Court Opinion

ID: 5224157
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:40:54.269445+00
Date Added: 2024-06-11T08:27:33.736073
License: Public Domain

Ingraham, P. J.:
I do not think that section 271a of the Tax Law (Consol. Laws, chap. 60 [Laws of 1909, chap. 62], as added by Laws *227of 1911, chap. 12) violates the Constitution of this State. By article 12 of the Tax Law the State imposes a tax on all sales, or agreements to sell, or memoranda of sales of stock, and upon any and all deliveries or transfers of shares or certificates of stock, in any domestic or foreign association, company or corporation, made after the 1st day of June, 1905, of two cents on each $100 of face value or fraction thereof. As a method of payment of such tax section 270 of the Tax Law (as amd. by Laws of 1910, chap. 38, and Laws of 1911, chap. 352) provides that “the payment of such tax shall be denoted by an adhesive stamp or stamps affixed as follows.” Then follows the provision indicating the books, instruments or agreements upon which such stamps shall be placed to insure the payment of the tax, with a provision in section 280 (as added by Laws of 1910, chap. 186) that the Comptroller may, upon proof. that stamps had been erroneously affixed so as to cause loss to the person making the claim, refund the amount thereof. Section 271 provides: “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.” Section- 272 (as amd. by Laws of 1911, chap. 352)* provides a penalty for a failure to pay this tax. Section 273 (as amd. by Laws of 1911, chap. 352) provides a penalty for failing to cancel the stamp used to denote the payment of the tax. By chapter 12 of the Laws of 1911, which became a law on March 9,1911, a new section was added to the Tax Law, known as section 271a, which provided that “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,” and a violation of this provision is made a misdemeanor. The charge against the relator was that after this *228amendment to the Tax Law, and on the 10th of March, 1911, the agent of the; Comptroller in the city of New York sold to the relator certain stock transfer tax stamps, and on the 20th of April, 1911, the said agent also sold to the relator certain other stock transfer tax stamps, and that on the 3d of October, 1911, at the city of New York, the relator sold and delivered certain stock transfer tax stamps issued by the Comptroller of the State of New York pursuant to the provisions of this Tax Law, some of which were included, within the same kind of stamps as were purchased by the relator on the 10th of March and the 20th of April, 1911, and received from the purchaser a sum of money for the transfer and delivery of such stocks. The defendant was not an agent of the Comptroller in the city of New York and was not doing business under the ' Banking Law of this State.. The relator alleges in Ms petition for a writ of habeas corpus that on the 9th of March, 1911, when this amendment to the Tax Law went into effect, he had in his possession stamps authorized and issued under the Stamp Act to an amount in excess of $1,000 in actual cash value, which stamps the relator had purchased from the Comptroller prior to the 9th of March, 1911. He also alleges that he had not bought or had in his possession any such stamps which were issued and sold by the Comptroller on or since March 9, 1911, and had not sold, offered to sell or exposed for sale any such stamps issued or sold by the said Comptroller on or since that date. The question whether or not the relator was guilty of the offense charged cannot be determined in this proceeding. There was evidence before the magistrate that the relator had been guilty of a violation of this section of the Tax Law which went into effect on March 9, 1911, and if the provision of that section is a constitutional exercise of the power of the Legislature, it follows that the writ must be dismissed and the relator remanded. The court in this proceeding cannot determine that the relator sold only stamps that he had purchased prior to the passage of the amendment to section 211a; and if this section can be construed as only containing a prohibition for the sale of stamps purchased after the passage of the section containing the prohibition, then there is no constitutional objection to the provision, and I think if it is necessary to sustain *229the validity of the provision it should he so construed. As a general rule, statutes are not construed so as to have a retroactive effect, or to affect property in existence at the time of the passage of the act, unless such construction is rendered necessary by the language used and the evident intent of the Legislature in passing the enactment. How this statute, as before. stated, became a law on March 9, 1911. It provides that no person, etc., “shall sell or expose for sale any stamp issued ” pursuant to this article without first obtaining from the Comptroller his written consent. This provision does not in express terms apply to stamps that had prior to that time been purchased from the Comptroller. The prohibition applies to stamps issued “ pursuant to this article.” It was this article as amended by the act in question to which, I think, it was intended the prohibition should apply. The prohibition was to apply in the future. It provided for no penalty for a sale of stamps prior to the passage of the act, and did not expressly refer to stamps purchased prior to the passage of the act. Stamps issued in pursuance of that article as then enacted and in force would be stamps issued in pursuance „ of the amended article which were stamps issued after the amendment went into effect. This construction seems to me to be entirely consistent with the purpose of the Legislature in enacting the law, would protect the owners of stamps theretofore issued, and would prevent any injustice, as any person buying stamps after the prohibition became effective would do it subject to the limitations as to the subsequent sale of the stamps so purchased. I think the section is capable of this construction, and, if so, it should be given such a construction as will render unnecessary declaring the act unconstitutional. But assuming that this prohibition did actually apply to stamps issued before it took effect, I do not think the enact-. ment of this provision was beyond the power of the