Court Opinion

ID: 5224159
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:40:54.276529+00
Date Added: 2024-06-11T08:27:33.739388
License: Public Domain

Scott, J. (dissenting):
The relator was arrested and held by virtue of a warrant issued by a city magistrate upon the charge that, on October 3, 1911, he “violated the provisions of Section 271a of the Stock Transfer Tax Law in that he sold adhesive stamps issued pursuant to said law by the State Comptroller without having written consent to do so from said Comptroller.”
The warrant was issued upon an affidavit by one Harry W. Rosenbloorn to the effect that relator is engaged as a stamp dealer and collector in the city of Hew York; that on the date named in the warrant he sold to affiant certain adhesive stamps *233of the character described in the warrant, and that said relator had not obtained from the State Comptroller a written consent authorizing him to sell said stamps and is not an agent of the State Comptroller, nor doing business under the banking laws of the State.
The Stock Transfer Tax Law, first enacted in 1905 (Laws of 1905, chap. 241, adding to Tax Law [Gen. Laws, chap. 24; Laws of 1896, chap. 908], § 315 et seq., as amd. by Laws of 1906, chap. 414, and Laws of 1907, chap. 324) and now constituting sections 270 to 280 inclusive of the Tax Law (Consol. Laws, chap. 60 [Laws of 1909, chap. 62], as amd. by Laws of 1910, chaps. 38, 186, 453, and Laws of 1911, chaps. 12, 352),* provides for a tax upon all sales, deliveries or transfers of stock, to be paid by the affixing of adhesive stamps to be furnished and sold by the State Comptroller. Section 271 provides that “ adhesive stamps for the purpose of paying the State tax provided for by this article shall be prepared by the State Comptroller, in such form, and of such denominations and in such quantities as he may from time to time prescribe, and shall be sold by him to the person or persons desiring to purchase the same; he shall make provision for the sale of such stamps in such places and at such times as in his judgment he may deem necessary.”
Section 27la, under which the relator has been held, was added to the statute by chapter 12 of the Laws of 1911, and went into effect on March 9,1911. It reads as follows: “ No person, firm, company, association or corporation other than a corporation organized under the Banking Law of this State or under the National Bank Act of the United States, or a duly authorized agent of the Comptroller, shall sell or expose for sale any stamp issued pursuant to this article, without first obtaining from the Comptroller his written consent, except that in connection with a sale of or agreement to sell stock a broker or agent of the principal making such sale or agreement to sell may supply and affix the stamp or stamps required by this article. No person shall sell any stamp for a sum less than the face value thereof without the written consent of the Comptroller. Any person violating any provision of this section shall be guilty of a misdemeanor. ”
*234The only matter we can inquire into in this proceeding is the jurisdiction of the magistrate to issue the warrant, which involves the inquiry whether or not the complaint laid before him sufficiently charged the commission of a crime. If the act of 1911 is valid, the affidavit upon which the warrant was issued was sufficient because it charged, with precision and accuracy, a violation of. the above-quoted provisions of section Slla.
The relator, recognizing the limited scope of the question involved, places himself broadly upon the proposition that the section is unconstitutional and invalid,, because if carried out according to its letter it may result in the deprivation of property without compensation and without due process of law. (See State Cbnst. art. 1, § 6; IJ. S. Const. 14th Amendt., § 1.)
His argument in brief is" that prior to the act of 1911 there was no limitation or restriction upon the right to traffic in stock transfer tax stamps; that it was consequently lawful for any person to purchase them, and, having purchased them, to sell them again; that such tax stamps are a species of property, and the effect of an inhibition against, their sale by one who has lawfully acquired them when their resale was permitted amounts to ,a privation of property, and that the act of 1911, since it makes no distinction in favor of stamps purchased before its enactment and forbids the sale of such stamps as well as of those purchased after the passage of the act, is unconstitutional and void. The relator asserts that the stamps which he is accused of selling were in fact purchased by him before the enactment of the act of 1911; that he had on hand when that act was passed about $1,000 worth of such stamps which he bought with the purpose of reselling them; that the State Comptroller had refused either to consent to the sale of said stamps by relator or to • redeem them and refund to relator the amount paid for them. These matters, if available to the relator at all, are in the nature of defenses and cannot be considered in this proceeding, which is limited to an inquiry into the validity of the warrant upon which relator is held. We refer to them only as illustrative of the possible effect of the act under consideration, and in discussing *235the validity of the act we do so with especial reference to its operation as to stamps purchased prior to March 9, 1911'.
