the carrier -- carrier that had nothing to do with the tax earned by the use of the highway. And so, we are presented -- were presented with that situation. And bear in mind, the Attorney General has ruled that we are not liable for any of these taxes by a sort of a mystic of the word “lien”. This is converted into a -- a liability against us for growing out of something we couldn't have been liable for except these, our three, the use of our three vehicles might have justified it.
Speaker: But if there had been a tax lien on this --
John Lord O'Brian: I beg your pardon?
Speaker: If there had been a tax lien, when you bought these upon this you -- you would have been liable the -- the part of the vehicles would have been liable for that tax lien?
John Lord O'Brian: It -- its -- pardon me?
Speaker: If there'd been tax lien, a sale lien.
John Lord O'Brian: Oh, well, now wait a minute. I -- I beg you pardon -- pardon me. But if this were a -- a general judgment or something of that sort --
Speaker: No -- no, just a (Voice Overlap) --
John Lord O'Brian: -- a -- a general tax. Now, this tax, bear in mind, is a specific tax for the use of the highways.
Speaker: Yes.
John Lord O'Brian: That and the tax law itself declares the purpose of it by declaring that the purpose of this tax is to provide revenue for the maintenance of the highway and to collect these taxes from the persons who most benefit from them, namely the heavy truck owners. So that -- let me turn back, if I may, to the question of the tax itself.
Speaker: Before the -- before you do that as there's one factual thing.
John Lord O'Brian: Yes.
Speaker: Your company is not carrier -- carrier, is it, the International Credit Corporation?
John Lord O'Brian: No. Well, it's the International Harvester Company, no. We're manufacturers.
Speaker: You're -- well, the International Credit Corporation.
John Lord O'Brian: Well, that -- that's just an ancillary finance corporation.
Speaker: It does. Well, it -- it isn't the case?
John Lord O'Brian: No -- no.
Speaker: But it isn't all the vehicles of the Credit Corporation then that are subject to this lien. It's only the ones that were used on the New York roads. Is that correct?
John Lord O'Brian: No, there -- it's all three. Let me put it this way. These appellants had three tractors. They were used.
Speaker: Yes.
John Lord O'Brian: The carrier had 12 more tractors and he been operating the whole fleet --
Speaker: Yes.
John Lord O'Brian: -- without paying any taxes on them.
Speaker: Yes.
John Lord O'Brian: And now, our property is seized to pay those tax liabilities incurred by the carrier although neither of these appellants ever operated a -- a truck on the roads.
Speaker: Well, has anything been seized except the three that were operated on the road?
John Lord O'Brian: No. Those are the only ones that belong to us. Those are the ones we replevied.
Speaker: Yes.
John Lord O'Brian: Yes.
Speaker: And those are the only three --
John Lord O'Brian: Yes.
Speaker: -- that have been seized?
John Lord O'Brian: We're -- we're -- they are seized and we're assessed the total liability for all of these taxes that have accrued back as far as January of 1952.
Speaker: But the -- but not in your own name, in the name of the carrier?
John Lord O'Brian: Oh, no. Well, that those taxes were levied against the tax but the lien and the liability --
Speaker: The lien is not against you as I understand it. The lien is against the three vehicles that you obtained from the carrier.
John Lord O'Brian: Yes.Our -- our own three vehicles, yes.
Speaker: Your own three vehicles --
John Lord O'Brian: Yes.
Speaker: -- which you allowed to be used and that's (Voice Overlap) --
John Lord O'Brian: That -- that is correct.
Speaker: -- New York says came under --
John Lord O'Brian: That is correct.
Speaker: -- the lien of the statute.
John Lord O'Brian: That is correct. Now, our primary contention is that -- that entirely apart from this statement of the Attorney General, we could not have been made liable for these -- for these taxes as conditional vendors because we didn't use the highways. It is true that we consented to the use of our trucks, but we -- we did not use the truck in the highways. And no benefit, going back to the old rule that no man may be required to pay a tax where there is no benefit that accrues to it. There was no benefit to us in -- in the legal sense except that it's a part of appellees, I think, weekly assert that our trucks had a market because they could be used on the highways and therefore there was some relationship. There was no relationship between these appellants and the carrier aside from the sale of those trucks. That's the only connection with this whole of a liability, the fact that three of their trucks were in his position. Now, let me turn if I may to the --
Speaker: And --and that's their only liability.
John Lord O'Brian: I beg your pardon?
Speaker: And the only liability that your client has are the three trucks?
Speaker: That's right. That's our position. But that isn't --
John Lord O'Brian: Now, New York doesn't claim anymore does it?
