260 A.D. 265 | N.Y. App. Div. | 1940
This proceeding is in the nature of certiorari to review assessments of State taxes made against petitioner under section 186-a of the Tax Law submitted to us upon an agreed statement of facts. The first question for our decision is whether petitioner is a utility subject to the tax imposed by this statute. If it is, then we must determine whether the statute violates the equal protection clauses of the State and Federal Constitutions.
Petitioner owns and operates an apartment building in the city of New York. It purchases electricity from the Consolidated Edison Company of New York, Inc., a public utility, and submeters and sells it to the tenants of its apartment house only. It renders them bills for electricity separate from their rents. It does not use the city streets in these operations and enjoys no special franchise. Under protest, it filed returns for the tax periods between May 1, 1937, and February, 1940, and made payment of the taxes. It now seeks a refund of these taxes and a construction that the statute does not apply to it, or, if construed so as to include petitioner, then that it is discriminatory and unconstitutional. The respondents deny these claims and ask judgment denying the refund and sustaining the validity of the taxes thus imposed.
As far back as 1933 a similar tax was levied by the city of New York upon utilities doing business within that city. Under the local law of the city, as amended, that tax was imposed upon every person engaged in the “ business of furnishing or selling to other persons, gas, electricity, steam, water, refrigeration, telephony and/or telegraphy or who shall engage in the business of furnishing or selling to other persons gas, electric, steam, water, refrigeration, telephone or telegraph service.” The Court of Appeals in Matter of 320 West 37th St., Inc., v. McGoldrick (281 N. Y. 132) held that such local law was not applicable to a corporation owning and operating an apartment house and submetering and selling electricity to its tenants in exactly the same manner as petitioner here is doing. Writing for the court, Judge Hubbs said: “The law, read as a whole, is quite evidently intended to apply to those engaged publicly in the business of distributing the named commodities or furnishing the named services.”
The definition of a utility in section 186-a of the Tax Law is practically identical with that of its obvious parent, the New York city local law. But, we are told, that while it is the same definition in the same words, it is in a new setting and, therefore, We should now construe it anew. We are urged to give to it a meaning which our court of last resort said it did not have. The difference in background, according to the State, is found in an amendment to the State Law (Laws of 1938, chap. 293) eliminating from “ gross income ” the receipts from sales which are not for
We are also of the opinion that the petitioner was not a utility engaged in the business of selling electricity or rendering electric service. Such sales as were made were wholly incidental to its business of owning and operating the apartment house. Nor is petitioner a utility in the universally accepted meaning of that term. Further basis for this construction of section 186-a of the Tax Law is found in its title “ additional tax on utilities ” and its position immediately following section 186 which imposes a franchise tax on water works companies, gas companies, electric or steam heating or electric light companies, all of which are clearly engaged in the business of supplying those commodities and services to the public generally. When the new section 186-a speaks of an additional tax on utilities, it is some indication that the Legislature meant utilities of the same type as those mentioned in the preceding section.
While this interpretation of the statute renders it unnecessary for us to determine the constitutional question raised by the petitioner, it is only fair to state in that regard that a very serious question indeed would be presented under the decision of Merchants Refrigerating Co. v. Taylor (275 N. Y. 113).
Hill, P. J., Schenck and Foster, JJ., concur; Heffernan, J., dissents and votes to confirm.
Judgment rendered in favor of petitioner in accordance with the stipulation, without costs.