That such stamps are property cannot admit of question. They may he the subject of larceny (Jolly v. United States, 170 U. S. 402), and one who has purchased them from the government has an insurable interest, and in case of destruction may recover their value from an insurer. (United States v. American Tobacco Co., 166 U. S. 468.) That such stamps may lawfully be trafficked in is apparent from the Tax Law. Section 2ll expressly provides that those stamps shall be sold by the Comptroller, not alone to persons who may have occasion to use them for the purpose of paying the tax, but “ to the person or persons desiring to purchase the same,” and the very section under consideration provides that certain persons may traffic in them, and that any person may do so with the Comptroller’s consent. I think it is clear, therefore, that those stamps constitute a species of property which any one, prior to the act of 1911, might lawfully buy and sell. The effect of the act, as to stamps purchased before its passage, was to destroy their salability. It is elementary that one of the attributes of property is the right of the owner to use and dispose of it and it has been well said that the depriving of an owner of one of its essential attributes is depriving him of his property within the constitutional provisions. (People ex rel. Manhattan Savings Inst. v. Otis, 90 N. Y. 48, 52.) In Wynehamer v. People (13 N. Y. 378, 396) Judge Comstock said: “ Nor can I find any definition of property which does not include the power of disposition and sale, as well as the right of private use and enjoyment,” citing 1 Blackstone Commentaries, 138; 2 Kent Commentaries, 320-326. The Wynehamer case, which has been so often cited and discussed, is closely analogous to the present. It arose under the Prohibition Act of 1855 (Chap. 231), which absolutely forbade the sale or keeping for sale of any intoxicating liquor, except for medicinal or sacramental purposes. 1STo distinction was made between liquor acquired before the passage of the act and that acquired after-wards. Wynehamer was charged" with having sold liquor in violation of the act, and, although he attempted to do so, was not permitted to show that the liquor he had sold was pur*236chased by him before the act took effect. The case turned upon the constitutionality of the act in question, and was most thoroughly and exhaustively discussed by all the judges. The court formulated and stated its conclusions as follows (p. 486):
“ 1. That the prohibitory act, in its operation upon property in intoxicating liquors existing in the hands of any person within this State when the act took effect, is a violation of the provision in the Constitution of this State which declares that no person shall be deprived of life, liberty or property, without due process of law.’ That the various provisions, prohibitions and penalties contained in the act do substantially destroy the property in such liquors, in violation of the terms and spirit of the constitutional provision.
“2. That inasmuch as the act does not discriminate between such liquors existing when it took effect as a law, and such as might thereafter he acquired by importation or manufacture, and does not countenance or warrant any defense based upon the distinction referred to, it cannot be sustained in respect to any such liquor, whether existing at the time the act took effect or acquired subsequently.”
The first proposition was distinctly placed upon the ground that to forbid the use and sale of property, lawfully acquired, was in effect a deprivation of property without compensation or due process of law. So, also, it was said in Matter of Jacobs (98 N. Y. 98, 105): “The constitutional guaranty that no person shall he deprived of his property without due process of law may be violated Without the physical taking of property for public or private use. Property may be destroyed, or its value may be annihilated; it is owned and kept for some useful purpose, and it has no value unless it can be used. Its capability for enjoyment and adaptability to some use are essential characteristics and attributes without which property cannot he conceived; and hence any law which destroys it or its value, or takes away any of its essential attributes, deprives the owner of his property. ” So, also, in Forster v. Scott (136 N. Y. 577, 584): “ Whenever a law deprives the owner of the beneficial use and free enjoyment of his property, or imposes restraints upon such Use and enjoyment that materially affect its value, without legal process or compensation, it deprives *237him of his property within the meaning of the Constitution. All that is beneficial in property arises from its use and the fruits of that use, and whatever deprives a person of them deprives him of all that is desirable or valuable in the title and possession. It is not necessary, in order to render a statute obnoxious to the restraints of the Constitution, that it must in terms or in effect authorize an actual physical taking of the property or the thing itself, so long as it affects its free use and enjoyment, or the power of disposition at the will of the owner.” It follows that, if these stamps constitute property, as we cannot doubt that they do, the prohibition against selling them results in depriving the owner of his