TULLY v. GRIFFIN, INC.

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Argument of Thomas P. Zolezzi

Chief Justice Warren E. Burger: We will hear arguments next in 75-831, Tully v. Griffin.

I think you may proceed Mr. Zolezzi.

Mr. Thomas P. Zolezzi: Your Honor, Mr. Chief Justices, and may it please the court.

This is an appeal by the President and members of the New York State Tax Commission and by employees of the New York State Department of Taxation and Finance.

It is an appeal from an order in judgment of the United States District Court with the District of Vermont which denied the appellant’s motion to dismiss this action for lack of subject matter jurisdiction.

The appellee originally had come before the District Court in order to enjoin the appellants from the enforcement and the execution of various provisions of the New York State Sales Tax Law.

Since they sought an injunction, a three-judge court was convened and the three-judge court decided against us.

That is why we are here.

The basic facts leading up to the action are that the appellee is a Vermont corporation with its place of business in Arlington, Vermont which is located approximately six miles from the New York border.

The appellee is engaged in the retail sale of furniture and in its operations, a large portion of the sales made are made to nonresidents of the State of Vermont and are made to the residents of the State of New York.

Some of the articles in the store purchased by New York residents are carried away by the residents.

Other articles are delivered by Griffin to purchasers in New York by use of Griffin’s own trucks by their own employees.

These employees would come in and in many cases setup the furniture such as attaching legs to tables etcetera and they will also send repairmen in to do various repairs and touch up work on the furniture.

Griffin also advertises extensively in New York by way of newspapers, radio and TV and a roadside sign.

The New York State Tax Commission, based on the activities of Griffin within the State, were of the opinion that there was minimal contact within the State and we sought to have Griffin collect sales tax for the State of New York on those articles which are delivered into the State.

We are not seeking to have sales tax collected on any articles which are sold to New York residents at Griffin store and carried away by the resident from the store.

We are only after the tax on goods delivered into New York State.

Unknown Speaker: When you say you sought to have that tax collected, you sent one of your auditors, did you not, to the store in Arlington?

Mr. Thomas P. Zolezzi: Yes sir, we sent one of our auditors to the store, based on the fact that we felt that there were minimal contacts within the state.

When we arrived at the store, at that time, we were represented with the summons and complaint in Federal District Court.

Unknown Speaker: What would New York have done, if the appellee here, Griffin had simply told the auditor in effect, get lost and not filed the lawsuit that he did?

Mr. Thomas P. Zolezzi: Had we been told get lost, we would come home and then based on external indices, what we did in this case really, we went to the Vermont Tax Commission and we obtained figures and facts relating to Griffin Sales and those sales upon which it had not paid sales tax to Vermont.

We took a percentage of that and applied it to New York, basically what you can say is was it an arbitrary figure...

Unknown Speaker: No, what I am going to say is would you have brought an action in the New York court?

Mr. Thomas P. Zolezzi: Yes, and based on these figures that we obtained from Vermont, what we would do, is come back, obtain a judgment in New York, and then under the provisions of Article 25 of the New York State Tax Law, we would have gone into Vermont and sought to enforce our New York claim in the Vermont courts.

Unknown Speaker: Well, now would Griffin have had an opportunity in the New York proceeding to litigate its claim that this was an unconstitutional exercise of advising authority?

Mr. Thomas P. Zolezzi: When we went into seek a judgment in the New York Courts, we would not do it ex parte.

We would have to serve motion papers and they would be put on notice that such an action was pending and they could come in and defend thier point.

Unknown Speaker: What would if it would be some sort of a long arm service?

Mr. Thomas P. Zolezzi: Correct, it would be the long arm service under Section 302 of our Civil Practice Law and Rules which under the theory of doing a transaction of any business within the state would permit us to have jurisdiction over any foreign corporations.

Unknown Speaker: What would be the situation on your view of the case, if sales were made final and the purchaser had to arrange for the transportation?

Mr. Thomas P. Zolezzi: If the purchaser arranged for the transportation; in that case we could not really touch Griffin because Griffin would be out of state.

There would be no transactions or no completion of the sale within the State of New York because the entire operation would be completed in Vermont.

The purchaser would have his own vehicle etcetera, pick up the goods and transport them.

Unknown Speaker: And for all practical purposes you couldn’t really tax those transactions as a practical matter?

Mr. Thomas P. Zolezzi: As a practical matter, we could not tax Griffin, but we could try to impose the use tax upon the purchaser when he brings them in for use within state.

Unknown Speaker: That is what I meant by the practical matter.

Could you really do anything as practical matter with respect to all these individual purchasers?

Mr. Thomas P. Zolezzi: Practically speaking, the answer is, no.

We have to rely upon the honesty of our residents.

Unknown Speaker: Unless they employed United Parcel Service to make most of the deliveries, that is if all of the purchasers went to United Parcel, you might be able to track them down that way?

Mr. Thomas P. Zolezzi: Yes sir, without becoming one big administrative upon...

Unknown Speaker: Almost impossible...

Mr. Thomas P. Zolezzi: It would be almost possible.

Unknown Speaker: Am I correct in some places you admit you do not want that money?

Mr. Thomas P. Zolezzi: That we do not want which money?

Unknown Speaker: You do not want the money to rot there and brought it back himself.

Mr. Thomas P. Zolezzi: Oh, no we are not saying we do not want the money.

We are saying; we are not trying to impose upon Griffin the obligation of collecting it.

Unknown Speaker: But it is admitted in this case, is it not?

Mr. Thomas P. Zolezzi: Yes we admit that we will not impose Griffin when the purchaser goes to Vermont, buys the article and takes it with him from the store.

Unknown Speaker: It’s not in this case.

Mr. Thomas P. Zolezzi: Pardon me sir.

Unknown Speaker: It’s not in this case.

Mr. Thomas P. Zolezzi: No, that’s not in this case.

What we are trying to do is get Griffin to collect the sales tax for those goods which are delivered into New York State by Griffin’s trucks, by Griffin’s employees.

Unknown Speaker: Mr. Zolezzi you assess the deficiency of $298,000, I think it was, is it your understanding that that was based just on those items delivered by the plaintiff trucks or was that on all sales to New York residents, but you used the percentage and if you manage to--?

Mr. Thomas P. Zolezzi: Well, we used the percentage.

What we had done was as I mentioned before, going to the Vermont Tax Commission and obtained an amount of money that was payable in sales taxes and sales taxes that were not paid to Vermont.

We took Griffin’s sales and then we had the sales upon which no taxes were paid.

We took a percentage of that and we accessed that against Griffin.

This was done under Section 1138 of our Tax Law, 1138 (a).

