Metropolitan Package Store Ass'n v. Koch

OPINION OF THE COURT

Plaintiffs and plaintiffs-intervenors are either retailers, wholesalers, or a trade association of liquor retailers, who seek a judgment declaring that the provisions of Local Law No. 30 of 1980 of the City of New York are unconstitutional and void, and enjoining defendants from administering and collecting excise taxes pursuant thereto or from imposing sanctions or penalties for noncompliance. Said local law was enacted by defendant City of New York pursuant to enabling legislation enacted by the Legislature as section 445 of the Tax Law in 1971 (L 1971, ch 406, § 1), and imposes a New York City excise tax in the sum of 12 cents per gallon upon beer and 26.4 cents per liter on liquor, upon distributors and noncommercial importers of alcohol which is sold or used in New York City (Administrative Code of City of New York, § Y46-2.0). The local law also included a one-time floor tax upon persons owning or possessing specified amounts of alcoholic beverages on August 1, 1980, the effective date of the local law (Administrative Code, § Y46-2.0). In order to implement collection of the excise taxes, defendant State Liquor Authority issued Bulletin 529 which required that wholesalers of liquor “collect” the taxes established plus the additional sum of 20% of such taxes. The bulletin had the effect of mandating that wholesalers pass the tax plus a 20% markup thereon along to retailers who then included the increases in their minimum retail consumer prices. The complaint alleged, inter alia, that the provisions of the local law, as implemented by Bulletin 529, are unconstitutional as violative of the supremacy clause (US Const, art VI, cl 2), the commerce clause (US Const, art I, § 8, cl 3), the import-export clause (US Const, art I, § 10, cl 2), and the Fourteenth Amendment (US Const, 14th Amdt, § 1). The complaint also alleges violations of the New York State Constitution’s prohibitions against incorporation by reference to other statutes (NY Const, art III, § 22, subd 1; art III, § 16), and of the due process clause (NY Const, art I, § 6). Additionally, the complaint alleges that the local law, as

There can be no doubt that the local law was enacted solely and simply as an exercise of the taxing power of the city and bears no motivation other than to raise revenue. “This being so, the due process clause may not here be availed of to condemn the statute. That clause, it has been said, ‘is applicable to a taxing statute * * * only if the act be so arbitrary as to compel the conclusion that it does not involve an assertion of the taxing power, but constitutes, in substance and effect, the direct exertion of a different and forbidden power, as, for example, the confiscation of property’ ” (Ampco Printing-Advertisers’ Offset Corp. v City of New York, 14 NY2d 11 , 24, app dsmd 379 US 5 , quoting from Magnano Co. v Hamilton, 292 US 40 , 44; see Shapiro v City of New York, 32 NY2d 96 , 102, app dsmd 414 US 804 ). We find no forbidden purpose present, discounting again plaintiffs’ arguments centered upon Bulletin 529, and hold that the terms of the law and its references to the Tax Law are clear and understandable to persons of “common intelligence” (Connally v General Constr. Co., 269 US 385 , 391). Moreover, we reject plaintiffs’ contention that

EQUAL PROTECTION

The differential treatment afforded wholesalers and retailers is not violative of equal protection. This court has recently rejected a constitutional challenge to the taxing power of the City of New York (Matter of Manganaro v Tully, 88 AD2d 206 [unincorporated business tax]). We noted (p 208) “ ‘in taxation, even more than in other fields, legislatures possess the greatest freedom in classification’ ” (quoting Madden v Kentucky, 309 US 83 , 88), and that “ ‘[t]he test is whether the difference in treatment is an invidious discrimination’ ” or is “ ‘palpably arbitrary’ ” (citing Lehnhausen v Lake Shore Auto Parts Co., 410 US 356 , 359, 360). The local law imposes the tax upon distributors who import into the city any alcoholic beverages for sale or use in the city, and does not distinguish between retailers and wholesalers. The distinctions complained of appeared in the ill-fated Bulletin 529, already declared void in Mancini v McLaughlin (supra), and are no longer at issue. The Legislature has wide discretion in creating tax classifications (Shapiro v City of New York, 32 NY2d 96 , 103, supra). The tax is imposed upon those who import alcoholic beverages for sale or use in the City of New York and since it is solely intended to produce optimum revenue, it is a valid legislative enactment (Matter of Long Is. Light. Co. v State Tax Comm., 45 NY2d 529 , 535-536). “That a ‘fairer’ taxing formula might have been adopted is of no moment” (supra, at p 535).