property without due process of law. It is true, of course, that, though unsalable, they still remain available in the hands of the owner for the primary use for which they are provided, to wit, the fixation to contracts for the sale of stock and stock transfers. This, however, would be wholly inadequate protection to a person who before the act of 1911 had purchased any considerable amount of the stamps unless he was engaged very largely in the business of buying and selling stocks for the tax amounts only to two cents upon each $100 of face value or fraction thereof. The possibility of thus realizing the value of the stamps will no more operate to save the validity of the act than did the right to use liquors for medicinal or sacramental purposes operate to save the validity of the act condemned in the Wynehamer Case (supra). Nor does the fact that a person owning stamps may deal in them if he can procure the consent of the Comptroller serve to save the statute, for the requirement that a person must secure leave from some one to entitle him to exercise a right carries with it, by natural implication, a discretion on the part of the other to refuse to grant it, and he cannot be compelled to act by mandamus. (People ex rel. Schwab v. Grant, 126 N. Y. 473; People ex rel. Fellows v. Early, 106 App. Div. 269.) The justice at Special Term from whose order this appeal is taken was of the opinion that the act of 1911 could be sustained notwithstanding its effect was to destroy the value of relator’s property because the Legislature had the undoubted right at any time to repeal the Stock Transfer Tax Law, and if it did so the owner of unused stamps *238“ could not then sell the stamps for the purpose for which they were originally designed, and the stamps would he without any value at all.”* It is scarcely conceivable that any Legislature would be guilty of the bad faith which would be involved in destroying the Value óf property under such circumstances without making due provision for the redemption of outstanding unused stamps. To do so would be distinctly dishonest, for it is not the purchase of the stamps from the Comptroller which pays the tax, but their cancellation after being affixed to the instrument of transfer. Until they have' been affixed and canceled they are in the nature of vouchers for money paid to the State to be applied in the future to the payment of the tax. If in the case supposed of a repeal of the Tax Law, an owner of Unused stamps could not recoup their value from the- State, it would not be because of the inequity of his claim for recoupment, but merely because the State, in its sovereign capacity, arbitrarily refused to redeem or to allow itself to be sued. A State can no more impair by legislation the obligations of its own contracts than it can impair the obligations of the-contracts of individuals (Woodruff v. Trapnail, 10 How. [U. S.] 207), and while a citizen having a just claim against the State may not be able to enforce it by direct action, he may as Occasion arises resist any law which infringes his constitutional rights. “Although the obligations of a State rest for their performance upon its honor and good faith, and cannot be made the subjects of judicial cognizance unless the State consents to be sued, or comes itself into court; yet, where property or rights are enjoyed under a grant or contract made by a State, they cannot wantonly be invaded. Whilst the State cannot be compelled by suit to perform its contracts, any attempt on its part to violate property or rights acquired under its contracts may be judicially resisted; and any law impairing the obligation of contracts under which such property or rights are held is void and powerless to affect their enjoyment.” (Hans v. Louisiana, 134 U. S. 1; Pennoyer v. McConnaughy, 140 id. 1.) We, therefore, are of the opinion that the act of 1911, in so far as it forbids the sale of stamps lawfully purchased before its passage by any person except *239those specially" enumerated in the act itself, is unconstitutional and invalid. The question remains whether or not it is valid as to the sale of stamps purchased after its passage. If the act applied in terms only to such latter stamps, or if it made provision for the redemption of stamps lawfully purchased before its enactment, we should find no difficulty in sustaining its validity. The difficulty is that the act does not discriminate between stamps purchased before it took effect and those purchased afterwards, and does not countenance or warrant a' defense based, upon such distinction. It, therefore, falls under the second conclusion formulated and announced by the Court of Appeals in the Wynehamer Case (supra), and cannot be sustained as to any stamps whether purchased before the act took effect or afterwards. (See, also, Matter of Townsend, 39 N. Y. 171; People v. Orange County Road Const. Co., 175 id. 84; People ex rel. MePike v. Van De Carr, 178 id. 425.) We are, therefore, constrained to hold that the act under which relator is held is wholly unconstitutional and invalid. It, therefore, furnished no ground for the arrest.
The writ should be sustained and the relator discharged from custody.
McLaughlin, J., concurred.
Order affirmed.

 Since amd. by Laws of 1912, chap. 292.— [Rep.

See 74 Misc. Rep. 498. — [Rep.