Unknown Speaker: But the question is that were you trying to get the figure on those delivered in the plaintiff’s trucks or on those goods sold to New York residents?

Mr. Thomas P. Zolezzi: We are trying to get the figure on the goods that are delivered by Griffin in their trucks to residents of New York in New York State.

Unknown Speaker: And they are very substantial deliveries, if your figure is anywhere near correct?

Mr. Thomas P. Zolezzi: We are of the opinion, your Honor.

At this point when we try to have an order, they would not permit us to see the books and we really do not have -- we do not know at this point really how much they are doing.

This is a pure estimate and this is one reason why we would like to have a hearing, so that we could determine, if they are liable, if they have minimum contacts, if they do have substantial business within the state.

If they do have substantial business, we are of the opinion that they should render and collect the sales tax for us.

Unknown Speaker: We are able to do that in the Vermont proceeding?

Mr. Thomas P. Zolezzi: In the Vermont proceeding?

Unknown Speaker: Yes.

Mr. Thomas P. Zolezzi: Yes, we had a judgment in New York and went over to Vermont.

Unknown Speaker: Well, couldn’t you have entered into the Vermont proceeding here as your hearing?

Mr. Thomas P. Zolezzi: Well, we weren’t in the Vermont proceeding.

We were in the Federal Court and since they had asked for injunction, I had moved in federal court to dismiss for lack of subject matter jurisdiction, based on 28 U. S. C. 1341 which says that the district court shall not enjoin, suspend, restrain the assessment, levy and collection of taxes in state Law.

Unknown Speaker: And you'll lost that motion?

Mr. Thomas P. Zolezzi: Yes sir.

There was a three-judge court that sat on the motion.

Unknown Speaker: And I am asking if you could not have defended your case when you lost the motion to dismiss?

Mr. Thomas P. Zolezzi: It is possible, but we preferred to come in on the motion to dismiss because we feel that this action should be within New York Courts because we feel we have...

Unknown Speaker: Well, suppose you lose here then what you going to do?

Mr. Thomas P. Zolezzi: Well, if we lose here, I imagine we are just going to have to go into Federal Court and defend our action.

Unknown Speaker: And one other question, you have not mentioned or have not cited Miller against Maryland, Miller Brothers against Maryland in your brief somewhere in your argument, would you comment on it?

Mr. Thomas P. Zolezzi: Well I have…

Unknown Speaker: You do not have to do it now or if you really want to?

Mr. Thomas P. Zolezzi: Having made the motion to dismiss for lack of subject matter jurisdiction, the question before the District Court in Vermont was whether the State of New York can provide plain, speedy and efficient remedies.

Unfortunately, the District Court in Vermont felt that the State of New York cannot provide plain, speedy and efficient remedies and we have now appealed and it is the position of the State of New York that such adequate remedies are available.

Griffin would have two remedies available to it in the State of New York.

One would be by an administrative agency, judicial review remedy.

Now, this is a proceeding under Article 78 of our Civil Practice Law and Rules.

The second method or relief would be by way of declaratory judgment.

Unknown Speaker: Would the constitutional issue be raised?

Mr. Thomas P. Zolezzi: In an Article 78?

Unknown Speaker: In the administrative and the...

Mr. Thomas P. Zolezzi: Yes it can.

Unknown Speaker: Does your opposition agree with it?

Mr. Thomas P. Zolezzi: I do not believe he does.

Under the provisions of Section 1138 of the New York State Tax Law, it specifically provides that there maybe an administrative review by the State Tax Commission of any assessments, determinations of the State Department of Taxation and Finance.

If the State Tax Department, State Tax Commission has this review the appellee would come before the Commission, present all those facts which it feels which supports it is position.

The State Tax Commission then would review the evidence as it was presented and based upon that evidence it would render a determination.

If the determination is favorable to the appellee, it would conclude the entire matter.

The State Tax Commission cannot decide the constitutionality of the statute which the appellee is claiming as being unconstitutionally applies with, but it can decide whether a statute should be applied to a particular taxpayer or person who has asked for a hearing.

The appellee contends an Article 78 proceeding as an inadequate remedy because in order to review the decision of State Tax Commission, he would have to commence an Article 78 proceeding, which is judicial review of an administrative determination.

Prior to bringing an Article 78 proceeding, they would either have to pay the tax or post the bond for the tax.

The appellee contends that this would render it not a speedy, plain or an efficient remedy.

As I said before, the appellee is pre supposing that the determination of State Tax Commission would be adverse to it.

I think that in this regard, he is trying to make the State Tax Commission a rubber stamp of the Department of Taxation and Finance, it is not.

It must review the evidence as presented and its decision must be based in fact upon the evidence as it has been reviewed.

Unknown Speaker: What would it cost to put up the kind of bond that your rule requires, your statute requires, worth $298,000 of taxes.

Mr. Thomas P. Zolezzi: Your Honor, I honestly do not know what a bondsman would charge percentage to...

Unknown Speaker: I suppose it would top collateral of at least $300,000, would it not?

Mr. Thomas P. Zolezzi: I would assume

Unknown Speaker: Probably more?

Mr. Thomas P. Zolezzi: Once again…

Unknown Speaker: That is pretty heavy burden, is it not?

Mr. Thomas P. Zolezzi: Well, once again we are at a position where while the tax is assessed at $298,000 that is a high estimate by the Department of Taxation and Finance.

If we had an audit of the books and we actually saw how much was being delivered into New York State and then assess our particular sales tax on it, that amount, that dollar amount could be substantially reduced, that that $298,000 should not be taken as a figure which is absolute that we have to post $298,000 bond.

Unknown Speaker: Well, cut it in half, it is still a $150,000, is it not?

Mr. Thomas P. Zolezzi: Correct, it maybe less than that, we do not know.

Unknown Speaker: But Mr. Griffin may have to submit to an audit if you told this?

Mr. Thomas P. Zolezzi: If he went before a hearing before the tax commission?

Unknown Speaker: Would he have to open up all of his books to New York?

Mr. Thomas P. Zolezzi: He would have to open up his books as to those sales which are delivered into New York State.

Unknown Speaker: And he is, the thing he has complained about is that, he does want you to see his books?

Mr. Thomas P. Zolezzi: Correct.

Unknown Speaker: So the relief you will give him is to make him show the books?

Mr. Thomas P. Zolezzi: Well…

Unknown Speaker: Am I right?

Mr. Thomas P. Zolezzi: We are not going to give him the reason, make him show his books.

He can either say…

Unknown Speaker: Well, that is why he filed the case, was it not?

Mr. Thomas P. Zolezzi: This is why he filed, correct.

Unknown Speaker: That’s the relief he seeks?