NEW YORK STATE CONSTITUTION

Plaintiffs erroneously argue that both Local Law No. 30 and section 445 of the State Tax Law (L 1971, ch 406,

Plaintiffs’ further argument that Local Law No. 30 violates section 16 of article III of the State Constitution prohibiting incorporation of statutes by reference without verbatim insertion of such act, similarly fails. Concededly, the enabling act and the local law both incorporate by reference other sections of the Tax Law dealing with administration and collection. However, reference “to the procedure of an earlier general statute does not contravene this provision of the Constitution” (Richfield Oil Corp. of N. Y. v City of Syracuse, 287 NY 234 , 240). Moreover, the enabling act was an amendment to article 18 of the Tax Law and as such was not a violation of section 16 of article III (People ex rel. New York Elec. Lines Co. v Squire, 107 NY 593 , 602).

SUPREMACY CLAUSE

Plaintiffs argue that Local Law No. 30 constitutes price fixing per se in violation of the Sherman Antitrust Act and the supremacy clause (US Const, art VI, cl 2). We disagree. Initially, we reject plaintiffs’ argument as erroneously premised upon Bulletin 529 which, we reiterate, is not at issue herein. Moreover, the subject laws and regulations fall within the “State action” exemption to the Sherman Act and thus do not violate the act nor, by implication; the supremacy clause (see New Motor Vehicle Bd. of Cal. v Fox Co., 439 US 96 ; Exxon Corp. v Governor of Maryland, 437 US 117 ; Lafayette v Louisiana Power & Light Co., 435 US 389 ). The exemption applies since the excise tax was specifically authorized by State laws, and enforced by State and municipal officials acting as State agents (see Parker v Brown, 317 US 341 ; Tribe, American Constitutional Law,

REMAINING CHALLENGES

We find no inconsistency between Local Law No. 30 and section 101-b of the Alcoholic Beverage Control Law violative of section 2 (subd [c], par [ii]) of article IX of the New York State Constitution. By focusing their challenge once again on Bulletin 529, plaintiffs and plaintiffs-intervenors have effectively raised no valid argument regarding an alleged inconsistency. In any regard, Local Law No. 30 is solely revenue producing while section 101-b of the Alcoholic Beverage Control Law is purely regulatory. Such statutes are to be harmonized whenever possible (Cimo v State of New York, 306 NY 143 ), and section 445 of the Tax Law and Local Law No. 30, enacted long after section 101-b of the Alcoholic Beverage Control Law should prevail (People ex rel. Thorpe v Clark, 62 AD2d 216 ; see McKinney’s Cons Laws of NY, Book 1, Statutes, §§ 391, 398).

The technical violation of section 39 of the New York City Charter, which requires approval at a public referendum of any enactment transferring powers vested in a municipal agency to a nonmunicipal agency, does not void the local law. While it is true that the power to administer and collect all excise taxes is placed in the Department of Finance (NY City Charter, §§ 39, 1504, subd 2; Administrative Code, § Y46-4.0), and here, such power has been transferred to the State Tax Commission without referendum approval, we hold that the State, through the enabling act (Tax Law, § 445) authorizing Local Law No. 30, and section Y46-4.0 of the Administrative Code of the City of New York, has effectively superseded the referendum requirement provision of section 39 of the New York City Charter (see City of New York v Maltbie, 274 NY 90 , 96-97; Rooney v City of Long Beach, 42 AD2d 34 , 39, apps dsmd 33 NY2d 897 ).

Plaintiffs’ argument concerning inconsistencies between the local law and section 171-a of the Tax Law, respecting disposition of the excise taxes, presents no real conflict. The statutes relate to different taxes from different sources, and may easily be harmonized since proceeds

Nor do we find that the local law offends the Twenty-first Amendment to the United States Constitution, because there is no attempt made to regulate either the transportation or importation of liquor into this State. The imposition of an excise tax at the moment of sale or use of goods after they have come to rest in the city is within the sovereign power of the State, here, passed on to the City of New York by the enabling act.

' Finally, having failed to establish that Local Law No. 30 is violative of either the United States or New York Constitutions, or in any other respect invalid, neither plaintiffs nor plaintiffs-intervenors are entitled to an injunction enjoining enforcement of the law.

The judgment should be affirmed, without costs.

Mahoney, P. J., Kane, Casey and Levine, JJ., concur.

Judgment affirmed, without costs.