Court Opinion

ID: 5358952
Source: CourtListenerOpinion
Date Created: 2022-01-08 07:15:39.701491+00
Date Added: 2024-06-11T08:29:50.711167
License: Public Domain

McNamee, J.
(dissenting). Plaintiff assumed office as a justice of the Supreme Court of New York on January 1, 1937. In the same year an act of the Legislature was passed, effective May twenty-eighth, requiring him to include in his gross income for the year the compensation received by him from the State for his services as such justice, for the purpose of levying an income tax in respect thereof, and the tax was levied. The plaintiff had no other income that was taxable, and refused to pay the tax on the groimd that it constituted a diminution of his compensation as a justice of the Supreme Court, and also on the ground that it affects his contractual rights with the State in respect of salary already earned at the time the act was passed. The State Tax Commission threatened to enforce payment, and thereupon this action was brought on an agreed statement of facts.
Two questions arise on the controversy, as follows:
1. Do the statutes of the State of New York impose a personal income tax, under article 16 of the Tax Law, upon the salary and compensation of a justice of the Supreme Court of the State of New York?
2. Do such statutes, or their application under the facts and circumstances here agreed upon, violate any of plaintiff’s rights and privileges under either the Constitution of the State of New York or the Constitution of the United States?
The legislative enactment by which, it is claimed, plaintiff’s compensation is brought within the provisions of the Income Tax Law, in so far as important here, reads as follows: “The term ‘ gross income ’ also includes salaries and compensation of all public officials and judges, notwithstanding that such public officials and judges hold constitutional offices and their salaries or compensation are not subject to being increased or diminished during their terms of office.” (Laws of 1937, chap. 744, adding Tax Law, § 359, subd. 4.)
The pertinent provision of the Constitution of the State of New York, article VI, section 19, reads: “ AE judges, justices and surrogates shall receive for their services such compensation as is now or may hereafter be established by law, provided only that such compensation shaE not be diminished during their respective terms of office.”
The corresponding article of the Constitution of the United States, article III, section 1, provides: “The Judges, both of the supreme and inferior Courts, shall hold their Offices during good Behavior and shall, at stated Times, receive for their Services, a Compensation, which shall not be diminished during their continuance in Office.”
*183Section 10 of article I of the United States Constitution, in so far as pertinent here, provides that “No State shall * * * pass any * * * Law impairing the Obligation of Contracts.”
Thus we have raised for the first time in this State, in a plenary action, the questions above stated by counsel, and those questions in connection with the status of constitutional judges and fundamental principles of American government. We must determine here whether we have indulged, both in theory and practice, a definite understanding of the status of constitutional judges and of American government, and, if so, whether we are to abandon those basic views long maintained.
The affirmative and complete separation of the judiciary and the Legislature was an -unquestioned doctrine of American government and law in the Colonial period; and it has been the theory and practice of this State and of the Federal government throughout their existence that the legislative, executive and judicial departments were not only co-ordinate but coequal branches in their respective spheres. None was dependent upon the other for its complete integrity or independence. That the King of England subjected the judges to his will was one of the basic grievances recited by the signers of the Declaration of Independence in that document. And royal proclivities of similar import have not yet wholly passed away among men. Human nature still remains unchanged. And when the People of the States created the United States, they provided for the complete and affirmative separation, integrity and independence of the judges by placing their tenure of office and fixedness of compensation beyond the power of Congress to alter the one or diminish the other “ during their continuance in office.”
In 1847 the Constitution of New York contained a similar provision against diminution of compensation, and like provision has continued in each succeeding Constitution. And after the Constitution of the United States had been authoritatively construed by the United States Supreme Court, against the diminution of compensation by tax, and its meaning clarified beyond dispute, New York changed its Constitution to make it identical, in so far as questions raised here are concerned, with that of the Federal Constitution thus construed. And until the Legislature proposed to diminish substantially the compensation of the judges of this State by the 1937 amendment to the Tax Law, when this case arose, the bench or bar, or the taxing authority of the State, had never acted in such a way as to indicate a belief that such a power resided in the Legislature. These Constitutions had not been changed in 1937, nor had their construction been altered by any *184authoritative decision. And, of course, the Legislature had no more power to reduce the compensation of a judge in 1937, by taxing that compensation, than it had when the last constitutional provision became effective in 1925. Under the act of 1937 it is not the judge that is taxed, but his compensation; and this is so despite the device, or formula, or language, resorted to in arriving at the result.