Mr. Thomas P. Zolezzi: Correct.

Unknown Speaker: Is there any way in New York, he can get such relief of not being required to show his books?

Mr. Thomas P. Zolezzi: He can bring an action for the declaratory judgment in the State Court’s in which case he can challenge the constitutionality of the applicability of the New York Tax statute did not apply to him.

Unknown Speaker: And he get an injunction?

Mr. Thomas P. Zolezzi: He can get an injunction under Section 6301 of the Civil Practice Law and Rules.

Unknown Speaker: You would not oppose it?

Mr. Thomas P. Zolezzi: Pardon me sir?

Unknown Speaker: You would not oppose it on the same ground?

Mr. Thomas P. Zolezzi: That is a policy decision of the State Tax Commission that I cannot make at this point.

I would assume that we would put up nominal opposition to it, basically because we would like to get Griffin into court to find out how much he owes the State of New York.

Unknown Speaker: But whether your oppose it or not, does not mean whether the New York Court will grant it.

Mr. Thomas P. Zolezzi: Even if we opposed it, the likelihood of Griffin obtaining an adjunction in the New York State is extremely good because under Section 6301, it says that a irreparable harm would be done to the person seeking the injunction, the courts will grant an injunction.

In this case, with a $298,000 assessment and Griffin claiming only $250,000 in the assets, I am sure the court would say, if we do not grant an injunction a irreparable harm would be done and it would.

Unknown Speaker: But going back to this burden again, on the face of it, it is a $300,000 bond or if we cut it in half, the $150,000 bond on a relatively small business in order to achieve the opportunity to assert either the validity of the tax on non constitutional grounds or the validity of the tax on constitutional grounds.

Now, in that point, do you have any burden?

Mr. Thomas P. Zolezzi: This would be a feature of the Article 78 procedure approach.

Unknown Speaker: What others would be available?

Mr. Thomas P. Zolezzi: The other approach would be available to him.

Unknown Speaker: Pay the tax?

Mr. Thomas P. Zolezzi: If he paid the tax and came into court and his position was sustained, we not only return the tax, but we would give him 6% interest on top of it.

We do not take tax.

Unknown Speaker: Absolutely, all this is for the privilege of litigating a businessman’s tax liability in another state?

Mr. Thomas P. Zolezzi: This is would be a piece of the Article 78 approach.

Unknown Speaker: What about the injunctive proceeding?

Mr. Thomas P. Zolezzi: As I said in the injunction proceeding which would be an action for declaratory judgment as is provide for by Section 3001 of our Civil Practice Law and Rules.

The appellee could come into the courts of New York, apply for and most probably obtain an injunction because a irreparable harm would be done, if we were to force him to pay more than his total assets.

Unknown Speaker: And that’s the proceeding that Judge Kaufman and two other New York Judges found was not adequate remedy?

Mr. Thomas P. Zolezzi: They found that that was an adequate remedy.

Unknown Speaker: For purpose of 1341?

Mr. Thomas P. Zolezzi: Yes in the Ammex case.

Unknown Speaker: In arguing unless you get over 1140, I am not sure in this prohibition that your statement that the other remedy should be exclusive and that should be no declaratory judgment?

Mr. Thomas P. Zolezzi: Under 1140.

Unknown Speaker: 1140.

Mr. Thomas P. Zolezzi: Now, under the provisions…

Unknown Speaker: You have to have an under arm an end run around that statute?

Mr. Thomas P. Zolezzi: Well, it is not an end run around.

We took it head on in New York.

Under the declaratory judgment proceedings, set forth by Section 3001 of the Civil Practice Law and Rules, we have cases in New York, specifically holding that eventhough a tax statute says that an Article 78 proceeding shall be the exclusive remedy to be followed.

If the constitutionality of the statute or the applicability of the statute is challenged, you do not have to follow the Article 78 proceeding, but you can proceed in the way of declaratory judgment.

Unknown Speaker: Do you think that is a great comfort to the taxpayer?

Mr. Thomas P. Zolezzi: It is a comfort to the tax department.

The answer is yes because otherwise what will happen is if he does not come in and challenge us, eventually what will happen is his trucks will come in to New York and we will probably confiscate one and then we are going to run into the Miller situation, is probably could be your next question, we are the opinion that Miller does not apply in this particular case.

Unknown Speaker: Why?

Mr. Thomas P. Zolezzi: Miler was a situation where the State of Maryland was trying to impose the collection of the use and consumption tax of the State of Maryland upon a Delaware vendor.

Under that case, the residents of Maryland would go into Delaware, purchase their goods and they would bring them back into Maryland or on occasion Miller would have its trucks deliver the goods into Maryland on an occasional basis.

Unknown Speaker: So far precisely the same as this expect for the word occasional, is that the distinction you are doing?

Mr. Thomas P. Zolezzi: Yes, we are of the opinion that there is substantial business interest within the state.

We feel if there is more than a minimum contact that Miller did not have the minimum contact as such.

Miller did its advertising strictly in its Delaware papers.

The advertising happened to carry over into Maryland and Maryland residents then went to Delaware to Miller’s Store, made their purchases and proceeded from there.

In the case at bar, Griffin advertises in New York newspapers which are published solely in New York.

In its advertisement as will be found on page 30 of the appendix, there is a map which specifically sets forth the roads to be taken from the Albany, Schenectady and Cambridge areas of New York to Griffin’s Store in Vermont.

Unknown Speaker: Perhaps I got a (Inaudible) but are you claiming that this taxpayers should collect a Sale Tax or Use Tax on goods that are sold at its store and carried away by the customer himself.

Mr. Thomas P. Zolezzi: No sir, no sir, not at all.

Unknown Speaker: Then what’s the significance of these advertisements?

Mr. Thomas P. Zolezzi: Well, we say that…

Unknown Speaker: It is perfectly alright.

Mr. Thomas P. Zolezzi: It is perfectly alright.

Unknown Speaker: So it is right to advertise in New York and say here is how to get our store.

Mr. Thomas P. Zolezzi: Right, solicitation itself would not be doing business within the state, I agree.

Unknown Speaker: Well, and then as long as the customer carries it away with them, you are not attempting to collect?

Mr. Thomas P. Zolezzi: We are not attempting to collect it.

However, the solicitation within the state coupled with the delivery by Griffin’s employees with Griffin’s trucks and the sending of Griffin’s repairmen into the state to do touch up work.

The cumulative effect of it would be a minimal contact of doing business or transacting business within the state.

We are of the opinion that the contract itself is not completed until the goods are delivered and the delivery takes place in the state.