Speaker: Oh, New York claims $3800 or $3900. All the taxes that accrued against this carrier and that is -- but -- that's our trouble. If this were a case where the Tax Commission as it could have done under this statute, when it came to levying its lien have allocated against us, the amount of taxes shown by the returns filed, this case would not be here. But our property is taken to satisfy the liabilities of someone else, namely, the carriers. Bear in mind, appellees insist that this tax is -- is even now not on us. And not [Laughs] on our vehicles. That sounds very paradoxical but our -- we're like that (Inaudible) was imprisoned in the (Inaudible) case where Mr. Justice Hughes, said whether he was there by breach of contract or from misdemeanor didn't make any difference to him because he was in jail. It doesn't make any difference what these theories are. The cold reality is that our property has been seized to pay a tax and penalties for which we are not liable and which were incurred by the carrier and the reason for it is said to be, the only justification, is said to be this provision of the statute about the lien applying to all vehicles as against -- that he has against the taxpayer. Now, our view is this. That the -- the State could seize only the -- only the interest that the carrier had in these vehicles. He had the right under any theory to use in possession, whether we retain the title or not. All that he had under the conditional sale contract was the right to use them. But instead of seizing that right and undertaking to settle that right they -- they have seized the property of the creditors. Now, may I call attention to the question of what this lien is? Because that is -- that is something on which there is a sharp difference of opinion. I'm not stopping to distinguish those cases where it meant -- meant innocent parties have been -- have been caught in the toils of the law because they permitted their -- their vehicles to be loaned and used for illegal purposes. And I'm not stopping to distinguish the cases where a public policy as declared by the legislature has made special exceptions. But this a case where there was no benefit to us and therefore no lawful tax could have been imposed, constitutionally, except for the use of our trucks. Now, note -- note what this -- note what this lien is, if this lien -- this lien is a caveat. Statute says, the lien shall attach at the moment the vehicle goes upon the highway. And we're quite familiar with the rules of law which hold, as I have said, that where a tax is impose of an inchoate character like that and later on it becomes fixed in a mound, then that dates back. Now, we don't contest that in this case, but here was a secret lien. This lien and I think I speak advisedly. This lien was not -- unlike that lien of the collector of Internal Revenue. Those liens have been so often before the Courts. Those are liens where the collector files a liquidated claim and he files it. He's required by law to file it. Now, in this case, this lien was not required to be filed anywhere. It was what Justice Cardozo called in the Maclay case a caveat. It was noticed that if that they take -- that if the carrier that -- that it was noticed that if the carrier did not pay his taxes, then this would become a liquidated lien. Now, at the time of the seizure of these -- of these tractors, I go back to that, in the ordinary course of business, the right of the carrier has been extinguished in this. The appellants were the -- now the legal -- now the legal owners. Now, this lien is in short a sort of a cloud on title. It -- its floating there. If the man pays his bills, there is no lien. It's -- it's in the area. It's noticed that there may be a lien literally. And in -- in that case the -- in -- in -- and -- and there you'll have a situation where the -- the purpose of a lien, the traditional lien, the common law lien, the purpose of a lien was to give notice to a purchaser or a -- or an interested party that there was a lien. So that, and this all important, he might go to the recording office or the assessment office or the State Tax Commission and ascertain whether there was a liquidated lien. But in this case, and I keep emphasizing it, the State itself made that impossible because it made it a crime to disclose anything about -- about this delinquency. Now, it's significant, I think, in that connection, although not at all, of great importance, that the legislature of this last year following the opinion below, in this case, has added a clause to the secrecy provision and of which authorizes the State Tax Commission periodically to print lists of tax delinquents under this statute, so that men can now ascertain. But the lien, and my point is, in this case owing to these peculiar facts, the lien was legally ineffective as against the property right of -- of these appellants.
Harold Burton: As I understood you Mr. O'brian, you do not dispute that New York could have taxed in there, put a lien upon your property or your vehicles when you state had made it in the highway?
John Lord O'Brian: That is correct.
Harold Burton: You object to the enlarging of that lien for the use of the other --
John Lord O'Brian: Well --
Stanley Reed: -- vehicle.
John Lord O'Brian: Yes, Sir. Except I wouldn't called it enlarging of the lien. We -- we're being tax, bear in mind, the Attorney General said we're -- we're not liable for this tax. We -- we answer that, he says as a conditional vendor we're not liable for this tax. But our property is seized for the purpose of paying this tax. That -- that's the nub the case. And -- but now, it will be said that well, after all, you have notice of this tax. You might have known there'd be some tax. All you're complaining about is that the tax is larger than you thought it would be. That is not our case. We say that this tax must have a foundation in law. That there was, except for our three vehicles, there was no relationship between us and the circumstances that gave -- gave rise to this tax. Now, it will also be urged that it vested the State Tax Commission to say, how this should be levied. And they take the position that as a matter of convenience, this is the way the tax should be levied, all put into one ball of wax and --and assessed. We say that cannot hold. That -- that is not legal as against us. That they can't do that. There's nothing in this statute, may I emphasize, either that would prevent, if you read and interpret the State Tax Commission, when it came to enforcing its lien against the (Inaudible) that -- that these are problems. There's nothing in the statute that would or have prevented that from charging us the correct amount of -- of our taxes. But that isn't what they did. And I keep -- I keep repeating that and perhaps too much. In other words, we say the State neither the State nor the Tax Commission have the power to impose on us a liability that concededly, that incurred against another and compel us to pay the full amount of that liability for no other reason than that at one time we sold three trucks under vendor's -- under vendor's contract. And so far as being given notice to this concern, I have already referred to that. The doctrine of imputation of knowledge does not apply in this case because all the knowledge that was given us was notice that there would be a lien and unless taxes were paid. We -- and -- and the State did not liquidate its claim until after we became the sole owners of -- of the property. Now, the -- there's one other feature of this which -- which I think goes perhaps to the looseness of the statute itself and may explain something of what has happened here. This statute carries with it the regulations made by the Tax Commission. The Tax Commission in addition to the -- what I have read as to how returns should be made and the separate milage and the separate tax assessed against each vehicle. In addition to that, the -- the Tax Commission provides that before the Tax Commission can proceed to enforce its rights against the carrier, I'm talking about the Eastern, they must give him notice. They must assess the tax. They must give him notice. They must -- they must give him notice of any -- they must propose sale. They must give him a hearing. And the statute also provides, as you will see in the Appendix to our reply brief, that so far as our carrier concerned, he is also given a specific right of court review. Not one of those protective rights is given us under this statute on the theory, apparently, that we're merely -- we're merely conditional vendors who merely hold the title to this problem. We have no review. We have never had had a hearing. We never had a notice and -- and over and beyond that the -- if we pay this tax under this coercion, we have no right over against anyone by first, the legal procedure taken in good faith and in ignorance of the existence of these statutes.