It is contended by the Attorney-General that “ concepts ” of taxation have developed and advanced since 1925, and that a new policy of taxation was proclaimed by the Legislature in 1937; and that these new and advanced concepts and policy of'taxation should be adjudged and held as law by the courts. There is nothing new or advanced in either, except the suggested determination to set aside the Constitution, and the construction placed upon its unmistakable language by the highest court in the land. Such concepts and such policies, however advanced or however popular, are mere expedients when they violate the letter and spirit of the Constitution.
Likewise, it is urged that judges should pay their share of the expenses of administering the government of the State. No constitutional argument is advanced to show that they are required to do so in a new or diffeient manner, or that they do not do so. They do not pay formal taxes levied upon them as such by the Legislature, but they render services for a compensation fixed by law, which may not be diminished during their tenure of office. The government is not sustained by tax money alone; services rendered may be and often are of still greater value. Surely the soldier in the field supports his government quite as effectively as does the taxpayer. But, however that may be, the kind, the value and the extent of aid or support to be given to the State by one branch of the government may not be determined by another in the absence of clear constitutional mandate.
The tendency has become apparent from the restlessness of some people and the contention of some government officials to resort to a so-called “ leveling process,” so that all distinctions of station will be eradicated, whatever their nature. This, of course, is a popular-front argument, not a constitutional nor a legal one. The judicial branch of the government is the weakest of the three; not only is this true as to numbers, but it is without political power. It is quite without power to defend itself, and must rely on such protection as the Constitution throws about it. It must act not only openly and uprightly, but without fear as between the many and the few, between the powerful and the weak, in popular and unpopular causes, with no cloak of security except the justness *185of its decision and the Constitution which creates and maintains it. Plaintiff’s case will be regarded in some quarters and by many as an unpopular one, but this will not relieve the courts from upholding the Constitution as written by the People, and from asserting its clear mandate.
It is urged that the tax upon the compensation of the plaintiff is not a diminution of compensation but a tax such as is imposed upon others who have sources of income. The plaintiff has no taxable income except the compensation fixed by law for his judicial services. The tax involved amounts to more than $1,600, and yet it is said that his compensation is not diminished. Such a statement is a mere assertion that fails in appeal to intellectual integrity. It is his judicial compensation which the plaintiff is required to include in his gross income for the purposes of taxation. This is the compensation that is in effect taxed, as he has nothing else to tax. The Constitution of this State says that may not be done; and the particular formula used by the Legislature or the taxing authority to give outline to the proposal does not alter the nature of the act of taxing the compensation in question; and as a matter of elemental thought, any such device will not bring it into harmony with the Constitution.
To say that the tax is non-discriminatory does not add virtue to the proposal; it is irrelevant. We are dealing with the Constitution. And so, to say that it is a tax on the “ right to receive and enjoy ” the compensation, is trivial at best. The constitutional provision is not impotent and futile; when it guarantees a fixed compensation and guarantees the payment without diminution, it likewise guarantees the right to receive and enjoy it, as fixed and paid. The guaranty, as I see it, is not an empty gesture, but one of living force and of definite purpose and meaning. The tax in question would devitalize the force, frustrate the purpose, and obscure the meaning, and that without any constitutional reason.
In view of our constitutional provision, and its precise similarity to the corresponding provision of the United States Constitution, the clear course to be followed by this court in the case at bar is mapped in striking detail and clarity in the case of Evans v. Gore (253 U. S. 245). That case construes the Federal constitutional provision touching the diminution of the salaries of constitutional judges, before our present constitutional provision was adopted. This court must regard that decision as controlling. That case involved an action by a district judge of the United States to recover the Federal income tax that he was required by the Treasury Department to pay. As in the case at bar, the plaintiff there had no taxable income beyond his judicial compensation. After *186an extended discussion of the Federal clause against diminution of compensation, the United States Supreme Court in Miles v. Graham (268 U. S. 508, 509) said: “ The words and history of the clause indicate that the purpose was to impose upon Congress the duty definitely to declare what sum shall be received by each judge out of the public funds and the times for payment. When this duty has been complied with the amount specified becomes the compensation which is protected against diminution during his continuance in office.”
And speaking of the vice óf encroachment of one department upon another, the court in Evans v. Gore (supra, at p. 249) observed: “ For otherwise the legislative department, inherently the strongest, might encroach on or even come to dominate the others, and the judicial, naturally the weakest, might be dwarfed or swayed by the other two, especially by the legislative.”