The New York State Sales Tax is a tax which is placed at the time of transfer of possession or title and as this court held in the Berwind White case back in 1939 that is a tax which can be upheld because the tax takes place at transfer of possession and/or title.

Unknown Speaker: Did you suggest a while ago that in this declaratory judgment action available in the state courts that the tax people withhold their hands, pending the completion of that action or not?

Mr. Thomas P. Zolezzi: I did not say that we would hold our hands pending, I just said that the probability of success on Griffin’s part was greater than any because of the irreparable harm which would be done prior to the hearing, with a $298,000 tax assessment and only $250,000 in assets.

Unknown Speaker: In case you identify, I suppose you can get a no really a flat rule in New York that you could not get in terms of pending...

Mr. Thomas P. Zolezzi: Oh, there is no question.

There is no flat rule saying he could not get an injunction.

He could get an injunction and probability of success is great.

Unknown Speaker: Well, Mr. Zolezzi, what if in Mr. Justice White’s words the tax commission had decided not to “Hold its hands,” it still had a long way to go before it could ever get a judgment even in New York against Griffin, did it not?

I mean, just sending an auditor up to Arlington was not the same thing as getting an enforceable judgment?

Mr. Thomas P. Zolezzi: No, we would send the auditor to Arlington.

The auditor would come back with his report.

Based upon that, we would commence an action against Griffin in our State Courts for the enforcement of injunction.

Unknown Speaker: You decided to seize his trucks?

Mr. Thomas P. Zolezzi: Unless we decided to seize his trucks, correct, but the practicalities of that are few and far between because we just do not have the manpower to sit on the roads from Vermont to New York waiting for Griffin’s trucks to come.

Unknown Speaker: Mr. Zolezzi, I am somewhat confused at this point.

As I understand that you not trying to collect the tax from the plaintiffs, but rather you are trying to collect something like a penalty because they failed to collect the tax from their customers.

Mr. Thomas P. Zolezzi: No, under the New York State Tax Law, a vendor who does business within the State of New York is personally liable for sales tax.

The sales tax is collected from purchaser.

If the vendor does not collect the sale tax, at that point the vendor himself would become liable for the sales tax that he had not collected.

This is…

Unknown Speaker: On the sales that they do not make delivery, in other words, the customer comes in and takes the merchandise back to New York, who owes what kind of a tax to New York on those sales?

Mr. Thomas P. Zolezzi: On those sales, the purchaser himself, upon coming back would owe the State of New York a use tax for use within the State of New York, but it would not…

Unknown Speaker: After regardless of whether not Griffin does any business in the State of New York, is it not correct?

Mr. Thomas P. Zolezzi: Correct.

Unknown Speaker: For wholly, wholly apart from that?

Mr. Thomas P. Zolezzi: A wholly apart from that.

Any purchase by a New York Resident out of state and brought back in, the purchaser on his own honesty is supposed to call the tax department and say I owe you money.

Unknown Speaker: Well, if the…

Unknown Speaker: And you are trying to collect it from Griffin any part of that?

Mr. Thomas P. Zolezzi: No, we are not trying to collect that at all.

Unknown Speaker: All you are saying is Griffin was supposed to collect itself?

Mr. Thomas P. Zolezzi: No, Griffins should not collect that tax.

This is where we differ also from Miller because Maryland when tried to get Miller to collect the used tax.

Unknown Speaker: Are you sure about that?

Mr. Thomas P. Zolezzi: I am pretty sure of that Your Honor.

It was a use and consumption tax that Maryland was trying to impose in Miller.

Unknown Speaker: What kind of gross do you collect from New York residents who go out to Arlington or everywhere else and buy goods and bring it in the New York?

Mr. Thomas P. Zolezzi: I would even venture a guess, Your Honor.

Unknown Speaker: Anything at all?

Mr. Thomas P. Zolezzi: I would not venture a guess.

I honestly do not know.

I know that on occasion…

Unknown Speaker: For a man I would say it addresses that Paramus similar to New Jersey?

Mr. Thomas P. Zolezzi: Well, this is exactly what happened.

Unknown Speaker: Well I am capable (Inaudible) would be New York Court.

Mr. Thomas P. Zolezzi: Well, this is exactly what had happened in, just prior to this Griffin case, we sent people out and they had road blocks for the truck mileage tax as an incident to collection of the truck mileage tax by New York State.

It was found that many goods were been shipped into the State of New York and no sales tax was being collected.

The sales tax in New York is the tax which is applicable at place of delivery.

So even within the New York stature rates vary.

You can buy goods in New York City which has an 8% sales tax, order them shipped to Schenectady County which have a 4% sales tax and you only have to pay 4% sales tax.

On the other hand, if you buy it in Schenectady County to ship to New York, you pay 8%.

So sales tax takes place on delivery.

Unknown Speaker: But if Consolidated Edison buys a big generator for a location somewhere in New York State from other state, the Tax Commission tries to collect the used tax from it, does it not?

Mr. Thomas P. Zolezzi: We try to collect the use tax from Consolidated Edison and not from the vendor who sold the generator.

Unknown Speaker: And Consolidated would probably end up paying, would it not?

Mr. Thomas P. Zolezzi: Correct.

Unknown Speaker: I suppose if it is relevant to this case, but if an arrangement is made for Griffin to have a standby or recommended delivery services, as you indicated before, they could completely avoid New York tax?

Mr. Thomas P. Zolezzi: Now, if Griffin arranged for either mail or common carrier services then we will fall directly into a Bellas Hess type of situation where we could not tax them.

But by the fact that they are using their own trucks, their own employees and they are sending own repairmen into…

Unknown Speaker: What if it is a matter of Vermont Law; that the Title passed in Vermont and goods were paid for before the delivery was made, would you still contend that you would impose the tax?

Mr. Thomas P. Zolezzi: Yes because our tax takes place upon delivery and if they can obtain a credit from Vermont for tax that they pay in New York, fine, but as far as New York is concerned, we say that our...

Unknown Speaker: You are not paying attention where the title passes, that is irrelevant?

Mr. Thomas P. Zolezzi: Well, under the Uniform Commercial Code, I believe that title would pass upon completion of delivery and the completion of delivery takes place in New York State.

Unknown Speaker: Well, but if as matter of State law in Vermont it took -- the title passed upon payment for the merchandise and then you could I suppose where you kind of, the parties could be and make a transaction one in which title passed at the time that goods were paid for?

Mr. Thomas P. Zolezzi: Well, the New York State Sales Tax…

Unknown Speaker: But you would disregard that, I suppose?

Mr. Thomas P. Zolezzi: The state sales tax has been upheld by this court in the Berwind White case is the tax takes place upon transfer of title and/or possession and possession as transferred is in New York State when delivered by Griffin to the purchaser in the State of New York.