Hugo L. Black: What -- what would be here -- what would there have to be in here exactly?
John Lord O'Brian: Of -- of what came out of these taxes, for example. It's entirely conceivable that the argument about that we're presenting here have been made through the Tax Commission at the time, a different result would have been to. But I think, Your Honor, in speaking of due process, where a man is being subjected to a liability, there must be some element of due process. So far as we are concerned --
Hugo L. Black: I'm not sure --
John Lord O'Brian: -- that there was --
Hugo L. Black: -- that I quite understood, you have --
John Lord O'Brian: Well, I said that --
Hugo L. Black: -- some argue that -- some length about what the state law provide as though that was a violation of state law. Is that what you rely on?
John Lord O'Brian: No. I am relying on the fact that it's pointed out in dissenting opinion below. This was a violation of due process, substantive due process in that our property has been confiscated. Now, the reason I won't use the word “confiscated” is that we have no right over against anyone.
Hugo L. Black: Well, am I wrong in thinking this? I'm -- I'm not sure from your argument, I quite understand you. Suppose New York law had simply provided that a tax of a --a certain amount should be imposed on a carrier for road purposes and it should be a lien on every vehicle that was used on that road by that carrier --
John Lord O'Brian: Yes.
Hugo L. Black: -- whoever had the title to the vehicle.
John Lord O'Brian: Well, that's virtually what this statute says.
Hugo L. Black: And do you say that's fair?
John Lord O'Brian: Yes. I say that under the -- (Voice Overlap) --
Hugo L. Black: But suppose you haven't had the title, but it was used on the highway, could they have taxed it?
John Lord O'Brian: I -- I don't --
Hugo L. Black: I -- I mean suppose -- suppose that the company had -- had the title for the property.
John Lord O'Brian: You mean the carrier?
Hugo L. Black: The carrier.
John Lord O'Brian: Oh.
Hugo L. Black: They could have done that. But what you claim is that because someone has a title to the property, besides the carrier, New York could not attach a lien to it?
John Lord O'Brian: It could attach a lien to it for the use of that particular vehicle. Now, I'm -- I'm -- perhaps I better restate this.
Hugo L. Black: Yes.
John Lord O'Brian: I make -- we make no -- no question. But that as to the three vehicles which we sold, knowing there it'd be used on the road, that we make no question that we can be lawfully required under a lien, the lien to pay that tax.
Hugo L. Black: On -- on where it takes the whole three vehicles?
John Lord O'Brian: Yes. Because it's levied on the use of -- of the three vehicles. That is to say the State can enforce that lien against our three vehicles against us.
Hugo L. Black: But -- suppose you have let the company use them and the State's taxing plan is to tax as a whole in the aggregate --
John Lord O'Brian: That cannot --
Hugo L. Black: -- to carry it --
John Lord O'Brian: That cannot be done --
Hugo L. Black: (Voice Overlap) -- that choice?
John Lord O'Brian: Yes. That cannot be done constitutionally. There is no -- there is no benefit that can -- or opportunity in the language of the cases that can be imputed to us by the use of those 13 other tractors.
Hugo L. Black: Well, assuming if nothing can be imputed to you you're challenging the right of the State to put a tax on a carrier, all the vehicles used on a carrier's line.
John Lord O'Brian: I'm not -- I'm not disputing the right of the State to tax the carrier -- the carrier.
Hugo L. Black: It's the same as to tax them differently if you are own the title to the property.
John Lord O'Brian: Yes. If they undertake to impose a lien, that lien against us, a stranger they must on our theory, allocate against us the amount of that tax.
Hugo L. Black: But are you a stranger if you let your company be used by that carrier, even though you have a lien. Are you a stranger to that carrier business so that the Constitution forbids the State to hold your vehicle than theirs both liable for the total tax?
John Lord O'Brian: Our theory is that even as against the carrier, the State would be confined to the carrier's property right in that property. That is, he had the right to possession and use of the property. But in this case they've seized the whole property of the creditor.
