Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

MATTER HOUSE SEAGRAM v. STATE LIQUOR AUTHORITY ET AL. (07/22/68)

SUPREME COURT OF NEW YORK, APPELLATE DIVISION, THIRD DEPARTMENT 1968.NY.42723 <http://www.versuslaw.com>; 292 N.Y.S.2d 183; 30 A.D.2d 380 July 22, 1968 IN THE MATTER OF HOUSE OF SEAGRAM, INC., ET AL., APPELLANTS,v.STATE LIQUOR AUTHORITY ET AL., RESPONDENTS Matter of House of Seagram v. State Liq. Auth., 51 Misc. 2d 157, affirmed. Schreiber & Schreiber (Emanuel Becker and Lester H. Schreiber of counsel), for appellants. Louis J. Lefkowitz, Attorney-General (Grace K. Banoff and Ruth Kessler Toch of counsel), for respondents. Herlihy, J. Gibson, P. J., Aulisi, Staley, Jr., and Gabrielli, JJ., concur. Author: Herlihy


Matter of House of Seagram v. State Liq. Auth., 51 Misc. 2d 157, affirmed.

Herlihy, J. Gibson, P. J., Aulisi, Staley, Jr., and Gabrielli, JJ., concur.

Author: Herlihy

 The petitioner has alleged that it is a wholesaler of certain alcoholic beverages imported by it from foreign countries and resold by it in "the package of original importation".

Section 99-a of the Alcoholic Beverage Control Law requires the petitioner to secure a brand label use permit for the subject imported goods prior to their sale or the solicitation of any orders therefor in this State and further imposes a fee for the said permit based upon sales in this State. The said section 99-a also provides that the subject fees are not applicable if the sales would be exempt from excise taxes pursuant to article 18 of the Tax Law.

Section 424 of the Tax Law imposes an excise tax on liquor except where the State is without power to impose such a tax.

The narrow issue presented to this court is whether or not an excise tax may be imposed by New York State on the first sale of alcoholic beverages in their original package in New York State by an importer-wholesaler.

The parties agree that the applicable portion of the United States Constitution is section 10 of article I thereof, commonly known as the Import-Export Clause which prohibits State taxation of imports or exports without the consent of Congress. (See Department of Revenue v. James Beam Co., 377 U.S. 341, 344.)

The power of a State to tax chattels imported from foreign countries depends upon whether or not the process of importing has ended prior to the imposition of the tax. (See Department of Revenue v. James Beam Co., supra, p. 346.) In Brown v. Maryland (12 Wheat. [25 U.S.] 419) the court held that a tax on the importer for the privilege of selling an article, imported only for sale, was prohibited by the Import-Export Clause. The prohibition against such a tax, however, was limited to levies prior to the incorporation of the goods into the common mass of goods in the State. In the Brown case, the statute involved required importers, as a specific class, to obtain a license and pay a fee for the same prior to selling the imported products. In the present case, the subject fee is applied to all wholesalers who sell the subject alcoholic beverages in this State. In Hooven & Allison Co. v. Evatt (324 U.S. 652, 656) the court reiterated the rule of the Brown case.

As a general proposition the rule appears to be that goods imported for resale in their original package may not be taxed by a levy on the importer, which levy is related to the sale of the goods. The prohibition against such levies appears to be limited to transactions prior to the goods having reached the market place or point where they are held for sales to consumers.

However, the present case concerns a particular class of goods, to wit: alcoholic beverages.

In 1919 the Eighteenth Amendment to the United States Constitution was duly ratified by the States. This amendment prohibited "the manufacture, sale, or transportation of intoxicating liquors within, the importation thereof into, or the exportation thereof from the United States * * * for beverage purposes." (Emphasis added.) In 1933 the Twenty-first Amendment to the United States Constitution was duly ratified by the States. This amendment repealed the Eighteenth Amendment and provided in section 2 thereof: "The transportation or importation into any State, Territory or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited." (Emphasis added.)

The most recent decision of the Supreme Court relating directly to the Import-Export Clause and the Twenty-first Amendment is Department of Revenue v. James Beam Co. (supra). Beam was the sole distributor in the United States of a particular brand of liquor produced in Scotland, shipped via the ports of Chicago or New York to Beam's warehouses in Kentucky and subsequently sold to customers in domestic markets throughout the United States. The applicable Kentucky statute provided: "No person shall ship or transport or cause to be shipped or transported into the state any distilled spirits from points without the state without first obtaining a permit from the department and paying a tax of ten cents on each proof gallon contained in the shipment." (Ky. Rev. Stat., ยง 243.680, subd. [2], par. [a]). The Kentucky Court of Appeals held that the tax in question, although an occupational or license tax in form, was a tax on imports, noting that the incidence of the tax is the act of transporting or shipping the distilled spirits into the State. The Supreme Court affirmed the Kentucky court and held that the tax was one on imports and thus in violation of the Import Clause; and that the Twenty-first Amendment did not permit the State to lay an impost on imported liquor. (It might be noted that an impost is a generic term for tax; and an excise tax has been defined to mean a type of impost [see Black's Law Dictionary (4th ed.), pp. 672, 889].) In Beam the tax was on the act of shipping or transporting the liquor into the State; in the present case we are considering a tax on the sale of liquor which is an excise tax levied when the liquor is sold within this State by an importer.

The court in Beam referred to the case of DeBary v. Louisiana (227 U.S. 108) as follows: "The Court upheld under the Wilson Act a Louisiana license tax imposed on the business of selling in their original packages wines and liquors imported from abroad. There is nothing in that decision * * * to support the view that Congress intended * * * to consent to state taxation upon importation of liquor." (Emphasis in original.) (Department of Revenue v. James Beam Co., supra, pp. 345-346, n. 7.) The emphasis of the court on the aspect of selling as opposed to the act of importation (transportation) cannot be ignored and we find in Beam an implicit approval of taxation on the sale of alcoholic beverages in the original package or otherwise. More support for the theory that there presently is a distinction between a tax on the sale of the subject beverages and a tax on the importation of the goods is found in Gordon v. Texas (166 Tex. Cr. Rep. 24, affd. 335 U.S. 369). As noted in Beam, the tax in the Gordon case was held not to be a tax on imports. (See Department of Revenue v. James Beam Co., supra, p. 345, n. 6.)

In view of the holdings in Gordon and DeBary and the language in Beam, we conclude that by virtue of the Twenty-first Amendment an unusual and exceptional power was given to the States to control alcoholic beverages within its borders and, therefore, the Import-Export Clause is not violated when New York imposes an excise tax on the sale of liquor in ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.