There also it was said (pp. 253, 254) that: “ The primary purpose of the prohibition against diminution was not to benefit the judges, but, like the clause in respect of tenure, to attract good and competent men to the bench and to promote that independence of action and judgment which is essential to the maintenance of the guaranties, limitations and pervading principles of the Constitution and to the administration of justice without respect to persons and with equal concern for the poor and the rich. Such being its purpose, it is to be construed, not as a private grant, but as a limitation imposed in the public interest; in other words, not restrictively, but in accord with its spirit and the principle on which it proceeds.
“ Obviously, diminution may be effected in more ways than one. Some may be direct and others indirect, * * *. But all which by their necessary operation and effect withhold or take from the judge a part of that which has been promised by law for his services must be regarded as within the prohibition. Nothing short of this will give full effect to its spirit and principle. * * * Of what avail to him was the part which was paid with one hand and then taken back with the. other? Was he not placed in practically the same situation as if it had been withheld in the first instance? Only by subordinating substance to mere form could it be held that his compensation was not diminished. Of course, the conclusion that it was diminished is the natural one.”
And continuing in its discussion so pertinent to this case, the Supreme Court wrote:
“ If the tax in respect of his ■ compensation be prohibited, it can find no justification in the taxation of other income as to which there is no prohibition; for, of course, doing what the Constitution permits gives no license to do what it prohibits.
*187“ The prohibition is general, contains no excepting words and appears to be directed against all diminution, whether for one purpose or another; and the reasons for its adoption, as publicly assigned at the time and commonly accepted ever since, make with impelling force for the conclusion that the fathers of the Constitution intended to prohibit diminution by taxation as well as otherwise — that they regarded the independence of the judges as of far greater importance than any revenue that could come from taxing their salaries.”
And in language of marked finality, the court (at p. 256) speaks of the inclusiveness of this prohibition upon the legislative branch: “ Certainly there is nothing in the words of the prohibition indicating that it is directed against one legislative power and not another; and in our opinion due regard for its spirit and principle requires that it be taken as directed against them all.”
There is no controlling authority contrary to Evans v. Gore and Miles v. Graham; and in the light of those cases, none that is persuasive.
Assuming for the sake of discussion that we are to abandon a theory and practice of government that have been followed in this State and Nation since Colonial days, the Federal question remains, viz., whether the proposed tax may be imposed on a judge’s compensation by an act passed after the compensation has been earned. As to such earlier salary an implied contract arose according to which the plaintiff was entitled to receive the compensation promised and earned, and the State was required to pay it. This contract may not be set aside by the Legislature, and plaintiff may not be deprived of his vested rights under it. The contract clause, and the due process clause, of the United States and of the State Constitutions forbid it. (U. S. Const. art. I, § 10; Const. of N. Y. art. I, § 6; Fourteenth Amendment of United States Const.; Gen. Constr. Law of New York, § 93; Guaranty Trust Co. v. N. Y. & Q. C. R. Co., 254 N. Y. 126; Dartmouth College v. Woodward, 4 Wheat. 518, 694; Fisk v. Jefferson Police Jury, 116 U. S. 131; Robertson v. Miller, 276 id. 174; Indiana ex rel. Anderson v. Brand, 303 id. 95.) Again, mere taxing statutes passed by Congress, which were retroactive, have been held invalid by the United States Supreme Court. While a tax for a local improvement, imposed three years after the betterment, was regarded valid on the theory of a physical benefit conferred directly upon the taxpayer, as a mere quid pro quo (Seattle v. Kelleher, 195 U. S. 351; 25 S. Ct. 44; 49 L. Ed. 232), an act of Congress authorizing a tax upon gifts which went back ten days was held unconstitutional ( Untermyer v. Anderson, 276 U. S. 440; 48 S. Ct. 353; 72 L. Ed. 645); and so a toll imposed for the *188use of a canal, two years after the use had ceased was void (Forbes Boat Line v. Board of Comrs., 258 U. S. 338; 42 S. Ct. 325; 66 L. Ed. 647). Likewise the withdrawal of an exemption from transfer tax was held by the Court of Appeals of this State to be invalid legislation when enacted three years later in derogation of a vested right. (City Bank Farmers’ Trust Co. v. N. Y. C. R. R. Co., 253 N. Y. 49.)
The accumulated learning, experience and wisdom of 130 years were brought to bear in the decisions of the United States Supreme Court in Evans v. Gore and Miles v. Graham, which laid down in the clearest language that the compensation of a judge, protected against diminution by its constitutional provision, such as ours, is beyond the power of the legislative branch of the government. The first question propounded by counsel, and above stated, should be answered in the negative; and the second question, in the affirmative; and the plaintiff should have judgment, with costs.
Crapser, J., concurs with McNamee, J.