Hugo L. Black: But suppose -- suppose nobody's property was on there except people who had conditional sale. How could the State collect the tax at all?
John Lord O'Brian: Well, there are other methods by which it can collect tax that's besides this. I mean in -- under the regulation. These people --
Hugo L. Black: But if it -- if it desires to put a tax according to the vehicle's use, that the vehicle that's -- they're operating on the road.
John Lord O'Brian: Yes.
Hugo L. Black: Should it be hampered or the Constitution hampered and that the --
John Lord O'Brian: Well --
Hugo L. Black: -- I get just the same, whoever owns it?
John Lord O'Brian: Well, I'll put it -- may I put it the other way?
Hugo L. Black: Yes.
John Lord O'Brian: By the way -- by the way around. We -- we sold these trucks. And as you say we're put on notice in the status of a lien that for any -- there would be a lien for any unpaid taxes. Now, insofar as the carrier is concerned, that's a matter of no concern to us. It's (Inaudible) to levy on all of his vehicles for all of his taxes but they cannot levy on us. Our only property right was in these three vehicles. And we hold the title to these vehicles. And instead of the -- and -- and we liquidated the title. We're the sole owners now, today. Today this -- this lien is served after all of these things been going through with it. Can the State come in and arbitrarily tax us for all the liabilities and all the penalties for misbehavior that the carrier has incurred under the statute? No. Because these -- all taxes must have a basis. The basis as was held by, Your Honor, in many of my (Inaudible) of this Court in Capitol Greyhound's case for example.
Harold Burton: Well, at least theoretically the other tractors are subject to the tax too, aren't they?
John Lord O'Brian: I beg your pardon?
Harold Burton: At least theoretically, the other 12 -- 12 tractors are subject --
John Lord O'Brian: Oh, yes.
Harold Burton: -- to the tax?
John Lord O'Brian: Yes. Those are owned by the carrier.
Harold Burton: Well, there -- there, yes. Because then there would be something that would -- you'd benefit by wouldn't you. That the other trucks that would be liable to the tax, too.
John Lord O'Brian: Well, pardon me, Your Honor. That -- that's the point I've been trying to make. If we pay this tax under this coercion --
Harold Burton: Well, that wags it out, I understand that.
John Lord O'Brian: He can't sue anybody.
Harold Burton: -- I understand that.
John Lord O'Brian: We can't sue the Tax Commission. We can't sue the -- the Eastern. There's no physical --
Harold Burton: Suppose they'd have --
John Lord O'Brian: Between --
Harold Burton: -- suppose they -- suppose X company they had traditional sales through their contracts on the other 12 trucks. And they'd -- had taken the excess trucks, instead of yours.
John Lord O'Brian: Well, that wasn't of worst of this, of course.
Hugo L. Black: (voice overlap) --
Speaker: There having --
John Lord O'Brian: (voice overlap) --
Hugo L. Black: -- they were your clients.
John Lord O'Brian: -- they were -- but as far -- (Voice Overlap)
Hugo L. Black: -- that they -- that they -- happen to be your client.
John Lord O'Brian: Yes. That's quite so, Your Honor. That's usually the case I think in this Court.
Hugo L. Black: I think so, most of the --
John Lord O'Brian: My chief interest in this is my client, sir.
Earl Warren: Well, Mr. O'Brian --
John Lord O'Brian: Your Honor.
Earl Warren: -- suppose you have disposed of these trucks through the chattel mortgage device rather than conditional sales contract, could the State have taxed, the -- the entire --
John Lord O'Brian: No.
Earl Warren: -- being in the (Voice Overlap) --
John Lord O'Brian: No. That wouldn't have made any difference. They have (Voice Overlap) --
Earl Warren: Even though they -- even though the carrier owned -- owned them?
John Lord O'Brian: No. That wouldn't have an effect -- I -- I beg your pardon. I thought you meant, could they have taxed us.
Earl Warren: No. Could they -- could they --
John Lord O'Brian: -- as the -- mortgagees. -- could they have taken -- could they have taken the three trucks for the -- for the purposes --
John Lord O'Brian: While they were ----
Earl Warren: if there were reasons --
John Lord O'Brian: -- in the possession --
Earl Warren: -- they took in here?
John Lord O'Brian: -- of the carrier -- of the carrier?
Earl Warren: Yes, in possession of carrier.
John Lord O'Brian: I think there the old cases would apply that would limit the right of seizure to the value of the property right of the carrier in those trucks. It wasn't outstanding interest there -- the -- in the chattel mortgage. But that
Earl Warren: It does not to State. And doesn't the State have the right to -- to fix the priority of its tax lien?
John Lord O'Brian: Oh, yes. And I'm not contesting that although --
Earl Warren: But suppose the State said that it would -- it would come before the priority of the tax lien would come before the -- the seller's mortgage rights, what then?
John Lord O'Brian: Well, I haven't given any thought to tell the truth to -- the right of anybody but of conditional vendor here.
Earl Warren: Well, you said a few moments ago in answer to Justice Burton as I recall that -- that there was a difference between the two. Now, between --
John Lord O'Brian: Yes. Oh, there is a difference.