Legislature. As before stated, the issue of these stamps merely provided a method by which persons subject to the payment.of the tax could discharge their obligation to the State. The statute authorizes the Comptroller to issue these stamps and to sell them “ to the person or persons desiring to purchase the same.” There was ño provision in the statute which authorized persons *230purchasing the stamps which were issued for the purpose of enabling those liable for the tax to pay it to sell or deal in stamps or treat them as articles of merchandise. It seems to me that a person purchasing stamps under this provision of the statute as it existed prior to March 9, 1911, purchased them subject to the right of the: Legislature to regulate their use or methods in which they should be transferred or sold. If, after the relator had purchased these stamps, the Legislature had repealed the provision imposing a tax upon stock transfers, that , repeal would certainly .not have been unconstitutional because thereby the stamps in the possession of the relator were rendered valueless. It might be' that the relator would have a claim against the State to refund the amount that he had paid the State oil the purchase of the stamps. And it may be that the relator has a right to a refund from the State of the amount that he had paid to the State for these stamps if they had become valueless in his hands, because of the prohibition in their sale contained in the amendment in question. Just how such a right could be-enforced against the State it is not necessary to determine. We are dealing now with the power of the State to pass an act which would affect the value of the stamps in the hands of the relator, and the nature of the law that affects that value seems to me: immaterial. What the relator purchased were stamps which were required to be used in the payment - of a tax imposed by the State upon a transfer of its stocks. The relator, not needing those stamps for his own purpose, claimed the right to sell them to others who would need them to .pay such tax,: but the State had objected to the sale of such stamps and made it a misdemeanor to sell them, and it is the validity of this prohibition that is in question,. There is nothing in the statute or in the inherent character of the. stamps themselves which, as I view it, makes the constitutional provision applicable.. The stamps were sold for the purpose of enabling persons who were liable to pay a tax to: the State to pay such tax and they were available to the relator for use for that purpose. They were in effect, it seems to me, a receipt by the State of a certain tax paid in advance, and which was to be used as evidence of such payment when the tax became payable. Mr. Justice *231Scott, in his opinion, bases the conclusion that this act was prohibited by the Constitution upon the assumption that these stamps when purchased became property of which relator could not be deprived without due process of law, and he seeks to uphold this conclusion by an application of a line of authorities of which. Wynehamer v. People (13 N. Y. 378) is the leading case; but it seems to me that the principle there established has no application to such stamps. That case applied to a stock of liquors, the sale of which was rendered illegal by chapter 231 of the Laws of 1855. Now before the passage of this prohibitory act liquors were personal property. like any other property. The State had not manufactured or sold them and they differed in no respect from merchandise of any other character. It was in relation to property of this kind that Judge Comstock observed that he could not find any definition of property which did not include the power of disposition and sale, as well as the right of private use and enjoyment. It is true that persons stealing stamps which have been purchased may be guilty of larceny, and any person who had purchased stamps of this character and held them for use in paying the tax has an insurable interest upon which he could obtain insurance in case of their destruction by fire. They undoubtedly constitute a species of property by which a person having purchased them prior to the 9th of March, 1911, could have used them to pay to the State the tax when it became payable, but I do not think that the right that the relator acquired was property so that he could not be prohibited from transferring the right to use these stamps in payment of a tax to others within the protection of the State or Federal Constitution, for, as before stated, they were at most a certificate that a person had paid to the Comptroller a sum of money and received from him evidence of such payment which could be subsequently used in the payment of a tax under section 270 of the Tax Law. As before stated, the State could repeal that tax entirely which would destroy the value of these stamps in the hands of the relator, but for that reason the repeal would not be unconstitutional. So, I think it clear that the State could change the method of payment of the tax by requiring that in the future it should be paid in money directly to the *232Comptroller instead of by the nse of these stamps. Certainly such an act would not be a violation of the Constitution because thereby the value of the stamps in the hands of the purchaser had been impaired or destroyed, but the act in question does not affect the use of these stamps by the relator to pay any tax for which he is liable but prevents him from transferring to others the right to- use the money that he has paid to the Comptroller represented by the stamps in payment of the tax due by the transferees. The very nature of the' transaction between the relator and the Comptroller when the relator purchased' the stamps for a use limited by the act under which they were sold seems' to me to limit the interest of the purchaser of the stamps so that they did not become property within the meaning of the constitutional provision which it is claimed renders this legislation void.
My view, therefore; is that this statute in question was a lawful exercise of the power of the Legislature and the learned judge at Special Term correctly disposed of the application. (See 74 Misc. Rep. 491.)
The order should, therefore, be affirmed.
Clarke, J., concurred; Scott and McLaughlin, JJ., dissented.

 Since amd. by Laws of 1913, chap. 292.— [Rep.