Court Opinion

ID: 5758776
Source: CourtListenerOpinion
Date Created: 2022-01-12 17:10:54.436131+00
Date Added: 2024-06-11T08:41:29.530887
License: Public Domain

Steuer, J. (dissenting).
The question arising in this action for a declaratory judgment is whether the defendant City of New York may collect a tax imposed on real estate transfers, on the plaintiff as purchaser of certain realty from the United States. The city derives its power from an enabling act (L. 1934, ch. 873, § 1, as amd.). The act originally allowed the city to tax conveyances of real property. In 1952 it was amended to provide certain exemptions. The amendment reads, in part:
“ This act shall not authorize the imposition of a tax on any transaction by or with the following:
“ a. The state of New York, or any public corporation (including a public corporation created pursuant to agreement or compact with another state or the Dominion of Canada), improvement district or other political subdivision of the state where it is the purchaser, user or consumer;
“ b. The United States of America, insofar as it is immune from taxation.” (L. 1952, ch. 742, § 5.)
The balance of the act is not applicable to the situation.
The implementing act (Local Laws, 1959, No. 49 of City of New York) provides that the tax shall be paid by the grantor. Where the grantor is exempt, the tax shall be paid by the grantee. The act further provides that the United States is exempt but that a grantee from the United States is liable for the tax.
*324Clearly, under this last provision plaintiff here would be liable for the tax, but just as clearly only in the event that the enabling act allowed the city to enforce collection on one buying from the United States.
To construe the enabling act it may be helpful first to set out the applicable exempting provision as a continuing sentence, which would read: “ This act shall not authorize the imposition of a tax on any transaction by or with the United States of America, insofar as it is immune from taxation ”. While the sentence is not entirely clear in that the word “it ” could refer to either of the two preceding substantives (“ transaction ” and “United States of America ”), to make good sense from the context the pronoun must refer to the former. The United States is completely immune from taxation. Persons dealing with the United States may or may not be. So where the tax is in terms levied upon the transaction, a person who is a party to that transaction is immune when the transaction has been made immune, and otherwise not. Once it is recalled that the State Legislature which enacted the enabling act had no power to declare which transactions with the United States were taxable and which were not, paragraph b becomes understandable and clear, especially when read in conjunction with paragraph a. This last paragraph, dealing with transactions with the State over which the Legislature enjoys complete power, grants exemption in finite terms to some transactions and denies it to others. As regards the United States, where it could not overrule an exemption granted by the United States, it yields to any such exemption which has been or may be granted and limits the imposition of the tax to such instances where the United States has failed to provide for immunity.
On the question of whether the Federal laws provide for an immunity, it is conceded that there is no specific act of Congress which would cover this transaction. In the absence of such legislation it is now the rare case where one dealing with the United States enjoys immunity from State taxation because of the governmental character of the transaction (Oklahoma Tax Comm. v. Texas Co., 336 U. S. 342). Whether the tax is on the proceeds of the transaction with the United States (James v. Dravo Contr. Co., 302 U. S. 134) or placed on the transaction itself (Alabama v. King & Boozer, 314 U. S. 1; Colorado Bank v. Bedford, 310 U. S. 41) makes no difference—both are collectible by the State. The United States having failed to grant immunity to the persons dealing with it, the transaction is not immune and the tax is collectible.
*325The argument that imposition of the tax will affect the price at which the Government will hereafter be able to sell land is no longer available (James v. Dravo Contr. Co., supra, p. 160). Nor is there validity to the claim that this amounts to double taxation on the ground that the plaintiff here, when it comes to sell the land, will as vendor be liable to the tax. Two separate transactions are involved. The second may not even be taxable if, perchance, plaintiff should sell to the State of New York, to one of its subdivisions or agencies, or to a charitable corporation.
The judgment should be reversed and the petition dismissed, with costs and disbursements.
Botein, P. J., and Breitel, J., concur with Rabin, J.; Steuer, J., dissents in opinion in which Witmer, J., concurs.
Order and judgment affirmed, with $50 costs to the respondent.