Earl Warren: All right. Now, my question is this. Is it a constitutional difference or is it something that the State can wipe out, if it desires to do so?
John Lord O'Brian: That is, could the State in the exercise of the -- of -- of public policy, restrict the right of a chattel mortgagee and make it -- a mortgagor and make it different from this?
Earl Warren: No. I mean this. Could -- could the State say that, we will treat a conditional sales contract exactly as we treat a chattel mortgage for -- for tax purposes?
John Lord O'Brian: Yes.
Earl Warren: And this being a -- a conditional sales contract in this case, in New York it would have to be treated as a chattel mortgage.
John Lord O'Brian: Well, they said (Inaudible)
Earl Warren: Could the State use --
John Lord O'Brian: -- by saying --
Earl Warren: Well, could the State do that constitutionally?
John Lord O'Brian: I think -- I think they might. Except that I still insist that they cannot tax me. They cannot measure a tax against me by the amount of somebody else's property or somebody else's taxes.
Earl Warren: But the State doesn't claim to do that.As I understand they claim to tax these -- these vehicles for the use that they make of their highways.
John Lord O'Brian: Yes.
Earl Warren: And they --
John Lord O'Brian: No -- no, Your -- beg your pardon, Your Honor.
Earl Warren: Isn't that right?
John Lord O'Brian: No. They -- the tax -- that's -- that's one of the paradoxes of this case.
Earl Warren: Well, they wouldn't tax --
John Lord O'Brian: From taxes --
Earl Warren: -- they would have taxed Voice Overlap) --
John Lord O'Brian: (voice overlap)
Earl Warren: -- but personally if the -- they wouldn't tax your company personally if the -- if the three trucks were not -- were not sufficient to pay for the tax, would they?
John Lord O'Brian: Well, I -- that I don't know. I don't know what -- what the motive is.
Earl Warren: And that's what I mean. I mean the distinction between looking to the -- looking to the vehicles for their tax and looking to the seller.
John Lord O'Brian: But the Attorney General has ruled, Your Honor, that this is -- this is the paradox that we are not liable for this tax because we did not use, ourselves, the highways.
Earl Warren: The trucks are?
John Lord O'Brian: The -- the trucks were used. But this is not a tax, the appellee say in their brief upon us nor is it a tax upon the vehicles. It's a tax only upon the carrier. But it's lifted over by this lien argument here and impose on us and we say that cannot be done because the fundamental conceptions of property rights that we cannot be taxed. And that this question in another form has been before this Court, I'm sure many times about the measure of the tax. This statute, it describes exactly how the tax have been measured, according to the use of each vehicle. This isn't one of those numerous cases where it's difficult to break down taxes. And they -- they know what use has been made of this vehicle -- of these three vehicles. They come in then and -- and impose on the theory that they -- that the State has a power to impose a lien and do by to a lien something you could not do in any other way but simply saying there's a lien on all vehicles. They say that's sufficient excuse for what the State has done in this case. We say that cannot be done in the -- in the light of the fundamental conception of property rights. Tax -- the amount of taxes must be measured by the benefit or the opportunities, or the results to a particular taxpayer or group of taxpayers. And therefore, I end where I began. That here we are with our property seized and admittedly seized for a tax to which we never were liable and -- and measured not by the use of the three vehicles we sold but measured by all the vehicles that the this -- this carrier own. And going back to a time where as Justice Van Voorhees said in his opinion that some of these taxes accrued even before the appellant's vehicles were manufactured. And -- and we are called on to pay them. The -- my time -- the -- let me -- may I read just two or three --
Earl Warren: Certainly.
John Lord O'Brian: -- sentences from the --
Earl Warren: Sure.
John Lord O'Brian: -- the one -- one opinion below that took our view of the matter. He said that, it starts off, it's in the transcript of record at pages 20 and 21. It's only one page. He said, "Appellants could not have ascertained the tax liabilities of the vendee prior to the sale." He means because of the secrecy provision, even if the books of the Tax Commission have been opened to them in as much as a vendee had filed incorrect tax return. Highway use taxes accruing with respect to vehicles sold can be given priority over appellant's property interest in those vehicles. But it seems to me, they constitute depravation of property without due process of law and denial of the equal protection of the law to subject the recognized security interest of a conditional vendor to taxes which have accrued against the conditional vendee without reference to these vehicles and in substantial part before they were delivered to the conditional vendee or even manufactured.
Earl Warren: Mr. Solicitor General.
