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Keywords

contractstatutemotionregulationrespondentappellantdeclaratory judgment

contractstatuterespondentappellantdeclaratory judgment

Related Cases

Dun & Bradstreet v. City of New York, 276 N.Y. 198, 11 N.E.2d 728

Facts

Dun & Bradstreet, Inc. filed a complaint seeking to determine whether it was subject to a local sales tax imposed by the City of New York on services. The respondents moved to dismiss the complaint, arguing that the appellant's receipts were taxable. The Special Term denied the motion, stating that the services provided by the appellant were not included in the local law. The Appellate Division reversed this decision, asserting that the complaint did not warrant declaratory judgment or injunctive relief. The appellant's business involved providing confidential financial information to subscribers, and the complaint included details about the subscription contract and the nature of the services rendered.

The complaint sets forth a copy of the contract entered into between appellant and its subscribers, which provides that the subscriber employs the appellant to investigate and furnish reports up to a certain number for a certain sum, and $1.25 for a report on each name over and above the number specified.

Issue

Do the local laws require the payment of a tax upon the amount paid by subscribers for the services rendered by Dun & Bradstreet, Inc., and if not, has the appellant sought a proper remedy?

The questions presented for determination briefly stated are, first, do the local laws here involved require the payment of a tax upon the amount paid by subscribers for the services rendered to them by appellant? Second, if not, has the appellant sought a proper remedy?

Rule

Taxing statutes of doubtful validity must be construed in favor of the taxpayers, and if the local law does not impose a tax upon the appellant, the comptroller cannot impose such a tax through rules or regulations.

It is elementary that taxing statutes when of doubtful validity or effect must be construed in favor of the taxpayers.

Analysis

The court analyzed the local law and determined that it was not intended to impose a tax on services rendered by Dun & Bradstreet, Inc. The court noted that the local law specifically taxed services rendered by certain public utility companies and that the comptroller's conflicting rules created ambiguity. The court emphasized that the appellant's services were confidential and personal in nature, and the delivery of reference books was incidental to the service provided, not a separate taxable transaction.

It is quite apparent that the local law was not intended to impose a tax on income from services rendered except by the public utility companies named.

Conclusion

The court concluded that Dun & Bradstreet, Inc. is not liable for the local sales tax on the services it provides to its subscribers. The Appellate Division's decision was reversed, and the order of the Special Term was affirmed.

As we have reached the conclusion that appellant is not taxable under the local law, it remains to determine whether an action for a declaratory judgment under section 473 of the Civil Practice Act constitutes a proper remedy.

Who won?

Dun & Bradstreet, Inc. prevailed in the case because the court found that the local law did not impose a tax on the services it rendered, and the comptroller's attempt to impose such a tax through regulations was invalid.

The following cases are relied upon by respondents: Matter of United Artists Corp. v. Taylor, 273 N.Y. 334, 7 N.E.2d 254; People ex rel. Walker Engraving Corp. v. Graves, 243 App.Div. 652, 276 N.Y.S. Y.S. 674, affirmed, 268 N.Y. 648, 198 N.E. 539; People ex rel. Foremost Studio, Inc., v. Graves, 246 App.Div. 130, 284 N.Y.S. 906.

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