273 N.Y. 334 | NY | 1937
The Comptroller of the city of New York, assuming to act pursuant to Local Law No. 20, adopted December 5, 1934 (published as Local Law No. 21, Local Laws of 1934, p. 143), as amended by Local Law No. 24, adopted December 28, 1934 (published as Local Law No. 25, Local Laws of 1934, p. 164), as authorized by chapter 873 of the Laws of 1934, assessed appellant United Artists Corporation the sum of $21,188.92 as a tax on sales between December 10, 1934, and May 31, 1935.
Appellant is a Delaware corporation authorized to transact business in this State, and its principal place of business is at 729 Seventh avenue, New York city. Its business is the distribution of motion picture films to exhibitors. It is not an agent of producers but is an independent contractor. It obtains licenses from producers to distribute and market photoplays to exhibitors within *339 certain territories, and its revenue is derived from the exhibitors. Its contract with Twentieth Century Pictures, Inc., which is typical of all its contracts with producers, recites that appellant is engaged in distributing and marketing photoplays throughout the world. By that contract the producer agrees that the license for distribution granted to appellant includes the sole and exclusive right, license and privilege to exploit, market and turn to account and cause to be distributed and exhibited all of the photoplays, consisting of two negative prints and a number of positive prints, not to exceed one hundred and fifty, included in that contract for a period of seven years. The exhibitors, with whom appellant, as distributor, contracts, pay appellant for the right to show the films, and appellant pays the producer a percentage, varying from seventy-five per cent to fifty per cent, of the moneys derived from the license to use the photoplays.
The transaction by which appellant acquires the right from the producer to obtain possession of and to distribute the films and to contract with exhibitors for their exhibition is not the subject of the tax imposed which appellant seeks to vacate. Probably the sale to this appellant in this State by the producer in California of films manufactured in that State and elsewhere outside New York, and their transportation to this State is included within the operation of interstate commerce. (Binderup
v. Pathe Exchange, Inc.,
If these contracts between appellant and the exhibitors in New York city constitute a sale within the purview of chapter 873 of the Laws of 1934 and Local Law No. 20 of December 5, 1934, as amended by Local Law No. 24 of December 28, 1934, the transaction, so far as the delivery of the prints and the licensing of their exhibition is effected in the territory included within New York city, is taxable. Appellant's contract with the producer provides that the distributor (appellant) purchases all the producer's right to market positive sound prints of motion pictures, that appellant will use its best efforts to market them, that it agrees that all leases orlicenses to use positive copies or copies of each of the producer's photoplays shall be made separate and apart from theleases or sales of other motion pictures or photoplays, and used in no way to influence the license, lease or sale of other motion pictures or photoplays. The subject of the transaction between the producer and this appellant, which is the same subject as the transaction between appellant and the exhibitors in New York city, is a photoplay consisting of two negatives and of complete positive copies not to exceed one hundred and fifty. *341
Local Law No. 20, effective December 5, 1934, imposes a tax on the sale of tangible personal property and defines the term "tangible personal property" as corporeal personal property. This Local Law No. 20 was amended to take effect December 28, 1934, by Local Law No. 24. This amendment contains this definition: "(e) The word `sale' or `selling' means any transfer of title or possession or both, exchange or barter, license touse or consume, conditional or otherwise, in any manner or by any means whatsoever for a consideration, or any agreement therefor * * *." (§ 1 [e].) The transaction which is the subject of the tax under review consists of the transfer by the distributor to the exhibitor of the possession of corporeal property in the form of positive and negative prints of photoplays with the license to use or exhibit them for a specified time. The license to exhibit without the transfer of possession would be valueless. Together they are one transaction and constitute a sale within the definition of Local Law No. 24. In so far as this sale originates and is consummated in New York city, it is subject to the tax. In so far as the transfer of possession of the prints and the license to exhibit them is effected in territory outside the city, then no tax is applicable. We hold that the Appellate Division is correct on both aspects of this case, and that the order should be affirmed.
The order should be affirmed, without costs.
CRANE, Ch. J., LEHMAN, LOUGHRAN, FINCH and RIPPEY, JJ., concur: HUBBS, J., taking no part.
Order affirmed. *342