James O. Moore, Jr.: May it please the Court. I think the great paradox of this case is one that Mr. O'Brian hasn't mentioned and that is that we are here, New York is here, today, solely because the New York State legislature tried and succeeded in enacting an equitable highway truck structure because if we hadn't set up this tax that apportions the cost and the burden of the highways and the people who use it most. If we hadn't set up this apportionment, this claim could never be made here at -- in collecting the tax, even though we didn't have to apportion strictly in imposing it. The claim here as in collecting it we have quote about that apportionment. Now, this legislation was not hastily conceived. It isn't something that was improvised. It was drawn after two years of study by joint legislative committee. And it was drawn in recognition of the problems that would be involved in collecting and administering the tax. The joint legislative committee refused to compromise with equity. They refused to put on a flat tax which would have been available to them under the decisions of this Court and they insisted and putting out a tax that was apportioned. And the trouble here arises right from that conscious choice. Now, naturally in adopting this tax, then recognizing the burdens in collecting it, we have these enforcement provisions and we have this lien provision which is here in dispute. And the statute makes very clear. There isn't any question at all here about statutory construction. It makes very clear that put these appellants on notice, that put anybody else in their place on notice that the State was going to insist to the fullest extent on its lien priority here. And that the State was going to recognize for the purpose of defeating the collection of the tax any security reservation of title. These appellants knew that when they entered into these transactions and the statute put them on notice of it.
Felix Frankfurter: Suppose -- suppose you don't have a statute in which the case is saying lien priority not to (Inaudible) on highway tax but to (Inaudible) income tax of the carrier, would that be all right?
James O. Moore, Jr.: And it gave the same lien priority.
Felix Frankfurter: Within lien priority, the same notice --
James O. Moore, Jr.: I -- I think --
Felix Frankfurter: -- they're favored of income tax?
James O. Moore, Jr.: I -- I think it -- it would Your Honor as against anybody who put the carried in possession of property.
Felix Frankfurter: Yes. Everything you say.
James O. Moore, Jr.: As a matter of fact, in New York State, we have a tax right now which I'm going to take up later. But it's been our books for 150 years that the tax collector of any county can seize any personal property in the possession of a tax debtor that the owner of the title of that property has no right to object to the seizure. That's put on the New York statute books for 150 years. It's been upheld by the Court of Appeals time and time again in the cases cited on our brief at some --
Felix Frankfurter: That's the question of tax in their property?
James O. Moore, Jr.: No, Your Honor. It's -- it's a tax on the real property of a tax debtor in the county. He owes his taxes. He doesn't pay them. The tax collector can seize any personal property in his possession which he can find in the county. And it hasn't got anything to do with the personal property he seizes. It's -- it's a -- a tax collection priority which is well-known to New York. It's been upheld --
Felix Frankfurter: What about (Inaudible)
James O. Moore, Jr.: I -- I would say under income tax that we would have the same right, Your Honor. That --
Felix Frankfurter: Although -- although, the owner, the lien owner or the conditional vendor in my point of view, the mortgagee, mortgagors couldn't contend to claim tax which the tax payer himself could claim.
James O. Moore, Jr.: Yes. Yes, Your Honor. I
Felix Frankfurter: But the tax then can be challenged, the validity of that and prove that (Inaudible) doesn't own it, that someone puts property into the possession of the taxpayer and have his property taken away to pay for tax without being given the challenge the validity of that. Is that right?
James O. Moore, Jr.: I -- I say yes, Your Honor, provided --
Felix Frankfurter: Why it's not of denial of legal protection of the law?
James O. Moore, Jr.: Well -- well, because it is not a denial, for this reason, Your Honor, that the State -- if the State can show that this is a measure that's necessary in the collection of its revenue. Now, I don't have to go this far in this case because --
Felix Frankfurter: Why it isn't more necessary in the case of a non-taxpayer with the property being seized although you are (Inaudible) and in the case of a taxpayer? I don't follow that at all.
James O. Moore, Jr.: Well, Your -- Your Honor, in -- in this particular case, I'm not going that far because I have a direct connection --
Felix Frankfurter: That's okay.
James O. Moore, Jr.: Well, I'm --
Felix Frankfurter: Why we shouldn't be -- be (Inaudible) be allowed to challenge as it flashed on the owner or the conditional vendor? What -- what administrative reasons are there, by the conditional vendor can challenge in rightfulness, the extent of the tax by which the property was taken when the carrier can't?
James O. Moore, Jr.: Well, I -- I would say there's a very obvious administrative reason, Your Honor, that after all proceedings to enforce the tax are intended to be, summary proceedings to -- to allow the State to have a prompt collection of its revenue. That's been recognized in a numeral cases. Now, if the State in -- in a summary proceeding is going to be required to give notice to anybody who has a claim in this property, that is trying to proceed against summarily why, administratively it's going to destroy the whole preceding.
Felix Frankfurter: The carrier -- the carrier could protect procedure and get the criteria to get it.
James O. Moore, Jr.: Yes. Because the tax is imposed on the carrier.
Felix Frankfurter: But -- but from the point of view of taking $5000 out of that man is possible. What difference does it make whether it's the carrier $5000 or the owner by (Inaudible)
James O. Moore, Jr.: Oh, I think it makes this difference, Your Honor. That -- that if we're taking $5000 out of their pocket, it's only because they can't collect from the person to whom they sold the property. They can't collect the debt that they have originally entered into. That's why it's coming out of their pocket. We're not trying to interfere --
Felix Frankfurter: Coming out of their pocket before you're taking it, just it did in coming out of the carrier's pocket and he can resist. And he can stop the -- collecting it and -- and litigate the question. But this fellow (Inaudible)
James O. Moore, Jr.: Well, I -- I say he can't litigate it, Your Honor, because we're not imposing the tax on them. Now, it's coming out of his pocket, but he has a right over unless he's waived it against this person with whom he's doing business.