Chief Justice Warren E. Burger: I think your time is up, counselor.

Mr. Thomas P. Zolezzi: Thank you, Your Honors.

I just request that the lower court’s decision overturned and that the complaints be dismissed.

Thank you.

Chief Justice Warren E. Burger: Very well.

Mr. Wickes.

Argument of R. Paul Wickes

Mr. R. Paul Wickes: Mr. Chief Justice and May it please the court.

Section 1341 of Title 28 does not by it terms require a dismissal of Federal Court complaint that involves state taxes.

Rather it requires the District Court to make inquiry of the quality of the remedies that are available to the particular litigant in the State Court and it is not helpful in that analysis to have a long list of cases which uphold the efficacy of the remedies of the certain state without testing to see whether they are relevant to the particular plaintiff in the case before the court.

The appellants assert the availability of two remedies for Griffin in this case, both of which we submit do not pass the test of Section 1341.

The first remedy is that set forth by the statute which requires as a first step that all of the books and records of Griffin Incorporated be turned over to the taxing authorities of the State New York, dating back to 1965 which was when the sales tax was enacted.

The District Court for the Southern District of New York in the United States Steel case specifically held that submitting to an audit by a taxing authority of questionable jurisdiction constituted the irreparable injury and if that audit procedure constituted irreparable injury for United States Steel Company and the other corporations that were involved in that litigation the situation is certainly much worse when we look at this little Mom and Pop furniture store in Arlington, Vermont.

Unknown Speaker: Will irreparable injury though is not a test under 1341, is it not, you have to have that to get any injunction?

Mr. R. Paul Wickes: That’s right.

I think in the District Court’s analysis in the United States Steel case I think it used the term irreparable injury by way of demonstrating that remedy was not “plain, speedy and efficient.”

Mr. R. Paul Wickes: But I certainly reading 1341 literally, you would have to make out all the ordinary elements of an injunction, which will include irreparable injury and then show an addition that it was no “plain, speedy and efficient.”

Unknown Speaker: That’s right.

Incidentally, do you think the District Court’s findings and conclusions of law in your favor on the applicability of 1341 can stand side-by-side with Judge Kaufman’s opinion in the Ammex case.

Mr. R. Paul Wickes: Yes, I do.

Unknown Speaker: Why do you, how would you distinguish one from another?

Mr. R. Paul Wickes: I think there are important distinctions.

The most important is the fact that the appellate tried to ignore all through this case which is in between the offices of the New York State Tax Commission and Griffin, there is a state border and Ammex had eight sales facilities that were located in the State of New York.

They have challenged that sales tax was an Import-Export Clause challenging, the Commerce Clause challenging, that there was no due process issue.

Unknown Speaker: But that goes to the merits of the constitutional claim, does it not?

Mr. R. Paul Wickes: I think it goes.

Unknown Speaker: Not to the speedy and adequate, are not they.

Mr. R. Paul Wickes: No, I think it goes to the quality of the remedies that’s available in the State because one of our contentions has been all along that the very act of going into New York and invoking one of these remedies, may constitute a submission of jurisdiction in New York which is the basis of our due process claim and if that is correct, by the act could going in and raising the claim in New York, we lose it and Ammex clearly did not have this.

Unknown Speaker: But if you have a due process claim, if you feel there is a constitutional objection to New York procedure, you are free of the conclusion of the New York court proceeding is to bring that claim here, are you not?

Mr. R. Paul Wickes: Well, that is right, we are.

There is another difference between the Ammex case which is important I think and that is that there was no issue in that case of about whether or not an injunction was available in the declaratory judgment proceeding because the party had stipulated that there would be no collection activities, pending completion of a litigation and there is no such stipulation here and Judge Kaufman thought that stipulation was important.

The final thing, I should say about Ammex is when Ammex finally got into the Supreme Court in New York, the trial court in New York, that court held that a declaratory judgment remedy was improper and in an unreported opinion, this published in the New York law journal in January, the court said we are not going to decide this is a declaratory judgment and then it proceed to convert it into an Article 78 proceeding and decided in Ammex’s favor on the merits, but there is still I think even after Judge Kaufman’s decision in Ammex.

I think there is a substantial difference, that case was before our District Court in Vermont.

That was argued fully in the District Court and I think the District Court deals with it in its opinion.

The second objection we have to the statutory procedure is the apparent inability of the tax commission, based on the Hospital Television Systems case to hear a constitutional challenge to its authority.

Apparently, the function of the proceeding in the Tax Commission is simply to sit and check the arithmetic of the tax auditors.

Now, the appellants have argued that we can go in and present evidence on the constitutional claim before the Tax Commission, but that really raised a question of what is going on here.

The Tax Commissioners or the appellants in this case, they have argued all along that on the facts of the cases that did not disclose, we are liable for the tax.

Unknown Speaker: Can I ask you for at this point?

Is it your understanding that New York is seeking to collect only the tax due on goods that are delivered by your client in New York?

Mr. R. Paul Wickes: Yes.

Unknown Speaker: And it is your submission I think that there would be eventually that New York is constitutionally forbidden to impose a sales tax at the point of delivery and make the delivered or collected?

Mr. R. Paul Wickes: When the deliver or is separated by state law and has the limited times of contact across that state law and that are presented in this case.

We think that expect perhaps for the map in the newspaper, this case on its fact is identical…

Unknown Speaker: You think it has to be, what you -- in other context might be called doing business in New York?

Mr. R. Paul Wickes: Well, the Sales tax cases of this court have set up a pretty clear line between a business, on the one hand which either has people on a regular basis in terms of salesmen soliciting orders which was the Scripto case or has some kind of property or facility in the case and somebody who just goes in and out on a temporary basis to perform a delivery the way that they did Miller’s, there is a firm line that has been held in the sales tax cases.

Unknown Speaker: Would you not concede that if there were enough trips across the state lines, that millions of people cross the state line on behalf of this Mom & Pop store that that might give them jurisdiction.

Mr. R. Paul Wickes: I think that at some point...

Unknown Speaker: You concede that how is the state of New York ever going to find out when that point has been reached?

Mr. R. Paul Wickes: Well, I suppose there going have to litigate with the series of people who do increasing or decreasing number of trips.

Unknown Speaker: Well, they are litigating with you now.

Would you agree that if they asked you in discovery what your volume of deliveries is, you would have to tell them that?

Mr. R. Paul Wickes: Well, that question came up in the District Court and we indicated some doubt about whether we would agree that we had to tell them that because I do not think under Miller Brothers in the sales tax case it is relevant, but the relevance of the issue clearly can be determined in the District Court and the District Court can…

Unknown Speaker: How can you tell the relevance of the issue without having some idea of the magnitude of the transactions within New York?

