LOUIS F. GAUTIER, Respondent,
ANNA P. DITMAR, Appellant, Impleaded with THE CITY OF NEW YORK, Respondent, and AMELIA HOWARD, Trustee of SIMEON HOWARD, Deceased, and Others, Defendants.
APPEAL by the defendant, Anna P. Ditmar, from an order of the Supreme Court, made at the Kings County Special Term and entered in the office of the clerk of the county of Kings on the 8th day of March, 1911, denying the said defendant's motion for judgment on the pleadings.
William G. Cooke, for the appellant.
Milton Frank, for the plaintiff, respondent.
John B. Shanahan [James D. Bell and Archibald R. Watson with him on the brief], for the respondent The City of New York.
By chapter 490 of the Laws of 1908, which amended generally the Greater New York charter (Laws of 1901, chap. 466), a new scheme was provided for the collection of arrears of taxes and assessments on lands within the city of New York. This scheme, stated briefly, provided in title 5 of chapter 17 of said charter that the city through its appropriate officers might sell at public auction after a prescribed notice any lien which it held against lands within the city for taxes or assessments unpaid and in arrears for three years from the date on which they were payable originally. The lien to be so sold covered, in addition to the amount of the tax as originally levied, all accrued interest, together with the expenses of the sale. It was provided that at the public sale the city's lien should be struck down to the bidder who, offering the amount of the city's claim, should at the time agree to charge 'the lowest rate of interest, not exceeding twelve per centum per annum.' The statute provided for a formal transfer to the purchaser of the tax lien on complying with the regulations of the sale. This formal transfer may be recorded in the appropriate office as if it were a mortgage on the lands affected. It was likewise provided that the amount of the lien so transferred should become due as to the purchaser and as against the property at a date three years after the date of the sale, and in the meantime the purchaser or holder of the lien should be entitled to receive interest thereon semi-annually on the first days of January and July at the rate which
the purchaser shall have bid at the public sale. Provision was made for a redemption of the lands affected by the tax lien by any person having a legal or beneficial interest in the property affected. It was likewise provided that, in default for thirty days of payment of interest on the lien or in default of the payment of taxes for six months after the delivery of the transfer of the tax lien, the holder thereof might elect to have the aggregate amount of the lien become due and payable at once against the land affected. Provision was made for the maintenance in the Supreme Court by the holder of the tax lien of an action for the foreclosure thereof and a sale of the land affected, and the provisions of the Code of Civil Procedure regulating actions to foreclose mortgages were made applicable to an action to foreclose the tax lien. In an action brought to foreclose the tax lien, the instrument of transfer of the tax lien was made presumptive evidence of the regularity and validity of the lien and its transfer, subject to such defense as to the irregularity or invalidity of the lien as was specifically pleaded in the answer, and the burden of proof of any irregularity or invalidity of the lien was put upon the person pleading or setting forth the same. If judgment be awarded to the plaintiff, then the property affected is to be sold at public auction, with provisions as to a deed thereof and the distribution of the proceeds of sale as are common to actions for the foreclosure of mortgages.
On October 5, 1910, the plaintiff bought from the city of New York a tax lien on the property of the defendant Ditmar in the sum of $118.94, on which interest was payable at the rate of four and seven-eighths per centum per annum. The defendant neglected or refused to pay the plaintiff the interest which became due thereon on January 1, 1911. Thereupon the plaintiff elected that the whole amount of the lien should become at once due and payable, and he brought this action to foreclose the lien, as in the statute provided. The complaint sets forth the facts claimed to constitute a cause of action for foreclosure in a short form provided by the statute in question. The defendant thereupon, without answering, moved at Special Term for judgment in her favor against the plaintiff on the complaint, on the ground that it did not state a cause of action. This motion
having been denied, the defendant appealed to this court. On this appeal, as at Special Term, the defendant asserts that the statute in question, so far as it attempts to authorize a transfer by the city of New York to a private person, of a tax lien on lands, with power to proceed to enforce the same, is unconstitional and void. This, and this only, is the question involved in this appeal.
The argument advanced by the appellant, stated syllogistically, is as follows: The right and power to levy a tax against persons or on lands is purely governmental, as it is a part of the power of sovereignty. The power to sell lands for a failure to pay taxes is an inherent part of the right to lay taxes, and cannot be transferred to private persons to be exercised for their own purposes. Therefore, the statute in question is unconstitutional and void, in so far as it attempts to transfer to private persons rights and powers which are purely governmental, and pertaining alone to the sovereign or its governmental agencies. The major premise of this argument is correct unquestionably. The right to lay taxes, even under a constitutional government, exists as an incident of sovereignty, and not by virtue of any specific grant of power to the government under the forms of a constitution. The right may be regulated or restricted by express constitutional provisions, but it is not created by them, for it is the life blood itself of all government. ( People ex rel. Hatch v. Reardon,184 N.Y. 431, 443.) The exercise of this power is practically unlimited by our Constitution, the only limitation being that taxes shall be levied for public purposes. (Const. art. 8, § § 9, 10.) Nor is there any express or implied constitutional restriction on the power of the Legislature to choose such form of collection of taxes as it may deem expedient. As was said in Genet v. City of Brooklyn (99 N.Y. 296, 306): 'The power of taxation being legislative, all the incidents are within the control ...