Felix Frankfurter: I don't see that that makes any difference so far as the state action is concerned. It doesn't make any difference insofar as the State is concerned that the State is asserting the power against him that our (Inaudible) on his part to contest it whereas, that if he does it against the carrier, the carrier can't (Inaudible)
James O. Moore, Jr.: Well, all I can say to that, Your Honor, is that -- that traditionally, I don't think that any of these tax lien provisions or certainly none of the common law lien provisions provided for such notice to --
Felix Frankfurter: We do not know this, in the case of the carrier.
James O. Moore, Jr.: In -- in the case of the carrier we do, Your Honor, although --
Felix Frankfurter: (Voice Overlap) say that you got under the assertion of power by the State, the practical purpose which differentiates between the carrier and the owner.
James O. Moore, Jr.: Oh, I don't think it does, Your Honor, because --
Stanley Reed: Why -- why do you say that the -- that the owner can't object to this tax?
James O. Moore, Jr.: Oh, I don't say that the owner can't -- that carrier or the owners --
Stanley Reed: Don't focus to the International wholly.
James O. Moore, Jr.: I -- I say that the owner can't, Your Honor, because we're not imposing a tax on the owner.
Stanley Reed: He couldn't come in and say this tax is too much?
James O. Moore, Jr.: No. That right is given to the person upon whom the tax is imposed. Now, he can't come in and contest the tax anymore than --
Stanley Reed: (Voice Overlap)
James O. Moore, Jr.: (Voice Overlap) -- any other tax.
Stanley Reed: -- (Voice Overlap) 100,000 miles instead of a 50, if he can prove that the 50,000 miles was all that the trucks had run.
James O. Moore, Jr.: Well, I'm -- I would say this --
Stanley Reed: That International couldn't make that objection?
James O. Moore, Jr.: I -- I think that international standing in the shoes of a taxpayer probably --
Stanley Reed: No.
James O. Moore, Jr.: -- could make the objections.
Stanley Reed: So, it's the one -- your going to against property and you're taking it on a tax that's twice as high as it should be.
Felix Frankfurter: You want to be clear about that.
James O. Moore, Jr.: Well, I -- I
Felix Frankfurter: (Inaudible)
James O. Moore, Jr.: I -- I take this position, Your Honor. That -- that the -- that the right to protect -- to protest the tax is given on the statute clearly to the carrier. I don't believe there's any right given specifically in the statute --
Hugo L. Black: Does it have to be given in the statute? I think you have a much shorter answer.
James O. Moore, Jr.: Well -- well --
Hugo L. Black: Equal protection requires it and due process requires it. And they ask it and did ask it. And that put the question here. This Court could say that equal protection required it or due process required it. Have they asked to challenge the amount of tax imposed on the carrier?
James O. Moore, Jr.: No. There's --
Hugo L. Black: Is that the issue that's here?
James O. Moore, Jr.: No. That issue was not here, Your Honor.
Hugo L. Black: So far as I'm concerned, I don't have to take all the burden you assume. I don't have to take all the burden, even if your law says they couldn't have notice. That you couldn't have it. That can be raised if they challenge it on that ground. Then comes here. And I should think that whether your statute provides you or not, certainly, if due process provides it or equal protection provides it, they're entitled to get it, when they raise that question.
Felix Frankfurter: You represent the State of New York and its law and we're not making that.
James O. Moore, Jr.: Yes, Your Honor.
Felix Frankfurter: You speak for it.
James O. Moore, Jr.: Well, I -- I --
Felix Frankfurter: You may have to take the law as implied here and not as we want (Inaudible)
James O. Moore, Jr.: Yes, Your Honor. And I take the position here that the statute (Voice Overlap) --
Hugo L. Black: The question I have -- the question I put was this. This Court very frequently, unanimously sometimes hold that whether a statute provides for notice or not, it has to be given. I assume from what you say, that your statute does not specifically provide for notice.
James O. Moore, Jr.: There'll be --
Hugo L. Black: Speaking for myself, I would view this case very differently but what he was asking here and he has it here is to get a right to challenge him, out of tax imposed on the carrier. That would be one question. I understood the question as quite differently. New York could not impose a tax on the carrier -- hold this particular vehicles' right for the whole tax of the carrier. Now, has there been any denial to the appellants here of a right to challenge -- I'm not talking about what your statute says. Has there been any denial by the courts of the New York up to this time in this case of a right to challenge the amount of the tax due by the carrier?
James O. Moore, Jr.: There is no such denial on this record, Your Honor. It comes here on a stipulated statement of facts that raises no question as to it. In answer to -- to Mr. Justice Frankfurter's question, I state quite frankly that the statute does not provide notice. It's our position that notice to this -- to the carrier is -- is notice to these conditional vendors and the -- that if they want to contest the tax they must do it in the his shoes of the carrier. That's the way I was (Voice Overlap) --
Hugo L. Black: You think you get the position, as I understand it on the authority of the -- the Lockett case as Chief Justice Stone wrote that. I've noticed you'd cited, Anderson against Lockett --
James O. Moore, Jr.: Yes, Your Honor.