Mr. R. Paul Wickes: Well, the indication in the District Court is that that is how they decide that and we may well have to disclose that information.

Unknown Speaker: But if you have to disclose that in the Federal proceeding anyway what’s the irreparable harm about submitting to an audit?

Mr. R. Paul Wickes: Well, I think there is a substantial difference between having to answer in interlocutory that asks how many trips you do into New York or even how many dollars of business you do in New York, to having it open up your basement where your records are kept to the sales tax department of New York.

Unknown Speaker: It's just a matter of the burden of coming through a lot of records?

Mr. R. Paul Wickes: And in this situation it's a substantial burden.

Unknown Speaker: That there is no privacy at interstate?

Mr. R. Paul Wickes: Well, not a very important matter.

Unknown Speaker: Just a matter of responding to the discovery that is your irreparable injury here.

Mr. R. Paul Wickes: Well no, I do not think responding to discovery would constitute the irreparable injury.

I think the irreparable injury comes about when by asserting a tax in the face of Miller Brothers or in a situation where the facts are as close to Miller Brothers as they are, the auditors can require us to turn over all of our records.

I think that is the injury.

Unknown Speaker: Well, then you are just reading 1341 virtually out of the books.

You are saying that any time a Federal Court determines that the imposition of tax is unconstitutional substantively, it can enjoin the enforcement?

Mr. R. Paul Wickes: No, I do not think that is true.

I think…

Unknown Speaker: Or even when there is a claim that was then dismissed, they can issue an injunction depending on decision?

Mr. R. Paul Wickes: Well, I should speak about the preliminary injunction that was issued in this case for a minute which is the reason we were here.

When this case was filed, we have been notified that an auditor was going to come and we filed and served the auditor when he came to Vermont.

In the initial pleadings in this case there was no request for preliminary injunction.

We requested it a declaratory judgment and a permanent injunction, but there was no issue about preliminary injunction.

After the complaint was filed, after the motion to dismiss was filed, after the State’s memorandum of law was filed in connection with the motion to dismiss, came this assessment for $298,000 and the reason we then asked for interlocutory relief was that on the expiration of 90 days from the issuance of that assessment, our right to contest the amount of issue was forever gone.

So we asked for the interlocutory injunction just to stop that clock for money.

Unknown Speaker: To get away from that $218,000 because that’s all over rich Mom and Pop, is it not?

Mr. R. Paul Wickes: Yes it is Your Honor.

Unknown Speaker: And then you could not honor your Mom and Pop, could you?

Unknown Speaker: Mr. Wickes, suppose you were located in Troy rather an Arlington.

What is the New York system?

Do you have to file an annual return of this type of tax?

Mr. R. Paul Wickes: It is a quarterly return I think Your Honor, but yes it is a self reporting mechanism essentially.

Unknown Speaker: Are you taking the position that under no circumstances are you serving to New York tax at all?

Mr. R. Paul Wickes: We are taking a position that under the present circumstances we’re not serving to the New York sales tax.

Unknown Speaker: Not on these deliveries of furniture to New York...

Mr. R. Paul Wickes: That is right, because the issue is not whether there is a tax due on that transaction.

There clearly is a tax due on that transaction.

It is a Use Tax that the New York purchaser is supposed to pay.

The issue is whether we have sufficient contacts in New York that New York can constitutionally require us to put on their tax collectors hat; that is what this case is about, not whether there is a tax due.

Unknown Speaker: Well, does Griffin or anybody pay Vermont Sales Tax along what’s delivered in New York?

Mr. R. Paul Wickes: No, there is no sales tax paid on that transaction.

Unknown Speaker: But if it is in Vermont, it is paid by the Vermont, what is it?

Mr. R. Paul Wickes: Not if the goods are delivered into New York; if it is delivered in Vermont or picked up in New York…

Unknown Speaker: As a matter of fact, Griffin pays neither Use Tax nor Sales Tax?

Mr. R. Paul Wickes: Well, as I said, Griffin -- the store never pays the Use Tax.

Unknown Speaker: Well, Griffin setup a seal where neither he nor the purchaser pays tax.

Mr. R. Paul Wickes: Well, not under the statute.

Under the statute, the purchaser in that situation is required to pay the tax.

Unknown Speaker: Well, as of now the people in Albany who buy the property in Vermont and is delivered in the Griffin trucks in Albany, nobody pays either sales tax or Use Tax on that delivered furniture?

Mr. R. Paul Wickes: I do not -- there is not anything in the record to suggest that people in New York ignore their tax statute and the tax is due on that transaction.

Unknown Speaker: You assume that they pay the Use Tax?

Mr. R. Paul Wickes: I assume some numbers.

Even I assume some numbers who do not.

Unknown Speaker: And what New York wants is double tax, is that he say?

Mr. R. Paul Wickes: No, it is not, it is not.

What they want is for us to be their collectors because a lot of their people apparently they think do not pay their taxes.

Unknown Speaker: I request this is all based on facts on New York, rest of the people complain.

Mr. R. Paul Wickes: Well, that is what a tax assessment was based on.

Unknown Speaker: Mr. Wickes, there seems to be a difference between your view of the tax and your opponent’s view at the tax.

He told me that the tax which would be payable on the merchandise delivered by your trucks to New York people at their residence is would be a sales tax and you are saying it would be, the only tax due would be Use tax.

Mr. R. Paul Wickes: That is exactly the dispute here on the merits.

That’s the dispute because if the sales tax we have to collect it and if it is a Use Tax, we do not have to collect.

Unknown Speaker: So that the issue is one whether it is a matter in New York Law the tax payable on the transactions in dispute is the Sales Tax or Use Tax?

Mr. R. Paul Wickes: Well, that…

Unknown Speaker: If that is the issue, can you give me some New York authorities for the position you maintain?

Mr. R. Paul Wickes: That is not the issue.

The issue is, you see that the way the New York Sales Tax works is that on every transaction where the sale takes place in New York.

Unknown Speaker: The seller is required to collect the tax and then it goes on to say if there is a situation where the seller does not collect the tax, there is a Use Tax, it is in fact called the compensating Use tax is to make up for this...

Well, if they get to the if, it does say that the seller must collect the Sales Tax in that situation?

Mr. R. Paul Wickes: That’s right.

Unknown Speaker: While in Use tax, they do not these transactions if precisely that situation?

Mr. R. Paul Wickes: They do, if New York can kind of -- as a matter of Federal Constitutional Law.

Unknown Speaker: There is a matter of New York Law.