Felix Frankfurter: I suppose I can relate (Inaudible)
James O. Moore, Jr.: Oh, I don't contradict the facts in his -- in his dissent, Your Honor at all.
Speaker: (Inaudible)
James O. Moore, Jr.: No. No, sir. Well, turning now, to the -- the priority question as I understand it, there's no great challenge here as to the state sovereign right of priority has been recognized. New York's rights have been recognized many times in this Court, in the Marshall case specifically was cited in our brief. Now, the Marshall case recognized -- cited a New York case known as New York Terminal versus Gaus. And in the Gaus was the case of the New York franchise tax, which is the tax on the privilege of exercising a corporate franchise in New York. And in the Gaus case the New York Court of Appeals held that the lien -- the lien for that tax, the lien and the property of the corporation was a lien prior to the prior encumbrances which had been placed on that property. And the same principle was followed in the lower federal courts in the reorganization cases involving the New York Ontario and Western Railway Company. Now, both -- in both of those cases are -- are authority for the preposition that -- that where you have this kind of a tax, which is a tax really on the privilege of using the highways. That's the way this tax is imposed just as in the Gaus case there was a tax and the privilege on the privilege of exercising the corporate franchise that --
Speaker: What -- what was that -- what is that case, Gaus --
James O. Moore, Jr.: New York Terminal versus Gaus, Your Honor in 204 New York. Both of those cases held that the tax could be made prior to the prior encumbrance and the -- the same holding has -- has followed. The -- the holding that there is no need to apportion or breakdown this tax and to run an accounting proceeding every time you try to enforce it, as followed in many of the -- the Courts the last resort of the State, which was cited in our brief. Now, this brings me to the point I mentioned in opening that the reason we're here is that we set up this fair and apportioned tax. This Court has held that we were required only to arrive at a rough approximation. And that the administrative burdens on the State might well justify the State in disregarding these key factors which we don't disregard in our tax such as mileage. Now -- so, it was opened us to put on a flat fee or the type of tax as in the Capitol Greyhound's tax and had we done that, these appellants couldn't be here complaining because as they themselves admit that these are valid taxes which you can't breakdown. And seemingly, the rationale of this argument is because we have tried to be fair, because we have a right to this apportionment that we've somehow limited our sovereign right to collect the tax. And certainly, the -- the necessity for this measure has been upheld by the New York courts. It's backed up by not only the presumption of rationality which this Court will accord. The New York legislator is backed up by the very facts surroundings this trucking industry. And it seems that there is no evidence in this record which would indicate that the act of the New York legislator in adopting this measure to protect their revenue was arbitrary act --
Felix Frankfurter: I didn't follow that the -- was the equitable the necessity is this. (Inaudible) it either would have had a flat tax. Isn't it?
James O. Moore, Jr.: Yes, sir.
Felix Frankfurter: Or you would have a tax giving certain generalized statute which currently doesn't involve a concern existing, existing to this opinion that's legal at all so that included the inescapably on ordinarily of this kind namely, the imposition of -- of accumulated arrears on vehicles other those have been taxed?
James O. Moore, Jr.: Well, let me see if I can answer Your Honor's question. If we'd had a flat tax, I think it's conceded in the -- in the appellant's brief.
Felix Frankfurter: I don't care how high it was (Inaudible)
James O. Moore, Jr.: But If we had a flat tax, there isn't any way that you can apportion a flat tax to -- to taxes that have been run up but this -- by truck A, B, or C.
Felix Frankfurter: And does that have a flat tax in dollar amount over a period.
James O. Moore, Jr.: Yes, Your Honor.
Felix Frankfurter: That should remove it.
James O. Moore, Jr.: And -- but -- but we could assert, certainly our whole lien for the whole -- I -- I mean the State could assert a lien on their one truck --
Felix Frankfurter: For?
James O. Moore, Jr.: For all of the taxes.
James O. Moore, Jr.: Well -- You could have -- by stating that way, you change the form of the question?
James O. Moore, Jr.: I don't think I had changed it, Your Honor. I -- I think --
Felix Frankfurter: (Inaudible)
James O. Moore, Jr.: No -- no.
Felix Frankfurter: But I think it's leading to the same question.
James O. Moore, Jr.: I -- I think it is Your Honor. And -- and it's our -- our claim here that it all boils down right to that but in -- but -- but that kind of a -- of a lien priority has been upheld on the Gaus case. It's been upheld in the railroad reorganization cases and just --
Felix Frankfurter: But the problem here is the divided monetary interest in reducing the problem that that way there was a problem. So far as I know that problem is not the original case.
James O. Moore, Jr.: That -- that is quite correct Your Honor. In those cases, it was not raised except to this extent. In the railroad reorganization cases, the fund involved was a fund that the State had advanced for grade crossing elimination. So, if there had been any constitutional requirement that you -- that you can find the lien of the tax to the property on which -- under which the tax arose was perfectly feasible.
Felix Frankfurter: Or by the (Inaudible) that the -- that the interest concentrated is one person with one --
Earl Warren: We'll recess now, Mr. --