Mr. R. Paul Wickes: As a matter of New York State Law there is no question.

Unknown Speaker: We are talking about a Sales Tax rather than a Use Tax.

Mr. R. Paul Wickes: That is right.

Unknown Speaker: So you were mistaken earlier, that you said it was a Use Tax.

I just want to be sure.

Mr. R. Paul Wickes: No, I am sorry.

I guess I am not being clear.

It is a Sales Tax that we view is the case because it is a Use Tax only in a situation where for one reason or another the Sales Tax does not apply.

So if we win the case and do not have to collect the Sales Tax then what New York collects from its purchaser is Use Tax.

Unknown Speaker: Right, but what they are trying to collect is a Sales Tax?

Mr. R. Paul Wickes: That is right.

That is what they are trying to make us collect.

Unknown Speaker: Suppose Griffin salesmen brought the furniture over and delivered it to an Albany home and said this is worth a $125, you give me a $125, it is yours.

Would New York be entitled to Sales Tax?

Mr. R. Paul Wickes: No, New York would be entitled to the Use Tax.

Unknown Speaker: Well, if Griffin comes over and says Mr. Jones, I want to make a sale to you, I want to sell you this chair for $140 you give me $140 and it is yours.

New York is entitled to Sales Tax from Griffin.

Mr. R. Paul Wickes: That is right.

Unknown Speaker: And the difference is what?

Mr. R. Paul Wickes: The difference is…

Unknown Speaker: Is that he repaid him in Vermont?

Mr. R. Paul Wickes: No, the difference under Miller Brothers is that given the way Griffin transacts business.

It does not have enough contact in New York to allow New York to require it to be taxable, to fill that function.

Unknown Speaker: Though that they receive?

Mr. R. Paul Wickes: I do not think that changes the situation.

I do not think the question where the money changes hand, effects the situation.

Unknown Speaker: If the property and everything else changes hand in New York, I think New York has an interest.

Mr. R. Paul Wickes: Well, the point is under the Miller Brothers and the Bellas Hess analysis you do not look at a single transaction and determine what tax applies in that transaction.

You look at the way the party conducts his business and ask the question of whether he is got in the total picture of enough contact in that state.

Unknown Speaker: That is what New York would like to (Inaudible)?

Mr. R. Paul Wickes: Yes it is, yes it is.

Now, the appellants have argued that we got a declaratory judgment procedure available as an alternative to the state’s proceeding and they cite ten cases in support of that proposition.

On careful analysis not one of those cases can safely lead us to conclude that a declaratory judgment proceeding will be available on this case.

Sections 1138 and 1140 of the New York State Sales Tax Law are extraordinarily clear in saying that no declaratory judgment challenge is available for any kind of a tax litigation whether it involves constitutional questions or not.

All, but one of the cases cited by the appellants in support of their declaratory judgment argument were decided under statutes that do not talk about forbidding declaratory judgment challenges in constitutional cases and the Courts as a matter of statutory interpretation said since the statute does not forbid it for constitutional challenge, you can use a declaratory judgment challenging that case.

Two of the cases quoted, including the one that is decided under the Section of the Act has some language about declaratory judgment actions, but on the facts of the case that is not the issue involved.

There is the Hospital Television System, First National City Bank case and three of the cases they cited in support of this declaratory judgment remedy, while the court talks about the possibility that might be available in some case, in fact they threw the plaintiff back and sending back to the Tax Commission.

It is impossible to read the declaratory judgment cases in New York and find a rationale that can lead the confidence that that procedure is going to be available in this Court.

Unknown Speaker: But now in a sense that is where Ammex and the District Court here conflict, do they not?

Mr. R. Paul Wickes: I think that Judge Kaufman’s opinion in Ammex is considerably more certain about the availability of declaratory judgment than it should have been.

Unknown Speaker: And yet he and the other two Judges on that panel were New York Judges and presumably ex New York practitioners and in your case the District Court consisted as it properly should have about three Vermont practitioners or former practitioners?

Mr. R. Paul Wickes: That is right, and Judge Oaks is one of them who sits in the Second Circuit New York City, but that is right.

Unknown Speaker: Mr. Wickes, First National City Bank case before the three-judge court, when this case was argued and decided?

Mr. R. Paul Wickes: I do not remember Your Honor.

Unknown Speaker: The First National City Bank case was decided late in 1975 as I recall and as you suggest it is very clear statement that the word exclusive does not apply where you have constitutional issues?

Mr. R. Paul Wickes: That is right.

It is a very clear statement, but had nothing to do with the decision that the court had to make in that case.

Unknown Speaker: Nevertheless the clear statement by the highest Court of New York.

May I ask you this question, if you were satisfied that declaratory judgment relief followed by injunctive relief were available in the New York courts, would you be here?

Mr. R. Paul Wickes: I would Your Honor.

Unknown Speaker: Why?

Mr. R. Paul Wickes: Because of the fear that invoking the remedies of the New York State Courts may cause our due process argument which is an argument that says we have such insubstantial contacts in New York State that the Courts of that state do not have jurisdiction sufficient to support a judgment on the taxpayers and I think we will not walk in the New York and ask them for a declaratory judgment, we may will cause ourselves some problems on that.

Unknown Speaker: You would present that issue right there, would you not?

Mr. R. Paul Wickes: I am sorry Your Honor, right where?

Unknown Speaker: You would be present your due processes you right there?

Mr. R. Paul Wickes: Yes.

Unknown Speaker: Well, you may lose it, but you would certainly present it on appeal?

Mr. R. Paul Wickes: Well, with the points, I think we cause risk to that issue by the act of invoking a remedy, it is the problem.

Unknown Speaker: You think that they would say that you done a good general appearance and you are now under the jurisdiction.

Mr. R. Paul Wickes: So far as I notice there is no special appearance proceeding available us.

Unknown Speaker: Well, no, but whether it is a general or special appearance is not really the point.

The point is when whether White may said that would be the very basis of your complaint; you can go in any court trying that?

Mr. R. Paul Wickes: I think I am saying that I think there is a risk there, a risk that 1341 does not require us to take.

Now, another problem with the declaratory injunction proceeding is the question of whether an injunction is available if the Tax Commission decides to proceed, if when we begin the declaratory judgment proceeding in the way they issue their assessment here after we went into the Federal Courts.

Unknown Speaker: Well no, have there been any instances in New York practice where the Supreme Court of New York has issued a declaratory judgment holding a tax not applicable and the State Tax Commission is nonetheless gone ahead and try to levy it?

Mr. R. Paul Wickes: Our problem is different in this case.

Our problem is the fact that when that assessment is issued in the first instance, a clock starts to run and at the end of 90 days the amount of the assessment is fixed and forever unchallengeable and if we go in and bring a declaratory judgment proceeding in New York and they start that clock running the way they started it here and we lose our declaratory judgment challenge we are stuck with 218 or 298 or whatever thousand of dollars.

Unknown Speaker: I thought you are distinguishing between a declaratory judgment and an injunction and as I understand that the only difference between those remedies is that one if that the defendant violates and it can be held on contempt and the other if it is violated he cannot be held on contempt, but you could raise every issue on the merits in the declaratory judgment.

Mr. R. Paul Wickes: That is right.

The risk here is the risk of what happens to us if we lose the declaratory judgment action, that is it is eventually determined that we constitutionally are liable for the tax and in the meantime we have lost the ability to contest the amount of the taxes because if this assessment in the 90-day period.

Unknown Speaker: Well, that would be equally true if you lost the injunctive action, would it not?

Mr. R. Paul Wickes: Oh yes.

Unknown Speaker: I thought you were distinguishing between…?

Mr. R. Paul Wickes: No, I am not.

What I am saying is that is that the problem with the asserted remedy in New York is that if the Tax Commission starts the clock running there is not anything the New York can do to stop the clock.

Unknown Speaker: That maybe so, but it maybe that you might like other taxpayers have to resort to your administrative remedies if you want to have the amount of the tax reviewable in Court.

Mr. R. Paul Wickes: Well, that is right, but the point is that if we…

Unknown Speaker: If you have your declaratory judgment action and you are afraid about what is happening to you administratively you litigate before the administrator do?

Mr. R. Paul Wickes: Well, I think if this Court determines that these remedies in New York are "plain, speedy and efficient" then that is the situation we are going to have.

If it determines that it seems to me that what you have done as you read those words out of the statute because the statute does not say that the Federal Courts are without jurisdiction whenever there is any remedy available in the statute, it clearly imposes some test about the quality of those remedy.

Unknown Speaker: Who has the burden of proof on showing the remedy issue that explains the situation so far?

Mr. R. Paul Wickes: The District Court I think in effect treated that as a question of law.

There was no, I suppose when the statute is written it is our burden to come in and show that the remedies are insufficient.

That was the manner in which this thing was argued out in the District Court though it seems to be there is a presumption under 1341 and under the cases that it decided under it that just in terms of numbers if the remedies are probably adequate and it is up to us, we pleaded in the complaint that 1341 (Inaudible) because the remedies were not adequate and I think the burden was on us to make that argument in the District Court.

Another thing I think is important to say that in order to affirm the decision of the District Court in this case it is not necessary to make any expansion of the categories of cases that are permitted to be heard in the District Courts under 1341.

In Spector (Inaudible) and in the Township of Hillsborough case, both of which were decided in the 1940’s, this court held that in situations where the availability of appropriate remedies was unclear, it was proper for the District Court to hear the case and in the couple of cases that were decided under Section 1342 which is the companion statute to 1341 which deals with administrative raid orders, this court specifically said that a State with a statute that denies relief when that statute has not been assertatively over turned by the State Supreme Court cannot come into the Federal Court and speculate that it may not be followed and on that basis try to get the case dismissed under Section 1341.

Unknown Speaker: Mr. Wickes, may we come back a minute to you wanting stop the clock from running.

Suppose a three-judge court in Vermont had decided the constitutional question against you, would you have gone into the New York State Tax Commissioner to keep the clock from running on you or what would you have done there?

Mr. R. Paul Wickes: If our compliant had been dismissed?

Unknown Speaker: Suppose the preliminary injunction had not been issued by the three-judge court, what would you have done?

Mr. R. Paul Wickes: Well, I think we probably would have to go into New York with all the risks that that carries and try to stop that clock.

Unknown Speaker: Could you have gone both ways simultaneously, sought injunction, say in the three-judge court and peruse administrative remedies in New York just to protect yourself as to the amount of the tax?

Mr. R. Paul Wickes: I am not sure whether we could have done or not Your Honor.

I do not know if any reason why we could not, it turned out not to be necessary because the motion for the preliminary injunction was granted.

Unknown Speaker: If you could have done it in Vermont because you have done it in New York.

Mr. R. Paul Wickes: In the New York State Courts.

Unknown Speaker: Yes.

Mr. R. Paul Wickes: I think the answer to that is no because I think the New York Law that prohibits the granting of injunctions in these kinds of cases is so clear.

There is not one case that suggested that statute is going to be.

Unknown Speaker: But you have very substantial dictum?

Mr. R. Paul Wickes: Not only on point of injunction going to declaratory judgment there is.

There is not even a hint of dictum about injunctions, not in, any of these cases there is not even a suggestion that that injunction is going to be ignored.

Unknown Speaker: Is there any negative language?

Mr. R. Paul Wickes: The issue has not been raised so far as I know.

Unknown Speaker: What issue; I thought you receded from what I thought was a distinction you are making about injunction versus declaratory judgment.

Is your point that even though you could get a declaratory judgment there is some prospect that the Tax Commission would go ahead notwithstanding the state court saying the levy was unconstitutional and levy on the property anyway?

Mr. R. Paul Wickes: No, no, that is not the problem.

Our point really has to do with the ability of the New York courts to grant a preliminary injunction, to preserve the status quo, to protect our right eventually if we have to contest the amount of the taxes that are due, if we lose on the merits.

There is no distinction between a declaratory judgment and a permanent injunction.

Unknown Speaker: Well, what reason do you have to think that a declaratory judgment and it will not come up on the motion calendar rather than on a trial calendar?

What reason do you think that a action for declaratory judgment will not be heard within the same time span in New York as an application for preliminary injunction?

Mr. R. Paul Wickes: I do not have any reason to think that.

I say that the problem is that a preliminary declaratory judgment is not going to tell the Tax Commission not issue this assessment they way they did in this case.

I do not what a preliminary declaratory judgment is.

Unknown Speaker: I do not either.

What I had asked you, what I thought was an ordinary declaratory judgment.

Mr. R. Paul Wickes: Yeah.

Unknown Speaker: Could that not be heard by a New York court within the same time span as an application for a preliminary injunction?

Mr. R. Paul Wickes: I doubt that we could fully litigate the merits of the case in the same time as you can heard a ordinary preliminary injunction motion.

Any more than we could have completed this litigation in the District Court faster than we heard the preliminary injunction and that is the point of our preliminary injunction, that it is an expedite a proceeding and we do not have to make a full determination, we talked about likelihood of success on the merits in that ultimate results and that is what unavailable to is in this case and I think this is clearly showed.

Thank you.

Chief Justice Warren E. Burger: Thank you gentleman.

The case is submitted.